Division of State Lands Asset Management Plan Implementation Progress Report December 12, 2000 Summary The Division has made major strides in fulfilling the eleven implementation tasks contained in the agency s 1995 Asset Management Plan. Most notably, the Division has completed and/or has embodied as an ongoing management objective seven of the implementation tasks relating to: Reviewing costs of managing common school forest land. Identifying scattered tracts of forest land for decertification and subsequent exchange, sale or reclassification. Developing a pilot rangeland disposal program for isolated tracts. Working with a Grazing Fee Advisory Committee to recommend rangeland lease rates. Identifying unauthorized uses of state-owned submerged and submersible land and bringing them into conformance with leasing-registration program requirements. Establishing a waterway leasing task force to undertake a comprehensive review of water lease rates, terms, and procedures. Working with the Oregon Department of Geology and Mineral Industries to develop a mineral information base for the Division s lands. Lesser, albeit still significant progress has been made on the remaining four implementation tasks: Developing area management plans. Establishing investment standards to determine the value of proposed land acquisitions and capital improvements. Developing criteria and policies for the identification, classification and management of special interest lands. Developing cooperative agreements with ports and other entities to increase revenue from waterway leases. Since adoption of the Asset Management Plan by the Land Board, the Division has sold 1,643 acres of land for a total of $7.6 million. In addition, the Division has facilitated other sales and exchanges for agencies such as the Oregon Department of Forestry, Department of Administrative Services, and Department of Energy.
2 Introduction ORS 273.245 provides that: Not later than January 1, 1996, the shall adopt an asset management plan in accordance with this section to guide management and disposition of real estate under the board s jurisdiction. The Division of State Lands shall provide a report to each regular session of the Legislative Assembly on the progress of implementing the asset management plan. Pursuant to the requirements of this statute, the adopted an Asset Management Plan in December 1995. This report summarizes the progress made to date in the implementation of the eleven overall and resource-specific measures contained in the plan. Background The (Land Board), which consists of the Governor, Secretary of State, and State Treasurer, has two principal functions: Management of approximately 2.3 million acres of land owned by the State of Oregon, and Trustee of the Common School Fund. The Division of State Lands (Division) is the administrative arm of the, and in this capacity is responsible for carrying out policies of the Land Broad in the dayto-day management of the land. Nearly all of this land administered by the Land Board was granted to Oregon by the federal government at the time of statehood for specific purposes. How a parcel of land is managed depends on whether it is categorized as Trust or Non-Trust Land. Trust Land originally consisted of Sections 16 and 36 in each township. This land was granted to support the state s public schools (kindergarten to 12th grade). Since that time, many of these lands have been sold or exchanged. Non-Trust Land includes the submerged and submersible lands underlying navigable waterways as well as other lands granted to the state at a later time (for example, Swampland Act lands). This land is to be managed for the greatest benefit of all the people of the state. Common School Fund (CSF) is a permanent fund or account consisting of two types of assets: financial (for example, cash and investments in stocks, bonds and other securities), and real property (Trust Land). Revenue derived from the leasing and sale of state-owned Trust and Non-Trust Land is deposited in the CSF, as is the interest derived from the principal. Among the activities which generate such revenue are the leasing of rangelands to ranchers for grazing; sales of timber; and use of state-owned waterways for such sand and gravel removal, houseboat moorages, marinas and log storage. Twice each
3 year, a distribution is made from the CSF to the public school districts of Oregon on a per student basis. As of mid-august 2000, the value of the CSF was approximately $815 million. The real property assets managed by the Land Board and the Division are conservatively valued at approximately $1.1 billion. Rationale For An Asset Management Plan Historically, management of the real property assets of the Common School Fund has suffered from several basic shortcomings. Prior to development and adoption of the Asset Management Plan: The Land Board and the Division had never adopted an overall plan or vision for managing their land portfolio. This often led to inconsistent and ad-hoc management of these assets. The real estate portfolio of the CSF was not typically put on an equal investment footing with the CSF s financial assets. More often than not, state lands were viewed as an avenue for advancing other state policies rather than as investments which should be managed for long term revenue production. It was difficult to balance revenue production and resource conservation. With the development and adoption of a plan, the Land Board and Division have been able to clearly articulate in a single document: An overall philosophy elaborating the trust and stewardship mandates governing state-owned land. This philosophy elaborates trust and stewardship mandates and provides the Land Board with a cohesive and flexible foundation for more detailed policies, Guiding principles which provide more detailed management direction for all Division land assets, and Resource-specific management prescriptions and, where appropriate, implementation measures for each land class which provide revenue enhancement and investment objectives and strategies. It is important to recognize, however, that this plan does not govern parcel-specific management decisions by the Land Board and Division. Rather, it provides a framework to guide programmatic decisions made by the Land Board and the Division about how best to manage particular types or classes of lands and resources in a consistent way. Furthermore, this plan is not self-implementing. Instead, as this report will indicate, the Division must, as it has already been, engaging in additional planning, developing implementation measures, and, in some cases, initiating administrative rule-making in order for the plan to be fully operative. Thus, the Land Board and Division will continue to seek public input on land management prescriptions and implementation measures long after this Plan is adopted. The plan will be reviewed and updated at least every five years.
