Connecting state and local government leaders
Some states are getting into the development business.
This story was originally posted by Stateline, an initiative of the Pew Charitable Trusts.
SEATTLE — Checkerboarded across the landscape of the American West are thousands of parcels of state-owned land that collectively cover an area larger than North Dakota. They include vast swaths of forest and prairie, fracking wells, coal mines, luxury housing developments, parking lots, cell towers and solar panels.
Known as state trust lands, these parcels were given to Western states as they were admitted to the Union, setting them up with a long-term revenue stream to fund public services, primarily schools. Although the rules can vary by state, government officials generally have broad leeway to manage the lands to provide that education funding. Historically, that’s often come from timber harvesting, agriculture and grazing leases, and fossil fuel extraction.
In some states, though, those natural resource-based industries are no longer paying the bills. Some, including Wyoming and New Mexico, still rely on trust lands for a significant portion of their education budgets. Others, such as Washington, only get a fraction of their school funding from the land.
Land managers also are facing pressure from environmentalists who think the land’s value goes beyond its contributions to the state balance sheet. And as officials look to new revenue streams such as real estate development, they’re running into backlash from locals who feel the state’s plans to make money off its land conflict with the values of the surrounding communities.
Meanwhile, loggers and livestock ranchers who have long operated on state lands say shifting revenue models could devastate their industries and the rural communities that depend on their jobs.
Together, this leaves state land managers in the fast-growing West with a near-impossible needle to thread: providing steady funding for schools while protecting the environment and avoiding conflict with communities and industries that have their own ideas about how the land should be used.
“That struggle is real,” said Jason Crowder, deputy director of the Wyoming Office of State Lands and Investments. “Every parcel of state land is an asset that needs to perform, because that’s what our mandate is, but we have to be sensitive to the local impacts and needs as well.”
Joel Webster, vice president for Western conservation with the Theodore Roosevelt Conservation Partnership, said state officials are in an unenviable position as they try to make those choices.
“These decisions will impact groups that depend on these lands for their livelihood,” he said. “Housing developments are not so compatible with wildlife habitat, but we can’t dismiss the revenue they bring in. How can these lands be managed in a way that tries to address all these different concerns?”
But trust lands also are beginning to show promise as sites for wind and solar projects, which could allow states with such parcels to speed up their transition to clean energy. And in some cases, environmentalists and states have worked together in creative ways to conserve land for habitat and recreation, while at the same time preserving its purpose as a funding source for schools.
Real Estate Boom
In the Mountain West, some states are trying to take advantage of surging property values in tourist towns such as Jackson Hole, Wyoming, and Moab, Utah. Trust land experts say Utah has led the way in pushing aggressive real estate development as a funding source over the past decade.
“Oil and gas used to be our mainstay, but revenues have dropped off,” said Troy Herold, planning and development project manager with the Utah School and Institutional Trust Lands Administration.
That shift has helped Utah diversify its funding and cut its dependence on fossil fuels. But it’s also led to some local concerns. In Grand County, outside of Arches National Park, local officials objected earlier this year to a high-end housing development proposed on state land, saying it could worsen the area’s affordable housing crisis.
“The community very, very explicitly made a statement that this is not an area where we want to see increased development,” said Emily Campbell, chair of the county’s planning commission, according to the Moab Sun News.
Campbell did not respond to a Stateline request for comment. Asked about the proposal, Herold noted the agency’s efforts to develop affordable housing on other trust lands in the area but acknowledged the plan had received “mixed reviews.” However, he said he had yet to see a situation where the most lucrative development option for a state parcel proved to be a poor fit for the community.
“Our goal is to always work with communities and not try to shove anything down their throat,” he said.
In Wyoming, some state lawmakers are eager to get more return from state trust land parcels near Jackson Hole and its skyrocketing real estate prices.
“Budgets are tight, money's short, so some legislators look to Teton County and say we should develop these lands,” said state Sen. Mike Gierau, a Democrat who represents the area. “They joke about K-12 casinos, cocktails for kids. Behind the joke, it's real.”
Last year, the state enacted a law calling for development proposals on state trust lands. For parcels in Teton County, proposals included a high-end housing development and a “glamping” operation for luxury campsites. Local leaders have raised concerns that those plans would undermine county planning efforts. The housing development would threaten wildlife habitat and local agriculture, county commissioners said in a letter to the state, while the glamping location lacks wastewater treatment and access for emergency services.
“We put a lot of consideration into how we're going to handle environmental mitigation, affordable housing, wildlife corridors, traffic congestion and access to transit, wastewater and water quality planning,” said county Commissioner Natalia Macker. “The potential for [state trust lands] to be exempted from all of that throws a wrench into the planning.”
To provide more stability amid the boom-and-bust cycle of fossil fuels, Wyoming is looking to add revenue streams, including from real estate, wind and solar. Trust lands often generate controversy, said Crowder, the Wyoming official, because the public incorrectly views them as public lands for recreation instead of financial instruments for education.
In some cases, the state has found ways to combine those values with conservation leases, in which a nonprofit or local government pays the state to leave the land undeveloped. Many of the proposals submitted for the Teton County parcels include conservation objectives, including a plan to sell one section to adjacent Grand Teton National Park. Any proposal approved by the state must pass a sustainability test, Crowder said, which includes buy-in from local officials.
In Idaho, one trust land proposal has generated significant controversy. The plan would turn over forested state land around Payette Lake to a residential developer, which would trade timberlands from another area back to the state. The housing plan would increase the land’s financial productivity, but residents fear the transition would cut off their access to the lake and make their community unrecognizable.
