PART 4. SCHOOL LAND BOARD

CHAPTER 155. LAND RESOURCES

SUBCHAPTER A. COASTAL PUBLIC LANDS

31 TAC §155.15

The School Land Board (Board) proposes amendments to 31 Texas Administrative Code (TAC) §155.15 relating to rent and fees for residential, commercial, and industrial activities on coastal public lands. The proposed amendments include changes to the text of §155.15 and to the related graphics in §§155.15(b)(1)(C)(i), 155.15(b)(1)(C)(ii), 155.15(b)(1)(C)(iii), and 155.15(b)(1)(C)(iv).

BACKGROUND AND ANALYSIS OF PROPOSED AMENDMENTS

In accordance with the Texas Natural Resources Code (TNRC) Chapter 33, the Board may execute grants of easements for rights-of-way across, through, and under unsold Permanent School Fund (PSF) land, the portion of the Gulf of Mexico within the jurisdiction of the state, the state-owned riverbeds and beds of navigable streams in the public domain, and all islands, saltwater lakes, bays, inlets, marshes, and reefs owned by the state within tidewater limits. TNRC §33.103 authorizes the Board to grant interests in coastal public land, including leases, easements, permits, and other interests for public purposes and easements connected with littoral ownership and cabin permits. The leases and easements are for structures such as breakwaters, jetties, and piers, as well as for open encumbrances, dredging, and fill placement.

Currently, the rent and fees for many coastal easements and leases issued by the Board are tied to the appraised market value of the adjacent littoral property. Recently, market values have increased at an unprecedented rate, resulting in rate increases that are unreasonable and often inconsistent with market conditions. The Board is proposing this rulemaking due to the rapid increase in real estate appraised values during the past five years. The amended rule will ensure that rent and fees on the coast are reasonable and more accurately reflect market value. In addition, some residential rent and fee rates are being revised in consideration of the environmental benefits of certain structures.

Rent and fees for residential coastal easements and leases are set based on the specifications in the graphics attached to 31 TAC §155.15 in §§155.15(b)(1)(C)(i), 155.15(b)(1)(C)(ii), and 155.15(b)(1)(C)(iii). The Board is proposing to decrease the annual rent for breakwaters, jetties, and groins from 20 cents per square foot to 3 cents per square foot. The rent decrease is proposed in consideration of the benefit these structures provide in the coastal environment, including the creation of habitat for small fish, crabs, and other animals. They also provide a hard substrate for oysters, barnacles, mussels, and other sessile animals. In addition, when breakwaters are a component of a living shoreline, which is an alternative to traditional shoreline armoring that incorporates nature-based features, no rent is assessed. Reducing the rents for all breakwaters is appropriate since they serve similar environmentally beneficial functions even if they are not part of a living shoreline. In addition, reducing rent may encourage more of these structures, adding environmental protection and coastal resiliency, eventually increasing revenue to the PSF.

The Board is also proposing an adjustment to the fees for fill for residential use to address the recent unreasonably high rates caused by the rising assessed value of adjacent littoral property. The proposed amendment would result in residential fill fees of either $0.10 per square foot, or an amount based on the fill formula, whichever is greater, as the baseline for annual rent, not to exceed $1.00 per square foot. Annual rent below $1.00 per square foot will escalate in accordance with the terms currently in the rule, not to exceed $1.00 per square foot. This rate also aligns with the proposed new rate for commercial fill, which will start at a $1.00 per square foot and increase based on the Consumer Price Index for All Urban Consumers (CPI-U). In addition, the phrase "no minimum rent" is being changed to "no rent" for clarity in all of the graphics.

The Board is also proposing changes to the Commercial and Industrial Activity rent and fees graphic that include the elimination of the basin formula, which ties rental fees to the assessed value of the adjacent littoral property. In its place, the Board is proposing a component formula, which charges a separate rental fee to each component of the leased premises, standardizing the fees for most commercial leases and mitigating the impact of rising property values.

