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SITLA Board of Trustees Page 1 of 12 August 18, 2016

Chairman Louis Cononelos Vice-Chairman James Lekas

Director David Ure

Board of Trustees

School & Institutional Trust Lands Administration

Salt Lake City, Utah

August 18, 2016

2:00 p.m.

Minutes

Board Staff Louis Cononelos David Ure James Lekas Kim Christy Tom Bachtell John Andrews Lonnie Bullard Rodger Mitchell Scott Ruppe Ron Carlson Roger Barrus LaVonne Garrison Mike Mower Tom Faddies Donald Foot (New Member Oath of Office) Lisa Schneider Jeff Roe Deena Loyola Rick Wilcox Scott Bartlett Stephanie Barber-Renteria Chris Fausett Kyle Pasley Lou Brown Nannette Johnson Others in Attendance:

Paula Plant, Utah State Office of Education Karen Rupp, Utah State Office of Education Tim Donaldson, Utah State Office of Education Margaret Bird, Universities Ron Allred, Anadarko Michael D. Merrill, Anadarko Sterling Brown, Utah Farm Bureau Federation Collon Kennedy, Global Carbon Strategies Denise Dragoo, West Ridge Resources, Inc. Mark Compton, Utah Mining Association Jocelyn Clark, Utah Mining Association Jill Merritt, Elders Rising Wade Bitner, Tooele County Commission Scott Barney, Millard County Economic Development Kevin Carter, Former SITLA Director


Board of Trustees

School & Institutional Trust Lands Administration

Salt Lake City, Utah

August 18, 2016

2:00 p.m.

Agenda

Topic Page No.

1. Welcome 3

2. Approval of Board Minutes for June 16, 2016 3

3. Confirmation of Upcoming Meeting Dates 3

4. Recognition for Chairman Louis Cononelos 4

5. Oath of Office for Donald Foot and Election of Board Leadership 4

6. County Advisory Committee, Northern Ute Tribe, and Public Comment Period 5

Recognition for Voluntary Service – Anadarko and Town of Junction

7. Consent Calendar

Consent

a. Proposed Amendment to Board Policy No. 2006-01, Roads and Access 6

b. Flared Methane Lease, Carbon County 6

Notification

c. Minor Transaction – Maverick Sienna Hills Shopping Center Parcel 8

d. Minor Transaction – Black Bear Sienna Hills Shopping Center 8

e. The Internet Mineral Competitive Offering 8

Follow-up after Six Months 8

8. Chair’s Report

a. Committee Assignments 8

9. Director’s Report 8

a. Director’s Update 8

i. Fee Waiver Report 9

b. Limited Performance Audit of Open Public Meeting Practices 9

c. Annual Open Public Meeting Training 9

d. FY 2018 Proposed Budget 10

e. Properties Poised for October Land Auction 10

f. Exchange and Litigation Update 11

g. Real Estate Briefing on Negotiations 11


1. Welcome

Chairman Cononelos welcomed those in attendance and recognized Sterling Brown of the Utah

Farm Bureau, Scott Barney of the Millard County Economic Development, representatives from

Anadarko, and former Director Kevin Carter.

2. Approval of Board Minutes for June 16, 2016

The Board approved the minutes of the last meeting.

“I make the motion the Board approve minutes of June 16, 2016, as written.”

Motion: Mower/Bachtell Unanimous

Roll Call:

Louis Cononelos – yes James Lekas – yes Tom Bachtell – yes Scott Ruppe – yes

Lonnie Bullard – yes Roger Barrus – yes Mike Mower – yes

3. Confirmation of Upcoming Meeting Dates

September 22 Salt Lake City

October 20-21 Meeting and Tour, St George November 17-18 Meeting and Retreat, Salt Lake City

December 15 Meeting as Needed There were no changes to the current schedule of meetings for the rest of 2016. Board members received a draft of the itinerary for the Board Tour in St. George on October 20-21.

4. Recognition for Chairman Louis Cononelos Chairman Louis Cononelos thanked Margaret Bird who nominated him six years ago to serve on

the Board of Trustees as the Mining representative. Chairman Cononelos expressed gratitude to associate with Trustees and the renewed relationships while serving on the Board. He expressed

gratitude for the growing experience.

