08/18/2014 at 12:33 PM #54254
Does anyone have any insight/opinion on NCSU proposed sale of the 79,000 acre Hoffman Forest?
There certainly seems to be some very valid points being made by Save Hoffman Forest supporters…..
I am just going to re-post an email. Not trying to spam, but the is the best way I know to share related information/links/subject matter for review, etc. The group has a informative facebook page. For the record, I am personally opposed to the sale for a multitude of reasons, one of which the sale has no real present value to NCSU, compared to the future present value IMO.
Dear Friends of Hofmann Forest,
Thank you so much for signing our petition to stop the sale of this 79,000-acre tract of public land!
If you’re in North Carolina (or if you don’t mind traveling), please take a minute to write this in your calendar this morning:
Hofmann Forest Protests, Monday August 25, noon-1pm (come when you can)
Location: take your pick between NCSU’s campus in Raleigh, and Deppe Park (part of Hofmann Forest) just up the road from Jacksonville, NC
1. NCSU Campus in Raleigh, Brickyard Plaza, in front of DH Hill Library. Parking should be available in the Dan Allen Deck on Dan Allen Drive, and also off Hillsborough St, or take a bus from a NCSU park and ride and get off at DH Hill Library. Arrive early to have time to park and walk to the Brickyard.
2. Deppe Park in Hofmann Forest, 5472 New Bern Hwy, Maysville, NC 28555 (=on US 17 northeast of Jacksonville), parking should be available at the park.
Bring to either protest: most important – your friends and family! Also: homemade signs (or your Save Hofmann Forest yard sign), snacks, water, hat, raincoat if its wet, peaceful energy, clever chant ideas.
This is our time, we have the momentum, please show up and bring people with you! It will be fun, and you’ll help make history!
Please help us make sure everyone knows about this! The Appeals Court could decide the Hofmann case any day now, we need to show our strength on the 25th!
Its so easy to think of excuses not to attend – but consider this – all those other parks and forests you enjoy – someone stepped up when it was time to protect and defend those special places. Don’t let Hofmann Forest down! We can win this!
To RSVP (not required but appreciated), see the event postings we’ve put on http://www.facebook.com/savehofmannforest – please invite your friends!
Thank you so much for your dedication,
Ron Sutherland, Ph.D.
NCSU Biology ’99
ps – we’re so close to 10,000 signatures on the MoveOn petition, which we’re planning on delivering to the NCSU leaders on the 25th – can you please take a moment today to share the petition (again) with your friends and family? Invite them to join the protest at the same time.
http://petitions.moveon.org/sign/save-hofmann-forest-from?source=c.fwd&r_by=1092583508/18/2014 at 1:01 PM #54255
Sorry for the gramatical errors above. Posted quickly without proof reading as usual.08/18/2014 at 3:43 PM #54259
Glad you asked…
This “Sale”… and the word “giveaway” would be more accurate”… IMO…ranks as one of the biggest scams ever perpetrated on North Carolina citizens ….
Just for your reference:
I had a little timber cruising experience in another life… I still got my old International Log scale stick….
I did have a “little” sawmill set up on the Farm… and actually sold a fair amount of grade hardwood .. mostly to Italy … believe it or not…. but I hadn’t bought or sold any trees or lumber in about 12-13 years…
So I’m counting on you younger Forestry grads and Mr. Stick… to help me out here…
Here’s the way I see it….
1. A “good Pine Tree” is about 20-24″ at the butt and yields three or more 16 foot grade logs — one Prime, one #1Common, one #2Common…
2. A good Pine tree might be worth around $100.00 in today’s market STANDING IN THE WOODS….
3. The Hoffman Forest Sales Price is $150,000,000.
4. The track is approximately 79,000 acres
5. That’s $1,898 dollars per acre….
6. Now let’s say that only FIFTY (50%) PERCENT of the tract is productive timberland… that’s 39,500 acres and those acres need to be worth… $3,796 each so the good acres and can pay for the bad acres…
Here’s the catch…. that’s only THIRTY EIGHT GOOD TREES per good acre of timberland….
For those that don’t know Pine Tree are planted at rate of 600 -650 per acre… maybe higher in some places…They are generally thinned /harvested by one in half twice… so you still got 38 trees left in any decent job of “Shelter-Cutting” so those trees can re-seed the area underneath them….
In doesn’t take a rocket scientist to figure out that there’s a whole lot more trees than that in the Hoffman Forest…
You just need Google Earth….
If my math is not quite for you… consider this….
There’s NO F’ing WAY anybody can harvest all those trees (no matter how many there are ) at ONE TIME…
The fact is that Trees GROW…. and when they do they are worth more not less….
