June 1, 2017 BOARD MATTER H - 1 FINAL CONSIDERATION OF STATE TRUST LAND EXCHANGE

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1 June 1, 2017 BOARD MATTER H - 1 ACTION: AUTHORITY: FINAL CONSIDERATION OF STATE TRUST LAND EXCHANGE W.S , , and ; Board of Land Commissioners Rules and Regulations, Chapter 26, Section 5 OVERVIEW OF PROPOSAL AND PROCESS On October 17, 2011, Bear Lodge Cattle Company (Bear Lodge) applied to the Office of State Lands and Investments (OSLI) and the Wyoming Board of Land Commissioners (Board) to commence a land exchange process pursuant to the Board of Land Commissioners Rules and Regulations, Chapter 26 (Board s Rules). The parcels of land requested to be exchanged are: Bear Lodge Parcel (Moskee) Township 50 North, Range 61 West, of the 6 th P.M., Crook County Section 16: E2SW and E2NWSW (100 acres) Appraised value: $310, ($3, per acre) TOTAL: $310, ± acres State Parcel Township 53 North, Range 65 West, of the 6 th P.M., Crook County Section 17: W2NW (80 acres) Appraised value: $320, ($4, per acre) TOTAL: $320, ± acres The properties were appraised by a Certified General Appraiser, John Widdos of Hall- Widdos & CO., with an effective date of September 1, The appraiser was instructed to estimate the current market value of the fee simple interest for the parcels, excluding the mineral estate and assuming legal public access. The appraiser used the Sales Comparison Approach to arrive at the market value noted above. At its June 6, 2013 regularly scheduled meeting (Walk-In Board Matter #3), the Board requested that a second appraisal be done to validate Mr. Widdos opinion of values with regard to the identified parcels by a separate appraiser, contracted and paid for by the Office of State Lands and Investments. This appraisal was completed by a Certified General Appraiser, Que Mangus of Mangus Appraisals, with an effective date of July 18, Mr. Mangus used the Sales Comparison Approach to arrive at a market value of $300, ($3, per acre) for the Bear Lodge Parcel (Moskee), and $330, ($4, per acre) for the State Parcel. Additionally, on June 6, 2013, the Board adopted a resolution authorizing the Director to enter into an Agreement to Initiate the Exchange (ATI) of State Trust Land for land owned by Bear Lodge in the Moskee Area. The ATI was executed by all parties on October 17, The ATI sets forth conditions which are required to be fulfilled before the proposed exchange may be completed. One principal condition addresses clear title to the land owned by Bear Lodge. The Title Commitment has been received, reviewed, and approved by OSLI. On March 31, 2017, OSLI made available to the public and the Crook County Commissioners: (1) the Detailed Analysis of the proposed exchange; (2) the appraisals; (3) the existence and importance of any wildlife habitat and wildlife-oriented recreational opportunities located on the parcels, as determined by Game & Fish; and (4) the existence and importance of any public recreation opportunities or cultural resources located on the parcels, as determined by State Parks. OSLI held a public hearing at the Crook County Library in Sundance, WY on May 4,

