April 4, 2009

VIA US MAIL and EMAIL: exchanges@dnr.wa.gov

Department of Natural Resources
Olympic Region
411 Tillicum Lane
Forks, WA 98331

ATTN: East Jefferson Exchange

No. 86-083323

Gentlemen:

The South Bay Community Association (SBCA) represents about 550 homes in Port Ludlow, Washington with a population of about 1,000.

Last Friday, April 3, 2009, at its regular monthly meeting, the SBCA Board voted unanimously to recommend that the land swap between DNR and Pope Resources (East Jefferson Exchange No. 86-083323) be approved.

I want to confine my remarks to two points:

1. DNR will probably eventually swap out of its East Jefferson Land Parcels. We would prefer that these go to Pope who we believe will be in Jefferson County for years and who has shown a willingness to compromise on mitigating issues.
2. There is no significant difference to Jefferson County’s revenue with or without the swap.

Let me take you through our thought process:

• DNR has a fiduciary duty to maximize revenue.
• They must consolidate to achieve efficiency.
• That means exiting East Jefferson small parcels and adding land in West Jefferson County.
• That brings us to a highly sensitive 530 acre piece of land DNR #6. We in South Bay want a voice on what happens to this parcel.
• This abuts the Golf Course and is within one-half mile of the proposed Iron Mountain Quarry.
• It is Port Ludlow’s southern boundary.
• At some point it will probably be owned by someone other than DNR.
• We would rather deal with one landlord we know and one that is willing to negotiate on mitigation steps.
• Plus, Pope will be in Jefferson County for years and can be held accountable by us over time.

Pope has agreed to enter into a written agreement with the Port Ludlow Village Council (PLVC) and SBCA on two items:

• No mining in DNR #6
• No rezones before 2025

We are in discussion with Pope and expect progress on two additional items:

• Extension of trails into DNR #6
• Sound and visual buffers

Agreement on these items are being worked on between the two community organizations and are separate and distinct from any agreement between Pope and DNR.

Over time, DNR’s regulations and fiduciary duty require that it maximize revenue to the County. After some ten hours of research on the numbers, three calls to the Jefferson County Appraiser Jack Westerman, four calls to Treasurer Judi Morris and numerous emails, it is apparent to me that Jefferson County’s revenue from DNR, before and after this exchange, will be revenue neutral.

Any timing differences will be adjusted for by time value of money adjustments. The one exception will be a significant plus to the County of $178,000 paid by Pope to Jefferson County as a Land Transfer Fee.

Short term (one year) – Swap a plus:

• 2009 will be a very bad year for DNR tree sales. In Jefferson County they will possibly be down, in dollar terms, some two-thirds from early 2009’s projected level.
• Pope will pay $178,000 on Real Estate Excise Tax to Jefferson County on swap, if it takes place.
• The Pope payment will be the only bright light in Jefferson County’s revenue from tree sales this year.

Over the next 15 years it is very hard to see any meaningful difference to the County revenue with or without this deal.

• 71% of the difference in mature trees has been taken out of the swap or reserved for DNR.
• Rest offset by fewer acres to Pope.
• DNR gives up 2,970 acres and gets 4,420. Therefore, DNR will have 49% more land to produce money for local government.
• To the extent that there are timing differences, DNR must consider the time value of money to the County. Therefore, there is no long term impact on the County.

Sincerely,

South Bay Community Association

Daniel J. Meade
President
email: dmeade1@gmail.com