Updates to the SFIA

FINDINGS AND RECOMMENDATIONS
FROM SUSTAINABLE FOREST INCENTIVE ACT (SFIA) WORK GROUP
January 2006

SFIA provisions at Minn. Stat. § 290C were enacted “to encourage the state’s private forest landowners to make a long-term commitment to sustainable forest management.”

From October, 2005 through January, 2006, a Work Group, representing a broad cross section of public and private entities concerned with sustainable forestry in Minnesota, participated in a series of meetings to discuss the Minnesota’s Sustainable Forestry Incentive Act (SFIA). [Names and affiliations of SFIA Work Group Participants are attached to this report.]

The primary motivation for this series of meetings is the relatively low rate of participation in SFIA by family forest landowners in the face of growing development pressure on private forestland. The Work Group determined that SFIA must be changed and improved in order to ensure that the Acts’ policy objectives are met. Those objectives include: 1) ensuring a long-term supply of competitively priced wood fiber to sustain Minnesota’s forest industries and the jobs they provide; 2) increasing the level of forest management on the state’s family forests; and 3) and providing a framework within which Minnesotans can continue to enjoy public access to the state’s private forestlands.

With these policy objectives in mind, the Work Group developed the following findings and recommendations:

SFIA Work Group Findings

1. The Work Group finds that substantive program changes are necessary in order for the SFIA program to accomplish the public policy objectives;

a. Preventing conversion of forestland to development;

b. Promoting sustainable forest management practices on private forestland; and

c. Promoting public access to private forestland.

2. The Work Group finds that the current SFIA payment formula does not provide a large enough payment to attract a substantial number of family forest landowners to enroll their property in the program.

3. The Work Group finds that program costs exceed program benefits for most family forest owners. Such costs include obtaining a stewardship plan, submitting an application, preparing and recording a covenant on the land, and annual recertification. The Work Group believes these requirements constitute a major “barrier” to participation given the perceived low level of the incentive payment provided by the program.

4. The Work Group finds that there are specific aspects of program administration that can be changed to ease enrollment in the program – particularly for family forest landowners.

5. The Work Group finds that administration of the SFIA program would benefit from a more clearly delineated lead agency responsible for coordination and promotion of the program.

6. The Work Group finds that DNR and Department of Revenue roles with respect to SFIA administration need to be clarified.

7. The Work Group finds that information/data must be gathered to provide the framework for discussions to take place regarding the level of payment which would be necessary to substantially increase enrollment in the SFIA program.

SFIA Work Group Recommendations

SFIA Program Administration

1. The Work Group recommends that the Department of Natural Resources be the lead agency responsible for administering the SFIA program.

2. The Work Group recommends that information to prospective enrollees regarding SFIA program benefits and enrollment procedures be developed and marketed using both print and electronic media.

3. The Work Group recommends that an educational and promotional program be developed to market the SFIA program to family forest landowners throughout the state. It is specifically recommended that funds for developing appropriate materials be sought through a proposal to the State Forest Stewardship Committee.

4. The Work Group recommends that major promotional efforts associated with SFIA not be launched until such time as the program has been modified – particularly with respect to the incentive payment structure -- in order to avoid failing to meet expectations of enrollees which could permanently damage the program and compromise the state’s ability to accomplish the policy objectives of the SFIA.

SFIA Program Technical Changes

1. The Work Group recommends that the Department of Revenue develop recommended technical changes to Minn. Stat. § 290C that address the following:

a. Clarifies payment eligibility when there is a change of claimant.

b. Clarifies reference to the forest management guidelines with which an enrollee must comply during the period of enrollment of their land in SFIA.

c. Clarifies that enrollees of small tracts of forestland are afforded the same protection from liability as is currently afforded enrollees of large tracts of forestland.

