37-281.04. Default of lease of state land; assignment to cities and towns

A. If a default of a lease of state land made pursuant to this article occurs during the first year of the lease agreement or within four years of the first anniversary date determined by the lease agreement, the lease may be assigned to a city or town by the commissioner pursuant to this section if the following conditions are met:

1. The state land is located either entirely within or adjacent to the city or town.

2. No portion of the state land is contained within any other city or town.

3. The city or town consents to be bound by all of the terms and conditions of the lease.

4. The commissioner determines that the assignment of the lease to the city or town is in the best interest of the state land trust.

B. If a notice of default has been sent to the lessee and the lessee's registered mortgagees or lienholders and the default has not been cured in accordance with the procedures and time periods in section 37-289, the commissioner, on written request of a city or town, may assign the lease to the city or town without the consent of the defaulting lessee if the city or town cures any outstanding default. An assignment made pursuant to this subsection is an alternative to cancellation of the lease as provided in section 37-289, subsection B. If the commissioner grants the written request of the city or town for assignment as provided in this subsection, the commissioner shall make a formal order assigning the lease to the city or town, and a copy of the order shall be mailed to the last known post office address of the defaulting lessee and the defaulting lessee's registered mortgagees and lienholders. The defaulting lessee shall be permitted to remove the defaulting lessee's improvements, if any, at any time within sixty days after the date of assignment.

C. The defaulting lessee and the defaulting lessee's registered mortgagees and lienholders may appeal an assignment order pursuant to title 12, chapter 7, article 6. If no appeal is made within the prescribed time or if no notice is filed with the department pursuant to section 37-255, subsection C, the order becomes final and the assignment shall be shown on the records of the department.

D. Nothing in this section authorizes a city, town, person or legal entity that has rights under this section to claim, represent, assert or imply any ownership interest or right of leasehold interest, present or future, in any negotiations with a state or federal agency without the consent of the private lessee before having been granted an assignment of a lease pursuant to subsection C of this section.