Fate of state trust lands in Bears Ears NM unresolved
Jan 31, 2017 | 6461 views | 1 1 comments | 294 294 recommendations | email to a friend | print
A map of San Juan County shows scores of 640-acre sections of state trust land, shown in blue.  The new Bears Ears National Monument includes approximately 109,000 acres of the state trust lands.  		Map courtesy SITLA
A map of San Juan County shows scores of 640-acre sections of state trust land, shown in blue. The new Bears Ears National Monument includes approximately 109,000 acres of the state trust lands. Map courtesy SITLA
by Bill Boyle

One of the many unfinished pieces of business surrounding the December 28, 2016 designation of the Bears Ears National Monument is the fate of nearly 110,000 acres of state trust land located within the boundaries of the monument.

In his declaration creating the monument, President Barack Obama directed the Secretary of the Interior to explore a trade of trust lands “within the boundary of the monument for land of approximately equal value managed by the BLM outside the boundary of the monument.”

The designation asked for a report to the president by January 19, the day before Obama left office. However, the board running the School and Institutional Trust Lands Administration (SITLA),

which manages the state trust lands, decided to avoid a rush to make a quick decision and to wait for the new administration.

As a result, no progress has been made of the issue entering the second week of the Trump Administration. At this point, not only is the fate of the trust lands unknown, but the fate of the entire monument.

The first days of the Trump Administration have been marked by a number of actions to overturn several key Executive Orders made by Obama.

The fate of public lands may need to wait until key positions are filled in the new administration, including the Secretary of the Interior and Secretary of Agriculture. At that time, other positions can be considered, including directors of the Bureau of Land Management (BLM) and Forest Service.

In total, there are 1,100 executive branch positions that must be approved by the US Senate. As of the press deadline, there have been nominations for just 34 of the positions, and only four appointees had been approved.

It is common, when looking at a map of San Juan County, to wonder about all the blue dots scattered across the county. They are state and institutional trust lands, set aside at statehood in 1896 to provide funding for state institutions, such as education.

The trust lands can benefit San Juan County in two separate ways: indirectly through proceeds from the sale or lease of the land, and directly through property taxes if the land is productive.

The proceeds from the sale or lease of trust lands are placed in a fund that is managed by SITLA. The trust fund now totals more than $2 billion. Interest revenue from the trust fund is distributed to schools across the state.

For instance, the interest revenue from the trust fund that was sent to the San Juan School District last year totaled $315,655.

These funds are allocated through the local School Community Councils and provide a growing funding source for local efforts to educate children.

If interest rates increase, the amount of funding through the trust fund could increase dramatically. The trust fund generated just 2.4 percent interest in the past year.

While these funds to local schools are growing, they still account for less than one percent of the total education budget for the school district.

In the case of the recent Lyman Family Farm purchase of the Comb Ridge SITLA property, the $500,000 purchase price goes into the $2 billion trust fund and generates interest revenue.

With a three percent interest rate, that $500,000 would generate an estimated $15,000 per year.

The challenge is that this $15,000 is split up into a small piece for every school child in Utah. And we all know that there are many school children in Utah.

The proceeds are spread across the state and are not focused on the community where the funds originate.

As a result, the San Juan School District piece of that $15,000 is just $95. Bluff Elementary School’s piece of the pie would be about $2.25.

The much larger local benefit from the sale or lease of SITLA land is in the property tax those lands can generate, if the land is productive.

An example is the new wind farm near Monticello. Last year, the Latigo Wind Farm paid $1.2 million in property taxes directly to San Juan County. This property tax is used by the county, by the libraries, and the school, health care, water conservancy and special service districts.

What if the Latigo Wind Farm had been built on a SITLA section? The benefit would be to the trust fund and, much more significantly, to local governments.

For this reason, if any SITLA lands in Bears Ears National Monument are traded for federal lands elsewhere, it is imperative to trade as much of the land as possible for other federal property located in San Juan County.

One challenge with trust lands is that they were randomly created at statehood, with no accommodation for on-the-ground realities. As a result, some of the trust land sections are in very valuable areas, while other sections may be located in an area with valuable resources, but they are in inaccessible areas.