Chairman Cononelos commended the tremendous work accomplished by the Beneficiaries. He encouraged the Beneficiaries to think in long timelines when considering projects. Issues like

water rights may take longer to gestate and come to value. He complimented the transparency in working through issues before the Board and the Agency. Chairman Cononelos expressed

concern for appropriate delivery of funds. He encouraged the Board to continue to request reports of how funds are used by beneficiaries.

Next, Chairman Cononelos addressed the staff at SITLA and acknowledged the competence demonstrated by SITLA professionals. The Chairman encouraged staff to take advantage of opportunities for cross-training within an organic work environment. There are many

opportunities within the single organization.

Chairman Cononelos continued by saying the last few years provided an opportunity to be

surrounded by experts of the highest caliber within their industry. Major discussions benefit from the knowledge shared across the Board. Chairman Cononelos said he learned not to second

guess the expertise of other Board members. Rather, he relied on the experts appointed to the


Board for an education during decision-making. He reminded the Board they have a policy-making role and to take care not to get involved in the administrative processes. The

Board has a fiduciary responsibility that may conflict and be in competition with the private sector. Board members are recruited for their expertise and should keep the fiduciary role in mind. As Chairman Cononelos passed the gavel to Vice-chairman Lekas, he reemphasized his

appreciation for the opportunity to work with so many professionals.

Vice-chairman Lekas introduced Tim Donaldson for recognition of Chairman Cononelos. Mr. Donaldson noted the compassion showed by Chairman Cononelos during his service on the Board of Trustees. The Beneficiaries presented a handmade quilt to recognize dedicated service

to SITLA and his loyalty to the University of Utah. Mr. Donaldson noted the recent distribution of almost $50 million to schools around the state. Many school representatives already expressed

gratitude for the funds, noting the difference those dollars make in the schools. Vice-Chairman Lekas honored Margaret Bird’s request to address the Board. She asked the

hypothetical question, “How do you describe Louis?” She continued by suggesting the descriptive words of “life force.” Ms. Bird told of witnessing the Mining Association’s

presentation of their highest award for influences in the mining industry. The recipient was Louis Cononelos. The mining contributions listed allowed Ms. Bird to recognize how much value he would have as a member of the SITLA Board of Trustees. Ms. Bird said, “He

graciously accepted the nomination.” For over 42 years Chairman Cononelos acted as a life force in mining education and industry with a keen awareness of the value of Utah mining. Ms.

Bird recognized the effort Chairman Cononelos to assure distributed funds reach the School of Mines at the University of Utah. The Chairman’s efforts show determination for assuring the fiduciary responsibility is fulfilled.

Director Ure presented a gift card from the staff and referenced a quote from the Olympics, “If

you want to predict the future you have to create it.” He acknowledged the Chairman’s willingness to do the hard work to create the future. Director Ure also presented a gift on behalf of both the staff and the Board members. The three-dimensional rendering of Utah’s landscape

finished in a copper metallic represents all the Chairman accomplished for the state of Utah in education and in the mining industry.

5. Oath of Office for Donald Foot and Election of Board Leadership Vice-chairman Lekas presented the Oath of office to Donald Foot. Mr. Foot became the newest

member of the Board of Trustees. Chairman Cononelos stepped down from the head table and Donald Foot took a seat at the head table for a six-year term or until replaced.

Vice-chairman Lekas asked for nominations to elect Board leadership for the next year. Tom Bachtell nominated Jim Lekas to become chairman of the SITLA Board and Mike Mower

provided the second. “I make the motion that in tradition for time served that Jim Lekas be the new chairman of the

SITLA Board of Trustees.”

Motion: Bachtell /Mower Unanimous

Roll Call:


James Lekas – yes Tom Bachtell – yes Scott Ruppe – yes Lonnie Bullard – yes

Roger Barrus – yes Donald Foot -- yes Mike Mower – yes

Chairman Lekas requested nominations for a Vice-chairman. Chairman Lekas made the motion

for Tom Bachtell to become the Vice-chairman of the Board with a second by Scott Ruppe.

