Commercial Heritage assets are parcels that have been deemed to have higher value as commercial property than they would have as agricultural property. Generally, this means the parcels are in close proximity to other existing commercial enterprises, have sufficient infrastructure to make them attractive to commercial enterprises, or have a potential commercial use that represents rent values significantly above market agricultural values.
Commercial Heritage Property is leased via Short-Term or Long-Term Commercial Lease.
Short-Term Commercial Lease Contracts
These contracts are three-year term agreements which are appraised prior to being offered. They are not subject to public bid and cover a variety of low-capital improvement activities.
To Apply: To apply for a Short-Term Commercial Lease Contract, the applicant must submit their application to the Commercial Real Estate Group by mail or by email to CLOCommercialLeases@clo.ok.gov. A non-refundable one-time fee of $250.00 must be submitted with the application. Please note, the application will not be reviewed until the fee has been received by the CLO. In the event the cost to appraise the parcel is more than the $250.00 application fee, the applicant will be charged for the difference. Upon receipt of application and fee, CLO staff will review the application and notify the applicant of its acceptance or rejection.
Rent: Contract rent is established utilizing an appraisal process and may be established on a monthly, quarterly, or annual basis. Once it is determined the applicant will be notified. If the applicant chooses to move forward with the application, the Land Office will prepare and deliver a contract to the applicant for review and execution. Once it is returned to the CLO, it will be reviewed, executed and recorded with an original returned to the Lessee via regular mail. Rent is due at the commencement of any contract, typically January 1 each year.
Renewal: Prior to the expiration of the Short-Term Commercial Lease Contract, CLO Staff will review the contract to determine if a new contract will be offered to the existing Lessee. If so, Staff will have the parcel appraised. Upon completion of the appraisal, a new rent rate will be established and the Lessee notified of the new rate and provided with a new contract. Lessee will have 30 days to accept the new rate, execute the contract, and return it to the CLO office for final processing.
Assignment: Short-term Commercial Lease contracts can be assigned subject to approval from the CLO. Assignors must request an assignment by submitting the assignment application and associated non-refundable $75.00 fee. In the event an assignment is approved, CLO will provide an assignment form for execution by all parties. This form must be returned to the CLO for final review, execution, and recording. Assignees are required to compensate Assignors for any improvements which will not be removed from the property, otherwise all improvements must be removed prior to assignment unless such removal will result in manifest injury to the parcel.
Common types of Short-Term Commercial Lease Improvements:
- Commercial Tower Sites – includes radio towers, cellular towers, and billboards
- Oil and Gas industry related sites – includes producing and saltwater well sites, pipeline valve sites, pipeline pig launchers, compressor stations, and meter sites
- Access roads – industrial access or residential access
- Residential – mature residential home site already in existence. Please note, CLO is not seeking new residential leases.
- Misc Commercial Sites – horse training facilities, gas convenience stores, etc
LONG-TERM COMMERCIAL LEASE CONTRACT
These contracts are more than 3-year term length commercial leases which are appraised as part of the negotiation process. Each agreement is purpose drafted utilizing a three-phase structure: development, construction, and operation. Many of the terms of the contract are negotiable and intended to generally comply with private sector norms relative to the use of the parcel while also complying with CLO rules (based in the Oklahoma Constitution and State Statute). These agreements must go to public bid and generally cover high-capital improvement activities.
To Apply: To apply for a Long-Term Commercial Lease, the applicant must submit their application to the Commercial Real Estate Group by mail or by email to CLOCommercialLeases@clo.ok.gov. CLO will review the application and if approved, will provide a draft contract to applicant for review and markup.
Rent: Contract rent for the life of the agreement is established utilizing an external appraisal. The contract will include development phase, construction phase, and operational phase rent, along with annual escalators as determined by CLO staff.
Auction: Once the contract form and rent have been fully negotiated, the agreement will be placed for auction. The auction must be advertised for 4 weeks in a publication local to the county where the property is, along with a publication with statewide distribution, in addition to being posted to the CLO website. At the conclusion of the notice period, the auction is held in the CLO offices and the results of the auction are presented to the Commissioners for review and approval (disapproval).
Renewal: New long-term commercial contracts can be offered at the conclusion of an existing long-term commercial contract, however commonly, a short-term commercial contract is the preferred path because it does not have to go through auction and the improvement has generally been fully depreciated.
Assignment: Long Term Commercial Contracts will dictate the terms of assignment but generally require application for assignment as a starting point. The assignment is subject to approval by the CLO based on the terms of the contract. Assignors must request an assignment by submitting the assignment application and associated non-refundable $75.00 fee. CLO staff will review the terms of the contract with respect to assignment. Upon approval to assign, CLO will work with the assignor to provide an assignment form for execution by all parties. This form must be returned to the CLO for final review, execution, and recording.
Common types of Long-Term Commercial Lease Improvements:
- Renewable energy – Wind and Solar
- Retail uses – restaurants, banks, gas stations
- State agency purposes – state parks, research facilities, etc
- Potable water production
- Municipal water treatment
- Industrial – rail, storage, etc
SAMPLE CONTRACTS | Sample contracts are available upon request.