DuckSouth.com

Marenisco wrote:Ethical issues aside, sealed bid auctions with right of first refusal typically result in lower revenues than sealed bid auctions w/o the right of first refusal - ON AVERAGE (There's always exceptions) This has been proven theoretically and empirically numerous times.

Okay, I think I've thought this through and can understand now. With right of refusal, the current lease holder has only to sit back and beat the high bid. A sealed bid from everyone would put enough uncertainty into the process to cause higher leases.

How would an open bid process affect revenue? All interested parties present at a given time on a given date and an auction held to the highest bidder.

Just got to thinking about the theory of maximizing the return.

you also have to think about the long term.... will the guy who paid double price for the lease in 2008 be willing to keep the land in good shape for the next 3 years and will he be a good tenant, or will he shoot everything off the place and then the next bidding process...nobody shows up to bid.
Giving the current lessee the first right of refusal is better in the long run for all parties involved.

If it were MY land,,,,I would want a good tenant before I had somebody pay me double what its worth and rape the resources.

Good points. The purpose of 16th section lands is to provide a source of income to the school system. Sealed bids will maximize the lease price. It seems very simple but when you factor in other considerations such as maintenance and prior lease holders it becomes a bit more complicated. Still I think the Sec of state would agree that whatever causes the lease to bring the highest price is the route to go. Also, doesn't the lease agreement on these lands contain some language that adresses upkeep, etc.??