“I move to follow tradition for time served that Tom Bachtell become the Vice-chairman of the SITLA Board of Trustees.”

Motion: Lekas /Ruppe Unanimous Roll Call:



6. County Advisory Committee, Northern Ute Tribe and Public Comment Period

Mark Compton acknowledged how Chairman Cononelos so ably characterized mining interests while serving as a member of the SITLA Board. Mr. Compton also recognized Tom Faddies as

the 2016 recipient of the Patrick E. Connor Award for excellence in the mining industry. Sterling Brown, Utah Farm Bureau Federation, told how he and Chairman Cononelos enjoyed

discussing, “Which came first the miner or the farmer?” Mr. Brown said he appreciated the respect demonstrated by Board leadership when a difficult issue of increased grazing fees

accompanied a pending rule change. Local ranchers attended the Board meeting in large numbers to speak. The announcement prior to the meeting led to a standing room only with high emotions. The meeting provided a good example of transparency and an opportunity to speak

and be recognized. “Above all, Mr. Brown said, transparency is always appreciated.” Mr. Brown concluded by saying, “Thank you, to Chairman Cononelos for setting a fine leadership

example.” Scott Barney thanked the Board for coming to Millard County in June. He appreciates the

interest shown. Mr. Barney looks forward to supporting those issues for the county that can also forward the SITLA mission. He then acknowledged the great staff at SITLA and added that

everyone is a pleasure to work with. Kim Christy recognized two separate parties who organized cleanup efforts on SITLA land. Mr.

Christy introduced Ron Allred and Michael Merrill of Anadarko. These gentlemen live in Uintah County and like to recreate in the area. These men rallied Anadarko staff who, together,

donated 80 man hours to clean up an area. Mr. Allred expressed appreciation for working with a partner like SITLA. The shared interest in keeping the land in good condition is appreciated by many as demonstrated by the willing volunteer effort.

Mr. Christy discussed the small town of Junction where Mayor Rick Dalton also serves the

community as a proactive individual. Mayor Dalton noticed a site becoming a dumping ground and mobilized the community to clean up the area. The Mayor could not attend the Board meeting. Mr. Lou Brown, SITLA Richfield Office, will present a plaque to Mayor Dalton in the

community where the successful efforts took place.


Commissioner Bitner of Tooele County arrived late for the public comment period. The Commissioners comments appear here in the minutes. The Commissioner asked about the status

of water in Rush Valley and requested an update on behalf of concerned citizens. Director Ure responded to say the issue is in the hands of the water engineer.

Commissioner Bitner also expressed appreciation for SITLA Board consideration for improvement projects to remove juniper and enhance the bird population.

7. Consent Calendar

Consent

a. Proposed Amendment to Board Policy Statement No. 2006-01, Roads and Access

Kim Christy recognized the historical right of ways have a 50-foot width for Class D roads.

However, State Code presumes the right-of-way to be 66-feet wide for R. S. 2477 rights of way. SITLA requests the Board's consideration and consent to update the Board Policy Statement No. 2006-01 to a recognize a 66-foot wide right of way for Class D, R.S. 2477 roads

instead of a 50-foot wide right of way.

Tom Bachtell asked if the policy change should be placed elsewhere on the agenda due to the requirement for a vote. John Andrews said that the consent calendar would suffice due the minor change to the rule. A larger or more significant change calls for a vote. However, no contest to

the consent item is recognized as approval of the policy by the Board.

This consent item will proceed for a policy change as outlined. b. Flared Methane Lease, Carbon County

LaVonne Garrison reported on a request by Global Carbon Strategies (GCS) Corporation to

manage remaining methane vented from the West Ridge Coal Mine (which has suspended

operations) through the existing vents according to an EPA-approved process. The lease with

GCS allows the company to measure the gasses in the flare and pay SITLA a royalty on the

MMBTUs it flares. GCS will measure and report the tons of methane destroyed and receive

carbon credits. Selling carbon credits is a voluntary program to allow companies emitting

methane to buy credits and offset methane they produce and vent from their operations. The

agency will not take part in the carbon credits program but will receive royalties measured from

flared gasses. A monetary value of the lease is $0.125 per MMBTU rather than a percentage

royalty. The lease term is for five years as long as the operations are ongoing. The lease also

requires an annual, recoupable, rent of $5,000 per year.

