Mineral lease district takes advantage of investment law

Putting money aside now could prove to be beneficial in the future.

That, at least, is the thinking behind the Mesa County Federal Mineral Lease District’s push for the authority to invest some of the royalty payments it receives from mineral extractions on federal land.

The district did just that on Thursday, setting aside $100,000 and hiring Grand Junction-based RoseCap Investment Advisors to manage the money for them, said David Ludlam, chairman of the FML board.

“I think this permanent fund is going to, in addition to doing good things in the community on a permanent basis, it’s also going to set an example on how the state can do better,” Ludlam said. “We’re the only state that spends our severance taxes as fast as it gets it. Every other state has some kind of permanent fund structure.”

The whole thing was possible after the Colorado Legislature approved a new law earlier this year allowing the state’s five FML districts to use some of the money they receive in royalties to help them generate revenue for future projects.

While all counties and municipalities receive FML money, only five counties have created their own special districts to manage the funds.

Having a separate district allows the counties, which include Mesa and Garfield, to maximize the money they receive.

Ludlam and other board members said it is important to be able to build off what money the district is receiving, in part, because it’s been somewhat diminished in recent years thanks to a drop in oil, gas and coal production.

“My goal will be to build up as much institutional support around the concept of this permanent fund as possible before my tenure’s done so that future boards understand why we did it, and why it’s important to parlay these one-time royalties into something that’s more lasting,” he said.

By law, any money from mineral lease royalties must be used to address impacts of the extraction industries, such as construction and maintenance of public facilities.

Any proceeds the districts make from invested royalty payments are no different.

Ludlam said the current FML board agrees with the philosophy of setting aside money, but future boards aren’t obligated to do so.

The new law, pushed through the Legislature by Grand Junction Republican Rep. Yeulin Willett and Sen. Ray Scott, doesn’t obligate the FML board to use it.

Such is the case for the Garfield County FML District.

Gregg Rippy, president of that panel, said his board might use the law to help finance larger projects, but has no current plans to emulate what Mesa County is doing.

Rippy said his district, which gets twice as much money in royalties than Mesa because it has more activity on federal land, requires applicants to provide five-year development plans so it can see what’s coming, and what may require more resources to accomplish.

“Our philosophy is, absent an identifiable project, we don’t think we should just stockpile money,” he said.

“It does more good getting it out there,”  he said.


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