4 Implementation Program To ensure that the management philosophies and prescriptions contained in the Asset Management Plan become embedded into Division s land asset decision making processes, the following eleven implementation tasks were developed, and subsequently adopted by the Land Board as a part of the plan. Following each implementation task heading is a description of the efforts undertaken to satisfy the task requirements. (1) Develop area management plans for: lands identified in the plan as most appropriate for evaluation for sale, exchange or in a transitional area; industrial, commercial and residential lands; and other lands with high potential for increased revenue generation and planning areas being addressed by other agencies in which Division holdings have revenue potential or high public interest. The Division is continuing to implement this task. The Division has completed several area management plans for various types of land managed by the agency. From 1995 to 1997, the Division, in cooperation with the City of Bend, Deschutes County, and other government entities undertook a master planning effort to identify potential and long term uses for a parcel of land (variously termed Section 11 or the Stevens Road Tract) acquired in an in-lieu trade from the Bureau of Land Management. Whereas the short term plan provides for uses that are consistent with the zoning (for example, commercial plant nursery, park, agriculture, grazing, or neighborhood retail center), the long term plan provides for a local government complex, park, school retail and commercial center as well as residential uses. Fulfillment of this plan is dependent upon expansion of the urban growth boundary and subsequent changes in zoning. In 1997-1998, the Division participated in the development of a master plan for the 510 acre Dammasch Study Area. Other members of the study team included the Oregon Department of Administrative Services, the Oregon Mental Health Division, City of Wilsonville, METRO, and the Department of Land Conservation and Development. During the past five years, the Division has conducted over forty Rangeland Management Plans on blocked state leaseholds, the majority of which are located primarily in southeastern Oregon. These plans are used to define grazing management goals and objectives. To ensure that the plan format would provide useful information to both lessees and the Division, a working group was established consisting of lessees and other range experts to discuss grazing management. (2) Establish investment standards to help the Land Board and Division determine the value of proposed land acquisitions and capital improvements.
5 The Division is continuing to implement this task. The Division, as well as other members of the Western States Land Commissioners Association, is currently participating in a project to determine the current theories and performance measures used by managers of public and private land. Although the primary emphasis of this research is on Trust Land performance measurement, the findings will be applicable to all land assets. When this project is completed, the Division will utilize the results to work toward implementing this task. (3) Review, in cooperation with the Department of Forestry, the costs of managing common school forest land. The Division has completed implementing this task. In 1996, the Oregon Department of Forestry (ODF) with assistance from the Division contracted with Duck Creek Associates to conduct an evaluation of the management of all state-owned forest land, including Common School Forest Land. In July 1998, the results of the study by Duck Creek Associates were presented to the Land Board. The major findings of the report were that: Oregon state forests are well managed. ODF s management of the state forests is generally efficient and effective. Several areas of potential improvement exist. Following Duck Creek s report, an ODF task force (which included a Division representative) was formed to review the report to identify key issues and opportunities for improvement identified in the report, and to develop an action plan. (4) Identify, in cooperation with the Department of Forestry, scattered tracts of forest land considered to be marginal or in need of greater management attention. Also, identify marginal parcels that are candidates for exchange, sale, or reclassification. The Division is continuing to implement this task.
