Oregon Department

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Oregon Department
of State Lands
Draft Asset Management Plan
June, 2006
A plan to guide the care and management of land,
waterways and mineral and energy resources to
benefit the Common School Fund
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Presentation to
Asset Management Plan Steering Committee June 1,
2006
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Prepared By
Oregon Department of State Lands775 Summer
Street NE, Suite 100Salem, OR 97301-1279503-378-
3805www.oregon.gov/dsl andCogan Owens Cogan,
LLC813 SW Alder, Suite 320Portland, Oregon
97205503-225-0192www.coganowens.com
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A. Goals for the Planning Period (10 Years)

• Retain core real estate assets
• Increase cash flow to CSF
• Rebalance the real estate portion of the CSF
  portfolio by disposing of underperforming assets
  and reinvesting in assets with greater return
  potential
• Establish priorities for management actions
• Balance revenue enhancement and resource
  stewardship

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B. Differences From 1995 Plan

• More specific management direction
• Short-term implementation priorities
• Reclassifications to better reflect
  current/potential uses
• Energy resources identified as asset
• Performance measures and targets
• Land acquisition and disposal criteria
• Specific parcels identified for evaluation for
  disposal
• Outcomes of Plan implementation

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C. Land Classification System Changes

• Add energy resources

• In recognition of revenue generation potential of
  geothermal energy, hydropower energy, ocean
  energy and wind energy

• Classify unclassified lands (5,400 acres)

• Reclassify over 33,000 acres to better reflect
  current and/or potential uses and to guide land
  investments

• ICR lands increase from 695 to almost 3,000 acres
• Special Interest lands increase from 4,800 to
  over 28,000 acres, primarily due to
  reclassification of ODOF Special Stewardship lands

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Current Land Portfolio
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Land Portfolio with Reclassifications
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C. Land Classification System Changes, cont.

• Establish categories of management practices

• Active management to achieve Plan strategies
• Minimal management
• Evaluate for disposal
• Evaluate for investment
• Evaluate for management by other entities

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D. Performance Measures and Targets

• Current Performance, 2004/2005

• Based upon limited financial information value
  and performance would be expected to be higher
• Forest lands provide majority of revenues
• Rangelands have lowest ROAV
• ROAV for ICR lands reflects holding of
  undeveloped properties for investment/future
  development

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D. Performance Measures and Targets, cont.

• Proposed Performance Measures and Targets

• Mix of measures and targets to be utilized

• Return on Asset Value (ROAV)
• Net Operating Income (NOI)
• Change in Total Annual Revenue (AR)
• Change in Land Value Appreciation (LVA)

• Targets of 3-5 annual increase
• Used to guide decisions on investment, retention
  and disposal to evaluate management actions
• Tracking over 10-year period, with annual
  reporting to Land Board and re-evaluation every
  3-5 years

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E. Management Direction
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E. Management Direction, cont.

• Key Strategies

• Retain core base of lands for long-term revenue
  generation

• Elliott State Forest majority of NW and SW
  Forest lands
• Agricultural lands
• Blocked Rangelands
• DSL office building
• Most ICR lands in urban areas or in
  path of progress
• Waterways
• Mineral interest ownerships
• Known energy resources

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E. Management Direction, cont.

• Key Strategies, cont.

• Acquire High Value Lands

• ICR lands in urban areas or in path of progress
• Forest and Agricultural lands throughout Oregon,
  with preference to lands west of Cascades
• Exchanges with BLM/others for Central Oregon
  properties
• Surplus lands from other state agencies

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E. Management Direction, cont.

• Key Strategies, cont.

• Evaluate unproductive lands for disposal

• Pursuant to Legislative Direction
• Unleased, isolated Rangelands (12,000 acres)
• Scattered Forest lands (12,000 acres)
• Exchange Special Interest lands to other entities
  as appropriate
• On case-by-case basis, other lands not meeting
  performance targets

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E. Management Direction, cont.

• Key Strategies, cont.

• Invest in lands with appreciation potential

• ICR lands in urban areas or in path of
  progress, with focus on Central Oregon
• Alternative energy (geothermal, solar, wind,
  wave)

• Manage to meet/exceed performance targets
• Reinvest sale proceeds into new lands or
  improvements
• Ensure leases and other authorizations reflect
  market values

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E. Management Direction, cont.