2 from 5:30 P.M. to 6:30 P.M. at which fifteen members of the public were in attendance. Of the fifteen, five were in favor, two were opposed, and eight were undecided. During the sixty day public comment period, four written comments were received and are attached. An audio recording of the comments received at the hearing is available upon request and those comments are summarized below. The comments received at the public hearing can generally be summarized as follows: (1) Acquiring more land in the Moskee area will allow for increased hunting opportunities; (2) the State could get more money by commercially developing the State Parcel or by auctioning it off; (3) the appraisal of the State Parcel is low; (4) because there is currently no grazing lease on other land owned by the State in Moskee it is unfair to use projected grazing income as a measure of value; (5) the State needs to fence the land it owns in Moskee. It has now been over sixty days since the Detailed Analysis and other required information was made available to the public. All the oral public comments received have been summarized above. Accordingly, pursuant to the Board s Rules, the Board must now consider, in open session, the proposed exchange. If the Board rejects the proposed exchange, OSLI shall remove the proposed Bear Lodge Exchange from the Category II Exchange List. If the Board approves the proposed exchange, it shall direct OSLI to complete the exchange pursuant to the Board s Rules and W.S and If directed to complete the exchange, the parties would exchange merchantable title to the surface estate only of each described property. POLICY CRITERIA The Wyoming State Legislature has declared that State Trust Land should remain a substantial component of the trust portfolio, managed under a total asset management policy, and with a focus on protecting the corpus for multiple generations. Accordingly, all State Trust Land sales, acquisitions, and exchange proposals are evaluated using Trust Land Management Objectives. A proposal need not meet all objectives, but all objectives are considered by the Board, which has sole discretion to determine the highest and best use of State Trust Lands. The proposed exchange is expected to benefit the State s trust beneficiaries short-term objectives by increasing revenue generated from grazing and agricultural use as well as timber production. The Bear Lodge Parcel abuts existing State Trust Land and will allow for a larger contiguous grazing lease that is expected to demand lease rates higher than the Board s approved minimum fee. Currently, there is no merchantable timber on the State Parcel, while the Bear Lodge Parcel has the potential to generate merchantable timber revenue in the short-term. The proposed exchange is expected to benefit the State trust beneficiaries long-term objectives by diversifying the State Trust s portfolio by increasing forested acres and increasing State mineral ownership, as the Board will retain the minerals under the State Parcel and gain those under the Bear Lodge Parcel. Should this exchange be approved, as well as the other transactions under consideration, the Board would increase and consolidate its ownership in an area with opportunity to provide multiple compatible revenue generating uses, including long term timber revenue. OSLI has experienced a reduction in administrative costs when State Trust Lands have been consolidated from scattered, isolated parcels into larger, contiguous ownership blocks. The proposed exchange consolidates State Trust Lands in the Moskee area, where the Board already manages land while disposing of a small and isolated tract. OSLI expects this to have a positive impact on administrative costs in addition to increasing efficiency and effectiveness of management. The proposed exchange will allow for greater public access in Crook County. While the State Parcel is open to the public, in 1987 the Board approved a Closed to Hunting and Discharge of Firearms restriction on it. The Bear Lodge Parcel abuts existing State Trust Land and will provide an open recreation opportunity in close proximity to a National Forest. The exchange is also expected to increase tax revenue for Crook County. Accordingly, pursuant to the Trust Land Management Objectives approved by the Board on August 11, 2005, the proposed Bear Lodge Exchange represents a prudent 2

3 transaction for the State s trust beneficiaries by improving the investment return of the State s trust assets. The exchange also represents improved earning potential by increasing revenue generating opportunities, consolidating ownership patterns, and acquiring a parcel with establish recreational opportunities. DIRECTOR'S RECOMMENDATION: For the reasons stated above, the Director recommends that the Board: 1. Approve completion of the proposed Bear Lodge Exchange. 2. Authorize the Director to amend State of Wyoming Grazing and Agriculture Lease to remove the acreage disposed of in this exchange. 3. Terminate Temporary Use Permit Terminate Temporary Use Permit BOARD ACTION: BOARD APPROVED WITH THE CONDITION THAT BEAR LODGE CATTLE COMPANY PLACE A CONSERVATION EASEMENT, WEST OF HIGHWAY 110 AND HIGHWAY 24, WITHIN FOUR (4) YEARS. 3

4 Bear Lodge Exchange 11 WY 2 WY 2 4 Devils Tower WY 111 Proposed Disposal Proposed Acquisition I9 US 14 S.U s u 0B 14 WY 113 I WY 5 0 US Crook County 12 Miles WY 116 Sources: Esri, HERE, DeLorme, USGS, Intermap, increment P Corp., NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), MapmyIndia, OpenStreetMap contributors, and the GIS User Community Roads Proposed Acquisition State Ownership Date: 5/18/2017

5 Bear Lodge Exchange Devils Tower Devils Tower WY 110 WY 110 Y W 24 Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community After W2NW of Section 17, T53N., R63W., Crook County State Trust Land State Land Proposed Disposal Date: 5/18/ Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community Before Roads Y W

6 Bear Lodge Exchange Subject Property USGS The National Map: National Boundaries Dataset, National Elevation Dataset, Geographic Names Information System, National Hydrography Dataset, National Land Cover Database, National Structures Dataset, and National Transportation Dataset; U.S. Census Bureau - TIGER/Line; HERE Road Data T52 N., R61 W., Crook County State Trust Land Forest Service Land Before Date: 5/18/2017 USGS The National Map: National Boundaries Dataset, National Elevation Dataset, Geographic Names Information System, National Hydrography Dataset, National Land Cover Database, National Structures Dataset, and National Transportation Dataset; U.S. Census Bureau - TIGER/Line; HERE Road Data After

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