leases. A. The Commissioners of the Land Office are authorized to grant commercial leases and agricultural leases in trust property. Commercial leases shall not exceed fifty-five (55) years. The granting of any commercial lease in excess of three (3) years shall be by public bidding at not less than fair market value. All commercial leases shall provide for fair market value throughout the term of the lease. Agricultural leases of trust property shall be limited to a maximum of five (5) years and shall be by public bidding at not less than fair market value. The granting of any interest in trust property at less than fair market value or not in compliance with this section is void. Any permanent improvement made on commercial trust property from and after July 1, 1989, shall revert to the trust at the end of the lease. B. In connection with any commercial and agricultural leases, the Commissioners of the Land Office shall, unless otherwise exempted by the Constitution or laws of this state: 1. Require payment of ad valorem property taxes on any improvements and structures on state school land, which would otherwise be subject to ad valorem property taxation if constructed on privately owned land; and 2. Indemnify and hold harmless the Commissioners of the Land Office from any financial obligation related to land, financing, or operation. C. An appraiser selected by the Commissioners of the Land Office shall appraise any improvements approved by the Commissioners of the Land Office made to the property leased as an agricultural lease by the current lessee that cannot be removed without manifest injury to the land. When the Commissioners enter into a new lease for the property, the lease shall require the new lessee to reimburse the previous lessee for the appraised value of any improvements made by the previous lessee by the date the new lessee is permitted to take occupancy of the property. It shall be considered a default of the lease of the property to the new lessee if such reimbursement is not made. Provided, no fees may be charged to a lessee above those included in the originally accepted bid to irrigate land used for agricultural purposes if the water is not sourced from lands owned or managed by the Commissioners. D. The Commissioners of the Land Office may refuse to accept any bid or lease on a commercial, agricultural, or mineral lease where the party is in default of any installment due or in violation of any provisions contained in a prior or current lease contract. E. The Commissioners of the Land Office may refuse to accept any bid or lease contract where the interested party cannot show adequate creditworthiness as determined by the Land Office. F. The Commissioners of the Land Office shall promulgate rules to implement the provisions of this section. Added by Laws 1989, c. 173, § 4, operative July 1, 1989. Amended by Laws 2010, c. 41, § 18, emerg. eff. April 2, 2010. Renumbered from § 101 of this title by Laws 2010, c. 41, § 75, emerg. eff. April 2, 2010. Amended by Laws 2025, c. 360, § 1, eff. Nov. 1, 2025.
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