Chairman Jim Lekas
Director David Ure
Board of Trustees
School & Institutional Trust Lands Administration
Holiday Inn 1808 S. Crosby Way; St. George, UT 84790
October 20, 2016
1:00 p.m.
Minutes
BoardStaff
Jim LekasDavid Ure
Tom BachtellKim Christy
Roger BarrusJohn Andrews
Don FootRodger Mitchell
Mike MowerLou Brown
Scott Ruppe (Attended by Phone)Kyle Pasley
Lonnie Bullard (Not Attending) Aaron Langston
Nannette Johnson
Karen Rupp, Utah State Office of Education
Natalie Gordon, Utah State Office of Education
Tim Donaldson, Utah State Office of Education
Boudicca Joseph, Big Water Community
Commissioner Dean Draper, Millard County
Commissioner Wade Bitner, Tooele County
Board of Trustees
School & Institutional Trust Lands Administration
Salt Lake City, Utah
September 22, 2016
9:00 a.m.
Agenda
1.Welcome3
2.Approval of Board Minutes for September 22, 20163
3.Confirmation of Upcoming Meeting Dates3
4.County Advisory Committee, Northern Ute Tribe, and Public Comment Period3
5.Consent Calendar
Notification
- Update-Minor Transaction & Notice of Land Sale, Midland Drive Industrial Parcel4
6.Chair’s Report
- Beneficiary Report: Amendment B 4
7.Director’s Report5
Director’s Update
- Director’s Update5
- Subcommittee Recommendations and Public Comment Opportunities6
- Gilsonite Lease Amendment: Lease #52139-OBA6
- OBA - Exploration Agreement with Option to Lease7
- OBA with Tera Renewable Resources, LLC7
- [Removed] Exchange No. 360 with the Utah Division of Wildlife Resources and Utah Department of Transportation
- Request to Spend $165,000 for Drainage at Ridge Road Ind. Park in Carbon Co. 8
- Discussion and Possible Approval of $200,000 Stewardship Expenditure for Sage Grouse Habitat 9
- Exchange and Litigation Update10
- Land Sale Strategies and Contract Negotiations 10
1.Welcome
Chairman Lekas welcomed those attending the meeting in St. George. Scott Ruppe joined the meeting by telephone. Lonnie Bullard was not able to attend. The Chairman recognized guests Boudicca Joseph of the Big Water Community, Commissioner Dean Draper of Millard County, and Commissioner Wade Bitner of Tooele County.
2.Approval of Minutes for September 22, 2016
The Board approved the meeting minutes of the meeting held September 22, 2016.
“I make the motion the Board approve minutes of the September Board meeting, as written.”
Motion:Bachtell/FootUnanimous
Roll Call:
Jim Lekas – yesTom Bachtell – yesScott Ruppe – yes
Roger Barrus – yesDon Foot – yesMike Mower – yes
3.Confirmation of Upcoming Meeting Dates
November17-18Meeting & Retreat, Salt Lake City
December15 Meeting as Needed
No changes to the meeting schedule. Mike Mower will not attend the meeting on November 17 but will join the Board Retreat on November 18.
4.County Advisory Committee, Northern Ute Tribe, and Public Comment Period
Boudicca Joseph provided an update on what is happening in the Big Water Community. She shared a general plan and ordinance changes for Big Water. Ms. Joseph then addressed a critical need for a sewer system. In a vote, five years ago, the Big Water’s town council rejected the free installation of the sewer system as it would require monthly service charges for all residents. Ms. Joseph encouraged the Board to consider development of land to assist in the generation of revenue for SITLA while also strengthening Big Water to justify the cost of a sewer system.
Commissioner Dean Draper of Millard County addressed the Board to discuss water rights on SITLA sales. The Commissioner was told the sales are taking the much needed water from the community. The Commissioner said he was told a sale sets aside 8,000 feet of water for future development. He said the reports say there is mining for water on a SITLA site for agriculture. The Commissioner said water rights are over-appropriated in the area and he is asking for the SITLA Board’s assistance to end water rights for SITLA sales.
Kim Christy and Lou Brown indicated there are no water rights associated with the sales in Millard County. The Commissioner agreed to sit with SITLA staff following the meeting to allow the agency to explain the leasing structure and the lack of risk to water rights in the community. Commissioner Draper was happy to receive clarification and agreed to a further discussion after the meeting.
Commissioner Bitner of Tooele County addressed the Board to ask for a progress report on the water rights issue in Rush Valley. Kim Christy said the decision is still with the State Water Engineer and no new information is available since the last inquiry at the September SITLA Board meeting. The Commissioner asked to be informed if there are changes in the status of the Engineer’s decision. Mr. Christy agreed to keep Commissioner Bitner informed as information becomes available to SITLA.
5.Consent Calendar
Consent
There were no consent items for this agenda.
Notification and Discussion Items
- Update - Minor Transaction and Notice of Land Sale – Midland Drive Industrial Parcel, Ogden
Rodger Mitchell provided an update on a transaction approved by the Board a year ago. The transaction took more time than anticipated but is now being completed. There was a challenge to the appraisal which was resolved. The transaction appears to be nearing completion.