• Short-Term Priorities

• Complete in-lieu selections
• Complete Stevens Road master plan/UGB amendment
• Develop Central Oregon specific area management
  plan
• Pursuant to ORS 273.245, evaluate for disposal
  unleased, isolated Rangelands (12,000 acres
  10.2 million)
• Evaluate for disposal scattered Forest lands
  (12,016 acres 30-39 million)
• Validate/renew authorizations and fees
• Establish policy for of revenues from land
  sales to be dedicated to land development and
  acquisition

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E. Management Direction, cont.

• In-Lieu Lands

• Selections not being accomplished
  through Plan
• Selections likely not completed for two to three
  years
• Plan includes Departments proposed selections
  within Central Oregon Strategy
• Final land classifications and management
  strategies to be developed as part of master
  planning, following completion of selections

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E. Management Direction, cont.

• Land Acquisition and Disposal Criteria

• Both general and land class-specific criteria
• Follow admin rule process
• Land Board approval required

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F. Key Outcomes

• A balanced approach to revenue enhancement and
  resource stewardship
• A consistent and sustained stream of revenue to
  schools
• A rebalanced portfolio
• Market level rates for leases and other
  authorizations
• Realistic performance targets

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Potential Rebalanced Land Portfolio (1)
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G. What We Heard

• PUBLIC MEETINGS
• Retaining ICR lands, e.g., Stevens Road, keeps
  them off the tax roles gives the state an unfair
  advantage in the marketplace.
• CSF should be reimbursed for designating/managing
  lands for resource protection versus revenue
  generation.
• Alternatives should be evaluated to ODOF
  management of CSF Forest lands.
• SI lands will continue to drive down performance
  of the portfolio and should be disposed of.
• Be more aggressive with disposal of
  underperforming lands.
• In setting lease rates, need to consider
  environmental constraints, market condition,
  other variables.
• Clarify whether mineral/energy values are sold
  with the land.
• Indicate that performance targets dont apply to
  specific parcels or land classes, but to overall
  portfolio. State that not expecting Rangelands
  to be able to meet the target over the 10-year
  planning period, but that other classes are
  expected to exceed it.
• For Rangelands, look at ways to increase revenues
  without jeopardizing leases. Example wind
  power generation.
• Exchange isolated Rangeland parcels with BLM
  rather than sell them.

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G. What We Heard, cont.

• LETTERS, E-MAIL, AND QUESTIONNAIRES
• Concerns regarding in-lieu land selections.
• Being overly aggressive in Central Oregon
  promoting urbanization and sprawl.
• Need to better balance revenue generation and
  resource protection.
• Comments on specific Forest land parcels to
  retain or dispose of.
• Opposition to the sale of any public lands.
• Plan is overly passive sell or exchange all but
  Forest lands and mineral/energy rights.
• Real estate assets should be managed by the CSF
  Trust, not DSL.
• Opposition to any fees for public use of state
  lands or to exclusive commercial recreation uses.
• Development of a plan to resolve conflicts
  between sand and gravel leases and salmon
  recovery plans should be a
  Plan priority.

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G. What We Heard, cont.

• Retaining core assets is unlikely to increase CSF
  revenues. Sell underperforming assets and invest
  in CSF, rather than reinvesting in new lands or
  improvements. Consider various scenarios for
  disposing as assets.
• Prior to disposal, consider alternative revenue
  generation strategies carbon sequestration,
  wetland mitigation banking. Assess contributions
  to regional natural resource strategies.
• Develop framework to determine how actively to
  pursue development of ICR lands.
• Be a leader in developing clean and green energy.
• In identifying/disposing of underperforming
  assets, consider public and wildlife values.
• Classify Winchester Bay tract as SI vs. ICR and
  make part of Umpqua Lighthouse State Park.
• Review policies/fees for undersea cables.

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H. Next Steps

• Steering Committee review of issues/needed
  revisions
• Land Board briefing in June
• Land Board adoption in late summer or early fall
• Upon adoption, this Plan will replace the AMP
  adopted in 1995

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