So the correct finance equation for the BUYER is not Net Present Value….(although that is the way the Buyer hopes the SELLER – the old poor farmer who doesn’t know any better might use to do his figures… )…
The correct Finance equation for the Buyer is this….
How much timber do we have to cut each year to make the mortgage payment…
When interest rates are substantially lower than the growth rate of the trees as is currently the case…
The correct answer is “AS FEW AS POSSIBLE!”…. duh…
Based on my constants above — I’m thinking about 9,000 good trees or about 300 acres of good timberland or some combination thereof yielding about $900,000 each year ought to do this job nicely….
Note: 300 acres is 3% of the 39,500 good acres of timberland… to put that another way…. At that rate, it would take 33 years to cut all Timber in the Forest today… but it only takes about 25 years to grow a new Pine tree of equal value….
The FACT is that if we had all the cruise numbers… we would find that the BUYERS can cut TWO or THREE or FOUR times that minimum number of trees each year … pay the mortgage, replant what needs replanting, put the rest in their pockets to do other things… and Nobody IN North Carolina will ever know that’s what they are doing… AND STILL NEVER RUN OUT OF TREES TO CUT….
Serious legal and constitutional questions aside just for a minute…. THIS IS WHY this is the biggest scam ever !
The Seller’s (whoever that is in this deal ) damn sure ain’t getting their/our money’s worth!
For that reason alone… Somebody should have stopped this deal … dead in it’s tracks…. a long time ago….
Mr. Stick… check my numbers for me please sir…#NCSU-North Carolina's #1 FOOTBALL school!08/18/2014 at 4:50 PM #54261
This is NC, the tax payer is not the concern. Dig deep enough and you’ll find a political debt being paid and the padded lining of a purse belonging to an associate/relative/friend of those in influential positions.
The Easley’s were not an aberration.08/18/2014 at 6:48 PM #54262
Nice summation Bill. Had this exact conversation with my brother (Weyerhaeuser employee-30 years) last year. 80,000 acres – first thin at 15 years, clearcut at 25 years. That sized tract should generate at least 9,600,000 a year on a rotating basis. (80,000 x 3,000(1st & 2nd cut = $240,000,000/25 year cycle = 9,600,000 a year) What other income streams could be generated on an 80,000 tract outside of just lumber??? Prices vary throughout the state but at $1,900 an acre that tract should be clearcut to the last one inch gum tree prior to sale. Would love to see tax information and intended use of 150,000,000. What makes financial sense to the sellers??? I know the buyers are licking their chops.
Bill, do you have any idea how long it takes a broken down 50 year old to plant 600 seedlings per acre? I got 60 acres to replant.08/18/2014 at 7:35 PM #54263
May I add that Hoffman Forest protesters will be joined by Blount’s Creek peeps.
We,and I say we, ain’t anymore pleased with the deal to sell, than we are the blantant, illegal, permitting by the NCDENR granted to Martin-Marietta.
Backroom politics come in all flavors. Your guys are as corrupt as their guys.08/18/2014 at 7:58 PM #54264
permitting by the NCDENR granted to Martin-Marietta.
What’s this about?08/18/2014 at 8:27 PM #54265
Paki…consider it a teaching assignment. I can’t summarize it all during a fantastic storm from an Android.
Blount’s Creek/ Martin-Marietta…
You don’t want my play by play.
Google the fu#k out of it.08/19/2014 at 12:03 AM #54266
No-so-fast-back-68…. I believe I’d contract that job out to your county forest service… they need something to do and it should be reasonable…
Unless you just don’t want to spend the money… in which case I’d say two men… (I don’t do nuttin by myself, anymore)…. ought to be able to layout (you did say you wanted your rows straight… didn’t you) and plant an acre every two days… some days more or some less depending on how the land lays… working four – five days a week…
In other words… start after Labor Day.. finish before Christmas…. just watch out for the dumbA%% deer hunters…. (which is the other reason you need to take another man with you )…
Tell you the truth … spending that much time in the woods sounds like an excellent vacation these days… I ain’t been in the woods nearly enough lately… and sadly… I really can’t say when I might get to go … anytime soon…
Now… using your Weyerheuser formula… I see you’re coming in at TEN TIMES the revenue stream I was projecting…. So now we have the minimum (my $900,000 number ) and Fastback’s max number ( $9,000,000 ) for our revenue projection…
Of course… neither on of us has got anything figured for the OTHER 39,500 ACRES as to possible revenue streams… we’re just talking about STANDING TIMBER…
Any body want to bet that the Buyers will be asking NCDept of Commerce and Hyde County Commissioners for EDC grants ???