6.Chair’s Report
Chairman Lekas reminded those present there was a reception planned for 6:30 p.m. at the St. George Holiday Inn where guests from the local community, industry, and education are invited to meet with Board members and staff in a casual setting to share ideas of mutual interest.
- Beneficiary Report: Update on “Friend of the Trust” Presentation
Tim Donaldson provided a report of the presentation to Representative Mike Noel at Kanab High School to award Representative Noel with the 2016 Friends of the Trust Award. The award comes with the honorary title of “Friend of the Trust.” Representative Noel joins a list of others who champion the Trust with support and active efforts to further the agency mission. Director Ure and Mr. Donaldson spoke of the significant contributions of the Representative and expressed appreciation for support in the past and as opportunities arise in the future.
Mr. Donaldson reviewed the progress of Amendment B noting positive press coverage received in the past several weeks. Senator Dayton initially spoke in opposition to the amendment.
Mr. Donaldson discussed the recent opportunity to meet with parents and teachers to discuss revenue production on school trust lands. The meeting outlined the role of the schools’ community councils where parents join with teachers to participate in the plans for how funds are used for academic opportunities in their schools. Parents and teachers were encouraged to take an interest in the development of funds distributed at their school.
Mr. Mike Mower thanked beneficiaries for stepping up to address tough political or legal issues around the state. In the case of the Highway Patrol, Honorary Colonels are recognized similarly to the Friend of the Trust. The Honorary Colonels then come together in support of issues relative to the Highway Patrol. Mr. Mower suggested the Friends of the Trust rally as needed for support of school trust land issues.
Chairman Lekas expressed congratulations to Representative Noel on behalf of the Board members on the well-deserved recognition.
Director Ure shared comments from the high school principal in Kanab, who remarked on the increase in the graduation rate. The principal said he believes the funds provided by the Trust are directly related to the increase in successful graduations.
The Chairman modified the agenda to accommodate travel schedules of presenters by moving two topics qualifying for closed session to this point in the agenda.
“I make the motion for the Board go into closed session for strategy session discussions for pending or reasonably imminent litigation and discussions for the purchase, exchange, or lease of real property.”
Motion:Mower/FootUnanimous
Roll Call:
Jim Lekas – yesTom Bachtell – yesScott Ruppe – yes
Roger Barrus – yesDon Foot – yesMike Mower – yes
The Board went into closed session at 1:25 p.m. and discussed the Exchange and Litigation Update and Land Sale Strategies and Contract Negotiations.
Those present for closed session were Board members Jim Lekas, Tom Bachtell, Roger Barrus, Don Foot, Mike Mower, and Scott Ruppe (by phone). Beneficiaries present were Tim Donaldson, Natalie Gordon, and Karen Rupp. Also present were Director Dave Ure and agency staff members John Andrews, Lou Brown, Kim Christy, Rodger Mitchell, Kyle Pasley, Aaron Langston, and Nannette Johnson.
The Board returned to open session at 2:10 p.m.
“I move to return to open session to continue with the meeting agenda and invite visitors to return to the meeting.”
Motion:Mower/BachtellUnanimous
Roll Call:
Jim Lekas – yesTom Bachtell – yesScott Ruppe – yes
Roger Barrus – yesDon Foot – yesMike Mower – yes
7.Director’s Report
- Director’s Update
Director Ure shared the suggestion from Board member Tom Bachtell to post the agency purpose statement in a prominent place for the public to see when visiting SITLA. The suggestion also asked for the purpose statement to be viewable when the agency participates in public appearances.
Chairman Lekas asked the Administrative Assistant to send Board members a copy of the purpose statement. Mr. Bachtell provided history of getting the statement wording just right and the value of using the statement to educate others on the purpose of the organization.
Director Ure acknowledged the comments provided earlier by Ms. Joseph on behalf of Big Water. The Director suggested the Board to consider if there is value in a future visit to Big Water on a Board tour to look at potential for investing in development in the Big Water area.
Mike Mower expressed support for Board members’ time to visit the area and consider the potential for future investment.
Director Ure asked Kim Christy to provide a short update on the Land Auction at Little America on October 19. Mr. Christy shared the success of $5.5 million in land sales. Eleven of twelve parcels were sold. The bidding was active and competitive on several parcels.
Chairman Lekas asked Kim Christy to provide a cost report related to the auction at the November Board meeting. Mr. Christy noted the closing costs largely cover expenses of the auction. Mr. Christy will compile the auction expenses and closing costs in a report.
- Subcommittee Recommendations and Public Comment Opportunities
Director Ure said the subcommittee meetings are not subject to the open public meetings act. He noted the discussions in subcommittee lead to effective reporting in Board meetings. Each subcommittee has at least one beneficiary appointed to the committee as a representative of beneficiary interests. Then committee recommendations are presented for approval in open public meetings.
Board member Scott Ruppe left the meeting at 3:00 p.m.
