News: CJ Exclusives

Hofmann Forest: 79,000 Acres of Conflict

Environmentalists battle university over proper use of forest

A battle over the North Carolina State University Endowment Fund’s right to sell its 123-square mile forest to an Illinois-based agribusiness firm appears to have ended.

On Nov. 22, a Wake County Superior Court judge ruled that the sale could proceed without an environmental impact statement, which a group of ecologists, conservationists, students, professors, and alumni had insisted on. While an appeal is possible, it looks as though the issue is over for N.C. State, which claims it could receive as much as $6 million per year from the proceeds.

The endowment fund owns Hofmann Forest, a 79,000-acre tract of land 120 miles east of Raleigh. The forest has been affiliated with the university for almost 80 years. It was purchased with a private donation in the 1930s and eventually it formally was given to the endowment.

The forest was intended to provide students and professors with educational and research opportunities and to provide a source of revenue for what is now N.C. State’s College of Natural Resources.

In September, five plaintiffs — conservation and forestry experts, a landowner, and the former head of N.C. State’s Natural Resources Foundation — sued the board of trustees of the endowment fund and the foundation, which manages the forest. Their goal was to stop the sale, or at the least make the school conduct an environmental impact analysis as required by North Carolina’s environmental regulations.

The university claimed from the beginning that it has the ability to sell the forest without triggering state environmental laws — primarily because the actual owner is a private foundation — and that the financial benefits for the school are too great to ignore.

Opponents maintain that N.C. State and the endowment fund have been secretive about the sale and that there are no assurances the buyer will not cut down the forest or use it for residential or commercial purposes in the future. They also argue that the university is the de facto owner of the forest and thus subject to environmental laws, which could affect the terms of future sales, leases, or easements.

In an email to the Pope Center, Brad Bohlander, a spokesman for N.C. State, explained that the forest is not used extensively and that only 2 percent of the College of Natural Resources’ research is conducted there. More than two-thirds of the forest is used for timber and wood pulp production to generate revenue for the College of Natural Resources. Over the last 10 years, revenues from pulp production (and hunting licenses) have averaged just over $2 million; last year, the college earned only $861,000. The university argues that selling the forest for $150 million and investing the proceeds in an endowment will earn the school $6 million annually, giving the college a steadier source of funding.

Frederick Cubbage, a professor in the college’s Department of Forestry and Environmental Resources and the lead plaintiff in the case against the endowment fund, sees things differently. He told the Pope Center that hundreds of N.C. State students visit the forest and “vast amounts” of workshops and tours take place there throughout the year.

Cubbage also has expressed doubt about the alleged financial benefits of the sale. “If the $150 million sale price were received in one lump sum payment, if there were no reductions in the principal, and if the stock market alternatives earned 4 percent per year without any loss of value, we would get $6 million per year (not including inflation losses). None of these ifs seems likely or guaranteed on a yearly basis,” wrote Cubbage in a recent op-ed in Raleigh’s News & Observer.

“The role of this court is not to decide whether the sale of Hofmann Forest is wise or ill-advised,” wrote Judge Shannon Joseph in the ruling. In their motion to dismiss, the defendants had argued that the plaintiffs lacked standing to sue, and that the legislature had given UNC system endowment funds a broad authority to dispose of funds and gifts in any way consistent with the terms stipulated by the respective donor.

Throughout this process, N.C. State has tried to ease the opposition’s worries by pointing out that its bidding process was thorough and ensured that the buyer would “preserve the legacy of Hofmann Forest” and give “access for students and faculty to conduct research, and maintain a working forest.” If the sale proceeds, time will tell whether the new buyer, or future buyers, will satisfy those assurances.

Jesse Saffron is a writer with the John W. Pope Center for Higher Education Policy.