Sec 37-322.01. Reimbursement for nonremovable improvements by succeeding lessee of lands not subject to auction; failure to pay; penalty

A. A lessee of state lands that are not subject to lease by auction shall be reimbursed by a succeeding lessee for improvements placed on the lands which are not removable.

B. If the retiring lessee and the new lessee do not agree upon the value of the improvements, or if there is no amortized value established for the improvements, either party may file with the state land department an application for appraisal of the improvements. If a lease is granted pursuant to section 37-284, a request for an appraisal shall be made more than ninety days before the expiration of the lease. Thereafter an appraisal of the improvements shall be made pursuant to section 37-322. For agricultural and grazing leases, the appraiser shall consider the following in determining the value of the improvements:

1. The impact to surrounding state land.

2. Replacement cost minus physical and functional obsolescence as it relates to agriculture and grazing.

3. Any other factors that the commissioner determines to be relevant.

C. Upon making the appraisal, the department shall give notice of the amount by certified mail to each person interested in the appraisal. The notice shall require that the new lessee pay to the department for the prior lessee the entire amount of the appraisal before issuance of the lease unless all parties agree to an extended payment schedule. If the improvements were placed on state lands subject to a commercial lease and if the commissioner determines that the value of the improvements is so great that it inhibits the commissioner's ability to lease the property at fair market value, the commissioner may require reimbursement of the improvements pursuant to a payment schedule of not more than five years.

D. If the improvements are not paid for as agreed in an extended payment schedule, the succeeding lessee shall not be permitted to sell, assign or transfer his lease nor sell, assign or remove any improvements whatever from the land until the entire amount of the appraised value of the improvements has been paid. Upon default the succeeding lessee shall be subject to the same penalties and liabilities as provided by section 37-288 for failure to pay rents, including a cancellation of the lease.