State Lands 2014 Annual Report

State Lands 2014 Annual Portfolio Report

Overview
Real Estate Portfolio - State Lands Portfolio

Greg Nyland, CalSTRS Portfolio Manager, Real Estate

Kevin Bassi, CalSTRS Investment Officer, Real Estate

General Information

Program Background

In 1853, with the passage of the Act of March 3, 1853 (10 Stat. 244), the Federal Government gifted 5.5 million acres to the State of California to be used for the support of public education. Between 1855 and 1984, nearly 90 percent of the “school lands” (all of the high quality land) was sold, leaving behind mostly desert land, most of which falls within the boundaries of the lands protected by the California Desert Protection Act.

Since 1984, the remaining lands have been under the trusteeship of the State Lands Commission, or SLC, with the proceeds from land sales reinvested into the trust and only the lease income flows to the Teacher Retirement System’s Supplemental Benefit Maintenance Account. The School Land Bank Fund currently holds 468,000± acres of land and another 790,000± acres of mineral rights where the surface rights have been previously sold.

General Information

Financial Review

In fiscal year 2013–14, school lands generated gross revenues of $9.9 million for CalSTRS, a decrease of six percent from the previous year. Net revenue to CalSTRS from solid mineral leases decreased substantially from $3,575,009 the previous year to $1,673,233 million, which is over a 53 percent decrease from the previous year. The decline in production at the Mesquite Gold Mine is the primary reason for the marked decrease in royalty revenue. Oil and gas lease revenue increased to $2.42 million this year compared to $1.98 million last year. 

General Information

Legislation Review

AB 982 Update – AB 982, which became law in 2011, directed the State Lands Commission and the Department of the Interior to enter into a MOA, Memorandum of Agreement, designed to facilitate land exchanges to consolidate State school land parcels consistent with renewable energy development of the DRECP, Desert Renewable Energy Conservation Plan.