There are trust land sections in San Juan County that have been productive or have great potential. Many have already been leased or sold, and they include the Comb Ridge property recently purchased by Lyman Family Farms, a section near the Cave Springs Ruins at Mule Canyon, and at the entrance to Natural Bridges National Monument and the Needles District of Canyonlands National Park.

However, given the rugged and broken up nature of the county, many more of the sections are difficult to access or use.

As a result, trading out sections of trust land in isolated areas for federal lands in more accessible areas promises to be of tremendous benefit to the trust fund and to the local economy.

If you look at a map of Utah, you can see that many of the trust land areas are bunched together. These can be part of the accommodation created after previous federal land actions, such as the creation of national parks, monuments, and recreation areas.

There are clusters of state trust lands in San Juan County in Spanish Valley, in Dry Valley, on the Bluff bench, the potash plant and east of the La Sal Mountains.

The Potash, Dry Valley and Spanish Valley blocks were created in 1963 and 1964, while the blocks east of the La Sal Mountains were set aside at statehood to specifically benefit higher education.

The potential of significant revenue from the trust lands increases if they are traded for other federal property elsewhere. Rather than a completely random scattering of state trust lands, they can be consolidated into sections of public federal land that have known value.

A case in point are the SITLA properties at the Intrepid potash plant, which straddles the San Juan and Grand county lines west of Moab. The Intrepid operation, which includes evaporation ponds used to crystallize the potash, is responsible for about 60 percent of the potash production in the United States each year.

The Intrepid operation would not be possible without the SITLA lands that surround the original potash mine. The sections were designated as trust lands in 1963.

Revenue from the sale and lease of the SITLA properties at the potash operation contributes to the SITLA trust fund. Some of the interest revenue from the trust fund eventually trickles down to San Juan County.

However, in addition to generating revenue for the trust fund, the potash plant also creates property tax revenue for San Juan County. The operation is valued at $29.4 million. Last year, it contributed nearly $50,000 in property taxes for San Juan County taxing entities.

In Grand County, the value of the Intrepid properties totals $1.34 billion and the operation contributed $1,341,877 in property tax to Grand County in 2015.

SITLA’s mandate is to maximize the revenue for the schoolchildren of Utah, not necessarily revenues for an individual school district. As a result, SITLA may be more interested in trading trust lands in Bears Ears National Monument for more valuable properties in other areas of the state, such as federal property adjacent to growing areas in Washington, Salt Lake, Utah, Tooele, or Uintah counties.

If the lands are traded for federal land out of San Juan County, the major benefit of the opportunity may be lost forever. If trust lands are traded out for federal land in another county, any proceeds from the sale or lease of that land is shared between the trust fund (50 percent) and the counties (50 percent). However, the 50 percent county portion is split between the original county of origin and the county of the trade.

For instance, suppose trust lands from San Juan County were traded for federal property in Uintah County and they generated $100,000 a year in royalty, lease or other income. In that case, the trust fund would receive $50,000, Uintah County would receive $25,000, and San Juan County would receive $25,000.

In the two cases in San Juan County (Comb Ridge property vs. Potash plant), the potential difference is astronomical between the impact of the trust fund interest revenue and the property tax.

Compare the $315,000 that comes to the San Juan School from the trust fund to the $1.74 million in property tax that comes to local taxing entities from the potash plant. The SITLA lands create wealth in both cases, but the difference in funding to local sources is dramatic.

Of course, the impact to the local economy, in the form of jobs, wages, wealth creation, and more, can dwarf the impact on local government entities.

While the state trust lands have generated revenue for many years, it is fair to say that this tremendous resource was haphazardly managed by the State of Utah in the past.

It was San Juan County Commissioner Calvin Black who helped drive the creation of the trust lands trust fund more than 30 years ago.

Black pushed the development of the trust fund so effectively that the bill was referred to as the Calvin Black bill while it was being developed. Since the trust fund was created, the insightful work by Calvin Black has benefited schoolchildren throughout the state.

In the past year, the trust fund generated nearly $50 million in interest revenue for the schools and schoolchildren of Utah.
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February 01, 2017
SITLA stands for the School and Institutional Trust Land Administration.
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