State Lands Office Recommends Auctioning Kelly Parcel, Starting At $80 Million

The Office of State Lands and Investments announced its recommendation Friday to auction off a pristine 640 acres next to Grand Teton National Park with bids starting at $80 million.

AR
LW
Andrew Rossi & Leo Wolfson

December 01, 202310 min read

The Kelly Parcel is 640 acres of pristine land that borders Grand Teton National Park.
The Kelly Parcel is 640 acres of pristine land that borders Grand Teton National Park. (Cowboy State Daily Staff)

After hosting four public hearings and receiving a huge public response of more than 8,000 comments, the Office of State Lands and Investments (OSLI) announced Friday it’s recommending a public auction of the Kelly Parcel in Teton County with a starting bid of $80 million.

Despite a vocal public outcry and concern over a public auction for a pristine 640 acres of land that borders Grand Teton National Park, OSLI still recommends the Wyoming Board of Land Commissioners to put the parcel up for bid — and with a starting bid nearly 30% higher than the property’s $62 million valuation.

This board is made up by Wyoming’s top elected officials: Gov. Mark Gordon, Secretary of State Chuck Gray, Treasurer Curt Meier, State Auditor Kristi Racines and Superintendent of Public Instruction Megan Degenfelder.

A letter released by OSLI, along with other information related to the board’s upcoming meeting on the parcel, concludes that “disposal of the State Parcel appears to reasonably meet the beneficiaries’ short and long-term needs.”

Those beneficiaries would be Wyoming’s public schools, as revenues from the Kelly Parcel are added to the state’s Common School Permanent Land Fund.

“Pursuant to the Board’s Trust Land Management Objectives,” the letter reads, “and OSLI’s statutory fiduciary duty, the director recommends the board authorize the sale of six hundred forty acres (640) acres in Teton County, Wyoming.”

OSLI is charged with raising revenues for the state and is required by the Wyoming Constitution to manage state trust lands to produce income to support public schools and other institutions. Although this may be the case, it is recommending a higher auction price than the land was previously assessed based on public feedback.

“We have a very narrow focus when doing work for the board,” said Jason Crowder, deputy director for OSLI. “It’s our job to provide the best fiduciary responsibility for the state.”

The recommendation is submitted to the Wyoming Board of Land Commissioners, which is discussing the Kelly Parcel during its meeting next Thursday. If the board agrees and votes to approve a public auction, it could be held before the end of January.

Public Outcry

All four of the public meetings were well attended by people who have expressed vocal concerns about the potential of the Kelly Parcel being sold, particularly to a private buyer who could use the land for luxury home development.

A total of 8,232 comments were submitted on the parcel during the 60-day comment period. Crowder said most of the comments oppose the land being sold publicly and instead selling it directly to Grand Teton National Park. The National Park Service has expressed interest in buying the land, but it’s bound by regulations about how much it can spend.

Some of the concerns and requests include:

  • Opposed to auction of the parcel.

  • Opposed to sale to a private entity.

  • Highest and best use of the parcel is long-term protection and conservation.

  • Concern about impacts of commercial development.

  • Concern about negative impacts to wildlife habitat and migration routes.

  • Concern about negative impacts development may have to wildlife habitat and scenic values.

  • Concern about continued public and recreational access.

  • There should be a direct sale to Grand Teton National Park.

  • Postpone auction for further analysis.

  • Provide conservation groups more time to develop a plan.

  • Analyze broad economic and tourism impacts.

  • Seek a legislative solution to the proposed disposal.

  • Appraisal doesn’t reflect the true value of the parcel.

  • Place stipulations on the sale to protect hunting, grazing and public access.

  • Only sell the parcel to a conservation buyer.

  • There is not a current need for the proceeds from sale.

  • Auction is too risky.

  • Seek other alternatives that would provide a fair return to the State’s trust beneficiaries while conserving the parcel.

  • Pursue an exchange of federal land elsewhere in the state.

  • Hold an unrestricted auction.

  • While conservation of the parcel is worthwhile, it would be a breach of fiduciary duty for the trustees to fail to maximize the revenue or make a disposition that does not fully comply with state or federal law.

Crowder further clarified to Cowboy State Daily that it’s OSLI’s job to solely represent the fiduciary responsibilities of the state and that they do not weigh how many times people express the same concern when offering recommendations.

It’s the land commissioners who must take into account general public opinion and comments about an issue in addition to considering potential financial benefits to the state before rendering a decision. An OSLI recommendation is not a blank check, proven by the land commissioners routinely rejecting OSLI suggestions when making financial decisions.

Parcel Problems

The Kelly Parcel is the last of four tracts of state trust land on the boundaries of Grand Teton National Park. The previous three parcels — Jackson Lake, Snake River and Antelope Flats — were all acquired by the U.S. Department of the Interior between 2012 and 2016.

Agricultural and grazing leases and temporary use permits on the Kelly Parcel raise $2,845 annually. Anticipated annual investment earnings from the sale of the parcel are estimated between $3.1 million and $3.9 million.

OSLI estimates that at the current rate of annual income, it would take 1,097 years to generate the amount of revenue that could be produced by the sale of the Kelly Parcel at its appraised value.

A recent appraisal of the parcel, paid for by the Grand Teton National Park Foundation, valued the 640-acre parcel at $97,539.06 per acre, for a total of $62.4 million.

