By Mike Koshmrl, WyoFile.com
Uncertainty is swirling around what will become of a square mile of state land within the boundaries of Grand Teton National Park that’s positioned to go to public auction.
It’s a common refrain in Jackson Hole and beyond that the best outcome for the 640-acre lot, a tract known as the Kelly Parcel, is to fold it into Teton Park, preserving the sagebrush and aspen-studded swath of land as part of the National Park Service system. Dotting the hilly property with luxury homesites isn’t a resolution many are advocating for, at least publicly.
But the door has officially been opened for development. And that possibility begs the question: What’s the likelihood that the scenic Kelly Parcel becomes another subdivision for the ultra wealthy?
The answer to that, as well as to many other questions, is not straightforward. Among the uncertainties: Will Wyoming’s top five elected officials — the governor, secretary of state, treasurer, superintendent of public instruction and the auditor, which make up the State Board of Land Commission members — OK the public auction pursued by the Wyoming Office of State Lands and Investments? If the land does go to auction, will there be buyers interested in pursuing a subdivision or other development sure to attract a world of controversy? Could the U.S. Department of Interior and its nonprofit partners combine to outbid developers? If the state is on track for a Kelly Parcel auction and big-dollar prospective buyers line up, what latitude does Wyoming have to back out of a sale?
On the question of development interest, a July 2022 appraisal that estimated the land’s value at $62.4 million suggests that there will be no shortage of prospective buyers beyond the federal government. That was the opinion of six real estate brokers interviewed by Jackson-based Granite Creek Valuation, which completed the appraisal for the Interior Department.
“None of the brokers believed that there was an absence of capable buyers in the subject market,” the appraisal report reads. “The broker interviews provide support for residential subdivision as a financially feasible use.”
The agents estimated the value of the section at between $50 million and $100 million. A Sotheby’s International Realty broker hit the value right on the nose — estimating $60-$65 million. All six brokers interviewed thought the type of buyer would be a developer.
Domestic horses graze the east end of the Kelly Parcel, a 640-acre tract of state school trust land within the borders of Grand Teton National Park. Elk, mule deer, pronghorn and bison all pass through the state’s square-mile lot during their seasonal migrations. (Mike Koshmrl/WyoFile)
Yet, four Jackson Hole-based real estate agents and developers reached by WyoFile were all on the same page in saying they personally did not want to see the property developed.
“Just because you can doesn’t mean you should,” Greg Prugh, broker/owner for Prugh Real Estate, told WyoFile. “Firstly, I’d just like to see it remain open space.”
In Prugh’s estimation, the $62 million valuation doesn’t sound like enough. The Prugh Real Estate broker interviewed for the Kelly Parcel’s appraisal estimated the value at $100 million based on the “highest and best use” for the land, an 18-lot subdivision. A “road buffer,” the interviewed broker commented, is not a “significant negative influence.”
No tunnel necessary
That “road buffer” is a scenic easement that extends 500 feet on either side of the Gros Ventre Road right-of-way. The easement, agreed to by former Gov. Cliff Hansen in 1965, on its face poses an impediment to developing the Kelly Parcel. Factoring in the right-of-way and easement, which prohibits most surface disturbances and wouldn’t allow for a new road accessing the property, roughly a quarter of the property — nearly 157 acres — is undevelopable.
The 58-year-old easement, given away by Wyoming for free, has fed speculation that a tunnel would be necessary to reach the developable portion of the Kelly Parcel. Other than the national park, the section is bordered by the Bridger-Teton National Forest to the east along with a small stretch of National Elk Refuge in its southeast corner.
The Kelly Parcel’s 2022 appraisal dispels the notion that a tunnel would be necessary.
Glena Vigil, chief realty officer for the Park Service’s Land Resources Program Center, determined in 2014 that access to the property could be accommodated by building roads that begin one section to the west, in the park near Kelly Warm Springs. Grand Teton National Park’s enabling legislation directed the Secretary of the Interior to grant rights-of-way to state owned and privately owned land within the park’s boundaries, according to the appraisal.
The Gros Ventre Road bisects the southern quarter of the state of Wyoming’s school trust parcel known as the Kelly Parcel, an inholding in Grand Teton National Park. A scenic easement extending 600 feet from the road’s centerline covers 157 acres of the section, but it’s not expected to deter development. (Mike Koshmrl/WyoFile)
To build those access roads, the buyer would need to fund and conduct an environmental assessment. That might take six months to a year and cost $50,000 to $80,000, the document estimated.
None of the six brokers interviewed for the appraisal responded that the lack of access would deter buyers or significantly impact value. One broker commented that it would have “no impact.”
Back in 2010, the federal government made an agreement to buy four pieces of Wyoming land to expand Grand Teton National Park. The Wyoming Legislature authorized the direct sale of state lands and minerals to the federal government and three of those pieces — including an 86-acre school trust parcel near the Snake River in 2012 and a 640-acre parcel in the Antelope Flats area in 2016 — sold.
Kelly Parcel basics
But federal funds for the Kelly Parcel didn’t come through in time, and the deal expired. Subsequent legislative efforts to make a deal failed. During the 2021 session, a bill to authorize the Kelly Parcel’s direct sale was amended to set the floor price at $3.2 billion, which thwarted any chance of it passing. Because the Legislature has not reauthorized the Wyoming Office of State Lands and Investments to do a direct sale to the park, a public auction or land swap are the remaining ways to offload the parcel.
