A proposed swap between the U.S. Forest Service and the Utah Division of Lands and Forest could put more money into the trust fund that helps finance public education.
The trade would give the Forest Service the surface ownership of approximately 80,000 acres of school trust land that is now located in seven national forests. In return, the state would receive coal royalties from a mine situated on forest land, said Kevin Carter, division assistant director.How much money the trust fund would realize can't be estimated until appraisers for both entities complete a survey of the land and determine its value, Carter said. The survey should be completed by the end of this summer. The division will retain mineral rights on any of the lands that have potential mineral value, he said.
If the deal is consummated, the division will receive royalties from designated sections of the Quitchupah Mine, which is operated by Southern Utah Fuels. The company is now paying royalties to the federal government on its coal properties located on forest lands. A portion of those royalties would go to the trust fund, up to the value set on the trust lands within forests.
"It's an old, established company. I feel really good about the prospects," Carter said.
The forest trust lands are part of the state's inventory of lands set aside at statehood to generate money for education. Four sections in each 36-square-mile township were designated for this purpose.
When large national forests were created in Utah, most of the trust sections within their boundaries were traded out, Carter said. The remaining 18,000 acres have been difficult to manage because of their location.
"We haven't been able to use what's left in the forests," Carter said.
The trade-out was prompted in part by the division's determination to try to make the lands productive for the trust, he said. Several years ago the division received an offer for purchase of a 640-acre section in the Big Rock Candy Mountain area near Panguitch. The Forest Service did not want the sale to occur.
The division, however, went ahead with the sale, and in fact received more than the appraised price for the land, Carter said. It was one of the first sales conducted under new rules that do not disclose the appraised price on trust tracts. Earlier, a minimal price was announced, based on appraisal, and buyers had little incentive to exceed that price. Since the rules changed in 1988, the return on 23 of 27 parcels of trust land has exceeded the appraised value, Carter said.
The division's determination to sell trust lands when possible, even if they were within forest boundaries, caught the attention of Forest Service officials, he said. "They came to us. They realized they needed to get us out of the forests."
The proposal to swap the trust lands inside the forest for coal income was the result, Carter said. Other options discussed and rejected by the division included land in ski resort areas or at Dutch John near Lake Powell. Those options were seen as less feasible for the division to operate, he said.
The coal royalties could produce more income for the schools if coal prices went up, or the could decline with as drop in coal prices. Money from the deal will go into the permanent trust account. Interest from the account goes to the schools each year.
There are some down-sides to the pending deal, Carter said. Some other state entities are now receiving part of the royalty income from the federal leases at Quitchupah and they would lose that income when it was dedicated to the public schools.
"The amount may be insignificant, however," he said.
In addition, the state now pays counties an in-lieu fee because of the lands tied up in the forests cannot be taxed. The counties would lose an estimated $40,000 on the 18,000 acres being traded, Carter said, unless the federal government could be convinced to pick up the in-lieu payments.
Let's make a deal
A proposed trade of school trust lands now located within national forests would affect these forest areas: