February 2, 2012 BOARD MATTER C - 1 WYOMING LAND AND IMPROVEMENT COMPANY, PROPOSAL TO ACQUIRE REAL PROPERTY IN ALBANY COUNTY, WYOMING

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1 February 2, 2012 BOARD MATTER C - 1 ACTION: WYOMING LAND AND IMPROVEMENT COMPANY, PROPOSAL TO ACQUIRE REAL PROPERTY IN ALBANY COUNTY, WYOMING AUTHORITY: W.S (k); Rules Chapter 26, Section 3 ALTERNATIVES: Approve Exercise of Option to Purchase, Sodergreen Lake Parcel as Assets Of the Trust Deny the Exercise of Option to Purchase and remove Sodergreen Lake Parcel from the Category II Acquisition List I. OVERVIEW OF PROPOSAL AND PROCESS: Pursuant to W.S (k) and the Rules and Regulations of the Board of Land Commissioners (Board Rules), Chapter 26, Section 3(f), on June 7, 2011, the State Loan and Investment Board adopted a resolution authorizing the Director and the Governor to execute an Option Agreement to purchase tracts of land owned by Wyoming Central Land and Improvement Company in Albany County, as more particularly described below. The option agreement was signed by the Governor on June 7, The Option Agreement sets forth required conditions to be fulfilled before it may be exercised. The conditions of the Option Agreement have been reviewed and found to be satisfactory. The Wyoming Central Land and Improvement Company has submitted a letter of application proposing the State of Wyoming Board of Land Commissioners to acquire ± acres of deeded land in Albany County, Wyoming. The Office of State Lands and Investments (the Office) received the proposal in May 2011 and recorded the application on the Category I Acquisition list. After preliminary review, the Director determined that the parcel may be suitable for acquisition, and moved the parcel to the Category II Acquisition List in accordance with the Board s rules. The parcel encompasses ± acres described below. The appraised value of the ± acres is $595, Township 14 North, Range 76 West, 6 th P.M., Albany County, WY Section 21: S ± acres (per Albany County Assessor) The State of Wyoming would acquire the mineral rights held by the Wyoming Central Land Company. There is currently no mineral development activity in the immediate area. Further details, including maps, appraisal figures, and the full reports of the Wyoming Game and Fish Department and the Department of State Parks and Cultural Resources are presented in the Detailed Analysis, available both in hard copy at OSLI and on the Internet at State law permits the State Loan and Investment Board to request that the State Treasurer invest money contained in the common school account within the permanent land fund (balance of approximately $14,985,747 million) to purchase land and improvements within Wyoming as assets of the trust. The money available for the purchase of land and improvements is that amount specifically designated by the legislature, together with funds received from sales of state trust lands occurring on and after July 1, The legislature has further instructed that in exercising such investment authority, there shall be no net gain of lands held for the common school account in excess of ten thousand (10,000) acres above the 1999 baseline land inventory. Page 1 of 5

2 Pursuant to Board Rules, Chapter 26, Section 4(e), on April 5, 2010, the Office made available to the public: (1) the Detailed Analysis of the proposed acquisition; (2) the appraisal; (3) the income generating potential of the parcel; (4) the manageability of the parcel, individually and in combination with other state trust lands; (5) the existence and importance of any wildlife habitat and wildlife-oriented recreational opportunities located on the parcel, as determined by the Wyoming Game and Fish Department; and (6) the existence and importance of any public recreation opportunities or cultural resources located on the parcel, as determined by the Department of State Parks and Cultural Resources. The Office has accepted public comment and held a public hearing concerning the proposed disposal in Campbell County on December 15, 2011 after having notified the Albany County Commissioners of the hearing. Accordingly, pursuant to Board Rules, Chapter 26, Section 4(f), the Board must now consider in open session the proposed acquisition. If the Board rejects acquisition of the parcel, the Office shall remove it from the Category II Acquisition List. If the Board approves the proposed acquisition, pursuant to Board Rules and W.S , W.S (k), it shall direct the Office and State Treasurer to exercise the option to purchase. II. PUBLIC COMMENT A public hearing for the Wyoming Central Land and Improvement Company proposal for acquisition was held in Albany County at the Albany County Library at 6:00 p.m. on December 15, Six (6) people from the public attended. All of the attendants were members of the Wyoming Central Land and Improvement Company (or spouses of members). Ami Williamson, Robin Hill and G.F. Williamson spoke in support of the State Board of Land Commissioners acquiring the subject parcel. Written comments were accepted through December 29, No written comments were received. III. ANALYSIS Relevant analysis can be summarized in the following categories: (A) socioeconomic impacts, (B) price and investment return, (C) physical and natural attributes, and (D) recreational attributes. A. Socioeconomic Impacts The possible socioeconomic issues regarding the proposed acquisition are inherently related to the use to which the future owner puts the parcel. If the State Board of Land Commissioners acquires the parcel, it would adjoin an existing 12,500± acre block of State Trust land commonly known as the X-Bar Ranch. It is anticipated that a lease for the 276± acres of land to be potentially acquired would be included as part of the X-Bar Ranch lease. The land is located approximately twenty (20) miles west of the town of Laramie with legal access from State Highway 230. The proposed 276± acre parcel is mostly native grass and rolling hills with a portion of Sodergreen Lake located on the parcel providing pubic fishing and other recreational opportunities. The parcel adjoins a large block of State Trust land known as the X-Bar Ranch. The 2011 property taxes assessed for the property totaled $ according to the Albany County Assessor s Office. The State is exempt from property tax and thus would not be assessed if the State were to acquire the parcel. Page 2 of 5

