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Land Board Hearing Recap

Tuesday, September 17, 2024

• All board members were present with the Attorney General joining by phone
• Review the Final Agenda
• Download the Meeting Materials

Department Report

Timber

• Attachment: Trust Land – Timber Sales

• August Sales:

  • Department of Land sold two endowment timber sales at auction; only one had competitive bidding (18%).
  • Two other endowment sales did not sell at auction.
  • Over 10.7 million board feet sold for $1.5 million (average $141.88 per thousand board feet).
  • The GNA sale in the Boise National Forest also sold in August.

• Upcoming Sales (September):

  • 12 sales offering 56.3 million board feet valued at $9.2 million.

• Current Contracts:

  • Nearly 500 million board feet of volume under 163 active contracts, valued at $136.7 million.

• Fiscal Year to Date:

  • $24 million in timber sale receipts; another $10 million projected for September.
  • 23 million board feet remain to be sold to close out FY24.
  • Target for FY24: 328 million board feet.
  • Cedar poles sales are progressing for FY25.

• Market Observations:

  • Harvest receipts are strong, near 100% of the three-year average for harvest volume.
  • Monitoring stumpage prices and market conditions (slow housing starts, high interest rates).

• Feedback on Unsold Sales:

  • Two endowment sales didn't sell due to market conditions.
  • The team is in close contact with industry partners to understand market dynamics and improve future sales.
  • Key challenges for unsold sales: distance from market and higher logging costs.

• Attachment: Trust Land – Leases and Permits

• August Transactions:

  • Department issued 31 instruments (leases, lease assignments, and land use permits).

• Real Estate Transactions:

  • Sold the Clark Fork Fish Hatchery surplus property for $436,000.
  • Property deed transferred from Idaho Department of Fish and Game to John and Sherry Meadows, completing the transaction.

• Non-Timber Revenue:

  • $336,000 in revenue as of the end of August.
  • Ahead of revenue projections, though income is variable throughout the year.
  • FY25 revenue target is just over $8 million, and expected to be met or exceeded.

• Permanent Fund Revenue and Royalties:

  • $442,000 in revenue deposited into the Permanent Fund in the first two months of the fiscal year.

Fire Season Report

• Attachment: Fire Season Report

• Fire Suppression Costs:

  • Total expenditures as of September 13th: $51 million, with $5.1 million reimbursable. Net obligation: $46 million.

• Key Fires:

  • Chimney Fire: This fire was reported on September 2nd, about 9 miles northwest of Fairfield. It has burned around 6,500 acres and is currently 10% contained. The fire started on state-protected land before moving into federal forest areas. A complex incident management team is handling this fire, and progress is being made.
  • Flat Fire: Located near Idaho City and Pioneerville, this fire has burned a little more than 3,700 acres. It is now in patrol status, having been 100% contained. A Great Basin Complex incident management team managed the fire, and state firefighters acted quickly to contain it.
  • County Line Fire: This fire occurred near Plummer, Idaho, on August 31st. It caused some evacuation notices, burned about 150 acres, and was 80% contained by the next day. It is now fully contained, and crews continue to monitor the area.
• 2024 Fire Season Statistics:
  • 292 fires and 48,000 acres burned under Idaho protection. This figure is slightly below the previous year's numbers but still reflects an intense fire season.

• Significant fires outside state protection:

  • Some of the largest fires that impacted the state but were outside Idaho’s direct protection include the Lava Fire (95,000 acres), the Wapiti Fire (126,000 acres), and the Middle Fork Complex (61,000 acres), with a total of over 800,000 acres burned across all ownerships.

• Remaining fire risks and prescribed burning:

  • Despite recent rains, the fire season is not over, and there is still significant fire risk. Some land managers are looking to begin prescribed burns this fall, but officials caution that fire conditions remain precarious, and continued vigilance is needed.

• Cost-Sharing and Agreements:

  • Cost-sharing with the Forest Service based on acres burned and suppression efforts.
  • Potential additional cost-sharing obligations exceeding $10 million.
• Resource Challenges:
  • The state faced significant resource strains with multiple fires burning across Idaho, Oregon, and Washington simultaneously.
  • Forestry and range staff were reassigned from their regular duties to support fire suppression efforts.
  • The state received assistance from out-of-state and federal partners to manage the situation.
  • The resource situation became so critical that active military personnel were deployed to help with federal fires.
• Governor's concerns:

  • Forest Service Performance:

    • Criticism of the Forest Service for not containing their fires effectively, while state-managed fires have been controlled.
    • The Red Fish Lake fire was contained with significant state pressure, but the Wapiti fire spread extensively.

