1. (1) The director may not lease trust lands for less than the fair market value of the leasehold. The director shall base the fair market lease rates on either the market value or income producing capability of the subject property and may require any commercially reasonable type of consideration, including rent, percentage rent, use payments, impact charges, escalating charges, balloon payments, and in-lieu payments. The director may base lease rates on any of the following criteria, in combination or otherwise:

   1. (a) the market value of the subject property multiplied by the current agency-determined interest rate;
   2. (b) responses to RFPs, pursuant to Section R850-170-600, or solicitations for competing applications, pursuant to Section R850-170-800;
   3. (c) comparable lease data;
   4. (d) market value of the proposed use of the subject property;
   5. (e) rates schedules approved by the director; and
   6. (f) the administrative costs of leasing the subject property and a desired minimum rate of return.

2. (2) Lease Review and Adjustment Procedures.

   1. (a) The director shall review renewable energy leases periodically as specified in the lease agreement and may adjust lease rates, the amount of financial guaranty, the amount of required insurance, and other similar lease provisions to ensure the agency receives no less than fair market value for the subject property and is adequately protected against a lessee's breach. Periodic lease reviews should normally be no longer than every five years.
   2. (b) The director may base lease rate adjustments on changes in market value including appreciation of the subject property, changes in established indices, or other methods that are appropriate and in the best interest of the trust beneficiaries.
   3. (c) If the lease does not specify the rate of adjustment, the rate of adjustment will be based on the Consumer Price Index, published by the U.S. Bureau of Labor Statistics, All Urban Consumers, Western Region Average, All Items (1982-84 = 100), or if the Consumer Price Index is no longer published, a substitute index published by a governmental agency and comparable to the Consumer Price Index. The adjusted lease rate cannot be less than the lease rate for the immediately preceding review period.
   4. (d) The director may suspend, defer, or waive lease adjustments in specific instances, based on a written finding that the suspension, deferral, or waiver is in the best interest of the trust beneficiaries.

KEY: administrative procedures, leases, trust land management, request for proposals

Date of Last Change: September 15, 2025

Authorizing, and Implemented or Interpreted Law: 53C-1-302(1)(a); 53C-4-101(1); 53C-4-202