S t a t e L a n d B o a r d. Regular Meeting December 13, 2011 Agenda Item 6c

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1 regon John A. Kitzhaber, MD, Governor Department of State Lands 775 Summer Street NE, Suite 100 Salem, OR (503) FAX (503) State Land Board SUBJECT S t a t e L a n d B o a r d Regular Meeting December 13, 2011 Agenda Item 6c John A. Kitzhaber, MD Governor Kate Brown Secretary of State Ted Wheeler State Treasurer Request from the Department of Human Services (DHS) to release the mineral rights along with the surface sale of a residential property in SW Portland. ISSUE Whether the Land Board should authorize DHS to release the mineral rights to the purchaser of the home located at 4335 SW 91 st Ave., in Portland. AUTHORITY Oregon Constitution, Article VIII, Sections 2 and 5; pertaining to the Common School Fund and land management responsibilities of the State Land Board. ORS ; providing that all state mineral and geothermal rights shall be retained by the state, absent a finding by the Land Board that their sale or exchange is for the purpose of obtaining the greatest benefit for the people of the state, consistent with the conservation of lands under sound techniques of land management. OAR ; relating to the release sale, or exchange of mineral rights held by agencies of the State of Oregon other than the Department of State Lands and State Land Board. SUMMARY In November 2008, DHS accepted a promissory note for $176, to settle a claim against the estate of Ruth R. Olson for the recovery of the cost of benefits provided to Ms. Olson. The claim was secured by a trust deed on the property at 4335 SW 91 st Ave., owned by the Olson Trusts. The Trusts defaulted on the trust and DHS referred the case to the Department of Justice for foreclosure. The foreclosure resulted in DHS acquiring title to the property in August 2010.

2 DHS intends to sell the property at an auction and asks the Land Board to release the mineral rights for transfer with the surface property upon sale. OAR /0119 provides a process for releasing the mineral rights. DHS has followed the process contained in the rules and submitted an application for the release (Appendix A). One of the requirements in the rule for an application is that a geologic report be prepared for the property. The Oregon Department of Geology and Mineral Industries (DOGAMI) has prepared a mineral scoping report (Appendix B) assessing the likelihood of mineral resources being located on the property. DOGAMI found that, based on available geologic data and consideration of the property s limits and boundaries, there were no identified conflicts or concerns related to the mineral right release and sale. Given DOGAMI s evaluation of the mineral estate of the subject parcel, the Department concludes the following findings are appropriate for the proposed release: 1. The DOGAMI evaluation of the mineral estate indicates the subject parcel has little or no potential for the economic occurrence for mineral resources. 2. Based on the above, the greatest benefit for the people of Oregon is to release the mineral rights along with the DHS property to be sold at auction. RECOMMENDATION The Department recommends that the Land Board authorize DHS to transfer the mineral rights associated with 4335 SW 91 st Ave. in Portland to the property purchaser. APPENDICES A. DHS application for release of mineral rights B. DOGAMI scoping report C. Site map Agenda Item 6c December 13, 2011 Page 2 of 2

3 APPENDIX A TO: FROM: Oregon Department of State Lands 775 Summer St NE, Suite 100 Salem, OR Oregon Department of Human Services Office of Payment Accuracy and Recovery PO Box Salem OR DATE: September 19, 2011 APPLICATION FOR MINERAL RIGHT RELEASE AND SALE Residential Foreclosure Property 4335 SW 91 st Ave, Portland, OR The Oregon Department of Human Services (DHS) hereby applies for the release and sale of the mineral rights of residential property located in Portland Oregon. DHS does so as owner, declaring the parcel surplus to its needs and available to sell to highest bidder at a future auction, date to be determined. Background and Summary: DHS had a claim against the estate of Ruth R. Olson pursuant to ORS , and for recovery of the cost of benefits provided to Ruth R. Olson. Pursuant to ORS (1)(a), as part of the settlement of the claim against the estate, DHS accepted a promissory note dated November 21, 2008 for $176,478.99, secured by a trust deed on the property commonly known as 4335 SW 91 st Ave, Portland, Oregon, from Karen Aaserude and Doug Aaserude successor trustees of the Olson Trusts. The Olson Trusts defaulted on the trust and DHS referred the matter to the Department of Justice for foreclosure. The foreclosure resulted in DHS acquiring title to the property on or about August 24, DHS is authorized pursuant to ORS and to take title to, and convey title to, real property in carrying out its estate recovery program. DHS intends to sell said property at an auction on a date to be determined. In support of the application are the following items required by OAR : A. Legal Description of the Subject Mineral Rights to be Conveyed: The mineral rights to be conveyed include all the minerals within the lot parcel. The property is described as follows: Lot 1, SHERYL S ADDITION, Washington County, Oregon. B. Legal Description of the Property Limits: The property limits and the boundaries of the mineral rights to be conveyed are the same. C. Tax Lot Map: (Exhibit A Attached) The boundaries of the parcel are shown on the attached Tax Lot Map, and are identified as Tax Lot 7500, NW1/4, NE ¼, Section 14, T1S, R1W, WM.

4 D. Zoning: (Exhibit B Attached) The entire subject property is zoned R-5. E. Appraisal: (Exhibit C Attached) The property has been most recently appraised by DA Wacker & Associates. Mineral rights were not appraised specifically, but were assumed to be part of the normal rights transferred with the title of the property. F. Geologic Reports, Mineral & Geothermal Resource Evaluations, Appraisal, Etc.:(Exhibit D Attached) A report from the Oregon Department of Geology and Mineral Resources is attached. G. Reason for Release: The property was acquired through foreclosure of a debt owed to DHS. The sale value of the property will be substantially reduced if the mineral rights are not sold with the parcel, resulting is substantial loss of revenue to the DHS budget. Furthermore, federal law, 42 USC 1396p, mandates the estate recovery program, and the federal government is entitled to approximately 40% of the proceeds of the sale of this property. H. Acquiring Party: To be determined at a future auction to be scheduled. I. Consideration Offered: Cash J. Documentation of Surplus Property Process: Exhibit E copy of Surplus Sale Notification Exhibit F copy of Notice of Sale by State Agency

5 APPENDIX B

6 APPENDIX C

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