  • Examples of Inefficiency:

    • A small mill in Idaho wanted to buy logs from dead trees, but the Forest Service refused to sell them.
    • The Lava Fire's damage was exacerbated by burning into areas with dead Tussock Moth trees, which could have been managed better.

  • Public Communication:

    • There’s a need to inform the public about the downsides of poor fire management, such as increased smoke, mercury in the air, and damaged fish habitats.
    • Emphasis on the need for the Forest Service to improve its management practices to avoid such issues.
• How can the Land Board Help?:
  • Support for initiatives like the Good Neighbor Authority (GNA) and shared stewardship to enhance collaboration with the Forest Service.
  • The importance of advocating for sound land management practices to prevent future costly fire scenarios.
  • A commitment to continuing partnership with the Forest Service to improve management and containment on federal lands.

• Budget Outlook:

  • Likely need to fully refill the $60 million fire suppression fund despite prefunding by the legislature.

Endowment Fund Investment Board

• Attachments:
  • EFIB Manager's Report
  • EFIB Investment Report

• Portfolio Performance:

  • August: Up 1.9%
  • Fiscal Year to Date: Up 3.8%, currently about 3.9%

• Market Volatility:

  • Early August: Significant sell-off due to softening labor markets.
  • Unemployment Rate: Rose from 4.1% to 4.3% (up from 3.4% a year ago).
  • Job Revisions: Bureau of Labor Statistics revised jobs downward by 818,000.

• Inflation Data:

  • CPI: Rose 2.9% year-over-year.
  • Core PCE: Rose 2.6%.

• Federal Reserve Actions:

  • Fed likely to cut rates by 0.25% in their upcoming meeting.
  • August market recovery in anticipation of rate cuts.

• Impact of Rate Cuts:

  • Lower interest rates generally boost bond prices and equity prices.
  • Interest rates influence the cost of capital, stimulating economic activity.
  • Current short-term Fed funds rate is 5.25%, with expectations of a decrease to about 2-2.5% in a year.

• Overall Outlook:

  • Positive start to the fiscal year with market adjustments to rate cut expectations.

Consent Agenda

• Approved - 5-0

Energy Lease M600099

• Attachment: Energy Lease M600099

• Energy Lease Overview:

  • Lease: Appaloosa Wind Energy Lease #2 (M600099).
  • Location: 280 acres in Elmore County.
  • Term: 49 years.
  • Project: Expected to include 1-2 wind turbines.
  • Developer: North Renews (part of the larger Appaloosa Wind and Solar project).

• Process and Consultation:

  • Approval: Lease language updated to align with new energy leasing policy.
  • Consultations: Included Elmore County Commissioners, a public meeting, and the existing grazing lessee.
  • Comments: No significant public comments or concerns.

• Revenue:

  • Estimated: $15,000 to $30,000 annually once in production.

• Policy Impact:

  • Changes: New policy adds terms for decommissioning and reclamation.
  • Comparison: First lease was before the new policy; the second lease aligns with it.

• Project Phases:

  • Phase 1: Development and due diligence.
  • Phase 2: Construction (about 2 years).
  • Phase 3: Production (generates most revenue).

• Current Revenue:

  • Grazing Lease: $243 annually from the existing lease on the parcel.

Regular Agenda

FY2026 IDL Budget Requests

• Attachment: FY2026 IDL Budget Requests
• Approved: 4-0, Governor abstained

• Enhancements:

  • Increase: $3,000,000 (3.4% increase).
  • New Positions: 5 additional full-time positions, totaling 337.6 FTPs.
  • Revisions:
    • Line 6: $16,000 increase for travel, vehicle repair, and office supplies.
    • Line 7: Transfer of spending authority with no net change.
    • Line 16: Transfer of spending authority within dedicated funds with no net change.
    • Line 17: $15,600 added for timber protection associations.

