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Land Board Hearing Recap

Tuesday, August 20, 2024

• All board members were present with the Controller joining by Zoom
• Review the Final Agenda
• Download the Meeting Materials

Department Report

Timber

• Attachment: Trust Land – Timber Sales

• July Timber Sales:

  • 7 endowment sales auctioned, 5 with competitive bidding.
  • 3 sales did not sell, will be re-auctioned later.
  • Net sale value showed a 7% increase over appraised value.
  • Over 28 million board feet sold for just over $7 million, averaging $248.48 per unit.

• GNA Sales:

  • 2 sales conducted with competitive bidding.
  • 1 sale did not sell.
  • Total volume: 12.7 million board feet for a net value of a little over $2 million.

• August Timber Sales:

  • 4 sales planned, totaling over 20 million board feet, valued at about $3.4 million.

• Current Contracts:

  • 529 million board feet under contract across 166 active contracts, valued at $147.3 million.

• FY24 Timber Sales:

  • $11.3 million in timber receipts in the first month.
  • $12.3 million projected for August.
  • 26.6 million board feet left to sell in FY24.

• FY25 Timber Sales:

  • 52.3 million board feet sold or in process.
  • Target for the year: 328 million board feet.
  • Cedar poles sales underway.

• Harvest Receipts:

  • Above the three-year average for harvest receipts and nearly 100% of the three-year average volume.

• Market Conditions:

  • Finished lumber and stumpage prices near or slightly above pre-pandemic levels.
  • Housing starts remain low; inflation and industry costs impact pricing.

• Attachment: Trust Land – Leases and Permits

• July Transactions:

  • 17 instruments issued, including 9 land use permits.
  • No real estate transactions occurred.

• Non-Timber Revenue:

  • First month of FY brought in approximately $100,000.
  • Target for FY25 non-timber revenue is just over $8 million.

• Royalties:

  • $231,000 deposited into the permanent fund in the first month of FY.

Fire Season Report

• Attachment: Fire Season Report

• Fire Suppression Costs:

  • Estimated at $29.7 million as of August 19th, with $2.7 million reimbursable.
  • Net obligation is approximately $27 million.
  • Costs include contracted aircraft and engines for resource scarcity and initial attack.

• Notable Fire:

  • Flat Fire reported on August 5th near Idaho City, currently 3,600 acres burned and 14% contained.
  • Managed by a complex incident management team to protect the Idaho City community watershed.

• Fire Season Overview:

  • 243 fires and 23,572 acres burned to date within Idaho protection.
  • National and Great Basin preparedness levels are at 5; Northern Rockies at level 2.
  • Elevated fire danger expected throughout Idaho into September.

• Fire Restrictions:

  • Stage 1 fire restrictions in multiple dispatch areas, including Grangeville, Payette, West Central Sawtooth, and Central Idaho.

• Southern Idaho Activity:

  • Significant fire activity south of the Sama River, with media coverage of governor's visit to affected areas.

• Acres Burned:

  • Statewide, about 400,000 acres burned, across different ownerships.

• Fire Deficiency Spending:

  • $29.7 million spent this fire season, detailed in the last table.

Land Revenue Forecast

• Attachment: Land Revenue Forecast
• Status Update
  • Annual forecast for next 4 fiscal years based on timber sales, lease revenues, and agency expenditures.
  • Variability mainly from timber harvest due to contract lengths and purchaser flexibility.
• FY23 Revenue:
  • Gross Land Management revenue: $89.97 million, $9 million more than FY23, and $9.8 million above the 10-year average.
  • Net revenue: $59.1 million, $6.3 million more than FY23, and $7.1 million above the 10-year average.

• Timberland Contribution:

  • Timberland accounted for 92.1% of gross revenue and 95.2% of net revenue.

• Forecast Methodology:

  • Monte Carlo simulations (500 per year) used to account for price variability and timber harvest amounts.

Resource Protection and Assistance Report

• Attachment: Resource Protection and Assistance Report

• Navigators Program:

  • Administers encroachment permits, merged land leases, easements, and disclaimers of interest.
  • Self-supported through a dedicated account; generated $1.2 million in FY24.
  • Three public hearings held on encroachment permits; outcomes varied.

• Regulatory Minerals Program:

  • Administers surface mining reclamation plans, dredge and placer permits, and abandoned mine land projects.
  • Supported by general and dedicated funds.
  • Significant ongoing projects:
    • Perpetua Resources: Continued dialogue on reclamation plans in Valley County.
    • Thompson Creek Molybdenum Mine: Approved phase eight reclamation plan; mining activities expected to start Q4 2024.
    • Integra Resources DeLamar Mine: NEPA process initiated; IDL reviewed and approved key reports.

• Mining Site Management:

  • 1,571 mine sites covered by reclamation plans; 27 by dredge and placer permits.
  • Bonding options available, including the Bond Assurance Fund (BAF) for small operators.
  • AML program funded by Idaho’s Mined License Tax; $156,000 income in the second half of FY24.

• Figures and Tables:

  • Detailed financials and project data provided in accompanying tables and figures.