3 B. Anticipated Investment Return The total return of any investment is comprised of two parts; (1) income generating potential; and (2) appreciation of the underlying asset. The Board of Land Commissioners Rules and Regulations, Chapter 26, requires that the detailed analysis include an estimate of the income generating potential of the parcel. The carrying capacity of the 276 acre parcel is estimated to be 72 AUMs, which would generate $ annually based on the 2011 rate of $4.64/AUM. Any additional income generated on adjacent State Trust lands as a result of this potential acquisition is considered nominal. Future appreciation in land values is unknown. Appreciation rates are influenced by several factors including current market conditions, economy, interest rates, inventory levels, and amenities within the specific property. It is anticipated that the value of the property will continue to appreciate but at an unknown rate. Appreciation rates are influenced by several factors including current market conditions, economy, interest rates, and inventory levels. The acquisition of the 276± acre parcel would provide additional legal access to the adjoining X-Bar Ranch. It would seem logical that the value of the X-Bar Ranch would increase at a slightly higher rate with the additional legal access. C. Physical and Natural Attributes The subject parcel is primarily composed of sandy loam soils and is well drained. The property is in good overall range condition. There is minimal evidence of overgrazing. There were some minor noxious weeds and pests observed during inspection. There are fences located on the property and it appears that all fences are appropriately situated on the property lines. There are several two track roads that traverse the property. There are no structural building improvements on the parcel. D. Recreational Attributes Board Rules, Chapter 26, Section 4 require the Office to make available to the public the existence and importance of any wildlife habitat and wildlife-oriented recreational opportunities located on the parcels as determined by the Wyoming Game and Fish Department. The Wyoming Game and Fish Department was asked to evaluate the parcel proposed for acquisition in terms of wildlife, wildlife habitat and wildlife oriented recreational opportunities. In a letter dated October 10, 2011, the Department commented that they are in support of the State's acquisition of the Real Property known as Sodergreen Lake. The parcel is not located within a sage-grouse Core Population Area and, therefore, is not subject to the core area protection plan as outlined in the Governor s executive order. Board Rules, Chapter 26, Section 4 further requires the Office to make available to the public the existence and importance of any public recreation opportunities or cultural resources located on the parcels as determined by the Wyoming Department of State Parks & Cultural Resources. The Department of State Parks and Cultural Resources was asked to evaluate the parcel in terms of cultural resources, historical significance and public recreational opportunities. State Parks evaluated the recreational opportunities associated with the parcel and in a letter dated September 27, 2011, states that there is an unevaluated segment of the National Register eligible Pioneer Canal that Page 3 of 5

4 traverses the SW portion of the property. IV. POLICY CRITERIA On August 11, 2005, the Board of Land Commissioners adopted a set of Trust Land Management Objectives, derived from applicable Wyoming Statutes and in accordance with the Wyoming State Legislature s mandate that 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. Applying these objectives, the proposed disposal of these parcels should: A. Better meet the beneficiaries short and/or long term objectives Revenue: Improved income generating potential from grazing and agricultural leasing, estimated at $ per year based on the standard AUM fee currently at $4.64. If the property can be leased competitively at a rate higher than the standard state AUM fee the advantage to the beneficiaries would be greater. The possibility of leasing the property under a long-term special use lease to the Wyoming Game and Fish Department for the purpose of public recreation, fishing and camping on Sodergreen Lake could also be considered. Investment: The value of the property would be considered high amenity land. The highest and best use of the property will be rural residential/recreational or as an add-on to an existing ranch operation. B. Improve the manageability of the land asset Consolidate ownership patterns: The completion of the 276 acre acquisition would provide a contiguous block of 12,780 acres of State Trust land with additional access and recreational opportunities. Leverage management resources of other agencies: There exists potential for cooperation and collaboration with the Wyoming Game and Fish Department for additional Walk-In Area status and Hunter Management Agreements to protect the land and productivity from unauthorized uses, which could damage the property. C. Meet a specific school and/or community need Improve Stability or Provide growth opportunity: Not applicable. Improve access/recreational opportunity: The exchange will provide continued public access and recreational opportunities to Sodergreen Lake and to adjoining State Trust lands. The completion of the acquisition would also preserve open space in an area currently under subdivision pressure. In the 2006 Budget Session, the Wyoming Legislature enacted legislation which requires no net gain of lands held for the Common School Permanent Land Fund in excess of 10,000 acres. FY-1999 establishes the baseline used to calculate the no net gain inventory. The CSPLF is currently 13,610± acres below the established Page 4 of 5

5 baseline, which would allow the Board of Land Commissioners to acquire up to 23,610± acres of land and remain within the 10,000 acre no net gain limit. The acquisition of The Subject Property would not only meet the long-term investment objective. But it would also aid in bringing the net land inventory closer to the baseline established in In conclusion, it appears as though the acquisition of this parcel represents a prudent transaction consistent with the State Trust Land Management Objectives and responsibilities to the trust beneficiaries, through: 1. investment return 2. increased income 3. efficiencies of consolidating land for efficient management DIRECTOR'S RECOMMENDATION: The Director recommends that the Board exercise the option to purchase the parcel referred to herein, containing approximately 276 acres, and request the State Treasurer to invest $595, in the common school account within the permanent land fund to complete the purchase. BOARD ACTION: Page 5 of 5