Ms. Garrison recommended the Oil and Gas group adopt the lease and proceed as outlined. The

speculation is for five years of viable operation. GCS is prepared to begin operation in August,

pending Board approval of the lease.

Demise Dragoo, Snell and Wilmer’s attorney for the West Ridge Coal Mine, and Collon

Kennedy of Global Carbon Strategies Corporation, attended to answer Board questions relative

to the lease. Ms. Garrison informed the Board that GCS will not continue with the project

without the SITLA lease.


Chairman Lekas asked Ms. Dragoo to explain the practical relationship between the mine and the

new operator. Denise Dragoo said the mine is in cessation and they are interested in selling the

GOB head holes to GCS. The methane is not part of the hydrocarbon coal lease with

SITLA. There is no relationship between GCS and West Ridge Resources.

Chairman Lekas restated that the physical property mentioned is owned by West Ridge and the

GOB wells are to be sold by West Ridge to GCS. He then asked if a sale was the intended

approach. Ms. Dragoo confirmed the statement provided. Chairman Lekas asked about the plan

for the infrastructure. Ms. Dragoo stated the intent to sell the equipment and infrastructure with

the transaction. Chairman Lekas asked if GCS will assume the reclamation bond in this

transaction. Ms. Dragoo confirmed the GOB holes are addressed in the mine permit so the new

owner will have to get all of their own permits including the reclamation bond. The two

companies would go to DOGM to reissue the permits which may be more as oil and gas rather

than as mineral permits. GCS will hold a reclamation bond for the project.

Tom Bachtell asked how to measure just the methane where other gasses exist. Collon Kennedy

of GCS explained there is a device at the flare that measures the content going into the flare to

determine the MMBTUs in the Flare. There is potential for other gasses in the flare. The

measures will define the quality of all the gas that comes to the flare on a BTU basis. Mr.

Bachtell asked if the credits are determined on a BTU basis. Mr. Kennedy confirmed the credits

are determined on a BTU basis.

Chairman Lekas indicated the Oil and Gas committee provided tentative support for the lease

pending comments during the Board meeting. Based on the discussion, Chairman Lekas asked

the Board if they objected to moving forward with the lease. Mike Mower suggested the Board

take a vote on the matter.

“I make the motion the Board approve the lease transaction with SITLA and Global Carbon

Strategies as outlined by LaVonne Garrison in her memo and during this meeting.”

Motion: Mower /Bachtell Unanimous

Roll Call:



This consent item will proceed as outlined.

Notification

c. Minor Transaction – Maverick Sienna Hills Shopping Center

Rodger Mitchell outlined the transaction for a lease expansion on Lot 9. A new lease offers the same lease rate to expand to the site adjacent to the lot already leased by Maverick. Tom Bachtell

asked for terms of the lease. Rodger reported the lease goes until 2028 with the option for two extensions.


This notification item will proceed for as outlined.

d. Minor Transaction – Black Bear Sienna Hills Shopping Center

Rodger Mitchell review the lease for the restaurant chain known as The Black Bear. The

transaction is for $7 a square-foot. The restaurant chain will attempt to capture the tourist traffic traveling to Zions Canyon.

This notification item will proceed as outlined.

e. The Internet Mineral Competitive Offering

LaVonne Garrison reviewed the internet competitive officering as the first time the workgroup

used an online process for competitive bids. The online process saves time, paper, and man hours with online bids. Ms. Garrison said the process ran seamlessly.

Tom Bachtell pointed out the charge for online bidding is paid by the customer, not by SITLA. LaVonne received no complaints about the 2% charge. Energy Net Services are

provided at no cost to the agency for the online bidding process. This notification item will proceed as outlined.