Consent Agenda

• Approved 5-0

Payette Readiness Center Surplus Property (Idaho Military Division)

• Attachment: Payette Readiness Center Surplus Property (Idaho Military Division)

• Property Details:

  • Located in Payette, Idaho; 3.45 acres with a 10,662 sq. ft. building, parking lot, and dog park.
  • Acquired by the military in 1945; used until June 2024.
  • Appraised value: $830,000.

• Disposition Process:

  • Property first offered to state agencies, then to tax-supported entities (e.g., city, county).
  • If no interest, the property will be auctioned publicly.
  • Payette County has shown interest but must wait until state agencies are notified.

• Context:

  • Part of the Readiness Center Transformation Master Plan, consolidating smaller centers into larger regional ones.
  • Process aims to reduce costs and improve training environments for soldiers.

• Next Steps:

  • If approved, the department will begin the surplus process, notify relevant entities, and potentially hold a public hearing in Payette County.

Regular Agenda

Endowment Fund Investment Board

• Attachments:
  • EFIB Manager's Report
  • EFIB Investment Report
  • FY2026 Beneficiary Distributions and Transfers
• Approved: 5-0

• Performance Report: The endowment fund started strong in the new fiscal year, with a 3% increase, driven by improved inflation rates and optimism about potential rate cuts.

• Inflation Progress: CPI inflation reduced from 9.1% to 2.9%; PCE inflation is down to 2.6%, close to the Fed's 2% target.

• Beneficiary Distribution Policy:

  • Distribute 5% of a three-year average of permanent fund balances.
  • State Hospital South distribution remains at 6% as it gradually reduces to 5%.
  • Maintain earnings reserves at target levels (seven years of beneficiary distributions).
  • Transfer excess reserves back into the permanent fund.

• FY26 Distribution Recommendation:

  • Increase distributions to $110.37 million, a 6.9% increase, with State Hospital South remaining flat.
  • Transfer $134.27 million of excess earnings reserves into the permanent fund to support future growth.

• Discussion Points:

  • Clarification on the gain benchmark and its role in maintaining flexibility during market volatility.
  • Both recommendations were unanimously approved by the Endowment Fund Investment Board.

• Board Decision: The board unanimously approved the recommendations for FY26 beneficiary distributions and the transfer of excess reserves to the permanent fund.

FY2026 Department of Lands Budget Enhancements

• Attachment:FY2026 Department of Lands Budget Enhancements
• Approved: 4-0, Governor abstained

• Budget Enhancements: Presented the FY26 budget enhancements, including 15 line items focused on strategic goals such as financial stewardship, customer focus, and fire program modernization.

• Enhancements Summary:

  • Total increase of $3,048,600 split between one-time and ongoing requests.
  • Request for five new Full-Time Positions (FTEs), with a focus on fire program modernization, including positions like Fire Emergency Support Program Manager and Fire Aviation Section Manager.

• Discussion:

  • Fire Program: Emphasis on positions crucial for fire response and coordination, including an additional assistant fire warden and urban community forestry program specialist.
  • Fire Detection Technology: Expansion of remote mountaintop camera detection using AI for quicker fire detection and response.

• TPA Budget Concerns: Addressed the inclusion and proper reflection of Timber Protection Associations (TPA) budgets within the department’s budget, ensuring their needs are met and considered in the larger financial plan.

• Approval: The Board directed the Department to include these enhancement requests in the FY26 budget proposal, with an acknowledgment of future discussions on the impact of pending federal actions on firefighter pay.

2024 Forest Asset Management Plan

• Attachment: 2024 Forest Asset Management Plan
• Approved: 5-0
• The plan details timber sales and management strategies for fiscal years 2026 through 2030.
• The 2019 FAMP target of 328 million board feet was achieved in FY2024.
• New inventory data, including younger tree data, estimates about 7 billion board feet of available timber.
• The plan aims to balance timber inventory with growth and harvest rates to maximize revenue, lower the risk of damage, and support long-term forest health and industry sustainability.
• The management strategy will prioritize even-aged management, leading to increased clear-cutting to enhance growth rates and returns over time.
• The harvest analysis predicts a significant drop in annual harvest levels to around 230 million board feet after ten years, depending on data refinement and growth projections.
• The plan includes a flexible harvest allowance of ±5% annually to adapt to changing conditions.
• Board members discuss the plan's flexibility, the potential impact of market conditions, and the importance of maintaining a stable revenue stream for beneficiaries.
• Concerns were raised about the projected future drop in timber revenue and its impact on the forest products industry and local economies.
• Idaho Forest Group's Tom Schultz expresses support for the plan but highlights the potential economic impact of reduced harvest levels, including job losses and reduced lumber production.
• The board acknowledges the importance of continuing to refine data and maintain transparency with industry stakeholders.
• A motion to adopt the FAMP's proposed harvest levels for FY2026-2030 is made, seconded, and passed unanimously.

