Posts tagged: land board
Idaho will auction off three new undeveloped cabin sites on Priest Lake this year, partly to get a sense of the true bare-land values as the state moves toward divesting itself of the numerous state-owned lots there on which renters have built and owned cabins for years. The state Land Board approved the auction plan this morning; the auction will take place in late August or early September. The three lots, all contiguous and lakefront, will be marketed nationwide.
“Although historically there have been 354 cottage sites associated with Priest Lake, an additional 17 have been platted and are unleased and undeveloped at this time,” Thomas Felter, the state Lands Department’s manager of commercial and residential real estate, told the board, which consists of the state’s top elected officials. “We believe a sale auction would help determine the market value for vacant and unimproved lots.”
The state had planned to allow some voluntary auctions of existing cabin sites this year where the lessees wanted to go that route – and perhaps bid against competitors to keep their cabin sites, or get paid for their improvements if a competitor won the bidding - but the need to reappraise all the existing sites has slowed that process down. Felter said none of the existing Priest Lake cabin sites will be ready for voluntary auctions before 2014; you can read my full story here at spokesman.com.
The value of Idaho’s state endowment fund hit an all-time high of $1.46 billion at the end of March, up 14 percent from the start of the fiscal year July 1. That’s partly because of strong investment returns this year – through yesterday, the fiscal year-to-date investment earnings show a 19 percent gain – and partly because of higher revenue from endowment trust lands, which was up 14 percent through the end of March compared to same nine months of the previous year. The receipts: $59.5 million. Much of the land revenue comes from logging on endowment lands. (In April, the fund had more gains, bringing it to $1.48 billion as of April 30.)
The state Land Board was briefed on the fund’s gains today by the Endowment Fund Investment Board, and there were smiles all around.
Investment returns for Idaho’s endowment fund have averaged 6.7 percent for the past five years, a big turnaround from the precipitous drops the fund saw after the state first started investing it in the stock market in the early 2000s. The fund lost nearly 15 percent of its value from 2000 to 2002, going from $803.7 million to $683.2 million.
The fire season on Idaho state lands so far this year has seen only 48 percent of the 20-year average number of fires, while the acres burned are only 7 percent of the 20-year average, the Idaho state Land Board heard this morning. That's the fourth-fewest number of fires in the last 28 years, and the fifth-fewest acres burned. That was largely because the active fire season was delayed by the cool, wet spring; September is predicted to be warmer and drier than normal, so wildfires could increase. Still, the state is likely to save money on firefighting costs for the year.
The recent brouhaha over operation of a mini-storage business on Idaho state endowment land is expanding today, with a report on the Boise Guardian here headlined, “Land Board to build brewpub?” about the state Lands Department advertising for a restaurant construction manager for a downtown Boise brewpub. But Kathy Opp, acting director at the Lands Department, said, “We are not going to run a brewpub.” Instead, what's going on is that a potential tenant for one of a dozen endowment-owned properties in downtown Boise, which include parking lots and commercial properties mostly leased for retail or office use, is interested in opening a restaurant.
“Our current relationships for constructing tenant improvements are all office retail,” Opp said. “So restaurants are potentially very different for that. So to construct a responsible different type of establishment for a tenant, we felt it was needed.” The negotiations are still under way, so the department isn't releasing the name of the potential tenant or site, though the construction manager RFP listing identifies it as a one-story 1915 building at 9th and Bannock. “It's currently got some retail space in it and some vacant,” she said. “But we would not be running a brewpub. This is simply to secure tenant improvements, which every investor has to do.”
As part of the negotiations, the state, as the landlord, and the tenant would negotiate who pays for what as part of the tenant improvements. “All those are negotiated,” Opp said. “That's what investors do all the time.”
The state endowment, a land trust that benefits public schools and other state institutions like the University of Idaho, owns property in downtown Boise as a result of a land exchange conducted between 1998 and 2000, when it acquired it as part of swap involving cottage sites and forest land. Two state agencies, the Public Utilities Commission and the Endowment Fund Investment Board, rent space in endowment-owned buildings; the remaining tenants are “mostly private firms,” Opp said.
She said, “We're not doing anything that any other investor wouldn't do to try to get a tenant in their space, and we will balance any tenant improvement with the long-term return for any potential lease. Contracting for these services does provide jobs for the construction company – we're not a construction company, so it does provide private-sector jobs.” Click below for a list of all commercial property owned by the endowment in Ada County.