6 ORS 530.460 requires the State Board of Forestry and the Division designate and set aside those common school lands that are primarily suited for the growing of timber and other forest products. These lands, when so designated, are referred to as common school forest lands, and are to be used and managed principally for their forest attributes. This statute, however, is silent as to how to decertify such lands after they have been so designated. In 1995, as a part of the development of the Asset Management Plan, the Division undertook a review in conjunction with the Department of Forestry of a number of scattered common school fund forest land tracts for their potential reversion to the Division for possible sale or exchange. This effort, focused on common school fund forest land tracts in Eastern Oregon, resulted in the identification of 8,412 acres of marginal forest land for possible decertification. In early 1997, the Department of Forestry and the Division agreed upon a process for decertification of common school fund forest land. In November of that year, these two agencies finalized a Memorandum of Understanding codifying the process. With this task completed, the Board of Forestry approved the decertification of the 8,412 acres. Soon thereafter, the Land Board approved the decertification thereby allowing the Division to manage the lands as common school trust land in accordance with the provisions of the Asset Management Plan. As common school trust land, other uses can be made of these parcels, and they can be sold or exchanged by the Division, thereby possibly generating substantially more revenue for the Common School Fund. The Division continues to look for other parcels of marginal common school forest land for decertification and subsequent possible sale or exchange. (5) Develop a pilot rangeland disposal program for isolated tracts. The Division has, and is continuing to implement this task. Immediately following adoption of the Asset Management Plan, the Division began to identify isolated parcels of rangeland for possible sale. In December 1998, the agency reported to the Land Board that it had identified 66 parcels totaling 16,258 acres in 11 counties as candidates for sale, 31 of which totaling 5,261 acres were unleased. Following review by other state agencies, interest groups and the public, the Division classified 30 of the parcels covering 5,233 acres in Klamath, Harney and Lake Counties as available for sale. An additional effort was also undertaken at the time to identify a second grouping of parcels as possible candidates for sale. In December 1999, the Division requested authorization to sell through a sealed bid process up to nine isolated unleased tracts of rangeland in Lake and Klamath Counties.
7 In March 2000, the Division held a sealed bid land sale for the nine unleased parcels. Twenty-three bids were submitted with a total bid premium of $19,300, or about 19% above the total appraised value of the seven parcels sold. Based on the success of this auction, the Division will prepare for future auctions of isolated, difficult to manage tracts of both leased and unleased rangeland. (6) Pursuant to HB 3239, work with a Grazing Fee Advisory Committee appointed by the Governor to evaluate and recommend rangeland lease rates. The Division has completed implementing that task. HB 3239 enacted by the 1995 Legislature created a State Land Grazing Fee Advisory Committee, the purpose of which was to develop and propose a formula by which rental fees for grazing of livestock on state common school grazing lands may be determined. In 1996, the Committee met twice in Bend and once in Burns. As the result of these meetings, the Committee recommended several changes be made to the fee formula used by the Division: The calf price index should be based on a USDA Oregon statewide average calve sale price for the preceding year, and The phase-in for the 20% state share of calf gain should be accelerated by one year, becoming effective in 1997. The distinction between blocked and isolated leases should be eliminated. At its August 1996 meeting, the Land Board approved initiation of public rulemaking to incorporate these proposed changes into the Division s administrative rules for the management of rangeland. Following this approval to proceed, the Division developed amended rangeland rules and held two public hearings. In December 1996, the amended rangeland rules were adopted by the Land Board. (7) Develop criteria and policies for the identification, classification, and management of special interest lands. The Division is continuing to implement this task. Special interest lands include unique aquatic and wildlife habitat, state Scenic Waterways, federal Wild and Scenic River area, special natural and cultural resources and recreation lands. The Division has not yet developed any criteria or policies for the identification, classification and management of these lands.
