Alex Cabrero, Deseret News
Flow tubes are open and water is being released Wednesday, May 4, 2011 from Flaming Gorge Dam.

MANILA, Daggett County — Faced with the loss of nearly $400,000 in federal money next year, Daggett County officials are seeking a land swap between the U.S. Forest Service and the school trust lands agency that could allow private development to take place within the Flaming Gorge National Recreation Area.

Such a transaction would require congressional action and Utah's congressional delegation is eager to get the process started, said Kevin Carter, executive director of the Utah School and Institutional Trust Lands Administration.

Carter was in Washington this week and briefed Utah's congressional representatives on the proposal, which he said was warmly received, particularly by Rep. Rob Bishop and Sen. Orrin Hatch, both Republicans.

"They're very anxious to move forward and do something on it," he said. Hatch sent one of his staffers to a meeting in February to listen to residents' concerns and get feedback on possible locations.

In late February, the Daggett County Land Exchange Selection Committee identified  Mustang Ridge on the Dutch John side of Flaming Gorge as the top parcel for a possible swap. The 11-member committee appointed by the Daggett County Commission based its decision on criteria that included geographic location, environmental and "buildability" issues, existing infrastructure, community benefits and adverse community issues.

"The Mustang Ridge site received unanimous approval as the site having the most visual appeal and other development benefits needed to capture the attention of developers and investors," the group's report said.

The five other sites surveyed, in order of rank, were: Linwood Bay, Lucerne Valley, Red Canyon, Cedar Springs and Sheep Creek.

All six sites are within the boundaries of the Flaming Gorge National Recreation Area, which by virtue of its designation would require congressional action for a swap to occur.

The possibility of such a development, however, has stirred up angry feelings by some local residents.

"There are people that have threatened to sue through every avenue possible to shut this down or slow it down," said Alan Browning, a business owner in Manila and a member of the land exchange selection committee.

"There are some people that don't want any change at all. There are other people that would like to see a Walmart down the street, and then you've got the majority of the people that are sensible and level-headed and understand we'll lose a lot of money from the federal government next year," he added.

In January 2013, Daggett County will receive its final annual stipend payment associated with the 1998 privatization of Dutch John. The town was built by the federal government to house the workers who built Flaming Gorge Dam. Over the years, the stipend to maintain the community has risen to about $380,000.

The proposal under consideration would involve SITLA trading out about 200 acres of its property within Forest Service boundaries in exchange for like-value land around Flaming Gorge. The agency, which manages lands granted to the state to benefit public schools, would then hold onto the property for lease to a private developer for the construction of a resort or other project.

Negotiations are extremely preliminary, Carter said, and would possibly involve the relinquishment by SITLA of land it owns in Cache County within Forest Service boundaries or in Carbon and Emery counties.  The Forest Service, Carter added, has been given a list of properties to review for a possible trade.

Browning and others believe the development has to be in close proximity to Flaming Gorge Reservoir for it to have any hope of success.

"The lake is the asset," Browning said. "If you want to draw people in here, you've got to draw them in and involve the lake."

"We have to capitalize on this lake somehow," Steglich added. "We have to create an environment where businesses can succeed."

The county does have about 2,200 acres available for development in the Dutch John area. Getting someone to purchase and build on that land is still the top priority, Daggett County Commission Chairman Jerry Steglich said.

And while that could provide a short-term fix for the county's financial problems, commissioners say they need the U.S. government to turn over more land if the county is ever going to be self-sustaining.

Asked how much land that might be, Steglich answered: "All that we can take from the federal government."

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