In addition, the Board is proposing an amendment that would require an update to the published fee schedule every five years. The fee schedule update would be based on the Consumer Price Index for All Urban Consumers (CPI-U). Rent and fees for Commercial and Industrial Activity will be based on the updated fee schedule in effect at the time of the execution of a new agreement or a renewal. The proposed changes will result in reduced revenue for the Permanent School Fund (PSF) initially; however, updating the fee schedule based on the CPI-U every five years ensures fees will adjust to inflation over time, stabilizing and potentially increasing long-term revenue. Standardizing fee calculations and aligning them with market conditions also attracts consistent lessees, enhancing occupancy rates and lease income. The lower initial rent benefits the public by making coastal commercial leases more affordable, promoting economic activity and job creation, and supporting local economies. Eliminating the basin formula and standardizing fee structures makes the rent and fees for commercial industries more predictable and transparent.

Other proposed adjustments aim to ensure consistent rates across all coastal commercial leases. These include the removal of the Submerged Land Discount, which is linked to the Basin Formula, setting a uniform fill rate at $1.00 per square foot, and decreasing the fee for Clear Lake Marina from $4.00 to $3.00 per linear foot of boatslip to align with the rates charged in other coastal counties. The proposal standardizes fee structures across different uses of submerged lands and aligns them with market conditions and regulatory standards, thereby ensuring consistent, predictable, and transparent pricing for coastal commercial leases.

The graphic attached to 31 TAC §155.15(b)(1)(C)(iv) lists the fees for commercial and industrial activity. The proposed amended graphic has been edited with the above changes and also to reflect a previously implemented rate increase from $0.20 per square foot to $0.32 per square foot of proposed fill. This increase was approved in 2022 but was inadvertently omitted from the graphic due to a scrivener's error. Footnote 3 is also being updated to remove language about whether existing fill was placed under the authority of a permit since it is no longer applicable. The phrase "no minimum rent" is being changed to "no rent" for clarity in all of the attached graphics. The rule is also being revised to make the text consistent with the amendments to the rent and fees graphics and to make minor administrative, non-substantive edits to the text of the rule.

FISCAL AND EMPLOYMENT IMPACTS

The Board has determined that during the first five-year period the proposed amended rule is in effect, there will be no negative fiscal implications for state or local government as a result of enforcing or administering the amended section. The Board has also determined that during the first five-year period the proposed amended rule is in effect, there will be decreased economic costs to businesses that execute a new coastal lease or easement renew an existing lease or easement since the adjacent land value will no longer be used as a factor in the rent calculation. The Board has determined that the proposed rulemaking will have no adverse local employment impact that requires an impact statement pursuant to Texas Government Code §2001.022.

PUBLIC BENEFIT

The Board has determined that the public will benefit from the proposed amendments because the new rental rates will no longer be tied to surging market values for coastal land, which increased rent considerably. With continued development on the coast, the number of coastal projects continues to increase, thus increasing overall revenue for the PSF even with the lower rent and fees. The proposed changes will result in reduced revenue for the PSF initially; however, updating the fee schedule based on the CPI-U every five years ensures fees will adjust to inflation over time, stabilizing and potentially increasing long-term revenue. The lower initial rent benefits the public by making coastal commercial leases more affordable, promoting economic activity, job creation, and supporting local economies. Although rent and fees are also being lowered for some residential structures, the Board anticipates that the number of these environmentally beneficial structures will increase. The revenue from coastal rent and fees is deposited into the Permanent School Fund, which ultimately benefits kindergarten through 12th grade school children in Texas.

ENVIRONMENTAL REGULATORY ANALYSIS

The Board has evaluated the proposed rulemaking action in light of the regulatory analysis requirements of Texas Government Code §2001.0225 and determined that the action is not subject to §2001.0225 because it does not meet the definition of a "major environmental rule" as defined in the statute. "Major environmental rule" means a rule, the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. The proposed amendments are not anticipated to adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state.