(8) Identify unauthorized uses of state-owned submerged and submersible land; evaluate the economic feasibility of bringing these uses under lease; initiate rulemaking to provide more effective tools for bringing such uses under lease. 8 Identifying Unauthorized Uses: The Division has made significant progress in identifying unauthorized uses of state-owned submerged and submersible land. This task is expected to be completed by August 2001. Bringing Unauthorized Uses Into Compliance: Division field staff have made substantial strides toward bringing unauthorized uses into compliance. Initiate Rulemaking: New administrative rules governing the authorization of uses on state-owned submerged and submersible land were adopted by the Land Board in April 1998 and June 1999. Identifying Unauthorized Uses In 1997, David Evans and Associates, Inc. of Portland was commissioned by the Division to undertake a pilot project to inventory all structures on state-owned submerged and submersible land on the Columbia and Willamette Rivers in the Portland metropolitan region. This survey utilized then current aerial photography coupled with geographical information system technology. Since the successful completion of that initial effort, Division staff have undertaken a concerted investigation using aerial photography and field checking of state-owned submerged and submersible land to identify unauthorized uses. To date, all of the coastal rivers except the Rogue, and most of the coastal lakes (Devils, Mercer, North and South Tenmile, Siltcoos, Tahkenitch, and Woahink) have been field checked. In addition, the Columbia River from its mouth to the confluence of the Sandy River, and the Willamette from its confluence with the Columbia to Newberg have also been checked. As a part of the field checking, digital photographic records have been made of all uses along each waterway. These records are also integrated into the Division s geographic information system to permit ease of use and future updating. The Division has periodically held public workshops to discuss the results of this inventorying effort, and most recently briefed the Land Board on its progress in December 1999. As of the date of that briefing, the Division had identified 2,156 structures/uses on 10 surveyed waterways, of which 1,200 appear to be potential unauthorized uses/structures. Of these unauthorized uses, about 90 % are noncommercial small docks and boathouses or other structures qualifying for registration. The remaining 100-150 structures/uses are either leasable, exempt, or are on non-state-owned submerged and submersible land. The specific disposition of these uses is the subject of the field checking effort. Bringing Unauthorized Uses Into Compliance Since adoption of the administrative rules governing non-commercial docks/floats, boat houses, floating recreational cabins, and water sport structures on state-owned
9 submerged and submersible land, over 1,000 such uses have been registered, many of which were previously in trespass. Similarly, numerous other leasable uses of state-owned submerged and submersible land which were previously in trespass have also been brought into compliance. Initiate Rulemaking In February 1998, the Division requested and received Land Board authorization to initiate the rulemaking process to revise the agency s rules for leasing state-owned submerged and submersible lands. At a first step in the rulemaking process, the Division developed administrative rules governing the registration of non-commercial docks/floats, boat houses, floating recreational cabins, and water sport structures on state-owned submerged and submersible land. These rules were adopted by the Land Board in April 1998. The Division completed the second step in the rulemaking process with the adoption by the Land Board in June 1999 of administrative rules for authorizing structures on and uses of state-owned submerged and submersible land by lease, registration, temporary use permit and public facility license. These rules also incorporated a choice approach to establishing fees. Since the time that these rules have been in place, the Division has been periodically reporting to the Land Board on the progress that has been made on their implementation. (9) Establish a waterway leasing task force to undertake a comprehensive review of waterway lease rates, terms, and procedures. The Division has completed implementing this task. In early 1996, the Division issued a request for nominations for persons interested in serving on the Waterway Leasing Task Force. Sixty nominations were received, and sixteen task force members were selected by the Division and approved by the Land Board. During the next six months, the task force held five meetings, including two field trips. These efforts resulted in the development of a report that was presented to the Land Board in April 1997 detailing the deliberations that occurred during life of the task force, as well as areas of concurrence and continued disagreement. Based on the recommendations of the task force, and public input received as the result of numerous public hearings and workshops, the Division developed proposed amendments to the waterway leasing administrative rules.
10 (10) Develop cooperative agreements with ports and other entities to increase revenue from waterway leases while maintaining public access and other public interests. The Division is continuing to implement this task. The Division has implemented several intergovernmental agreements with port districts that will possibly result in increased revenue from waterway leases and yet, at the same time, maintain public access and other public interests. As an example, two such agreements have been signed with the Port of Astoria and provide that the Port will clean up property managed by Division in return for a set amount of monetary compensation. By doing this, the Division will have property which is much more marketable for waterway-related uses. (11) Work with the Oregon Department of Geology and Mineral Industries (DOGAMI) to develop an information base about the Division s mineral ownerships. The Division has completed implementing this task. Since 1993, the Division has maintained an on-going memorandum of agreement with the Oregon Department of Geology and Mineral Industries (DOGAMI). This agreement provides that upon Division request, DOGAMI will perform a variety of mineral evaluation work on land. The two principal activities undertaken by DOGAMI have been: As-needed mineral potential evaluations relating to the near-term or immediate sale, exchange, or other conveyance of state-owned land, or the acquisition of other land by the Division, and On-going mineral potential evaluations of Division-owned land in each county of the state. To date, DOGAMI has completed as-needed mineral potential evaluations for several proposed land transactions, many of which involved Board of Forestry exchanges. Additionally, DOGAMI has completed mineral potential databases for Harney, Lake, and Malheur Counties. These databases show the location of state-owned and managed land/mineral rights relative to known mineral occurrences. For each occurrence, information is available concerning the type of mineral deposits, principal minerals of possible economic significance, grade of mineralization, and past level of production, if any.