SFIA Program Incentive Payment Changes

1. The Work Group recommends that the amount and structure of the annual SFIA incentive payment needs to be specifically explored. This includes evaluating:

a. A two-tiered SFIA payment structure for enrolled forestlands that provides a higher payment to landowners who provide public access to their forestland.

b. A multi-tiered SFIA incentive payment structure that provides a higher incentive payment for forestlands which are in areas at higher risk for development (conversion from forest cover).

Next Steps

1. The Work Group recommends that its findings and recommendations be presented to the Govenor’s office along with Commissioners Gene Merriam of the Department of Natural Resources and Matt Kramer of the Department of Employment and Economic Development. In doing so, the Work Group requests that the Governor’s Task Force on Global Competitiveness of the Primary Forest Products Industries be asked to review the Work Group’s report and identify needed changes needed to the SFIA program to accomplish its major public policy objectives.

2. The Work Group recommends that the House and Senate Policy and Finance Committees with jurisdiction over forestry matters be provided information regarding the SFIA Work Group effort. The specific recommendation would be to seek the opportunity to present testimony for the appropriate House and Senate Committees to outline the Work Group’s findings and recommendations.

3. The Work Group recommends that a state appropriation of $50,000 be provided to the University of Minnesota’s Department of Forest Resources to undertake a data gathering process to provide the basis for determining an alternative SFIA incentive payment structure.

SFIA Work Group Participants

Mike Roelofs, Legislative Director Dept. of Revenue, Mail Station 7100 600 North Robert Street St. Paul, MN 55146 Tom Baumann, Manager DNR - Forestry, Box 44 500 Lafayette Road St. Paul, MN 55155 Dave Zumeta, Executive Director MN Forest Resources Council 2003 Upper Buford Circle St. Paul, MN 55108 Terry Weber, Executive Coordinator MN Forest Resources Partnership P.O. Box 144 Grand Rapids, MN 55744 Gabe Horner, Gov't Relations Director The Nature Conservancy in MN 1101 West River Parkway, Suite 200 Minneapolis, MN 55415 John Curry MN Campaign for Conservation 458 Otis Avenue St. Paul, MN 55104 Mark Johnson, Executive Director MN Deer Hunters Association 460 Peterson Road Grand Rapids, MN 55744 Dr. Mike Kilgore, Assistant Professor Dept. of Forest Resources - U. of MN 115 Green Hall 1530 Cleveland Avenue No. St. Paul, MN 55108 Kathryn Fernholz Dovetail Partners, Inc. 4801 No. Highway 61, Suite 108 White Bear Lake, MN 55110 Jim Marshall, Forest Resources Manager UPM Blandin Paper Mill 115 S.W. First Street Grand Rapids, MN 55744

Lynn Reed, Executive Director MN Taxpayers Association 85 E. 7th Place, Suite 250 St. Paul, MN 55101 Larry Wolfe, Chief Deputy Auditor Cass County Courthouse P.O. Box 3000 Walker, MN 56484 Steve Kuha, Legislative Director Association of Assessors Cass County Courthouse P.O. Box 3000 Walker, MN 56484 Wayne Brandt, Executive Director Minnesota Forest Industries 903 Medical Arts Building 324 W. Superior Street Duluth, MN 55802 Chris Brokl MN Association of Consulting Foresters 16194 Siskin Lane NE P.O. Box 1171 Bemidji, MN 56619-1171 Bruce ZumBahlen, President Minnesota Forestry Association 8203 Innsdale Avenue South Cottage Grove, MN 55016 Kevin Walli, Vice President Fryberger, Buchanan, Smith & Frederick, P.A.First National Bank Building 332 Minnesota Street, Suite W-1260 St. Paul, MN 55101 Tom Murn, Regional Resource Manager Potlatch Corporation 105 Arch Street Cloquet, MN 55720 Rick Horton Ruffed Grouse Society P.O. Box 657 Grand Rapids, MN 55744 Bob Buckler Buckler Executive Counsel, Inc. P.O. Box 49984 Minneapolis, MN 55449