Wednesday, July 6, 2005

State land parcel in county offered for development

Land Board seeks proposals for 106 acres north of Hailey


By MATT FURBER
Express Staff Writer

The Idaho Department of Lands is turning to real estate development as a new vehicle for building the state's university endowment fund, and it's not overlooking Blaine County's prime real estate market.

For the past month, the department has been publishing notices that it will accept requests for proposal (RFP) for development of a 106-acre parcel on Buttercup Road north of Hailey and south of the Valley Club.

"That property is ripe for development," said Mike Journee, press secretary for Gov. Dirk Kempthorne.

Journee said the department is eyeing development of state endowment lands as a vehicle for maximizing the state's financial return from state lands. The department is directed by the State Board of Land Commissioners, comprised of the Governor, Secretary of State, Attorney General, State Controller, and Superintendent of Public Instruction

"It's been a tract of land the board has been keeping an eye on," Journee said. "In fact, last year there was another RFP for development of the property, but it was withdrawn for technical reasons."

A similar proposal was used to generate revenue in Valley County, south of McCall, another resort community. Tamarack Resort, the newest ski area in the country, is paying the state some $250,000 per year in revenue for use of 2,100 acres of endowment land. The current lease is for 49 years. Previously, the state earned between $30,000 and $40,000 per year from timber and grazing leases associated with the land.

The Buttercup property in Blaine County also has been deemed to be a similar opportunity for departure from the traditional agricultural and forestry uses of state lands. The difference is that at Tamarack the developer came forward with the proposal. For the Buttercup property, distributing an RFP compares to the state's auction process when it sells endowment land.

In 2003, the state terminated a crop and grazing lease with James Mizer, who paid the state some $2,300 per year for the privilege of growing crops and raising livestock on the Buttercup parcel. The land was subsequently reclassified as commercial property. The hope is that a creative development proposal in the form of a lease agreement or a long-term purchase agreement with a percentage of the proceeds going to the state will bring a larger return than any extraction lease.

The state is taking the new approach to land management where state endowment lands are "in the path of development," said Denise Mills, assistant director of the department, who oversees the real estate bureau. "We are looking at a number of state parcels to develop (where) agriculture is not the highest and best use."

As the department awaits RFP applications for the Buttercup parcel in the county between Hailey and Ketchum, it is having the land appraised for its current real estate potential, said Mike Murphy, the department project manger. "I believe this is the first (RFP) of this nature. This was clearly one to move ahead with first. We're taking a very simple, straightforward approach."

The successful applicant will be selected through an evaluation process, which includes a 90-day negotiation phase. Applications are due by the end of July and must conform to department specifications for appropriate use, which will be different depending on whether proposals involve a lease or a sale, which would require compliance with county zoning laws.

"We completely put the onus on the proposer," Murphy said. "We assume that (applicants) will go through the appropriate due diligence process."

Real estate interest in the Buttercup parcel began in 2001 as a swap proposal by Golden Eagle and Peregrine Ranch developer Harry Rinker, who offered to trade commercial property elsewhere in the state for the Buttercup parcel, appraised at the time at $4.7 million. The board of land commissioners rejected Rinker's offer and directed the department to look into alternative means for capitalizing on the state land.

"The Idaho Constitution requires the state to manage endowment lands in such a way to maximize long term financial returns," Mills said. "The state land board is exempt from county planning and zoning. The county certainly can weigh in. Ultimately, it comes down to the fact that it is state endowment land. We're leaving it up to the creativity of the applicant."

Mills said the department is trying to manage the lands more as an investment firm, looking for the best possible returns. She said the 2005 Buttercup RFP replaced the initial 2004 RFP because there were questions about fair review, where some applicants may have gotten more information than others.

"We've developed a process where everybody gets the same information," Mills said. "We want a fair and open competition."

Mills declined to identify the seven applicants who filed applications in 2004, but she did say they included both local and out of state applicants, some of whom may apply again. The deadline for proposals is July 31.

"We are certainly expecting last day submittals," Murphy said.




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