HomeMy Public PortalAbout2.5-CM AttachmentState Endowment
Trust Lands
Upon statehood in 1890, Idaho
received approximately 3.6 million
acres of land in trust from the
federal government as a means for
generating revenue for specific
public services and institutions, or
"endowment beneficiaries."
Ever since, state trust lands have
been leased, sold, or exchanged by
the state to generate long-term
funding. Today, IDL manages the
remaining 2.4 million acres of
state endowment trust land.
Proceeds generated by Idaho trust
lands have been accumulated in
the endowment funds, which are
managed by the Endowment Fund
Investment Board.
Constitutional Mandate
The Idaho Constitution mandates
that state endowment trust lands
are to be managed "in such a
manner as will secure the
maximum long-term financial
return" to the beneficiary
institutions.
Land Bank Fund
Proceeds from the sale of
endowment lands are deposited in
the Land Bank for a term of up to
five years. If the proceeds are not
reinvested in land assets within
five years, the funds automatically
transfer to the Permanent Fund
and are no longer available for
reinvestment.
IDL is Reinvesting in Timberland and Farmland
The Idaho Department of Lands {IDL) is considering strategic acquisitions of
timberland and farmland using proceeds from recent sales of residential
and commercial properties. The sales have caused a steady decrease in
endowment revenue and an increase in cash proceeds in the Land Bank
Fund, which can be reinvested in Idaho land within the next five years.
Following are the state's goals:
• Recapture lost revenue to the endowments
• Reinvest in land to mitigate financial market risk
• Expand endowment ownership of working forests
• Reinvest in timberlands that return at least 3.5%
• Reinvest in farmlands that return at least 4.5%
Target Asset A llocat ion: Land As sets and Fi nanci al A ss et s
The Strategic Reinvestment Plan for the Land Board provides that the
endowment portfolio should have a target asset allocation of 50%-60% for
financial assets and 30%-50% for land assets (e.g., timberland, rangeland,
and farmland).
Asset Allocation
•Land Bank
• Land Assets
Financial Assets
Five-Vear Opportunity to Reinvest in Land
Currently, over $120 million is in the Land Bank Fund and available for
reinvestment. These funds may be reinveste d in land assets or invested in
the financial assets but automatically transfer to the financial assets, or
Permanent Fund, upon expiration of the five-ye ar holding period.
The first set of funds scheduled to transfer to the Permanent Fund, in 2021,
is approximately $25 million. Based on the current Land Bank balance and
forecasted sales through 2020, IDL can reinvest approximately $33 million
(benchmark) per year in land assets. If IDL can meet the benchmark, the
land asset allocation will be 40%, which is within the recommended target
percentage.
Advantages
Additional Lands for Public Recreation
State trust lands are not public lands. However, the majority of these
lands are open to the public for recreational activities. Acquiring
additional acres of state trust land will increase accessible lands
available for biking, hiking, hunting, fishing, and other types of outdoor
recreation.
Perpetual Ownership
One unique advantage IDL has is that it is seeking properties for
perpetual ownership. Idaho law prohibits the sale of lands "classified
as chiefly valuable for forestry, reforestation ... " l.C. §58-133(1). In
other words, the timberland purchased by IDL will remain in state
ownership in perpetuity.
Increased Revenue for the Endowment Beneficiaries
State trust lands are actively managed by IDL to provide revenue for
designated endowment beneficiaries, incl uding Idaho's K-12 public
schools . A large portion of the annual income for the trusts is derived
from the sale and harvest of timber. Reinvesting in timberland and
farmland will help offset the lost revenue from the sale of residential
and commercial property.
Maintaining Healthy Working Forests
To ensure the long-term health, vigor, productivity, and expected
financial returns of the endowment trust forest, every year IDL timber
personnel prepare and reforest harvested sites, pre-commercial thin,
and manage noxious weeds on thousands of acres of endowment
forests.
About 18 jobs are created for every 1 million board feet of timber
harvested. This means the timber harvested from state endowment
trust lands in a single year equates to thousands of good-paying jobs in
the Idaho forest products industry.
Once in a Lifetime Opportunity
The revenue IDL produces from land assets can only fund financial
assets. Idaho statutes do not allow any revenue to purchase additional
land; only the proceeds from state-owned property sales can be
reinvested in land acquisitions. Income from recent sales of residential
and commercial properties has been deposited in the Land Bank Fund
and can be used to acquire additional land within the next five years.
This allows for significant reinvestment that will likely not be
experienced again in the near future.
Idaho Forest Land Ownership
Forests in Idaho cover approximately 21.3 million acres :
• Federal Forests-17.1 million acres {80%)
• Private Forests-3 million acres (14%)
• State Fore sts-1.2 million acres (6%)
(Cook, et al. 2018)
Sell Your Land to IDL
There are many ways you can propose your land for
purchase:
• Talk to the local IDL Area Office
• Call the IDL Real Estate Bureau (208) 334-0200
• Submit an online form at:
https://www.idl.idaho.gov/sell-land.html
Land Criter i a
The land must possess legal, transferable
ownership, pose no significant risk, and meet the
minimum return threshold.
Asset Type: Timberland and farmland
Size: 100+ acres
Access: The property must have legal access or
border property that is already managed by IDL.
Frequently Ask ed Questions
Where d o es the money come from?
The money for acquiring lands comes from the
proceeds of selling residential and commercial
properties. The purchase is not paid with tax or any
other state funds.
What will you do with the land?
IDL will manage the land the same as any other
endowment land. The management of the lands
produces revenue that is used to fund
endowments, mainly public schools.
What is the p rocess?
If the property appears to meet the minimum
requirements, the Real Estate Bureau at IDL will
propose the acquisition to the IDL executive team.
Upon approval, the Real Estate Bureau will begin
the due diligence process to determine if the
property has any physical issues and verify that the
valuation will meet the minimum return rate. Then,
IDL will enter into negotiations on the price and
proceed to a Purchase and Sale Agreement. Finally,
IDL will present the property for State Board of
Land Commissioners' approval.
What if t h ere is a conservation easement?
IDL will consider purchasing lands with
conservation easements. The land management
and revenue-producing goals of IDL align with
conservation easement objectives.
Updated October 2018