Follow-up after Six Months

There are no six-month follow-up items for this meeting. 8. Chair’s Report

a. Committee Assignments Chairman Lekas reviewed the committee assignments and noted that new Board member Donald

Foot is assigned to the Oil, Gas, and Mining committee along with the Legal and Adjudication committee. Tom Bachtell will join the Audit committee. All other assignments remain the same.

9. Director’s Report

Director Ure provided updates on delivery of checks for Normal Schools to President Pershing at

the University of Utah. President Pershing extended gratitude for SITLA’s work to generate the revenue to make the funds available. Director Ure plans to deliver the additional checks before the end of August.

Director Ure and Board member Tom Bachtell will speak during the Uintah Energy Summit in

Vernal on August 31 and September 1. The University of Utah Physics Department and the University of Tokyo requested an expansion

of the footprint for the experiments conducted in the west desert. The Universities asked for a limit on development projects that create dust. Director Ure shared that the limitation prevents opportunities for revenue and is, therefore, not in the best interest of SITLA.

Chairman Lekas asked how much money is earned from the lease of the land. The exact figure

was not available but the lease generates only a small amount of revenue.

Roger Barrus asked how BLM felt about the project. The Director noted BLM is not happy with

the limitations and speculated the BLM is waiting for SITLA to reject the request.


Tom Bachtell asked if the location would impact other leases. Director Ure noted the area is near ground the agency will inherit in the UTTR exchange.

Director Ure reported on the opportunity at the Western Regional Partners Conference at the University of Utah to discuss horse issues with officials from Washington. Janice Schneider

from the Office of the Secretary of the Interior attended the conference. Director Ure engaged Ms. Schneider in a discussion focused on the high population of female horses that will increase

the herd. Ms. Schneider recognizes the problem and admits there are financial issues in addressing the concern.

i. Fee Waiver Report

Director Ure explained the fee waiver decision-making process. The Board expressed no

objections to the waivers approved in the last six months.

a. Limited Performance Audit of Open Public Meeting Practices

Director Ure reviewed the limited audit findings and expressed disappointment at the printed media representation placing the agency in a negative light. The full report is available through the State Auditor’s website.

b. Annual Open Public Meeting Training

The Limited Performance Audit identified a need for annual training of Board members taking

part in Open Public Meetings. The Open Public Meeting Act requires training for awareness of compliance by Board members. To be compliant, the Agency is using the audit findings to

conduct annual training for the Board of Trustees.

1. Notice of meetings by:

Notifying the public regarding meetings at least 24 hours in advance.

Including the date, time, location, and agenda of each meeting in the notification.

Posting the meeting notice in a statewide publication, on the PNW, and at the principal office of

each independent state entity.

2. Written minutes will include:

Meeting date, time, and the location.

Members both present and absent.

The votes of individual board members.

3. Upload meeting minutes within three business days after approval.

4. Post a complete and unedited recording of each public meeting.

5. Recordings post within three business days of the meeting.

6. Annual transparency training takes place each year at the August meeting.

In response to the training, Chairman Lekas asked if rules require a motion to adjourn. Robert’s

Rules of Order say a vote is necessary. The Chairman and Vice-chairman requested a motion and full votes be implemented when adjourning Board meetings.

c. FY 2018 Proposed Budget

Lisa Schneider shared updated reports and reviewed the projected budget for the year beginning

July 2017. She outlined the three line items in the agency budget as the operation budget, capital development budget, and the stewardship budget. A recommended change to the budget


moves money from the stewardship budget to the operating budget to cover costs for appraisals associated with a monument designation or the UTTR Exchange.

The Board asked no questions relative to the budget. Lonnie Bullard moved to approve the budget as presented.

“I make the motion the Board approve the proposed budget for FY 2018 as presented.”

Motion: Bullard /Ruppe Unanimous

Roll Call:



The budget request will proceed as outlined by Ms. Schneider.

d. Properties Poised for October Land Auction

Kim Christy summarized the upcoming auction for 13 properties. Twelve of the parcels are SITLA properties. The remaining property is a Utah State University property. A PowerPoint

presentation provided details available on the Public Notice Website.

