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State has lost money for schools as logging is restricted for federally protected species

SALEM — Members of the Oregon State Land Board said Tuesday they want to sell the Elliott State Forest to another government agency or public-private partnership.

The proposal would provide the State Land Board with a way out of the long-running arrangement of logging the Elliott State Forest to generate money for public schools. That system has generated more controversy and less revenue in recent years, as the state scaled back timber harvests following lawsuits over federally protected species in the forest.

Environmental groups and members of the public have also urged the state to manage the forest for conservation and recreation, goals that clash with the State Land Board’s duty under the Oregon Constitution to maximize timber revenue for schools.

The three members of the board, Gov. John Kitzhaber, Secretary of State Kate Brown and State Treasurer Ted Wheeler, said during a meeting Tuesday that they want employees of the Department of State Lands to continue to proceed with an option to request proposals from entities interested in purchasing the 84,000 acres in the Elliott forest which the state manages to benefit schools.

In a report to the board, Department of State Lands employees wrote that any new owners of the forest should include “some component of continued ownership by a public entity,” such as a local, state, federal or tribal government. John Potter, the Department of State Lands project manager overseeing analysis of options for the Elliott State Forest, said the agency outlined a broad proposal in order to leave it open to a variety of potential purchase arrangements.

The catch is that any buyer, whether it be a government or a consortium of government, nonprofit and timber entities, must pay fair market value for the Elliott State Forest because of its connection to the Common School Fund. The goal would be to “decouple the Elliott and its timber harvesting business plan” from public school funding, according to the state report.

That goal resonated with the land board. Wheeler said he heard from members of the public who want the state to find a better balance between economic, environmental and recreation interests on state forest lands. Some of those priorities clash with the current state system to manage the Elliott State Forest for the benefit of schools.

“I think the box the three of us find ourselves in is a hopelessly antiquated model,” Wheeler said, adding it is possible the Legislature could set aside funding and create a new entity to take ownership of the forest.

Brown said the state should continue to develop the process to solicit proposals for new ownership of the forest, but officials should also take the time to make a thoughtful decision.

“I’m not feeling like we need to make a decision tomorrow,” Brown said, adding that she was impressed by the importance of the forest as a spawning ground for coastal coho salmon.

Kitzhaber said the current management of the forest to generate school revenue does not make sense, and the Department of State Lands should further develop the option to request proposals for ownership, then solicit more public input.

The land board also considered three other options for the Elliott State Forest, which the Department of State Lands outlined in a report. This included continuing state ownership of the Elliott State Forest but requesting proposals from parties interested in managing the forest. The state could also continue to have the Oregon Department of Forestry manage the land, or it could transfer the forest to a federal agency or tribal government.

Revenue from timber sales on the forest historically helped pay for public schools, as part of a system set up by the U.S. Congress when it granted the land to the state. Oregon is required to manage the forest to benefit schools, both as a condition of accepting the federal land and under the state constitution.

The money goes to Oregon’s Common School Fund, which provides approximately 1 percent of revenue in the state education budget and is managed by the State Land Board. As a result, the state must receive the market value for any part of the forest that is transferred to new owners.

The Elliott State Forest has been losing money since 2013, when the state changed the way it manages the land in response to a lawsuit over the federally protected marbled murrelet habitat.

The forest lost $3 million in fiscal year 2013 and although it did better in 2014, the state still lost nearly $392,000 because management costs exceeded revenue, according to a state report. The state expects the forest will continue operating at a loss in the future. As recently as 2012, the forest district earned $5.8 million for the state school fund.

Earlier this year, the state auctioned off three parcels of land in the forest to offset lost revenue due to changes in management of the forest. Additional auctions are now off the table, according to the state report.

During public testimony Tuesday, representatives of the timber industry urged the State Land Board not to discard the option to sell off part or all of the Elliott State Forest in a public auction.

But a majority of people who spoke before the board said the state should shift the way it manages the forest, to focus more on conservation and recreation. According to the Department of State Lands, streams in the Elliott State Forest provide spawning habitat for more than 20 percent of the coastal coho salmon in Oregon.

Potter said staff could bring back more details to the State Land Board on the process to solicit new ownership proposals as early as this spring. The current goal is for the state to have an agreement in place with new owners by January 2016.

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