A proposed $75 million state trust land sale in Wyoming could start a national trend

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The first stop on the Wyoming Office of State Land and Investments tour across the state was fiery, as dozens of Jackson residents lined up to blast a proposal to sell state land inside Grand Teton National Park at auction. 

“If this auction goes forward it will be the first time in the history of the U.S. that a state sells state trust lands within the boundaries of a national park,” Teton County Commissioner Luther Propst told The Colorado Sun. “It would be a terrible, horrible precedent.”

The proposal to sell the so-called Kelly Parcel to the highest bidder is drawing national attention. Public land and wildlife advocates fret that Wyoming’s plan to auction the 640 pristine acres with unfettered views of the Grand Tetons and robust wildlife could unlock the floodgates for billionaire castle-builders enticing state land boards that are mandated to make money for schools. 

The Colorado State Land Board owns 2.8 million surface acres and 4 million underground acres, making it the second largest landowner in the state, behind the U.S. government. Last year the land board generated $175.8 million from mineral leases to oil and gas companies, $30.3 million in lease revenue from ranchers grazing livestock, recreation users and utility rights-of-way and $6.5 million from urban commercial leases. 

The board also generates about $34 million a year in interest on the $1.2 billion Public School Permanent Fund. 

Last year the board distributed $114 million to the Colorado Department of Education’s Building Excellent Schools program and $90 million to the Public School Permanent Fund. The board last year invested $1.5 million in trust land improvements. 

But if the Kelly Parcel in Wyoming sells at auction — it’s been appraised at $62.4 million and will likely sell for more than that in a region rife with billionaires — will other state land boards start scouring their ledgers for lands that could fetch far more than annual leases to oil companies and recreation outfitters?

It’s a slippery slope, said Aaron Weiss with the conservation-focused Center for Western Priorities, who fears vocal opponents of public lands could point to the Kelly Parcel auction and argue, rightfully, that the best way to make top dollar for schools is to auction land. The federal Land and Water Conservation Fund typically directs money paid from offshore oil and gas companies to buy high-value and threatened land, but the process can take years.

“If the parcel does sell, public lands opponents will see this as a playbook and we could see a big push to sell high-dollar parcels before Land and Water Conservation Fund funding gets organized and spent to protect lands like the Kelly Parcel,” Weiss said. “We’ll see public lands opponents saying it’s for the kids.”

The Wyoming Office of State Land and Investments has proposed auctioning the 640-acre Kelly Parcel inside Grand Teton National Park to the highest bidder. The land was appraised at $62.4 million. A Wyoming lawmaker last year suggested the parcel list for $3.2 billion. (National Park Service)

There’s a long history behind the Kelly Parcel just north of Jackson and bordering the National Elk Refuge. The Wyoming land board and state land investment office in the late 1990s began exploring a possible land swap that would deliver four state trust parcels inside the park to the federal government. By 2010, without any progress on a swap, the state announced it would auction the parcels inside the national park to the highest bidder.

The Interior Department agreed to a deal that would transfer four state land board parcels inside the park to the Interior Department for $107 million, including $46 million for the Kelly Parcel. The department was able to buy three of the parcels but never found the money for the Kelly Parcel. So in 2021 the Wyoming land board approved a plan to auction the property.  (One Wyoming lawmaker in 2021 proposed selling the Kelly Parcel for $3.2 billion, calling the land “pure gold.”)

An appraisal in 2022 estimated its value, based on homes on 35-acre parcels, at $62.4 million. 

(The history of the land board in Teton County — one of the wealthiest counties in the nation — is troubled, with the board recently leasing state trust land to a glamping operation and self-storage facility and then suing to block county land-use regulations on the land where the two businesses operate.)  

Currently, the Kelly Parcel land earns $2,845 a year from a grazing lease and special permits including outfitters offering bike tours and cookouts. If the land board invests $62.4 million from the sale it could earn $31 million to $40 million over 10 years and $94 million to almost $120 million over 30 years. 

That revenue would go to schools or additional land acquisitions that would bring in more income from existing state land board parcels. The National Park Service could use most of the $100 million a year it gets from the Land and Water Conservation Fund to pay for the Kelly Parcel. Grand Teton National Park Superintendent Chip Jenkins told the land office at the Nov. 9 meeting that the agency “stands ready to once again work in collaboration and partnership so we can figure out a way to be able to provide revenue for schools, to be able to prevent development and to have this preserved as part of the park.”

At the first of four scheduled hearings in Jackson on Nov. 9, the land board heard from dozens of advocates and residents arguing that the state should sell to the feds. Some groups suggested that philanthropic efforts could help sweeten the federal government’s payment of the $62.4 million appraised value. 

While most of the recent speakers at the land board’s Nov. 9 meeting at the Teton County Library supported the fiery “Stop the Auction” effort, WyoFile reporter Mike Koshmrl reported there were a few much less vocal real estate brokers in the room with clients “who would bid a whole lot more than the appraised value” for the corner lot in a national park.