Idaho is starting a process to prepare for possible sale or exchange of its state-owned cabin sites at Priest and Payette lakes, and the state's top elected officials wrestled today with the implications. The state plans to spend about $1.48 million to survey and otherwise prepare for the transactions; state lands strategic business analyst Kate Langford said that may sound like a lot, but it's “less than 1 percent of that total estimated value, on a conservative level.” Langford said that work will start at both lakes in June. The first lots should be ready for possible transactions in the first quarter of 2012, Langford told the state Land Board, and the rest could be ready by the end of 2012. For Bonner and Valley counties, she said, “This is huge potential for both of those counties, a very positive impact for their taxable foundation. But it's also something that's not been done in recent times,” so the state will need to work with both counties as lots transition from state to private ownership. “Those discussions will be initiated once we get some direction from the board,” she said.
Idaho Secretary of State Ben Ysursa said he's worried that cabin owners on state-owned lots are getting “unrealistic expectations” that all the lots will be sold or traded quickly, and that's not likely to happen. “It's not going to be done immediately,” he said. “No. 1, you're working with the state, and No. 2, the market itself is going to dictate how fast some of this happens, and as we all know, the market's not real hot.” He added, “No one wants to get out of this thing faster than I do. But I also have a duty of undivided loyalty to the beneficiaries. We need to do it in a manner where we will get as much as we can.” Plus, he said, the state may opt against disposing of some of the cabin sites, choosing instead to buy out cabin owners. “Eventually those values are going to go back up, and we're going to have some valuable recreational property around lakes that no one's making any more.”
Under the state's current plan, the lake cabin owners who now lease their lots from the state would have three options: Voluntary participation in consolidated land exchanges, voluntary participation in rolling auctions for sale of the lots, or continuing to lease the land from the state. “We're going to be leasing lots for the next foreseeable future, quite a while, because we're not going to get rid of them in that quick a time frame,” Ysursa said.
After much discussion, the Land Board voted unanimously to adopt recommendations from its staff for the process, including all three of those options, but didn't adopt a proposal to set up installment payment programs for cabin owners who participate in auctions. Several Land Board members, including Attorney General Lawrence Wasden, said they had concerns about the state acting as a “bank” for those transactions; they may revisit the installment issue later.
Idaho's permanent endowment fund gained 3 percent in April, endowment fund investment manager Larry Johnson reported to the state Land Board this morning, for a fiscal year-to-date gain of 26.8 percent. “April was a very good month,” Johnson said. And year to date, “We have outperformed our benchmark.” May so far hasn't been as good, showing a drop of about 2.1 percent, “so we've given back some of that gain that we earned in April. But all of our investment managers are performing as we would expect in this environment,” Johnson said. “We have been outperforming vs. other public funds.”
Meanwhile, receipts from endowment lands for the first nine months of the fiscal year show an increase of 5 percent from the same period in 2010, Johnson said, “about equal to where we were in 2009.” Both the endowment lands and the fund benefit the beneficiaries of the permanent endowment, the largest of which is the state's public schools.
Idaho’s state Land Board’s ongoing push to diversify its endowment land holdings has put the state into the somewhat surprising position of being the new owner of Affordable Self-Storage outside Boise, a 5-acre storage facility with more than 400 units. The new acquisition joins offices, a bank building, parking garages and millions of acres of grazing and timber land in the land endowment, all of which is required by the state Constitution to be managed for maximum long-term returns for the endowment’s beneficiaries, chief among which is the state’s public schools; click below for a full report from AP reporter John Miller.
Idaho state Rep. Phil Hart stole timber from state land to build his log home in Athol in 1996, according to court documents, and still hasn’t paid a judgment against him for the theft. What’s more, the property Hart illegally logged is school endowment land, meaning the timber there is supposed to benefit Idaho’s public schools.
Hart contended then – and still does today – that a loophole in state law allowed him, as a citizen, to cut and take the logs, totaling nearly 8,000 board feet of timber. But three court rulings found that argument not only wrong but unreasonable and “frivolous.” In court documents, the state called Hart’s conduct “a blatant, unjustified trespass on state endowment land that resulted in a substantial loss to the state’s school endowment fund.”