11 DOGAMI and Division staff have also been working together to identify possible opportunities for the occurrence and development of rock, sand and gravel, and glass sand deposits proximate to, or on state-owned land. Land Sales And Exchanges: January 1996 through August 2000 Site Land Board Acres Disposal Method Sales Price/ Approval Appraised Value Hood River and February 1996 222.5 acres of Exchange NA/NA Washington Counties Board of Forestry mineral rights for 227.5 acres of City of Forest Grove mineral rights. Klamath County February 1996 108 acres of Sale to surface owner $500/no appraised Department of value determined; Energy mineral however, geologist rights to Crater retained by ODOE Lake Land and to conduct mineral Development potential evaluation Company. Crook County April 1996 39.23 acres of Sale $49,000/$49,000 Trust Land to the Oregon Youth Authority. Mineral rights as well as a reversionary interest in land held by State Land Board. Clatsop County August 1996 209 acres of Exchange $275,400 appraised value for State land and various Land Board land and $277,205 for and Board Longview Fibre of Forestry mineral land. No appraised rights for 207 acres value for mineral of Longview Fibre rights; however land and various DOGAMI mineral rights. conducted mineral potential evaluation of all parcels. Clatsop County October 1996* 625 acres of Exchange $172,500 (date exchange completed; land on/adjacent to transaction Miller Sand Island approved by for 20.65 acres of Land Board United States GSA in January upland on South 1992). Tongue Point.
12 Crook County December 1996 117.8 acres of Sale through two $239,000/$225,000 auctions Trust Land to Kevin Spencer. Mineral rights retained by State Land Board. Clackamas County October 1997 4.26 acres of Sale $514,000/$550,000 based on recent Trust Land comparable sales; (including mineral. $485,000 based on rights) to the City Appraisal in 1997. of West Linn. Wheeler County December 1997 40 acres of Sale $4,000/$4,000 based on a 1997 Trust Land appraisal (including mineral commissioned by rights) to the the National Park National Park Service. Trust. Harney County December 1997 788.91 acres of Sale $150,000/$150,000 based on a 1997 Trust Land to the appraisal Oregon State Parks commissioned by And Recreation the OPRD. Department (OPRD). Columbia County July 1998 78 acres of Sale $2,340,000 or $30,000/acre; Land (including $15,000 to $20,000 mineral rights) to based on a 1997 the Port of appraisal. St. Helens. Marion County October 1998 12.368 acres of Sale Final consideration Department of to be negotiated by Administrative Division and City Services (DAS) of Salem. mineral rights to the City of Salem. Crook, Deschutes, December 1998 8,705.75 acres of Exchange $701,000 for the Harney and Wheeler state land, and Counties land for 7,789.42 $701,000 for the Acres of GI private land which. Ranch Corporation is an even trade. Land. Mineral rights to the stateowned parcels were retained by the State Land Board since GI Ranch Corporation Did not own the mineral rights to the parcels it traded.
13 Lake County December 1998 4.01 acres of State Sale $1,025/$1,025 Land Board land (including mineral rights) to the Oregon Department of Transportation. Clackamas County February 1999 20 acres of Sale $200,000 or $10,000/acre plus Trust Land to the closing costs; West Linn- appraised value Wilsonville School $10,000/acre District. Mineral rights retained by the State Land Board. Lincoln and Polk Counties February 1999 77 acres of Exchange Exchange with 10-year timber land and mineral reserve provision rights, and 310 determined to be acres of Board of even. DOGAMI Forestry mineral conducted mineral rights for 382 potential evaluation acres of Simpson of all parcels. Timber Company land and mineral rights. Lake and Klamath Counties April 2000 514.72 acres of Sale through auction. $119,919/$100,620 Trust Land in seven parcels to various buyers. Mineral rights retained by State Land Board. Clatsop County July 2000 36 acres of State Sale through auction $4.0 million bid/ Land Board land $3.7 million (including mineral rights) to Cresmont, Inc.