- Gilsonite Lease Amendment: Lease No. 52139-OBA
Before presentation of the discussion for the Gilsonite Lease, Chairman Lekas recused himself from the discussions and voting, due to a minor interest in the project. The Chairman also said he did not participate in the subcommittee discussions on this topic.
Chairman Lekas passed the gavel to Vice Chairman Bachtell.
Vice Chairman Bachtell indicated the amendment is for a Non-Competitive minerals lease to expand mining to Section 29 by Table Rock Minerals. The amendment includes a bonus payment of $125 per acre for the first year’s rental for a total of $25,000. The ten-year term could extend an additional ten years. The rent is $25 per acre for the ten-year term after the first year with royalty payments being the greater of 10% or $16 per ton.
Mr. Bachtell added the subcommittee’s recommendation for Board approval of the amendment to the Gilsonite lease with Table Rock Minerals.
Don Foot provided the motion for Board approval as a member of the subcommittee.
“I move the Board approve the Gilsonite lease amendment as presented.”
Motion:Foot/MowerUnanimous
Roll Call:
Tom Bachtell – yesRoger Barrus – yes
Don Foot – yesMike Mower – yes
Vice Chairman Bachtell returned the gavel to Chairman Lekas for the remainder of the meeting.
- OBA - Exploration Agreement with Option to Lease
Don Foot reported on the proposal to lease land, as defined in the memorandum to the Board, for an OBA exploration agreement. The lease extension request is for a site leased continuously since 1973, until the lease’s expiration in 2014. Lisbon Valley Mining is interested in securing the previously leased lands. Terms were outlined in the memorandum to the Board. Donald Foot said the subcommittee recommends the OBA for Board approval. “I make the motion the Board approve the Exploration Agreement with an option to lease.”
Motion:Bachtell/FootUnanimous
Roll Call:
Jim Lekas – yesTom Bachtell – yesRoger Barrus – yes
Don Foot – yesMike Mower – yes
- OBA with Tera Renewable Resources, LLC
Kim Christy reviewed the OBA currently being explored. The work has been expensive and delayed for more studies. Tera Renewable Resources would like to continue to invest in the project studies and permitting requirements with the intent to continue a lease at the conclusion of the studies and investments.
Mr. Christy outlined the lease option with the first year, two-year, and three-year options. The studies, evaluations, reports, and surveys completed on the property are available to the agency for future use at no cost to the agency.
The subcommittee discussed the proposal and recommends the OBA be considered for approval by the Board.
“I make the motion the Board approve the OBA with Tera Renewable Resources to secure valuable data and information on this property for producing future revenue from the parcel.”
Motion:Bachtell/LekasUnanimous
Roll Call:
Jim Lekas – yesTom Bachtell – yesRoger Barrus – yes
Don Foot – yesMike Mower – yes
- Exchange No. 360 - Utah Division of Wildlife Resources and Department of Transportation
This item was withdrawn from the agenda prior to the meeting.
Chairman Lekas discussed the subcommittee’s review of Phase III for the 5600 West land exchange with DWR. The subcommittee came up with a proposal considered favorable to the Division of Wildlife Resources (DWR). When DWR requested a modification, the subcommittee decided not to accept the modification for a recommendation to the Board to consider. Therefore, the item was removed from the agenda.
Tom Bachtell thanked Kim Christy’s group and the subcommittee for their hard work. He said information was obtained in the course of seeking an agreement. The information will help the agency seek ways to obtain appraisals considering things like scenic value in the assessment of the property. Mr. Bachtell also noted the hours spent trying to find a mutual agreement. He expressed appreciation for the energy invested.
- Request to Spend $165,000 for Drainage at Ridge Road Industrial Park
Rodger Mitchell presented the project to spend $165,000 to create drainage to make land usable for development. Mr. Mitchell described the problems occurring with the water drainage in seasons of high rain and runoff. The project’s estimated cost increased since being placed on the agenda for the October meeting. The new cost derived from the low bid, is $233,000.
Mike Mower asked for the value of the land around the drainage area. Mr. Mitchell outlined the future development opportunities immediately adjacent to the site. The cost of the drainage will result in only a small profit for the trust when the area is developed. However, the water running through the area goes on to other trust land. The drainage will prevent damage to other trust lands as well.
Roger Barrus asked if the drainage will go under the road. Rodger Mitchell pointed out two places where the established construction allows water to run under the road.
Chairman Lekas reviewed expenditures along with the new request for additional spending. He again noted the project profit margin is small.
Mike Mower referred to the picture in the meeting materials showing the flooded parking lot. Mr. Mower noted the rain and run off come in significant amounts leading to the flooding shown in the picture. He then asked if there were complaints. Mr. Mitchell confirmed there are complaints. The grievances stated that, at the time of purchase, the curb and gutters were in place leading residents to believe the drainage was also established when the project was completed in the late 1990’s.
Chairman Lekas asked for the subcommittee’s input based on the higher amount of $233,000. Roger Barrus discussed putting money into a project to make it salvageable while also acknowledging profitability was limited through future development. Mr. Mitchell noted the liability exists with the selling of these lots. However, there will be a time when the liability is met and the decision to make further investment will be weighted by the completed drainage.