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Tuesday, July 18, 2023
Department Report
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Timber
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Attachment: Trust Land – Timber Sales
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Governor Brad Little asked about GNA timber sales and who sets the value and rates. Director Dustin Miller explained IDL’s contractors are used but the Forest Services rates are followed. The Governor wanted to make sure IDL had not misappraised the rate by 300%. The director explained part of the consideration was the neighboring parcel that had not sold.
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Leases & Permits
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Attachment: Trust Land – Leases and Permits
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Controller Brandon Woolf asked if the Land Board should expect to see the unexpected million dollars reported here in the future estimates. The director said he does anticipate the increase. He noted there were a number of new leases that were not anticipated, a lot of discussion regarding energy projects, and an increase in CPI based leases such as with Tamarack. He added the goal is to keep pushing that number up in the future.
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Superintendent of Public Instruction Debbie Critchfield asked if expected revenue will take into account the change in leases. The director expects it to be taken into account moving forward.
Fire Season Update
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Attachment: Status Update - Fire Season Update
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The Governor asked how inflation affected aviation contracts. The director wasn’t sure. The Governor asked for the information for the next Land Board meeting.
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The Secretary of State assumed most of the current cost are the contracts to keep assets in place, but that the cost will go up with use. The director confirmed.
Land Bank Fund
Endowment Fund Investment Board
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EFIB Manager's Report
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EFIB Investment Report
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Attachment: EFIB Investment Report
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The Secretary asked when the reserve fund is tapped into. EFIB Manager of Investments Chris Anton explained for each beneficiary there is a permanent fund and a reserve fund. The permanent funds cannot be tapped into and it must grow to match inflation. All the revenue Lands generates goes into the reserve fund, and out of the reserve we make beneficiary payments and pay Land and EFIB expenses. Based on the investment strategy there is a seven year reserve to protect against volatility on either Lands or Investments. The goal is steady and consistent distributions to the beneficiaries.
- Attorney General Raul Labrador thought Anton had given a rosy report but that some experts think there will be a recession. He wanted to know what EFIB was doing to keep ahead. Anton said while markets are optimistic, there is a real chance we will see a slowdown.
Regular Agenda
Ohio Gulch Commercial Ground Lease Request for Proposal (RFP)
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Approved 5-0
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Attachment: Ohio Gulch Commercial Ground Lease Request for Proposal (RFP)
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The Controller noted storage units were a hot topic in the past, but clarified the difference with this plan is that IDL owns the dirt, the lessee will own the business and we collect the rent. Real Estate Services Bureau Chief Roger Hall concurred.
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The Controller asked about communication with the neighbors. Hall said there weren’t many neighbors. In the immediate area is a shooting range operated by an IDL lessee and a compost site is down the road, so there hasn’t been much communication.
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The Controller asked if there will be privacy fencing. Hall stated the fencing will primarily be for parcel’s 2 and 3. If needed, slats could be required for privacy.
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The Controller asked about the timeline. Hall said that would be determined on the level of negotiation.
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The Governor found it peculiar that there would be an auction but there would be a negotiated contract. And noted it seemed like one vendor would have a leg up in the auction.
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The Secretary wanted to know more about the process to have a philosophical discussion. The Governor noted the last informational item will discuss this. The director noted a few years back IDL went back to the drawing board to make sure processes, rules and the constitution are followed.
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The Attorney General asked for materials be delivered to Land Board and staff a week before the staff meeting. He explained that while the DAG works to make sure contracts are well written, his attorney looks at the overall picture of how it affects the Land Board and the Constitution and determines if the Land Board should be voting yea or nay.
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The Secretary expressed that he would like to make sure that in entering into revenue sharing we don’t get struck with a lease that does not benefit over time.
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The Governor asked about analysis that are done of what is stored, potential liability and if insurance is required. Hall said both insurance and bonding is required.
Information Agenda
Proposed Rule for IDAPA 20.03.01 Rules Governing Dredge and Placer Mining Operations in Idaho
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Attachment: Proposed Rule for IDAPA 20.03.01
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The Superintendent thought this would be further discussed in Item 8, but that she is supportive of making fees reflective of costs. The Governor asked if this helps heal the problem of insufficient funds for abandoned properties. Resource Protection and Assistance Bureau Chief Eric Wilson clarified that Item 8 is specifically for endowment and noted that if a mine has been regulated it is not covered by the abandoned mine lands funds. He said bankruptcy is a bigger issue.
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The Superintendent asked if the fees will be changed every 30 years. Wilson explained that there is not a mechanism in place to review rules every 5 years.
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The Governor asked if there were only 30 permits. Wilson confirmed.
Proposed Rule for IDAPA 20.03.03, Rules Governing Administration of the Reclamation Fund
Proposed Rule IDAPA 20.03.05, Riverbed Mineral Leasing in Idaho
Endowment Land Leasing Continuum
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Attachment: Endowment Land Leasing Continuum
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The Governor appreciated the presentation. He noted revenue was down because of the Land Board policy decision to get rid of residential. He asked Trust Lands Division Administrator Jim Elbin how he would like the board to proceed. Elbin said was happy to answer questions today, but noted a need for deeper discussion so opportunities are not missed and there is a better understanding of the comfort level of what to explore. The director agreed more communication with Land Board staff is needed about possible leasing ideas to keep the ball moving forward.
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The Attorney General referred to the spectrum graphic showing really green to really red, and he assumed it was based not on returns but ease. He asked why if there is something most cost effective and brings in returns to the state we don’t do it more. Elbin noted residential leasing, if it could have been structured differently, had the highest rates of return. He doesn’t think IDL should run businesses but perhaps keeping the land and leasing to the private sector and just own the dirt. He thinks both are big opportunities with Idaho’s growth but they need to know comfort level before advertising. He added the best interest for the state is to be proactive and see what opportunities are out there.
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The Attorney General noted as an example the Ohio Gulch had a huge discrepancy in returns. Elbin said yes.
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The Superintendent asked about a timeline to determine how quickly to set up meetings. Elbin said there is no timeline but feels IDL is missing opportunities. He wants to build a mature process that is fair and transparent and can move things forward more quickly.
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The Governor asked about the number of leases there are like Ohio Gulch. Elbin said he would get back to him.
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The Controller asked about the 320 acre issue or blocking up other parcels to make them more valuable and if those type are included in this evaluation. Elbin said he believes it is part of the bigger issue on the asset management portfolio.
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The Secretary appreciated this topic. He said trying to hold onto the land and purchase more lands is a good idea along with looking more at recreational opportunities. He added with the value of the land it is better to advertise for ideas rather than first come first serve. Looking back, it would be nice to have some of that land around the lakes. Strategically planning would be good and managing the risk.
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The Governor expressed concern about the current hurdle rate which does not match EFIB rate of 6% and he expressed a need to look at appraisals and discounted net present values need to be evaluated. Elbin stated that as part of this process they need to find the common good where you do multiple uses and determine if lands need to go into a new asset class to gets much higher returns.
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The Secretary would like to know how IDL calculated the risk of wildfire because every year there is the risk of losing that asset class, so making sure the land value is accurate verses some of these alternative approaches. The other issue is looking at local governments and the tax revenue when IDL buys, land realizing there are limitations as the Land Board. He noted even the legislature benefits when the board makes distributions to the beneficiaries. He would like to figure out what can be done to make local government whole. The Governor notes that when land is put back on their tax rolls the board doesn’t hear anything from them. Dustin noted these are all things IDL is aware of and IDL determines if there are lands that need to be reclassed and sold. He added we are getting over-run with recreation and we need to figure out how to monetize recreation while maintaining traditional uses.
Executive Session
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