State Land 101 for Montana Landowners...Lease Rates on the Rise

Recently I was asked by an aspiring ranch owner about the blue squares on Montana topographic maps which indicate state owned lands. How are they managed? Can they be leased or purchased? In general, how do state owned lands impact me as a ranch owner in Montana?

These are great questions. Because state owned lands are scattered throughout Montana, encompassing over 5 million acres, many Montana ranches border state lands or lease state lands. Here is some background and basic information that you should know about state trust lands.

How did the State get all that land?
The Enabling Act, approved by the United States Congress on February 22, 1889, granted to the State of Montana for common school support sections 16 and 36 in every township within the state. Some of those sections were already homesteaded or were within Indian Reservation boundaries, so other lands were selected by the State to make up for the loss. In summary, state trust lands now include more than just sections 16 and 36.

How much acreage are we talking about?
Surface acreage totaled over 5.1 million acres at the end of 2010. Mineral acreage exceeds 6.1 million acres, largely because the mineral estate has been retained on lands that were sold by the State.

Who’s in charge?
The Trust Land Management Division, under the direction of the State Board of Land Commissioners, administers and manages state trust timber, surface and mineral resources. The board consists of Montana’s top elected officials: Governor Brian Schweitzer, Attorney General Steve Bullock, Superintendent of Public Instruction Denise Juneau, Commissioner of Securities and Insurance Monica Lindeen, and Secretary of State Lucy Richards.

What are the management goals?
The purpose of the Trust Land Management Board is to manage the State of Montana’s trust land resources for the benefit of the common schools and other endowed institutions in Montana. Their obligation is to obtain the greatest benefit for school trusts while preserving future returns. Leasing, trading or permanent disposition are all viable alternatives. In fiscal year 2010, nearly $150 million in net revenue was distributable to common schools and over $5 million was distributable to other trusts.

What are lease rates?
Currently there are about 8,500 agreements for the grazing of state trust lands. The average lease rate is currently about $6.50 per animal unit month, but the Montana Land Board agreed last week to increase that amount to $10.19 over five years. The new rate for the spring of 2012 will be $7.90 per AUM (Bozeman Daily Chronicle, 11/22/2011). Currently there are about 3,000 agreements for agricultural use of state lands. The primary crops are dryland hay and small grains, but also include higher revenue irrigated crops. The majority of these leases are on a crop-share basis with the minimum share of 25% set by state statute.

Who can access state lands for recreational use?
State trust lands are open to recreational use if they are legally accessible and have not been closed or restricted to that use by rule or the DNRC. The DNRC states, “Legally accessible state lands are those that can be accessed by public roads, public rights-of-way, public easement; by public waters that are recreationally navigable under the Stream Access Law; by adjacent federal, state, county or municipal land if that land is open to public use, or by permission of an adjacent landowner.”

Do I need a license to use state lands?
Sportsmen with a valid Montana Conservation License are allowed to hunt or fish on legally accessible state lands. A State Land Recreational Use License is required for other “General” or “Special” recreational use, including trapping, outfitting and group use.

How do I exchange for state land?
The Real Estate Management Bureau (one of four bureaus in the Trust Land Management Division) processes exchanges for the State Land Board using the following base criteria:

  • Equal or greater land value
  • Similar or greater land value
  • Equal or greater income to the school trust
  • Equal or greater acreage
  • Consolidation of state trust lands
  • Potential for long term appreciation Improved or equal access to state or public lands

How do I buy state land?
The Real Estate Management Bureau processes land sales for the State Land Board. All land sales must be competitively bid.

This information & much more on state lands in Montana can be found using the following resources: www.dnrc.mt.gov/trust

www.lincolninst.edu

B. ElflandB. Elfland and Fay Ranches represent the finest Montana land, ranches, farms and properties for sale. Contact Us today to find out how we can help you find the perfect sporting ranch or property and start living the life you deserve.