Guess that proves how stupid this deal is….
I think the judge ought to just go ahead throw the Dix property and the Charlotte Airport (CLT) in the pot and let ’em have all three for say … what do you guys think is fair…. another $150,000,000 ???#NCSU-North Carolina's #1 FOOTBALL school!08/24/2014 at 9:10 AM #54408
BTTT08/25/2014 at 9:14 AM #54427
This is almost unbelievable. Thanks for shining a spotlight on this. A good lesson for those of us who marvel at some of the other things the NC political machine is protecting…08/25/2014 at 12:09 PM #54429
… believe it … ‘giveaways’ and ‘takeaways’ ain’t nothing new in North Carolina…
Just go back to when the State of North Carolina and it’s related ‘agencies’….
1. ‘gaveaway’ NC Memorial Hospital and follow that thru the ‘acquisition’ of Rex Hospital to today…
2. ‘split’ the Dix property and ‘gaveaway’ what’s now the Centennial campus
3. the NC Supreme Court decision in the mid 90’s that protected all of the Dept of Commerce unconstitutional actions (past and future)… not the least of which was the ‘takeaway’ of the people’s right to know what DOC and local EDC ‘actions’ cost the taxpayers….
and then more recently….
4. the reorganization of NC Div of Mental Health… a bunch of ‘takeaways’ and ‘giveaways’….
5. Dix ‘giveaway’… part two or three… (vis City of Raleigh)…
6. the Charlotte Airport ‘takeaway’…
7. the Hoffman Forest ‘giveaway’….
… not to mention… numerous other but similar, lesser known in less visible places, ‘takeaways’ and ‘giveaways’….
In every case… the people of North Carolina… the rightful ‘owners’ of the State and all that involves… got zip…
except the promise that a few would be better at the expense of the many…
Democrats and Republicans… Governors, Solons and Justices… all in the pool together on this one…
It all gives new meaning to the old phase “State’s Rights”
And yes… our old friend and alum… TulipLips put it all in high gear…
For more information on this topic… just ask the Mayor of your town or city… or any Member or employee of the NC League of Municipalities.#NCSU-North Carolina's #1 FOOTBALL school!08/25/2014 at 1:53 PM #54433
B on the beach, I still don’t see how selling the land is the worse of the options. If I earn at minimum of a three percent return on average I am getting at least 4.5M a year. Not even close to the 900K you mention. Of course it doesn’t come close to FB68 estimate. I guess it is somewhere in the middle That is just assuming that I only invest in debt related obligations. Now equities are growing at a nice clip. Also I see that you recognize that they can never have enough timber to cut but discount(undervalue) the investment of the earnings they are getting on the 150M.
Don’t disagree with the back room deals and the dirty politics. Risk is inherent in any decision they make. Hell the timber could develop some sort of disease or insect(Pine beetle). The market could tank but again I say on average 3 percent return, that accepts the good and the bad years. I think 3 percent is still conservatively low. I admit I am timber novice(even as far as to say dummy) but to me this is not as bad as some project. If I am invested in timber I am at the mercy of timber prices. If the investment(equity or debt) is not performing I can move it.
I am open to be educated more on the timber business. They could have had this on the market for ten years and this was the best offer they got. Not everyone has 150 to 200M laying around. What a willing seller(will accept) and a willing buyer can offer is what its worth. Could be that expenses are going up and and timber prices are too volatile(their eyes) to expect the revenues to keep up. Correct me if I am wrong but this money is going to the endowment fund which I think is a nonprofit and taxes are minimal if any. If I am wrong please correct me on that.08/25/2014 at 2:42 PM #54435
^ Selling the Forest is not my main beef… it’s the price at which it was sold that deserves more public and closer scrutiny.
FWIW… for years … most of large ‘timber/land purchases’ nationwide have been by and between large Pension Plans not Timber companies.
Why… one might ask?