“The plan is a kind of bellwether,” High Country News wrote in a detailed report. “[W]ill its framing usher in a new era of massive private development in Idaho? The answer could resonate across the entire West.”
Meanwhile, some locals are proposing a conservation easement for some of the parcels near the lake, raising private funding to give the state a financial incentive to leave them undeveloped.
“[The state] could retain these lands, conserve them for a variety of purposes and get a cash payment,” said Jonathan Oppenheimer, external relations director with the Idaho Conservation League. “There's no reason we should be rushing to dispose them.”
The Idaho Department of Lands did not respond to a request for comment.
'That Resource Is Finite'
Not every state suffers from declining trust land funding. Thanks to a booming oil and gas industry, New Mexico has seen record revenue over the past three years, surpassing $1 billion in the past fiscal year. But leaders acknowledge that funding is unreliable.
“The traditional uses [of state trust lands] have been consumptive throughout the West,” said New Mexico Commissioner of Public Lands Stephanie Garcia Richard. “By its definition, it's not a sustainable model, because those resources are non-renewable. That resource and demand for that resource is finite, but how do we make up that revenue? What's our diversification strategy?”
The state is working to incorporate landscape-level planning into its decisions, considering effects on watersheds, ecosystems and habitat. Late last year, Garcia Richard’s office announced that it would halt the sale of water rights on trust lands for fracking operations.
“We are in this historic drought in this part of the country,” she said. “There are literally millions of gallons used in the oilfields for fracking daily. We're going to no longer allow leases to sell it for that purpose.”
That policy shift won’t carry much of a financial blow for the state, said Garcia Richard, but it signals that leaders are looking at more than the bottom-line dollar value for the operations they permit. Unlike other states, New Mexico doesn’t see real estate development as a significant revenue source for its trust lands, but Garcia Richard has added an outdoor recreation office to the land agency, seeking to capitalize on the fast-growing adventure economy with bouldering, birdwatching and camping sites.
“We have to make money off of it, but we also would like to give the public access to it,” said Garcia Richard. “This can raise revenue and create little micro-economies for our rural communities.”
Some states have opened wide swaths of their trusts land for hiking, hunting and fishing, even in areas with other commercial uses. Other states have complained about the public’s sense of “entitlement” to access trust lands.
In Washington, much of the state’s trust land is still used for logging, and the state is weighing the future of that model. Earlier this year, officials released an economic assessment that found timber revenue has declined sharply since 1995, while agriculture, commercial real estate and communications resources have grown quickly. Timber, though, still makes up the vast majority of the funding generated on Washington’s trust lands.
Kenny Ocker, a spokesperson with the Washington Department of Natural Resources, said the agency sees growth potential in nontraditional uses, but that it also is committed to keeping forestry in its model.
Last month, a pair of former Washington public lands commissioners released a proposal urging the state to get out of the timber business, reclassifying state forests as Ecological Reserves. A sweeping Seattle Times report outlined their plan to use the protected forests for carbon sequestration, allowing the state to sell carbon credits.
While neither of the former officials could be reached for comment, Washington’s current public lands commissioner, Hilary Franz, is not on board with the plan.
In an email, Ocker noted that 40% of the state’s trust lands are already managed for habitat conservation, much of that to achieve compliance with federal Endangered Species Act protections. Eliminating forestry on state lands would force the state to import more timber, he said, which would carry a greater carbon footprint. He added that the plan would hinder much of the state’s wildfire prevention work, and it would come at a cost to rural economies that depend on logging.
Timber is currently worth about five times more per ton than carbon offsets on the voluntary market, according to Ocker, and forestry has additional economic benefits for local communities. However, “if someone pays DNR more for carbon than timber,” he said, “we would have to look at that and the implications for beneficiaries.”
But the agency has paused timber sales on some older patches of forest as it analyzes their contributions to habitat and watersheds, as the Seattle Times reported, which could lead to additional protections.
Matt Comisky, Washington manager with the American Forest Resource Council, a timber trade group, said transitioning forest lands to a carbon credit model—or even pushing for more real estate development—could hurt local industry.
“There's a lot of these communities where timber is a significant driver of the local economy in addition to the revenue that these local government entities receive from these lands,” he said. “We need to make sure in order to get one benefit of [additional school funding], we don't kill off an industry in a local community.”
Meanwhile, the agency is also facing a lawsuit from environmental groups that assert the state must manage its trust lands “for all the people,” not just maximum revenue for schools. Last month, the state Supreme Court agreed to hear the case.
Mitch Friedman, executive director of Conservation Northwest, which is among the groups challenging the state, said the goal is not to eliminate logging on state lands. He noted that many of the lands taken out of forestry operations for revenue reasons likely would be developed.
“We do need to consider the timber jobs, the timber economies, but those decisions need to be made without an undivided loyalty to the fiduciary trust frame,” he said. “If we do win flat-out, the state would have more discretion to balance those considerations. Revenue for schools is part of that, but so is public health, recreation and ecosystems.”
The state and timber industry say that legal precedent is on their side, and that Washington courts have ruled the lands must be managed in the best interests of the trustee beneficiaries, primarily schools.
“These are school lands, they're for the support of public schools in Washington,” said Lawson Fite, the forestry group’s general counsel. “How do they not think that helps all the people of Washington?”
Alex brown is a staff writer at Stateline.