Fiscal year 2014-15 planned activities
State Teachers’ Retirement System Fund Revenues
Surface rental income and revenues
There are 141 revenue generating surface leases and they brought in $339,949.38 in funds in 2014-15, an increase of nearly 30 percent from the previous fiscal year. State Lands Commission also spent considerable amount of time and effort in gaining legislative approval for new higher base rents which had not been increased since 1992.
Currently, all revenue from the geothermal program is generated from royalties on the production of steam from state leases located at The Geysers geothermal field in Sonoma and Lake Counties. Electricity generated from the steam is sold to the utilities market and is the basis for determining royalty revenue paid to the state. Geothermal revenue totaled $5,352,254.23 for fiscal year 2014-15, a 3.5 percent decrease from the prior year.
Solid minerals program
Revenues from the Solid Minerals Program for fiscal year 2014-15 totaled $712,156.66, a 58 percent decrease from the previous year’s revenue. The decrease in production at the Mesquite Gold Mine was the main reason for the total production decline.
Fiscal year 2015-16 planned activities
Staff forecasts that revenue from geothermal leases on school lands at The Geysers will be reduced during fiscal year 2015-16. Staff anticipates that steam production on developed leases will continue its slow, long-term decline.
The Valley Fire has significantly affected the Geyser’s future production. Prices for electrical power – underlain by those for natural gas – are expected to decrease slightly as global crude oil prices ease further.
The continued scarcity of capital in light of preferential federal tax treatment for competing wind and solar generation will remain an obstacle to new exploration activity in the near term.
Abandoned mine lands
In fiscal year 2015-16, staff will continue the overseeing and inspecting incomplete contract remediation work. After the completion of construction activities, SLC staff will inspect the quality of work of the closures. Staff will also continue to assess previously unvisited abandoned mine features on school lands.
A new list of possible mines to be closed will be created in 2015-16. Fences, warning signs and bat gates will be installed as needed.
To the right is a picture of the bat gate at Gunsight Mine.
Surface rentals income
Staff estimates that surface rentals from existing and new surface leases on school land parcels during fiscal year 2015–16 will increase due to the appreciation of land values. SLC staff also has spent a considerable amount of time and effort in the past year gaining approval for higher base rents which had not been revised since 1992.
Renewable energy projects
With the passage of Assembly Bill (AB) 32, the increase in public awareness about climate change, and the rise in energy prices, staff expects more interest in the long-term leasing of school lands for renewable energy projects. Some of these projects will involve utilization of wind as an energy source. These projects require the installation and operation of wind turbines that, if installed, would generate electricity that would be placed into the State’s electrical grid. Other renewable energy projects will utilize solar technology such as photovoltaic cells and solar-concentrating systems (troughs, towers or dishes).
There is potential for income from timber salvage and sanitation operations in fiscal year 2015–16. These operations are conducted periodically due to losses from natural causes such as fire, high winds, insect infestation and diseases. Because of the irregular nature of these operations, the amount of additional income from these sources is difficult to predict.
SLC plans to continue processing an application for wind energy lease known as the Tule Wind Project, which was filed with in 2007. This proposed project involves more than 12,000 acres of lands located in eastern San Diego County, including federal lands administered by the Bureau of Land Management, private lands, tribal reservation lands of the Ewiiaapaayp Band of Kumeyaay Indians, and 640 acres of school lands.
The Tule Wind Project was studied in a joint Environmental Impact Report/Environmental Impact Statement prepared by the California Public Utilities Commission (as the lead agency under CEQA) and the BLM (as the Lead Agency under the National Environmental Policy Act).
In December 2011, the BLM issued a Record of Decision authorizing Phase I of the project which is located primarily on federal lands. Separate authorization from the Bureau of Indian Affairs for development for Phase II of the project on the nearby tribal lands was obtained in December 2013.
The proposed development of seven turbines on the State school land parcel is included in the proposed Phase II project. Staff currently is awaiting the completion of an appraisal of the subject property. If the project ultimately is approved by the SLC and the lease is issued to allow construction and operation of the wind turbines, staff anticipates significant revenue from this lease beginning in fiscal year 2017–18.
State Lands Commission staff will continue to process two applications for solar energy leases that together will cover 4,641 acres of school lands. The two projects, Aurora Solar and Windhub Solar, will be subject to environmental review. If completed successfully, the two leases will generate significant revenue from the leases beginning in fiscal year 2017-18.
United States of America land sale (SA 5767)
Escrow was opened for this sale in September 2015 and the proceeds will be included in next year’s financial summary. The sale will generate $806,500 for the School Land Bank Fund.
CDPA/BLM land exchange
Prior California Desert Protection Act land exchanges between the SLC and the BLM resulted in an unequal balance between the values of the lands exchanged. Currently, the SLC owes the BLM lands worth $2,154,675. The BLM has available, through the General Services Administration, $7,938,432.71 from surplus federal land sales designated for CDPA land purchases from the SLC.
Staff continues to work with BLM on a new proposed “Ledger Balancing Land Exchange” whereby the SLC will transfer school lands of approximately $10,149,600 in value to the BLM and National Park Service to eliminate the outstanding balance and complete the exchange. As part of the transaction, the National Park Service submitted a payment of $56,492.29 to balance the transaction.
This transaction, however, is stalled because the Government Accountability Office issued an opinion in December 2010 questioning BLM’s authority to use funds from the sale of surplus federal property to complete exchanges with the SLC. The legal basis for using funds from the sale of surplus federal property to complete the exchanges with the Commission remains unresolved.
While the SLC hopes to complete this transaction during fiscal year 2015-16, it remains uncertain if and when the legal dispute will be resolved. When completed as proposed, staff anticipates a total of $7,994,925 will be deposited into the School Land Bank Fund.