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Idaho officials retain plan to buy timberland and farmland

July 17, 2018 GMT

BOISE, Idaho (AP) — Idaho officials on Tuesday opted to continue a strategy of using millions of dollars from the sale of commercial and residential properties to buy timberland and farmland.

The Idaho Land Board voted to approve the plan that financial experts say offers good returns while also reducing market volatility.

“It provides a very stable revenue stream that meets or exceeds what we were generating,” David Groeschl, acting director of the Idaho Department of Lands, told the five-member Land Board made up of Idaho Gov. C.L. “Butch” Otter and four other statewide elected officials.

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Idaho has been selling hundreds of residential home sites as it gets out of the business of leasing that land. The Land Board has also sold commercial real estate it managed after complaints that state-owned businesses unfairly compete with private businesses.

The state has so far banked about $122 million from the sale of those residential and commercial properties and is expected to eventually have $180 million. That money is generally considered a rare windfall that Land Board members are trying to reinvest wisely to replace the money lost from residential and commercial real estate leases.

The Land Board manages 2.44 million acres (987,000 hectares) of state endowment land, benefiting mainly public schools but also smaller entities, and is constitutionally mandated to get the greatest return on that land and other investments over the long run.

Besides spending the $180 million on timberland and farmland, other options included moving the money into financial assets or doing some combination of financial assets and buying land.

In the end, the Land Board opted to take the advice of financial experts who suggested using all the money to buy more timberland and farmland.

Attorney General Lawrence Wasden questioned financial experts about the amount of timberland in the Land Board’s portfolio. Currently, timberland is about 81 percent of the value of Idaho endowment land, and about 30 percent of overall assets managed by the Land Board, which also has financial investments.

Land Board financial adviser Callan LLC said the timberland range could be from 30 percent to 50 percent of overall asset value, meaning the Land Board has plenty of room to buy more timberland.

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Callan also did an analysis looking at whether buying timberland and farmland was a good investment for smaller beneficiaries that get money from endowment land but that might be better off with more liquid assets such as stocks and bonds. But Callan said buying timberland appeared to be the best strategy regardless of the particular beneficiary.

“What’s good for one is good for all,” Sally Haskins of Callan told the Land Board.

Idaho received 3.6 million acres (1.5 million hectares) of endowment land at statehood in 1890. Over the years, it has sold about 33 percent and now has about 2.4 million acres (987,000 hectares) remaining.