Colorado Land Board rules include stewardship

The Colorado State Land Board owns land inside Brown’s Canyon National Monument and it does dispose of land, but unlike some other states, its commissioners have wiggle room to not solely chase dollars. 

In 1996, Colorado voters approved constitutional Amendment 16 that directed the board to emphasize “sound stewardship” of its trust lands alongside its mandate to generate money. Since then, the board has deployed land management strategies that support agriculture, communities, recreation and natural resource protection. The land board’s Stewardship Trust, which was part of Amendment 16, allows leasing for agriculture, recreation, resource extraction and public use but with stipulations requiring protection of natural values.

The Stewardship Trust is limited to holding no more than 300,000 acres and today includes 130 parcels totaling 296,426 acres. Before that 1996 vote, lawmakers in 1976 created the land board’s Colorado Natural Areas Program to better protect high-value state trust lands. The program now includes 24 properties covering 32,345 acres.

Amendment 16 allows the land board to look beyond just maximizing revenue. The 1996 amendment allowed the board to seek “reasonable and consistent” income from trust land. 

“This distinction is significant because it empowers our commissioners to make decisions rooted in intergenerational financial  outcomes, rather than  short-term outcomes,” land board spokeswoman Kristin Kemp said. 

The Colorado land board sold land in the late 1800s as a way to lure settlers to the new state but in the last 100 years, it has rarely sold parcels. But sales happen and the board must direct proceeds into the acquisition of more land or the Permanent Fund. 

Last year the land board acquired four parcels and sold two parcels totaling 717 acres to Boulder County. The county spent $10.8 million for 586 acres inside Heil Valley Ranch open space and $2.9 million for 130 acres inside the county’s Bald Mountain open space. The county had leased the acreage from the land board for open space protection. 

This year the land board is selling 47,859 acres of ranch land near Ellicott to conservation groups that are using federal money to protect the land and keep its airspace open for training  by the nearby Air Force Academy. The land board also sold 400 acres outside Erie to a developer, Nashville-based Southern Land Company, for $40.2 million. Southern Land Company plans to annex the property into the Town of Erie and double the size of its Westerly community, adding 1,500 homes, 400 rental properties and 205,000 square feet of commercial space. 

“Lots of factors went into the decision to dispose of that property, including a high appraisal, low financial returns for other leased uses, and the fact that SLC’s project will result in nearly 2,000 new residences,” Kemp said. “When it is accretive to the trust, our commissioners are open to long-term ground leases or land disposals that make possible new community housing developments to try to help solve the housing crisis in our state.”

The board is leasing land it owns to a developer who is building more than 100 affordable homes for teachers in Denver’s Capitol Hill neighborhood. 

The Colorado State Land Board had about $49 million on hand at the end of October after selling the Erie parcel and Bohart Ranch. The board last month closed on the $12.7 million acquisition of the William Parks Ranch in Routt County and in November approved depositing the $40.2 million from the Erie parcel sale into the Permanent Fund. 

Other state land boards are more inclined to sell. Only 23 states still have acres that were granted from the federal government at statehood. The Utah State Land Board has sold more than 4 million acres of state land, accounting for more than 54% of the original 7.5 million acres of trust lands granted at statehood. But the sales have supported the state’s fund for education. The Utah Trust Lands Administration this month announced it would send a record $106 million to state public schools for the 2024-25 school year. (A sidebar for the what-could-go-wrong-in-an-auction chart: The Ute Indian Tribe of the Uintah and Ouray Reservation is suing the Utah land board, alleging racism and discrimination in the board’s 2018 plan to auction 28,500 acres adjacent to the reservation.) 

The approach in Nevada is even more different. The state land board sold off nearly all its 4 million acres granted at statehood, leaving about 2,900 acres that generate $5,000 a year for schools. New Mexico, by comparison, has retained nearly all its trust lands, and its land trust fund is one of the largest in the world, delivering close to $1.2 billion a year to the state’s schools. 

The Wyoming State Board of Land Commissioners is made up of the five top elected officials in the state, including Gov. Mark Gordon. Following a 60-day comment period and the four public meetings, the board is scheduled to consider the Kelly Parcel auction Dec. 7. 

This is about state land boards recognizing “that land is not just a commodity,” Teton County commissioner Propst said. 

“It’s a balancing act for land boards, between optimizing and maximizing revenue,” Propst said, noting the Kelly Parcel is part of a seasonal migration corridor for mule deer and pronghorn. “Selling to the feds would be an unprecedented victory for Wyoming schools. Selling it at auction would also deliver money instantly, but at what cost? It would damage Wyoming’s reputation. We don’t want to be the pariah state. … We don’t want the scorn of the nation to fall on Wyoming.”

Source: coloradosun.com
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