by Matt Comisky
AFRC Washington State Manager
Why Should You Care About the TLT Program?
In part one we covered the basics and overview of the TLT program. In part 2 I am going to address the second question; Why should you care?
The answer; quite honestly the primary reason you should care about TLT is that it continues to erode the corpus (body) of the trust assets for near term gain at the potential detriment of future generations. So not only is the corpus of the trust eroded but the intergenerational equities (benefiting one generation over another) issue is also at play. But these are just the primary reason, there are many others, some broad and some finely nuanced, including the undivided loyalty concern.
What do I mean by erode the corpus of the trust? The corpus or body of the trust in this context is primarily timberlands managed by DNR. Under this program, the acres within the Common School trust are decreased through transfer or inter-trust exchanges. While providing the expectation of the agency buying replacement lands. In June of 2013 the DNR reported in its 2013-2015 Biennium TLT proposal document, there had been a disposal of 113,280 acres and only a purchase of 49,683 acres. This is a 66,772-acre loss of trust lands, mostly timber lands, from the TLT program alone. A decrease that is roughly 1.5 times greater an area than the City of Tacoma. This means that under DNR’s fiduciary obligation of inter-generational equities, today’s generation has been compensated but tomorrows generation may or may not be compensated through trust revenues. Especially in the current situation where the deficit of acquired lands is so large. While we are aware of some small acreage purchases since the 2013 report, we are working with DNR to learn what the current actual shortfall of replacement lands is. Reports published since the 2013-15 report have not included the totals for disposal and acquisitions under this program. It is our belief that the acquisition of lands still lags far behind the continued disposal, eroding the corpus of the trust.
The other nuance to this erosion issue is the inter-trust exchange process. I know this is going to be a bit dense in information but it is critical to understand this aspect of the process. Since Common School trust lands are the only ones which can be removed from trust status, other than County Trust lands re-conveyed to a county for park uses, TLT parcels which are not already Common School trust lands must be exchanged for similar value Common School parcels. For example, a 120-acre parcel of County Trust lands (State Forest Transfer lands) with high value timber is identified for TLT transfer. In order to accomplish this transfer, the 120 acres must be exchanged for Common School trust lands of the same value and preferably in the same rough geographical location. Often the Common School trust lands have younger trees growing on it. This means it takes more acres to create the same value. So the swap may equate to more like 120 acres in exchange for 250 acres of younger growth trees. While the dollar amount is the same, the county lands increase by 130 acres and the Common School decreases by 250 acres. The Common School trust gives up 250 acres in exchange for 120 acres that are then immediately transferred out of trust management. See the table below for the flow of acres.
|Flow of Acres in an Inter-trust exchange followed by TLT disposition.
|120 Acres of County Trust desired for TLT program with 85 year old trees
||250 Acres of Common School Trust needed for equal value with 15 year old trees
|Transfer 120 acres to Common School
||Transfer 250 acres to County Trust
|Receive 250 acres from Common School
||Receive 120 acres from County Trust
|Keep 250 acres
||Dispose of 120 acres to TLT (deposit to Common School Construction account and Real Property Replacement account per percentages)
|Net gain of 250 acres in County Trust
||Net loss of 250 acres from Common School
This has impacts on both current and future generations. Also since most of DNR’s planning efforts are based on managed acres, this has varied impacts on individual trusts and ultimately the number of acres available for sustainably managed timber harvest. This process raises concerns over inter-generational equities, undivided loyalty, and preserving the corpus of the trust.
Additionally, there are concerns over the process the TLT program takes in approving the parcel list that is submitted to the legislature. Ultimately there is not an open public process which allows for public input and engagement on the program from a broad perspective. While it is true the agency sometimes holds local community education meetings for specific parcels, there is no opportunity to look at the big picture impacts to the trust and the beneficiaries. Because the complete appraisals are not conducted until after the legislature approves the list, it is not possible to fully understand some of the negative impacts. This is especially true with the inter-trust exchange aspect as those exchange acres are identified later in the process.
There is also controversy over the role the Board of Natural Resources plays in the approval of the list. While the Board has the general power to “[e]stablish policies to ensure that the acquisition, management, and disposition of all lands and resources within [DNR’s] jurisdiction are based on sound principles designed to achieve the maximum effective development and use of such lands and resources…” RCW 43.30.215(2). The Board prior to approval by the legislature only has informational briefings on the proposal. As described in DNR’s own documents the information is “…assembled into an informational package that is presented to the Board of Natural Resources and then to the Governor’s Office for submission to the Legislature.” The Board does not weigh in on the policy, documentation, appraisals, impacts to the trust or other issues of concern related to the TLT proposed package. No discussion. No in depth review. No vote. No Board Resolution. Usually just a head nod and DNR staff proceed. A transfer parcel list developed by DNR staff, appraised by DNR staff, and ultimately disposed of after funding from the legislature by DNR staff, with little to no input from the beneficiaries or the Board other than a rubber stamp of approval of one transaction at a time.
These are just a few of the reasons why you should care about this program. Ultimately the concerns over fiduciary obligation, intergenerational equities, and undivided loyalty, play heavily into the impacts to the trusts both for today’s generation and tomorrows. And I did not even cover the lost revenue when these parcels are no longer managed. In part 3 we will explore what we can do about it.