State may auction Kelly parcel for minimum of $62 million

Approach is risky, as Park Service could be outbid.
 
JACKSON — After years of legislative wrangling failed to arrange the sale of 640 acres of state land to Grand Teton National Park, state land managers are eyeing a new tactic: putting the parcel up for auction, possibly as early as January.
 

But that approach comes with a risk: The National Park Service and its partners could be outbid.
 

The land was appraised late last year for about $62 million, the least the state would accept, according to a report released Monday. But $62 million is also the most the federal government could pay for the land. Federal policy keeps the National Park Service from paying more than appraised value, although private fundraising partners could make up the difference.
 

The Park Service typically receives about $100 million annually to buy land through the Land and Water Conservation Fund. If the agency alone paid face value for the property, the purchase would consume some 60% of the entire Park Service appropriation for the 2024 fiscal year, which started Oct. 1.
 

“It’s not the easiest lift,” said Rob Wallace, a former U.S. Department of the Interior assistant secretary for fish, wildlife and parks who oversaw the Park Service during his tenure in Washington, D.C.
“But in my candid opinion, I don’t know that there is a more important inholding in the national park system,” Wallace said. “I think there’s a lot of serious thinking going on in the Interior right now about this opportunity.”
 

Wallace also hopes nonprofit fundraisers will come to the table to ensure the Park Service will be able to compete with other potential buyers in an auction if the state chooses to move forward with an open-market sale. In 2016, when the park acquired another 640-acre parcel in neighboring Antelope Flats, the National Park Foundation and Grand Teton National Park Foundation raised $23 million.
 

For the auction to proceed, the State Board of Land Commissioners must approve it during a December meeting.
 

Teton Park and its primary fundraising partner were tight lipped Tuesday about the state’s direction.
 

The park provided a brief statement from Superintendent Chip Jenkins, reiterating interest in a deal.
 

“The inclusion of the 640-acre Kelly Parcel in Grand Teton National Park has been and remains a long-standing priority for the National Park Service and the Department of the Interior,” Jenkins said.
Leslie Mattson, executive director of the Park Foundation, declined to comment specifically about an auction.
 

“We have always and will continue to support the conservation of lands in Grand Teton,” she said.
 

The land, speckled with aspen groves and known colloquially as the “Kelly parcel,” sits at the park-forest boundary along the Gros Ventre Road, where the Gros Ventre River emerges from a canyon in its namesake mountain range and enters the sagebrush flats. Teton Park borders the parcel to the north, west and south. The Bridger-Teton National Forest borders it on the east, and a small sliver of the National Elk Refuge intersects with the parcel’s southern border.
 

In the spring and fall, pronghorn cross the acreage as they migrate into and out of Jackson Hole. Elk and bison winter there, and it’s one of the few places, aside from the elk refuge, where Wyoming allows people to hunt bison.
 

Wyoming and the Interior Department agree that those acres would be better off in the National Park Service’s hands. The state, which is required to maximize revenue from state trust lands for Wyoming schools, has struggled to monetize the land to benefit Wyoming schools because it’s surrounded by federal land. But Wyoming and the federal government have been unable to find a way to exchange the land.
 

The state already has sold three other inholdings to the National Park Service, with legislative approval.
 

But the Wyoming Legislature has not signed off on a deal for the fourth and final parcel. In 2021, legislators saddled a bill authorizing the sale with a $3.2 billion price tag. The deal fell apart.
Without legislative approval for a direct sale, and without an active agreement or authorization for transfer with the Department of the Interior, the Wyoming Constitution requires state lands to be auctioned.
 

“This is the remaining option, available for all trust land across the state,” Jason Crowder said.
 

Crowder is deputy director of the Office of State Lands and Investments, which is overseen by the State Board of Land Commissioners, consisting of the state’s top five elected officials: the governor, secretary of state, auditor, treasurer and superintendent of public instruction.
 

“The governor and his folks are driving this at the moment,” said Wallace, the former Interior official.
 

Michael Pearlman, spokesman for Gov. Mark Gordon, deflected a request for comment. The Board of Land Commissioners has “not taken any action,” he said. “This is an administrative action.”
A 60-day public comment window on the analysis opened Monday. It closes Dec. 1.
 

The Board of Land Commissioners is set to consider a sale at its Dec. 7 meeting, where Crowder said the governor and other elected officials will decide whether to move forward with an auction, and what the auction will look like. If approved, the auction will be advertised for 30 days.
 

That means the 640 acres won’t be on the auction block until early January, at the earliest.
 

On Monday, Crowder’s office released a report detailing the history of state land sales to the National Park Service and how past efforts to sell the Kelly parcel fell apart. It also details how auctioning the Kelly parcel would benefit schools.
 

Currently the parcel generates about $2,800 a year for the state’s common school fund, mostly from two grazing leases, along with guided mountain bike tours.
 

In contrast, selling the parcel now for about $62 million and investing the money in a school fund would generate between $3 million and $4 million annually, based on the fund’s past performance. If that money was reinvested, it could make anywhere from $30 million to $40 million in 10 years and $90 million to $120 million in 30 years.
 

In contrast, the state estimates the parcel will appreciate at roughly $4 million annually until it’s sold.
 

The Office of State Lands and Investments sees selling the parcel as a better option than holding onto it.
 

“While the state parcel lies within the part of Wyoming with the highest real estate values, appreciation of real estate in the same area has been shown to be volatile and highly subjective to fluctuating economic conditions,” the report reads. “Disposing of the state parcel looks to provide comparatively greater and more consistent returns than what is realized by continuing to hold the parcel and allow it to appreciate in value.”
 

Plus, the report says proceeds from selling the land can be used for another purpose: buying other land — possibly, federal land — to create larger blocks of state land and ease management. The report does not identify land state officials would like to buy.
 

In 2021, when Teton County representatives introduced the bill that would have authorized selling the land to the National Park Service, Rep. Steve Harshman, R-Casper, introduced the successful amendment that bumped the price tag from millions to billions and scuttled the deal. He met the report with consternation.
 

“Why would Governor Gordon bargain sale our most priceless 640 acres of State School Trust Lands to the Biden Administration?” Harshman said in a text to the News&Guide. “Wyoming people will be shocked.”
 

Rep. Liz Storer, D-Jackson, said she’s heard that Land and Water Conservation Fund dollars “equal to the appraised value” have been earmarked by the feds. She thinks all legislators, including Harshman, agree the land should be sold to the park rather than developed. But they disagree over how much it’s worth.
 

Storer hasn’t ruled out the Legislature approving a direct sale.
 

“But getting it through the budget session is a challenge, especially if there isn’t agreement on what the price should be,” she said.
 

In Teton County, environmental groups were critical of the state’s pivot to auction.
 

“Are we just going to sell this off to the highest bidder, and whatever happens on it happens on it?” said Kristin Combs, executive director of Wyoming Wildlife Advocates. “You leave it up to chance that it could maybe go to a developer that could build on it and make that piece of land functionally unusable for wildlife.
 

“That would be a disaster,” Combs said.
 

To avert that, Wallace, the former Interior deputy secretary, is looking to nonprofits to step up and raise enough money to make a federal bid in the state auction competitive. Storer said she’s heard talk about the same approach, which she views as a “generous offer by this community.” An auction, Storer and Wallace said, will determine the market value of the property and could end the dispute about price.
 

“But it also strikes me as risky and problematic, given the idea that everyone thinks it should be part of Grand Teton National Park,” Storer said.
 
This story was published on October 4, 2023.