Well… there’s a little thing called a ‘depletion allowance’ which works just like ‘depreciation’ on equipment (basically…tax credits on timber sales ) and they get to deduct ALL the ‘management expenses’, including but not limited to: consultants, cruises, appraisals, aerial inspections, lunches, motels, hunting and fishing trips and, of course, harvesting and replanting, as ‘legitimate business expenses’… most of which is paid to the large Timber Companies who get large chunks of cashflow without tying up any debt or cash…
Truth is … the large Timber Companies send plenty of deals they get first look at — straight to their ‘favorite’ Pension Plan Guys…
Then… if they wish…
they can ‘GIFT’ large sections to folks like The Nature Conservatory and get more TAX CREDITS… PLUS major political capital as DoGooders AND keep 100% of the timber rights… if their timber management plan is approved by the Donee (HA!)…
THAT makes the $numbers$ FB68 and I posted above…jump thru the roof and puts ‘timber’ in the same league as TripleAAA corporate and government 30 year bonds which is perfect (as in stable long term double digits ROIs ) for Pension Plans and the Pension Plan Guys may never step foot in NC much less in the woods…
If one thinks … the people of North Carolina think they got big ‘political’ problems inside the Beltway… they might want to ride to Rawlee first…
Bottom line is …. we, the people of North Carolina, simply cannot afford what Rawlee wants and does… regardless of who’s in charge. So we’ll just let our kids pay that off…too….#NCSU-North Carolina's #1 FOOTBALL school!08/25/2014 at 3:08 PM #54436
Credits don’t pay short term debt and they do expire and are at that the mercy of good hearted public servants (sarcasm). Again if pension companies and other potential buyers don’t feel timber is a good investment then their offer could have been lower than the 150M. We may never know.
Don’t get me wrong there is a lot of dirty s*it going on and this may be one of them. I am aware of the depletion cost recovery. It just reduces basis like any other income producing personal property you may sell.08/25/2014 at 3:59 PM #54437
It might be said…
The only reason you ever sell any asset, especially one that is paid for (free of debt)… is that you GOTT something BETTER you can do with the after tax proceeds of the Sale.
To put that another way…
To say “we’re gonna sell an debt free asset simply because we can get a ‘decent’ price while nobody’s looking… and put the money in the bank and then go look for something else to do… well…
Somebody else might say… “We expect better than *that from someone with ya’ll’s education and experience…”
Another observer might say… “You guys ain’t telling everything…”.
‘Cause everybody knows… the growth rate on Pine Trees is somewhat higher than banker’s interest rates on Cash Deposits.
Without full disclosure… Nobody really knows what the “Real Better Deal” is…#NCSU-North Carolina's #1 FOOTBALL school!08/25/2014 at 4:16 PM #54438
^ The above posts are why I like reading this forum. I learn something new every day.08/25/2014 at 8:42 PM #54443
I am always interested in articles written about asset diversification. I have read multiple sources over the years that state timber lands provide a safe 8% return in terms of growth in value per year. Unfortunately, the math behind the 8% is never provided. 8% of what, the cost per acre which is a moving variable. I simply divide 100% by the 25 year life span of a pine tree and come up with 4% per year. According to my google searches, Hoffman generates 2.0mm in income per year. Insert Picard face palm. That is $25 a year per acre for a whopping $625 over 25 years or just 20.8% of what it should generate over 25 years. $625/$3000. Job well done. (sarcasm)
I don’t think educational goals and profit maximization goals associated with the largest forest owned by a university in the world are mutually exclusive. I just expect better results from my alma mater and from our College of Agriculture & Life Sciences, College of Natural Resources, College of Sciences and from Poole College of Management. The State of North Carolina has a goal to increase publicly held forests by 1,000,000 acres before they are all gone. Why are we selling to an out of state pig farmer/developer? Why can’t our state purchase the property? Oh, that’s right, they are too busy pissing our tax dollars away on money losers.
Gowolves, as an accountant, I agree that there is a number where it makes financial sense for the university to sell the property if they simply do not want to manage 79,000 acres of forest and insist on selling and if they have other educational properties. I would rather it remain available to the citizens of North Carolina. I hope they get a better return on the 150mm but I won’t hold my breath. Bill mentioned dumbA%% deer hunters of which I am one. Hofmann is divided into several hunt clubs. 79,000 acres should be generating a decent amount of hunting lease fees but it probably is just another area of financial mismanagement.08/25/2014 at 9:03 PM #54444
^point of clarification #1… not all deer hunters are dumbA%%es… just the ones who shoot first and look second or can’t tell the difference between a buck and a doe in close cover… most of the rest I know are excellent sportsman…
and they probably GOTT as many ducks and geese, if not more, on that 79,000 acres as they do whitetails…
Now… wing shooting … that’s the sport of gentlemen….
There’s nothing better in the shooting sports … than walking behind a couple of pointers or setters when they’re working a cutover, or watching a lab retrieve from 120 yds….
^point of clarification #2…. that 8% ROI, as you CPAs well know, is most often calculated against book value (the original purchase price ) … it does not factor in any unrealized gains due to appreciation in the underlying value of the asset ( the land )…
That said, there used to be a GAAP… that allowed for increases in book value due to unrealized gains (appreciation) … when those gains could be well documented with an MAI appraisal. And doing so… makes your ratios look pristine.
