“The [Idaho] Land Board is sitting on an estimated $150 million, and it has a decision to make,” said Seth Grigg, executive director, Idaho Association of Counties (IAC). “Divert some of those funds to the endowment where it can be invested in the market, or acquire more lands?”
That decision has commissioners in many rural counties, including Idaho County, concerned.
One concern is the impact this may have in reducing already lean tax bases. The other is that ahead of the board’s consideration, county governments – whose constituents will be impacted – are not being considered in the deliberation process.
“It’s a complicated issue,” said Skip Brandt, chair, Idaho County Commission. “But, in my mind, it’s a matter of starting the dialogue instead of being driven over. We want to have a dialogue when governmental entities are looking at acquiring lands.”
Brandt, Grigg, and also Jeremy Chou, representing Stimson Lumber, spoke to the Free Press last week, as part of an IAC awareness campaign, concerning consideration by the land board on investing its $150 million. This is currently being discussed by a land board reinvestment subcommittee, formed by Governor Brad Little earlier this summer, regarding funds mostly generated from the sales of state-owned lakefront properties in Valley and Bonner counties.
Established by the Idaho Constitution, the five-member land board is tasked with directing the Idaho Department of Lands in managing more than 2.4 million acres of Idaho endowment trust lands. The board manages lands for the best return for endowment funds that largely benefit state education.
At issue is board consideration of reinvesting funds in private timber and agricultural properties, which is a two-fold concern: one for the potential competition with private businesses, and two, these purchases turning private land into tax-exempt public land. This last action removes those properties from the tax rolls, according to Grigg, that shifts this burden disproportionately on residential taxpayers.
“Any time you take private land off the tax rolls, that’s how the system works; it just shifts to other taxpayers,” Grigg said.
The board’s $40 million expenditure last December acquired 38,000 acres of timber land, largely in Benewah, Bonner, Boundary and Shoshone counties.
“That was significant, as far as land of the property tax rolls,” Chou said, and the board’s current $150 million expenditure discussion is for putting this entirely to timber land purchases, which, he said, would increase the state’s endowment land holdings by 10 percent.
Maintaining the integrity of the county’s tax base is an ongoing process, according to Brandt, which in recent memory goes back to the Upper Lochsa Land Exchange, a process started in 2007 with the Forest Service and Western Pacific Timber (WPT) proposing to swap lands each entity held near the Idaho-Montana border. That plan would have been a net loss for Idaho County’s tax base, as WPT was to have exchanged all of its lands locally for federal properties in other counties. In response, the Idaho County Commission proposed an alternative “acre-for-acre” option to retain as much private land as possible to minimize the impact to its tax base. Ultimately, this swap didn’t go through, though, according to Brandt, the state has been working with the USFS and WPT on a “three-way shuffle.”
“If the state, in an exchange, could acquire some of those federal lands that are not putting any logs in the mill, if they could get that,” he said, “there’s some uptick there.” The county’s concern is with federal entities acquiring lands, “because those timber lands will be held until they’re burned up.” Whereas his concern with the Upper Lochsa is it being acquired by federal entities entirely, “and be of no benefit to the economy of Idaho County, where if we’re looking at the state endowment gets it, they will manage it for economic gain for the endowment fund and , as well to fund our timber base.”
Chou and Grigg explained the land board has a fiduciary duty, as per the state constitution, to maximize returns to the endowment. As of 2018, the investment on timber lands returned 5.48 percent and the endowment had a 9.51 percent return. Explaining this at its most basic level, Chou continued that, based on these returns, it makes sense to keep that money in the market; however, “when you invest, you put some money in bonds in case your equities go down, because it is more stable, but it generates less of a return. That is the way they view timber lands.”
Brandt said the county commission faced four recent land acquisitions – 500 acres by the Bureau of Land Management, two 100-plus-acre acquisitions by the USFS, and 100 acres by Idaho Fish and Game Department – one was completed, one is pending, and two were subsequently dropped. For the three-way exchange proposal in the Lochsa, the commission is not in opposition, but rather is waiting to see the plan.
“What we wouldn’t accept is if they purchase Upper Lochsa lands, and the state acquires lands somewhere else that doesn’t fuel this mill,” he said. “Then, it’s just a pure loss for us.”
“That’s a good illustration of what a lot of counties are facing right now,” Grigg said, noting the $150 million from those Bonner and Valley counties sales, “all this money is to be used to acquire lands, and those lands will predominately be outside where the sales have occurred.”
Tying into this is concern with the state competing with private industry for these lands, according to Grigg, “but commissioner Brandt makes a valid point: These lands need to be productive, and maybe, in some circumstances, the state is the means for making those lands productive.”
“This has always been an issue,” Brandt said, on these land acquisitions, in a county with approximately 85 percent of its lands under public management, “but it’s just becoming more of an issue now with the potential loss of SRS [Secure Rural Schools] and PILT [Payment In Lieu of Taxes] arm-wrestling. And now, at what point do we just say we can’t do it anymore and still sustain government services? [As regards remaining private lands ownership in the county] Can we go down to 10 percent? Five percent? Where do you just say we’re done, we’re there?”
Grigg’s point is that when the land board is considering such decisions that counties be part of the dialogue.
“And, if there are concerns, that there is an opportunity for those concerns to be vetted,” he said, “and we hope that for those concerns that are raised the land board would weigh those in future land decisions.”