In early October, the Office of State Lands and Investments nominated the Kelly Parcel for disposal via public auction. The pressure to sell the land comes from the Wyoming Constitution, which stipulates the Office of State Lands and Investments is required to generate income from the parcel — and 3.4 million acres of other trust lands — in support of the state’s public schools.
Currently, the Kelly Parcel generates just under $3,000 annually from a grazing lease and temporary permits allowing a cattle chute, guided mountain biking tours and a horseback ride-cookout combo outfit.
The state of Wyoming’s last remaining Grand Teton National Park inholding, a tract known as the Kelly Parcel, includes a scenic easement (in yellow) prohibiting surface disturbances on the land. Because the National Park Service is statutorily required to provide access, the easement is not seen as a deterrent for developers. (Wyoming Office of State Lands and Investments)
Proceeds from a sale would dwarf this return in investment income. If the tract goes for the appraised value of $62.4 million and that gets added to the Common School Permanent Land Fund, that’d generate roughly $4 million in annual investment income at the most recent rate of return. Over 30 years, it’d likely generate somewhere between $94 million and $120 million for Wyoming’s public schools, according to an analysis of the Kelly Parcel prepared by the State Lands Office.
First, the State Board of Land Commissioners must OK the auction. It’s scheduled to review the issue at its Dec. 7 meeting.
There’s political pressure to not proceed. Rep. Steve Harshman (R-Casper), who led opposition to a direct sale during the Legislature’s 2021 session, told WyoFile in a text: “Why would Governor Gordon bargain sale our most priceless 640 acres of State School Trust Lands to the Biden Administration? Wyoming people will be shocked.”
And at least one state lands commissioner isn’t convinced that an auction is the way to go.
“Right now there are a lot of questions that are left unanswered,” Wyoming State Treasurer Curt Meier said. “I’m skeptical about public comment being able to give us more answers than questions.”
Public comments on the proposed disposal of the Kelly Parcel are being accepted through Dec. 1. They can be emailed to jason.crowder@wyo.gov.
The State Lands Office is also holding four public hearings on the matter: At 5:30 p.m. Nov. 6 at the Laramie County Library in Cheyenne; at 5:30 p.m. Nov. 9 at the Teton County Library in Jackson; at 5:30 p.m. Nov. 16 at the Thyra Thomson State Office Building in Casper; and at 5:30 p.m. Nov. 28 at the Wyoming Game and Fish Department office in Cody.
‘Uncharted territory’
If an auction proceeds, which could happen as soon as January, it’s been described as a risky strategy — at least if the goal is landing the Kelly Parcel in National Park Service hands.
“It’s uncharted territory,” said Rob Wallace, a Jackson Hole resident who oversaw the Park Service for the Trump Administration’s Interior Department.
The federal government cannot bid more than the appraised value of the property, $62.4 million. There’s money set aside in the Land and Water Conservation Fund, Wallace said, that could finance the acquisition.
“I think there are funds available now for the Department of Interior that would enable them to participate in an auction,” he said. “I think the governor hopes this lands with a conservation buyer. I believe his heart is in the right place, and he’s trying to do what’s best for the park.”
From fragile nighthawk eggs to views of the rugged summit of the Grand Teton, this 640-acre state school trust parcel in Grand Teton National Park holds significant natural resource values. Should Wyoming sell it, private interests could develop the land as a residential subdivision. (Angus M. Thuermer Jr./WyoFile)
It’s unclear if the park’s nonprofit partner, the Grand Teton National Park Foundation, could also bring money to the table to sweeten the federal government’s offer. In 2016, the foundation aggressively fundraised and split the $46 million tab for the acquisition of the Antelope Flats parcel.
“We’ve not ever had in the past, two parties participate in an auction for the benefit of one party,” said Jason Crowder, deputy director for the State Lands Office.
Wallace is hopeful that other prospective buyers will be deterred. The property would become privately held land surrounded by federal land, he said, and it would also be subject to Teton County land development regulations.
“If I were a developer,” Wallace said, “I would think long and hard about the very torturous path it would take to be able to do anything on that property.”
But there’s a real market for developing the site into 35-acre tracts, at least according to the six real estate brokers queried for the Kelly Parcel’s appraisal.
The State Land Office will get some advanced notice if the developers do come out, Crowder said. It’s not often the state holds a land auction, he said, and the process isn’t clearly laid out in rule or statute, but there will be steps bidders must take to qualify — including verification of funds.
“I have no idea what that looks like right now,” Crowder said. “We need to still work that process through.”
The State Board of Land Commissioners’ Dec. 7 meeting is likely to be a critical juncture.
“If they say ‘go for it’,” Crowder said, “we are on a path where we have to conduct the auction.”
Notably, he said, the direction to go to auction from Wyoming’s top five elected officials could come with “X, Y and Z” terms. Those hypothetical terms introduce another set of uncertainties.
“The terms of the sale can be very broad,” Crowder said. “It may require us to look at other things, and not just the highest bidder.”
WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.
The fence line separating sagebrush and historic pastureland marks the north end of the state of Wyoming’s school trust parcel in Grand Teton National Park, a tract known as the Kelly Parcel. (Mike Koshmrl/WyoFile)