State Rep. Liz Storer, D-Jackson, said she would like to see the land sold to Grand Teton, but doesn’t “feel good” about it being sold at auction given the feedback. She said although the appraisal may have come in a little low, it’s also probably in the general ballpark of what the land is worth. She supports the land being sold to Grand Teton as the federal government has expressed it is ready to buy it.

Some have speculated about the possibility of the state putting stipulations on the auction that makes it more difficult or impossible for a private buyer to acquire the land. This would likely fall into a legal gray area as the state is generally required to provide fair and balanced auctions of its land, but Crowder said the board could instruct OSLI staff to explore this route.

Complicating matters in that scenario could be that Grand Teton could be forced to buy the land for less than the original market appraisal of $62 million if the stipulations end of reducing the value of the land, which would result in less income for Wyoming.

New Price

Crowder said the new proposed starting price for the auction stems from suggestions at the public meetings. Although they are not considering the substantive suggestions of the comments, he said OSLI is taking into account this piece from a fiduciary perspective.

“We are obligated to provide the state with its best fiduciary option,” he said. “We do know that it was appraised at $62 million, so it could go for anything in this case.”

The previous three parcels were sold to the U.S. Department of the Interior in direct sales to avoid public auctions. However, OSLI cannot approve direct sales without authorization from the Wyoming Legislature. Acts and legislation that approve the previous direct sales have been rolled back, and the Legislature has yet to renew them or pass new legislation to authorize a direct sale or equivalent land exchange with the federal government.

Based on that appraisal and the lack of authority to approve a direct sale, OSLI has officially recommended a public auction of the Kelly Parcel and most of its land rights.

The auction bid would start at $80 million, with increments set at $250,000 per bid. The auction would be held in Teton County on a date no later than Jan. 30, 2024, to be determined by OSLI Director Jenifer Scoggin.

Funding for this purchase would come from the federal Land and Water Conservation Fund, which didn’t become fully funded until only a few years ago.

“The feds are at the table ready to take a deal,” Storer said.

The board, OSLI staff and other state officials had discussed for decades the merits of an equal value exchange of the land since the 1990s.

The Grand Teton National Park Land Exchange Act was enacted in 2003, under the sponsorship and active support of late Wyoming Senator Craig Thomas. The Act authorized federal acquisition of the identified state trust lands by donation, purchase with donated or appropriated funds, or exchange of federal lands in Wyoming that are identified for disposal under approved land use plans.

In 2010, the board notified Grand Teton that because it had been unable to resolve what to do with the land issue in collaboration with the federal government, the board was prepared to discharge its fiduciary responsibility to manage the trust lands within the park, and that the board would sell the Kelly Parcel at public auction unless the Department of the Interior and Congress could come to a deal in the near future with the state.

Two state legislative attempts to extend the agreement failed, and a 2021 bill that would have established a new agreement also died, mostly because the sale price was amended to a minimum of $3.2 billion by state Rep. Steve Harshman, R-Casper.

At a Cody meeting on the parcel last week, Rep. Sandy Newsome, R-Cody, said she hopes to bring a bill during the 2024 legislative session that addresses the parcel.

Other Options

There are alternatives to a direct auction. Actualizing them would be difficult if the board approves an auction that must occur by Jan. 30, 2024.

Chip Jenkins, superintendent of Grand Teton National Park, told Cowboy State Daily the U.S. Department of the Interior is ready to work on a direct sale with OSLI should one be authorized.

“We are prepared,” he said. “We are prepared to enter those negotiations. Remember, we've done this successfully three times in the past. We're ready to try to make it a fourth.”

Meanwhile, U.S. Rep. Harriet Hageman released a statement to the Jackson Hole News and Guide, saying the Kelly Parcel should be exchanged for subsurface mineral rights of an equivalent value on federal land elsewhere in Wyoming.

She recommended either a swap of the Kelly Parcel for all rights, title, and interest to federal lands in the Powder River Basin or a direct sale to the Department of the Interior on the condition that any moratorium on fossil fuel development on federal lands in Wyoming be lifted.

“This is a case of the federal government and wealthy out-of-state interests wanting something that the state of Wyoming has,” the statement reads, “and given the limited non-federal land available in this area, the state must gain something significant and meaningful in return — something that fundamentally changes the way we do business.”

What constitutes a moratorium may be a matter of personal opinion. President Joe Biden’s administration’s moratorium on oil and gas leasing hasn’t been in effect since 2021. But the Biden administration has skipped quarterly lease sales in 2021, 2022 and 2023, and new rules in the Inflation Reduction Act make leasing more expensive.

Thursday’s Meeting

The State Loan and Investment Board and the Board of Land Commissioners will also hold an executive session Wednesday, the day before the public meeting.

Although the topic of the Kelly Parcel is not slated to be discussed until near the end of the Thursday meeting, Crowder said his staff has determined that the 8 a.m. meeting will not run past the early afternoon.

He anticipates the public being allowed to offer comments at the meeting, but could not officially confirm this detail as of Friday.

Andrew Rossi can be reached at arossi@cowboystatedaily.com and Leo Wolfson can be reached at Leo@CowboyStateDaily.com.

Share this article

Authors

AR

Andrew Rossi

Features Reporter

LW

Leo Wolfson

Politics and Government Reporter