Cave Valley - Washington County (200.18 acres) o Adjacent to Zion’s National Park o Located on Kolob Mountain Road o Scenic Property with High Recreation Value

Comb Ridge - San Juan County (approximately 380 Acres) o Six Miles West of Bluff o The exact acreage is determined after completion of a survey. o Comb Ridge Recreational Area

Crouse Canyon - Uintah County (600 Acres) o Diamond Mountain Area – 25 Miles Northeast of Vernal o Premium Big Game Hunting Opportunities o Within a Limited-Entry Hunting Unit o Near a DWR Wildlife Management Area

Diamond Rim - Uintah County (640 Acres) o Southern Rim of Diamond Mountain o 20 Miles Northeast of Vernal o Big Game Hunting Opportunities o Located in a Limited-Entry Hunting Unit

Hanksville South - Wayne County (40 Acres) o Within the Incorporated Limits of Hanksville o Interest Expressed from a Nearby Private Landowner

Patmos Ridge – Parcels A & B - Carbon County (520 & 200 Acres) o Remote and Rugged Parcels with Limited Access o 22 Miles East of Wellington o Interest Expressed from Adjoining Private Landowner

Photograph Gap – Parcel C - San Juan County (180 Acres) o 35 Miles South of Moab – On the road going to Canyonlands National Park o Offered for sale in October of 2007 and May of 2016– Not Sold o Interest expressed after the May 2016 auction

http://www.utah.gov/pmn/sitemap/notice/344717.html


Spring Canyon - Carbon County (600.38 Acres) o Seven Miles Northwest of Helper o Beautiful Property Featuring Mountainous Terrain o Excellent Big Game Hunting and Outdoor Recreation Potential

Willard - North & South - Box Elder County (180.38 & 33.09 Acres) o Located East of the Bear River Migratory Bird Refuge o Two Miles Northwest of Willard o Marsh / Wetland Type Vegetation o Waterfowl Hunting Potential

Yellow Creek - Garfield County (519.15 Acres) o One Mile South of Cannonville o Very Scenic Property o Adjoins the Grand Staircase Escalante National Monument o Excellent Recreational Opportunities

USU Property - Carbon County (271.86 Acres) o 3 Parcels and 4 Warehouse/Office Buildings o Located on the east and west side of Highway 191, between Helper and Duchesne o Offering this property on behalf of Utah State University

Land Sale Auctions o Auctions are typically held biannually

Average Auction Results 1998 to 2016 • 44% Above Appraisal • 32% Above Minimum Acceptable Price Marketing of Auctions • ksl.com and landwatch.com • Local and Statewide Newspapers • Real Estate Publications • Mail and Email to SITLA Mailing List • Hunting Community Mailing Lists

SITLA parcels included for the auction are all School Fund properties.

e. Exchange and Litigation Update [closed session]

f. Real Estate Briefing on Negotiations [closed session]

The Chairman asked for a motion to go into closed session for the remaining two agenda items.

“I make the motion the Board go into closed session for a strategy discussion for pending, reasonably imminent litigation; and to discuss the purchase, exchange, or lease of real property.”

Motion: Bullard /Ruppe Unanimous

Roll Call:



The Board went into closed session at 3:50 pm. Those present for closed session included Seven

Board members, Director Ure, John Andrews, Rodger Mitchell, Tim Donaldson, Kim Christy,


LaVonne Garrison, Tom Faddies, Lisa Schneider, Kyle Pasley, Paula Plant, Karen Rupp, Tom Mitchell, and Nannette Johnson

The Board came out of closed session at 5:30 pm.

“I make the motion we return to open session to conclude the meeting.”

Motion: Ruppe/Bachtell Unanimous

Roll Call:



Chairman Lekas asked for the motion to adjourn. “I make the motion for adjournment.”

Motion: Bachtell/Mower Unanimous

Roll Call:


Roger Barrus – yes Donald Foot -- yes Mike Mower – yes Adjourn

Documents

Board of Trustees School & Institutional Trust Lands ... · Board of Trustees School & Institutional Trust Lands Administration ... Kevin Carter, Former SITLA ... Board of Trustees