I know I went broke using ‘creative GAAP financial accounting’…
… #3 or #4 among the things they don’t teach in business school….
Where the hell is Mr. Stick on this topic… I know he has words of wisdom regarding creative financial accounting.#NCSU-North Carolina's #1 FOOTBALL school!08/26/2014 at 7:43 AM #54452
The average lease rate for hunting land in NC is $12 per acre which equals $960,000 for a piece of property this size. It should command more than that based on the sheer variety and quality of hunting that exists on the parcel and we have not even factored in the added fishing opportunities. “56,000 acres are a working forest and 1,500 acres are agricultural. State acquired this land in the 30’s. Last year the property only generated $861,000 in income.” Opponents appalled by lack of transparency in Hofmann Forest sale by Jay Price 10/29/13 N&O.
Bill, deer hunters do come in a variety pack and most are willing to spend $500 to $1,000 a year to participate in a hunt club. Secondly, some of my best friends are native NC pig farmers. Could not agree more about wing shooters. You mater guys should appreciate the thought of a bean counter trying to figure out PH levels and trying to scratch out red clay for a brown top millet crop. I was shocked when two dozen dove took flight last Thursday. Shocked, I tell you.08/26/2014 at 9:23 AM #54453
My background is in accounting as well. FB68 all your points are valid.
Bill, If we look at the property as other than $$ then there are several reasons to keep the land and I agree with them. Hunting, nature conservancy, you name it.
That unrealized appreciation may never be realized if you don’t sell it. When you do sell it, that amount of unrealized appreciation may be no where you thought it was. It is hard to compare tracts of land that size in comparable past sales to gauge a value or price. Strictly for financial reasons (even if the price was a bit low) I think it is a good deal. It gives them so much more flexibility. For the other reasons mentioned it is not.
If the state of NC tried to buy it they would have low balled the price even more. They would be playing both sides of the fence. On one side they have the taxpayers of ALL of NC to appease to pay as little for it as possible. On the flip side the money from the sale goes to a state funded school. There is no winner in that battle. Like someone mentioned above the Dix property and the difficulties they have had trying to price and value that property. There is nothing like that in the Raleigh area. What is the real value? Commercial, residential, or nature/parks? All three would pose a different value based on the potential buyer.08/26/2014 at 10:14 AM #54454
“…walking behind a couple of pointers or setters…” – God help anyone hunting behind a setter. They are the most hard-headed bird dogs I’ve ever worked with. There is no dog on this earth better than an American Pointer. The field trial industry is dying a slow death, but if any of you guys like to watch a good bird dog work and have the opportunity go see a field trial in Hoffman (between Pinehurst and Rockingham) you should definitely go do it.
Sorry for the tangent; continue with the bean counting. and +1 to what Mr. Plywood said above.08/26/2014 at 11:22 AM #54457
^… you are right about ‘setters’ … but they are handsome dogs…
That said, the best bird dog I ever had was a Brittany.
If we look at the property as other than $$ then there are several reasons to keep the land….
And ALL of them are valid…
And is not one primary purpose of Government (including State supported Universities) … TO DO those things that serve the people that business either chooses not to do or at which they fail ???
For example… is anyone in favor of closing our public parks and museums?
The ‘issue’ with the Dix property is that is was given in trust, in perpetuity, to the people of North Carolina for one singular purpose.
That should be simple enough. Until there is a statewide referendum and the results of that vote indicate that a majority of the citizens of North Carolina are in favor of changing the terms of the original contract AND, likewise, a majority of the heirs and assigns of the donor support the same… the State should keep it’s greedy hands off the property.
Same with the airport in Charlotte…. did the citizens of Charlotte vote and approve giving the airport that was built with their tax dollars away ?#NCSU-North Carolina's #1 FOOTBALL school!08/26/2014 at 11:57 AM #54458
Wow…the freakin’ deer and turkey hunting lease on 79,000 has more value than the entire sales price. Not sure of all the math, but Bill’s numbers make sense and I’ve had enough experience in the tax side of timber sales to smell a rat! Timber prices certainly go up with maturity.
The only thing I can think of that would adversely affect it would be pine beetles so that you’d have to sell it for pulp which is less.
$2 acre a year for deer rights is well below the market which would exceed the sales price. I can guarantee you that we paid more than that per acre on a 48,000 acre lease on the Pee River back in the late 80’s/early 90’s.
Cowdog, you talking about the phosphate mining???
"Whomp 'em, Up, Side the Head"!08/26/2014 at 11:58 AM #54459
Do keep in mind that the mental health reform started under a Demcratic administration….It’s kept me busy for 15 years sorting through this stuff.
"Whomp 'em, Up, Side the Head"!
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