N.C. State University has retooled its controversial plan to sell the massive Hofmann Forest near Jacksonville. It now will sell nearly all of the timberland to an investment company that specializes in sustainable timber management.
That company, Alabama-based Resource Management Service, will buy 56,000 acres, while the original buyer, Hofmann Forest LLC, will purchase the remaining 23,000 acres, including the major open tracts, university officials said Tuesday.
NCSU also agreed to cut $19 million from the original $150 million price, but the new terms could eventually reap an additional $9 million if the buyers are able to negotiate a deal to sell training rights on and over the forest to the U.S. military or to sell protection rights to a conservation group.
Chancellor Randy Woodson said taking less – but still getting a good price and at least some assurance that the working forest would remain and be available for university research – is the right thing to do.
“We and the buyer have been pushing to work to identify patterns that can bring to bear sustainable forestry practices, and the idea is to keep as much of the property as possible in forestry production,” he said. “Bringing in this group enhances that future.”
The forest sits in the drainage basins of three sensitive riversheds and provides habitat for a number of important species, including black bears.
It was bought in the 1930s by a private foundation so that its timber-farming sales could be used to fund forestry programs at the university. It was eventually given to the university endowment.
In announcing the original deal, university officials said they were selling the land because it wasn’t yielding enough income and wasn’t used much for research anymore. The investments should generate about $5.5 million a year for operations of the College of Natural Resources, they say, which could help compensate for repeated cuts in state funding in recent years.
It had been producing about $2 million a year from timber sales, but in 2012 that dipped to less than $900,000.
Opponents of the sale say that the university has underplayed the land’s value for research and that if better-managed, it could yield steadier income. They also say it plays a host of vital environmental roles.
The original buyer is led by members of a major Illinois farming family. Opponents of the sale, who are suing to block the deal, have said they fear that Hofmann LLC would chop down the trees to make way for row crops. They said the original deal was deeply flawed because it gave no iron-clad protections for the forest, which the university uses for income from timber farming and for research.
Fears from prospectus
Their fears were stoked by a leaked prospectus that Hofmann LLC created to attract partners. It said parts of the tract could be used for up to 2 million square feet of commercial development and more than 10,500 homes. The prospectus also bragged about the high quality of the soil for crops if the trees were removed and even talked about potential for quarrying.
A spokesman for Hofmann LLC said then that the prospectus was preliminary and that the company had changed its plans. Opponents said they didn’t believe that.
The new deal is still far from perfect, since there are still no absolute, permanent protections for the forest, said conservationist Ron Sutherland, one of the plaintiffs in the lawsuit to block the deal.
But the participation of RMS was at least encouraging, Sutherland said, noting that the company was known to work with conservationists.
“At least there is an actual timber company involved now,” he said. “It sounds like a good step in the direction of what the university said the deal was supposed to be, but it’s still a few steps short.”
Last fall, a Wake County Superior Court judge dismissed the opponents’ lawsuit. They then took the case to the state Court of Appeals, which hasn’t yet ruled.
Sutherland said the new deal probably wouldn’t affect their pursuit of the case, because until it’s clear that the land is protected, the plaintiffs believe any sale should be subject to a full environmental review.
RMS is what’s called a Timber Investment Management Organization. It pulls together groups of large institutional investors who want to diversify their portfolios with something besides stocks and bonds. The organization buys a large piece of timber land, then manages timber production, harvesting and re-planting parts of the tract at a sustainable pace, said Ed Sweeten, the company’s executive vice president.
‘We grow trees’
“People can check who we are and what we’re about: We grow trees,” he said. “We don’t speculate and buy land where we’re going to go out and do something wild and crazy, because our clients, they have other people they invest with to go and find those kinds of things.”
The company manages about 230,000 acres of timber in North Carolina and about 2.6 million acres in the Southeast, he said.
It already works with NCSU on forestry research and not only plans to continue allowing research in Hofmann but hopes to expand it, Sweeten said.
“We have people on our staff that will be getting with them at some point and talking about the future, because we feel there is real value to research.”
Marines from nearby Camp Lejeune have long used the forest for training, particularly aerial operations over it. The prospectus suggested that the rights to continue using it for training could be sold for $50 million, and a Lejeune spokesman confirmed last year that the Department of Defense was interested in a deal.
Stephanie Spiros Walker, a member of the family that’s heading Hoffman LLC, said they were optimistic that an agreement could be signed with the military and that the company would consider layering on another easement with a conservation group if the terms made sense.
Hofmann LLC, she said, was still trying to figure out the best way to use the land it would be left with in the deal, but that its plans include exploring the development of a tract along U.S. 17 near Jacksonville and continuing the current use of the 1,500 acres of existing farmland.
Sutherland said it would go a long way to solving the problems with the deal if the military insisted on permanent protections for the working forest, though development along the highway would still be a downside because it could block the movement of wildlife, including bears.
The deal has been in the works for more than a year and a half. University officials said Tuesday that negotiations over that training easement were one of several things that had slowed the deal. The military apparently wanted to wait until the sale was complete before trying to work out an agreement, said Woodson.
Also posing problems were the complexity of the financing, title searches and the outcome of an EPA investigation into whether the university violated the Clean Water Act by illegally draining wetlands, something that could require modifications to the land or involve fines.
The new deal was signed Sept. 2. Officials expect a closing on or before Nov. 17. It’s unclear, Woodson said, whether the EPA investigation will be complete, but the new contract includes wording to allow for that contingency.