Hart, whose only opponent for a fourth House term this November is a write-in candidate, did forfeit a $5,000 bond he had to put up for his last appeal in the case. And he may have made a partial payment for attorney fees; state records are unclear. But liens against Hart filed in Kootenai County by the Idaho Department of Lands for $22,827 were never lifted – and now they’re not enforceable, because more than five years has passed since the judgment. You can read my full story here at spokesman.com, read the Kootenai County Sheriff’s Department investigative report on the log theft here, read the Court of Appeals Decision in the case here, and click below to read a summary of Idaho’s school endowment and how it works.
Idaho’s state Land Board has voted unanimously to set distributions from the state’s permanent endowment to public schools and other endowment beneficiaries for next year at this year’s level, less the special, one-time extra distribution of $22 million to public schools this year. That means overall distributions will be down 32 percent and public school distributions will be down 41.3 percent, dropping from a total of $53.3 million this year to $31.3 million next year. But if you set aside the special $22 million allocation this year, the total distributions actually rise by 0.6 percent.
Gov. Butch Otter asked Larry Johnson, manager of investments for the endowment fund, “Is there any way we can measure the effect of taking that $22 million out? I mean, for historical purposes - we’ve done it. … If we’re tracking it we can look back on it in years to come … know what our overall cost is.” Johnson replied that that will depend on the endowment fund’s earnings. For example, if the fund earns 15 percent, the cost would be 15 percent of $22 million. If the fund were flat, the cost would be zero. Said Otter, “I just think it would be valuable for us to know … what the effect of that was, should we ever be faced with that situation again.”
Johnson submitted pages of charts and analysis from the Endowment Fund Investment Board to the Land Board showing that holding the distributions even, but for the $22 million, would be “prudent” given the various endowment funds’ earnings. Continuing the $22 million in fiscal year 2012, however, would not, he said. In four of the endowments - not the major one, which is for public schools - earnings have actually built up beyond five years’ worth of distributions in the reserve funds, and the investment board recommended a transfer from those funds back into the permanent fund, as prescribed by its investment plan. “The recommended distributions and transfers appear to be achievable and represent an appropriate balance between the interests of current and future beneficiaries,” said the report from the endowment board.
Attorney General Lawrence Wasden made a motion to approve the recommendation, Controller Donna Jones seconded the motion, and the vote was unanimous - including from state Superintendent of Schools Tom Luna, who was participating by phone. Luna, who pushed for the $22 million extra distribution for schools this year - and who actually wanted twice that amount - made no comment this time. Idaho’s endowment fund had a 5 percent gain in July, the first month of the fiscal year.
Idaho’s state endowment fund made 16 percent on its investments in the just-completed 2010 fiscal year, though it dropped 2.2 percent in June. “All of the managers are performing as we would expect them to,” Larry Johnson, manager of investments, told the state Land Board this morning. “It was a good year in FY 2010, after, of course, a very tough year in 2009.” The state endowment board will meet in August to decide on a recommendation to the Land Board for distributions to the endowment’s beneficiaries next year, including public schools. At this point, Johnson said, the board’s staff is recommending staying with this year’s levels for the most part, but discontinuing the special $22 million, one-time distribution to public schools that the board approved this year at the urging of state Superintendent of Schools Tom Luna.
As of May, all the endowments except for public schools had reserves of at least four times the approved 2010 distribution, while public schools reserves were at 2.3 times, after the special distribution. The reserves serve as a “shock absorber” to protect annual distributions when investment earnings have ups and downs. Luna had pressed for twice as big a special distribution to help spare schools from big budget cuts.
As of the close of the state’s fiscal year on July 1, emergency fire suppression costs incurred by the state Department of Lands for the year were $1.95 million. That’s similar to last year’s costs, and is 33 percent of the 20-year average. The number of acres burned was just 12 percent of the 20-year average, at just 31 acres; the average is 253 acres. In fiscal year 2010, there were three lightning-caused fires on state lands and 20 human-caused fires, but only 31 acres burned. The reason: A warm, dry winter was followed by a cool and wet May and June. A report to the state Land Board today said, “Even though early July is predicted to be warmer and drier than normal, the summer is predicted to have normal temperatures with normal rainfall. At this time, the National Interagency Coordination Center is predicting a normal fire season for Idaho.”