GOVERNMENT GROWTH IMPACT STATEMENT

The Board prepared a Government Growth Impact Statement assessment for this proposed rulemaking. The proposed rulemaking does not create or eliminate a government program; implementation of the proposed rule will not require the creation of new employee positions or the elimination of existing employee positions; implementation of the proposed rule does not require an increase or decrease in future legislative appropriations to the agency and will not create a new regulation; the proposed rule will not expand, limit, or repeal an existing regulation; the proposed rule will not increase or decrease the number of individuals subject to the rule's applicability; and the proposed rule will not positively or adversely affect this state's economy. The proposed rule will result in a decrease in fees paid per lease or easement to the agency during the first five years the rule is in effect. During the first five years that the proposed rules would be in effect it is not anticipated that there will be an adverse impact on the state's economy. The Board anticipates that any potential decreased revenue will be offset by regular, structured increases in the base component rates.

TAKINGS IMPACT ASSESSMENT

The Board has evaluated the proposed rulemaking in accordance with Texas Government Code §2007.043(b) and §2.18 of the Attorney General's Private Real Property Rights Preservation Act Guidelines to determine whether a detailed takings impact assessment is required. GLO has determined that the proposed rulemaking does not affect private real property in a manner that requires real property owners to be compensated as provided by the Fifth and Fourteenth Amendments to the United States Constitution or Article I, §17 and §19 of the Texas Constitution. Furthermore, the Board has determined that the proposed rulemaking would not affect any private real property in a manner that restricts or limits the owner's right to the property that would otherwise exist in the absence of the rule amendment.

CONSISTENCY WITH COASTAL MANAGEMENT PROGRAM (CMP)

The proposed rulemaking is subject to the CMP, 31 TAC §29.11(a)(1) and §29.11(c), relating to the Actions and Rules subject to the CMP. The Board has reviewed these proposed actions for consistency with the CMP goals and policies. Because all requests for the use of coastal public land must continue to meet the same criteria for Board approval, the Board has determined that the proposed actions are consistent with applicable CMP goals and policies.

PUBLIC COMMENT REQUEST

Comments may be submitted to Walter Talley, Office of General Counsel, Texas General Land Office, 1700 N. Congress Avenue, Austin, Texas 78701, or by email to walter.talley@glo.texas.gov, by no later than 30 days after publication.

STATUTORY AUTHORITY

The amendments to 31 TAC, Part 4, Chapter 155, Subchapter A, §155.15 are proposed under the TNRC §33.063 relating to the Board's authority to charge fees for leases, easements, permits, and other interests in or rights to use coastal public land, and §33.064 providing that the Board may adopt rules necessary to carry out the provisions of Chapter 33, Texas Natural Resources Code. TNRC §§33.101-33.136 are affected by the proposed amendments.

The proposed amendments affect no other code, article, or statute.

§155.15.Fees.

(a) General.

(1) Form of payment. Fees may be paid by cash, check or other legal means acceptable to the commissioner.

(2) Time for payment. Payment is generally required in advance of issuance of easements, permits, leases and other documents and/or delivery of services and/or materials by the General Land Office (GLO).

(3) Dishonor or nonpayment by other means. In the event a fee is not paid due to dishonor, nonpayment, or otherwise, the GLO shall have no further obligation to issue easements, permits, leases and other documents and/or provide services and/or materials to the grantee, permittee, lessee, or applicant.

(b) Board fees and charges. The board is authorized and required under the Texas Natural Resources Code, Chapter 33, to collect the fees and charges set forth in this subsection where applicable. The board will charge the following coastal lease and coastal easement fees for use of coastal public land, and will charge the following structure registration and permit fees. The board charge will be based on either the fixed fee schedule or the alternate commercial, industrial, residential, and published [public] formulas as delineated in paragraph (1)(C) of this subsection. The greater of the fixed fee or formula rate will be charged [except in the calculation of fees for residential use, Category II and residential use, Category III, where only the fixed rate method will be used]. The board may adopt an escalation schedule that will allow for escalation of annual fees based on the term of a coastal lease or coastal easement.