• Total Budget:

  • Request: $80,174,400 for FY2026.
  • Decrease: Compared to FY25’s $96.9 million, due to reduced one-time authority, federal spending authority, and Good Neighbor Authority changes.

• Process:

  • Submission Date: August 30, 2024.
  • Approval: Recommended by the department.

• Additional Notes:

  • TPA Adjustments: Minimal cost changes; no fee increases expected.

Information Agenda

Idaho Career Ready Students: Forestry

• Attachment: Idaho Career Ready Students: Forestry

• Idaho Career Ready Students Grant:

  • Purpose: Address gaps between local high school programs and industry needs, focusing on forestry and logging.
  • Grant Development:
    • Inspired by high demand for skilled workers in areas like welding and forestry.
    • Aimed to create and expand vocational programs in high schools to meet local industry needs.

• Progress:

  • Funding: 70% of grant money awarded to forestry and forest products programs.
  • Programs Established: 647 forestry programs, including new and expanded ones.

• Curriculum and Training:

  • Uniform Curriculum: Developed with a $50,000 grant for Idaho-specific forest products education.
  • University Collaboration: University of Idaho supports high school instructors and offers pathways to certificates and degrees in forestry.

• Equipment and Enhancements:

  • Schools Receiving Equipment:
    • Potlatch, Orofino, Timberline, St. Mary’s, Council, Priest River, Kami, Grangeville, Lake Pend Oreille, Lewiston.
    • Equipment includes sawmills, drones, and other forestry tools.

• Additional Developments:

  • Career Pathways: Efforts to integrate forestry into career tech centers and support further training through launch dollars.
  • Community Impact: Enhancing local job readiness and industry sustainability.

• Future Plans:

  • Expansion: Exploring similar models for other industries, such as fire management, to provide high school students with relevant career training.

Energy Lease M800070

• Attachment: Energy Lease M800070
• Project Overview: M 800070, Arco wind and solar lease in Eastern Idaho.
• Size & Scope: 11,160 acres, 49-year lease term, potential for 50 wind turbines, and 2,000-4,000 acres of solar panels.
• Revenue Impact:
  • Estimated $1.5 to $2 million annually, boosting the leasing portfolio by 25%.
  • Land currently bringing in 59 cents an acre in revenue.
• Land Use:
  • Predominantly private land.
  • No existing infrastructure on private lands.
• Public Engagement: Meetings with county commissioners, public comment opportunities, no negative feedback received.
• Approval Timeline: Lease to be presented for Board approval next month.

Memorandum of Agreement with Department of Parks and Recreation

• Attachment: Memorandum of Agreement with Department of Parks and Recreation
• Purpose: Address growing public demand for recreation and access on state endowment lands.
• Goals:
  • Generate revenue for endowment.
  • Safeguard land assets.
  • Enhance public recreational experiences.

• Roles and Responsibilities:

  • Department of Lands (IDL) and Department of Parks and Recreation (IDPR) will collaborate on:
    • Developing and managing recreational opportunities.
    • Creating a development and management plan.
    • Outlining project details, including site evaluations, infrastructure, maintenance, and operations.
    • Specifying annual resource needs, projected revenues, expenses, and return percentages for endowments.

• Framework:

  • Draft MOA serves as a framework for collaboration.
  • Details on specific costs, revenue, and returns will be addressed in individual projects.

• Next Steps:

  • Potential involvement of IDPR Director Buxton in future discussions on project progress.
  • Future meetings to review project outcomes and progress with the Outdoor Recreation Fund Advisory Council.

Craig Foss Retirement:

• Craig Foss is retiring in early November.
• This is his last Land Board meeting, as he plans to hunt in October before officially retiring.

• Background:
  • From North Dakota.
  • Worked in forestry in North Dakota, Montana, and with the Idaho Department of Lands (IDL) for 29 years.
  • Most recently served as the Division Administrator for Forestry and was appointed State Forester in 2020.
• Contributions:
  • Advanced initiatives in forestry, forest health, Good Neighbor Authority (GNA), and fire program modernization in Idaho.
  • Valued for his dedication to natural resources and people.
• Farewell:
  • Craig expressed gratitude for his career and support from the organization.
  • Looking forward to retirement and new life stages.

Executive Session

None

Adjournment