Judge declines to block sale of NCSU's Hofmann Forest

jprice@newsobserver.comNovember 12, 2013 

— A Wake County Superior Court Judge declined Tuesday to temporarily block N.C. State University’s sale of the massive Hofmann Forest in the southeastern part of the state near Jacksonville. The decision is a setback to opponents of the $150 million deal, who fear that the prospective buyer of the 79,000-acre tract will develop it.

Special Superior Court Judge Shannon R. Joseph said she would decide later on a motion to dismiss the case. That motion, which came from attorneys for NCSU’s endowment board and the private N.C. State Natural Resources Foundation, which gifted the forest to the university in 1977, also was heard Tuesday.

They argued that the plaintiffs had no standing to sue and that state environmental regulations weren’t triggered by a simple sale of the property.

In denying the temporary injunction to block the sale, Joseph said she didn’t believe that the plaintiffs – who include foresters, professors, conservationists and an owner of land close to the forest – had shown they would suffer irrevocable damage if the sale occurred.

The deal must be closed in less than six months, but it could be completed any time before that if various conditions are met.

“Obviously this decision was a disappointment,” said NCSU forestry professor Fred Cubbage, one of the plaintiffs.

The decision actually could speed the sale of the land, with the buyer and seller working to get the deal closed before the main hearing on the lawsuit could be held, he said.

Another plaintiff, conservation scientist Ron Sutherland of the Wildlands Network in Durham, said Tuesday that the group planned to continue pressing the suit.

Opponents filed it in September, saying that changes to the forest could damage irreplaceable habitat for the large population of black bears and for other important species, such as the increasingly rare Eastern diamondback rattlesnake. It also could harm water quality in three important river basins.

The sale of such a massive piece of state-owned land, they said, required proper hearings and environmental review.

But attorneys for the university contend that the land is not owned by the state, but rather is controlled by an independent entity, the NCSU endowment board, under various stipulations that were attached to the deed by a private donor, the Natural Resources Foundation.

Jim Conner, an attorney for the plaintiffs, appeared to undermine that argument Tuesday, quoting aloud from a 1980 letter from the state attorney general’s office to the Jones County tax assessor that the land was exempt from local property taxes “since it is property owned by the State of North Carolina.”

NCSU was trying to have it both ways, Conner said – paying no taxes by claiming the land is state-owned, then trying to get his clients’ suit tossed out of court by claiming it wasn’t owned by the state.

An income generator

The forest was purchased by the private foundation – the initial tract in the mid-1930s – to create income for forestry programs at NCSU’s College of Natural Resources. It also has been used for research and teaching.

In recent years, the forest had generated about $2 million annually that was used to benefit the college, though the income had dropped to less than $900,000 last year.

The university’s endowment, which controls the forest, wants to sell it and invest the money to gain larger, steadier returns. Chancellor Randy Woodson said that by investing the money, the endowment expects to bring in $6 million annually for the college.

The university’s endowment board signed a deal last month to sell the forest to a new company headed by a large-scale Illinois farmer.

In the contract, Hofmann Forest LLC says its plan is to sell rights to the military for training on about 70,000 acres. A spokesman for Camp Lejeune confirmed that the Marines are interested in such a deal, in part because they have long used the forest for low-level flight training.

Such deals for training “easements” typically limit development that would bring more people onto the property, but row crops or other agricultural uses, such as poultry or hog farming, may not pose a problem.

Diversifying investments

A spokesman for the company said that its plan was essentially to leave the forest as it is and that the owners of the company saw the forest and easements as a chance to diversify their investments.

The opponents of the sale say the wording of the contract doesn’t prevent the buyer from replacing forest with more farming, nor does it stop other kinds of development, particularly if the property is resold.

Joseph, echoing an argument from NCSU’s attorneys about the lack of proof about any plans for development, asked why she shouldn’t consider the plaintiffs’ talk of strip shopping centers speculative.

Conner replied that, although there is no way to know the specifics of what the buyer plans, the amount being paid for the land dictates development, because otherwise it makes no sense as an investment.

“We know this purchase price can’t be sustained without some sort of development,” he said.

Paul T. Flick, an attorney for the defendants, said that talk of development makes little sense, given the facts about the land. Much of the portion of the forest in Jones County simply can’t be developed because it is protected wetlands. The larger part is in Onslow, which has zoned it only for conservation use, meaning little more is possible than timber and recreation.

The county government there is on record as wanting to leave the forest as-is to protect the viability of Camp Lejeune, which is the economic lifeblood of the area.

There is clearly harm possible, Flick said, and that would be to NCSU’s endowment if the sale doesn’t go through. For one thing, the buyer is offering $4.2 million over the appraised value of the land. Another buyer may not do that, and may offer even less that the appraisal price.

University officials say that most of NCSU’s forestry teaching and research now occurs elsewhere. And given the significant loss of state funding for the university in recent years, it’s crucial to sell the forest and make a smart investment that yields much more than it has been. The contract also notes that the buyer plans to continue to allow access for NCSU faculty and students and to keep the name Hofmann attached to the property.

Price: 919-829-4526

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