(1) Rental and Fees

(A) Structure registration. Structure registration fee is required for private piers or docks that are 115 feet long or less and 25 feet wide or less and require no dredging or filling, as authorized by the Texas Natural Resources Code, §33.115. Though board approval is not required for construction, the applicant must register the location of the structure. The registration is valid for the life of the structure.

(i) application fee: $25 (per occurrence for new, amendment and assignment applications).

(ii) annual rent: none.

(B) Coastal lease. The board may grant coastal leases for public purposes as prescribed by the Texas Natural Resources Code, §§33.103(1), 33.105 and 33.109. The application fee and annual rent shall be negotiable.

(C) The following tables list the rental fees for easements and permits on coastal public land.

(i) Residential Use, Category I.

Figure: 31 TAC §155.15(b)(1)(C)(i) (.pdf)

[Figure: 31 TAC §155.15(b)(1)(C)(i)]

(ii) Residential Use, Category II.

Figure: 31 TAC §155.15(b)(1)(C)(ii) (.pdf)

[Figure: 31 TAC §155.15(b)(1)(C)(ii)]

(iii) Residential Use, Category III.

Figure: 31 TAC §155.15(b)(1)(C)(iii) (.pdf)

[Figure: 31 TAC §155.15(b)(1)(C)(iii)]

(iv) Commercial and Industrial Activity.

Figure: 31 TAC §155.15(b)(1)(C)(iv) (.pdf)

[Figure: 31 TAC §155.15(b)(1)(C)(iv)]

(v) Structure (Cabin) Permits.

Figure: 31 TAC §155.15(b)(1)(C)(v) (No change.)

(2) Senior Rent Freeze. Upon application to the GLO and submission of proof of age by a grantee, fees for coastal easements associated with a single family residence will not be increased after the point in time when the littoral property owner (one person in the case of joint ownership) reaches the age of 65, unless the area of encumbered state land increases or there is a change in use of the coastal public land.

(3) Resource Impact Fee.

(A) Public use projects and Residential Use, Category I projects constructed within guidelines: exempt.

(B) All others: $100 plus $1.00 per square foot of impacted area.

(4) New Dredge Rent. A one time rental fee due upon completion of the initial dredging for a new project. The board may consider reduced new dredge rent on a case by case basis when the material is used for habitat creation, restoration, and enhancement projects, or when it is in the public interest to do so.

(5) Term. The term for all coastal leases and coastal easements is negotiable. Board approval is required prior to construction.

(6) Rental adjustments--all commercial and industrial easements. At every five-year interval in the term of commercial and industrial easements, the rental fee for the easement will be subject to adjustment. The adjustment, if any, will be in accordance with the then current Fee Schedule as adopted by the board.

(7) Implementation.

(A) New residential developments. Upon the application for an easement associated with the development of a multi-unit or single-family residential project, the easement application will be processed and fee determined according to the appropriate commercial activity rate. Upon the sale of an individual residential unit associated with the easement, with sufficient infrastructure in place to convert use of the unit to individual use (and use of associated easement to private activity), the original easement applicant, upon agreement with the commissioner of the GLO, may pay a $50 conversion fee. The easement fee may then be reduced by the percentage that the sold unit represented to the total number of units associated with the easement. At the time the conversion fee is paid under the provisions herein, the unit will then be considered to be subject to the residential activity rates upon renewal of the easement. For units already sold prior to the effective date of this section, conversion to a residential activity rate will be granted without the payment of the conversion fee.

(B) Additional terms. The commissioner of the GLO may require, as a condition for the granting of an easement set forth in this section, such additional terms that he feels are necessary to secure performance under any such easement.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 3, 2024.

TRD-202402450

Mark Havens

Chief Clerk

School Land Board

Earliest possible date of adoption: July 14, 2024

For further information, please call: (512) 475-1859