Buying, Selling and Trading State Land for Profit In several western states, government agencies that manage state-owned land have started acting like real-estate moguls, buying and trading land to generate healthy profits. In a few cases, state officials have even given land to developers in exchange for ownership of strip malls or parking lots. The practice is alarming to some critics. Austin Jenkins reports from Olympia, Wash.

Buying, Selling and Trading State Land for Profit

Buying, Selling and Trading State Land for Profit

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In several western states, government agencies that manage state-owned land have started acting like real-estate moguls, buying and trading land to generate healthy profits. In a few cases, state officials have even given land to developers in exchange for ownership of strip malls or parking lots. The practice is alarming to some critics. Austin Jenkins reports from Olympia, Wash.

ALEX CHADWICK, host:

From NPR News, it's DAY TO DAY. Across the western United States, state governments own about 40 million acres of state trust land. It gets used mostly for logging and farming. It generates money for schools and other state functions.

Increasingly, though, state land managers are trying to convert these assets to commercial real estate, where they can make a lot more money. Austin Jenkins reports from Olympia, Washington.

AUSTIN JENKINS reporting:

I'm standing in front of a Walgreens drugstore in the town of Des Moines, south of Seattle, along Highway 99. You might be surprised to learn who owns the land that this store sits on--it's the Washington State Department of Natural Resources. The department recently acquired this commercial property in exchange for 328 acres of forestland about 30 miles from here.

That forestland is now in the hands of a developer who plans to build a new subdivision. This outrages Peter Goldman who directs the Washington Forest Law Center, a Seattle based environmental group.

Mr. PETER GOLDMAN (Director, Washington Forest Loss Center): GNR's mission is to manage the natural resources of the state for future generations. And once these lands are sold off to development, they're gone permanently.

Commissioner DOUG SUTHERLAND (Commissioner of Public Lands, Washington State): I didn't get rid of forestland.

JENKINS: Doug Sutherland is Washington State's elected lands commissioner.

Commissioner SUTHERLAND: I got rid of bare land in the urban growth area, in an urban area that couldn't grow trees anymore. As forestland, it had little or no value.

JENKINS: Sutherland fiercely defends the land swap as a smart business move. He says the forest was no longer earning any money for Washington schools; by contrast, the Walgreens will bring in nearly half-a-million dollars a year. This is just one example, say experts, of a shift that's happening throughout the west, not just in Washington, but also in states like Idaho, Montana, Colorado, Utah, New Mexico, and Arizona.

As urban growth encroaches upon parcels of trust land, trust managers are cashing in. They're either swapping the land, selling it or leasing it to commercial or housing developers. Again, Washington State's Doug Sutherland.

Commissioner SUTHERLAND: I see the inclusion of commercial properties in our portfolio of lands as a balancing piece. I don't see commercial property as our primary piece.

JENKINS: Even so, when Sutherland goes out to buy or swap land nowadays, he works off a simple formula: one-third forest, one-third agricultural and one-third commercial. That means more and more of commercial real estate professionals now work alongside rugged foresters.

In Idaho, for instance, the Department of Lands manages several office buildings and parking lots in downtown Boise. Director Winston Wiggins says he's fulfilling his responsibility to maximize long-term profits from state trust land.

Mr. WINSTON WIGGINS (Director, Department of Lands, Idaho): Do I feel funny about it? Not really, because we're running a business. And businesses, to be successful, need to be alert to new opportunities, changes in the way we do things. And so, I just see this as a legitimate outgrowth of the urbanization that's taking place in a lot of the western communities.

JENKINS: In Washington State, the shift toward commercial property has alarmed some lawmakers. This year, the legislature placed a one-year moratorium on the DNR's commercial property program. State Senator Karen Frazier is a Democrat who sits on the Senate Natural Resources Committee.

Senator KAREN FRAZIER (Democrat, Washington): Are we going to be trading forestland that might have a lot of natural values, like water storage, habitat and recreation, and trade that to somebody's who going to convert it out of forest to more subdivisions climbing up the foothills of the Cascades. These are huge policy issues.

JENKINS: Frazier and environmentalists understand the mandate to make money off these lands for schools and other state institutions, but they want to strike a balance between profit and preservation.

For NPR News, I'm Austin Jenkins reporting.

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