Approval of Timber Sales with Clearcut Harvest Units–Westwood and Lower Eagle Cedar

• Attachment: Approval of Timber Sales with Clearcut Harvest Units–Westwood and Lower Eagle Cedar
• Approved: 5-0
• Both sales, part of the FY2025 sales plan, involve clear cuts over 100 acres and require Land Board approval.
• Westwood Timber Sale:
  • Location: 2 miles north of Rathdrum, Idaho
  • Area: 132 contiguous clear cut acres
  • Purpose: Address mortality and convert to more resilient tree species
• Lower Eagle Cedar Timber Sale:
  • Location: 5 miles southwest of Rose Lake, Idaho
  • Area: 133 contiguous clear cut acres
  • Purpose: Address high mortality and inadequate natural regeneration
• Both sales comply with the Forest Practices Act and FAMP.
• Department recommends approval of both sales.
• Motion to approve is made, seconded, and unanimously adopted.

Adoption of Pending Rule IDAPA 20.03.13, Administration of Cottage Site Leases on State Lands 

• Attachment: Adoption of Pending Rule IDAPA 20.03.13
• Approved: 5-0
• Four pending rules undergoing negotiated rulemaking
  • Objective: Reduce regulatory burden, remove obsolete or unnecessary regulations.

  • Outreach: Notices in the Idaho Administrative Bulletin, rulemaking web page, Town Hall Idaho posts, and direct stakeholder communication.

• Rule ADAPA 20.03.13:
  • Subject: Administration of cottage site leases on state lands.
  • Negotiated Rulemaking: Held on March 27 and April 8, 2024, with minimal attendance and no further comments received.
  • Changes: Streamlines language, updates guidelines for residential cottage site leasing, and reduces regulations by 50%.
  • Next Step: If approved, the rule will be submitted to the Office of Administrative Rules Coordinator for the 2025 session.

  • Motion: Approved the rule as presented, seconded, and adopted.

Adoption of Pending Rule IDAPA 20.03.14, Rules Governing Grazing, Farming, and Conservation Leases

• Attachment:Adoption of Pending Rule IDAPA 20.03.14
• Approved: 5-0
• Meetings: March 27 in Boise (6 participants), April 4 in Idaho Falls (3 participants).
• Comments: 4 written comments received; no further comments during proposed rulemaking.
• Changes: Removed non-commercial recreation and communication site leases, eliminated 2 clauses, reduced restrictive word count by 38%, and overall word count by 10%.
• Next Step: If approved, rule to be submitted for the 2025 legislative session.
• Discussion: Ensured that the department maintains authority over specific lease conditions; board to be notified of significant changes or unusual applications.
• Motion: Approved rule as presented, seconded, and adopted.

Adoption of Pending Fee Rule 20.03.15, Rules Governing Geothermal Leasing on Idaho State Lands

• Attachment: Adoption of Pending Fee Rule 20.03.15
• Approved: 5-0
• Meetings: March 28 and April 10; 3 non-department participants.
• Comments: 1 written comment received; increased word count by 3 words but reduced overall word count by 11%.
• Next Step: If approved, rule will be submitted for the 2025 legislative session.
• Testimony: Scott Nichols from Ormat Technologies praised the rulemaking process and department's work; discussed the geothermal industry's challenges and future developments.
• Motion: Adopt the rule as presented; seconded and approved.

Adoption of Pending Fee Rule 20.03.16, Rules Governing Oil and Gas Leasing on Idaho State Lands

• Attachment: Adoption of Pending Fee Rule 20.03.16
• Approved: 5-0
• Meetings: March 28; 3 non-department participants.
• Comments: Received from Idaho Conservation League (ICL) and Snake River Oil and Gas; ICL had concerns about removal of lease provision sections, but the department chose to retain them and clarify language.
• Changes: Reduced restrictive word count by 11% and overall word count by 18%.
• Next Step: If approved, the rule will be submitted for the 2025 legislative session.
• Motion: Adopt the rule as presented; seconded and approved.

Approval of General Counsel

• Attachment: Approval of General Counsel
• Approval: 5-0
• Legislative Background: Bill 1292 amended Idaho Code 58120, requiring the Director to hire a General Counsel, subject to State Board of Land Commissioners' approval.
• Position Details: General Counsel is independent of the Attorney General's office but can consult with it; the department can also contract additional legal staff.
• Hiring Process:
  • Position advertised in May.
  • Resumes reviewed; interviews conducted with input from Human Resources, Deputy Director Bill Hoganson, and a panel including Land Board staff and the Attorney General.
  • Two attorney positions and a legal assistant were hired.
• Selected Candidate: John Richards
  • Expressed gratitude and excitement about joining the team.
  • Background:
    • Grew up involved in public lands and grazing.
    • Attended the University of Idaho and Lewis and Clark Law School, specializing in natural resources law.
    • Experience includes working with Governor Little’s Office of Species Conservation on sage grouse and salmon issues.
    • Currently at Sawtooth Law Offices, focusing on civil litigation for agricultural clients.
  • Eager to contribute to the Department of Lands and appreciated the opportunity.

• Board Action:

  • Motion to approve John Richards as General Counsel.
  • Motion seconded and approved.

Information Agenda

None

Executive Session

None

Adjournment