When The Nature Conservancy and the Trust for Public Lands announced in June of 2008 their commitment to purchase 500 square miles of Plum Creek Timber Company lands in the state of Montana for more than $500 million, they knew that many challenges awaited them.
What they didn’t anticipate was a severe global recession.
Now, in the midst of an economic downturn that has been particularly unkind to the real estate and financial markets, The Nature Conservancy and the Trust for Public Lands are struggling to find the money to complete the massive deal, known as the Montana Legacy Project. The federal government has ponied up its share – $250 million – and about two-thirds of the acreage has already been purchased from Plum Creek. But The Nature Conservancy and the Trust for Public Lands need to find buyers for the portion of the lands that they bought on credit – and still need to raise the money to fund the final phase of the project.
Supporters continue to praise the Montana Legacy Project as a once-in-a-lifetime opportunity to transfer private lands into public ownership. The conservation groups say they’ll ultimately find the money they need. But the dramatic shift in the real estate market has renewed criticism that the Legacy Project partners—The Nature Conservancy, the Trust for Public Lands, the U.S. Forest Service, the Montana Department of Natural Resources and Conservation and the Department of Fish Wildlife and Parks – are paying too much for logging-scarred landscapes. And a year after the deal was announced, there are not only financial hurdles still to clear, but political and bureaucratic ones as well.
The Project, To Date
The original contract called for the purchase of 320,000 acres for $510 million, but it has since been modified, with 13,000 acres north of Libby dropped due to asbestos contamination and some other small parcels added or subtracted as the process moved forward. Now The Nature Conservancy and the Trust for Public Lands are committed to purchasing 312,000 acres scattered across western Montana for $490 million. The deadline for completing the purchase is December 2010.
The transaction was divided into three phases and spread out over two and half years. The first phase – 130,000 acres with a $150 million price tag – was funded by The Nature Conservancy through a combination of internal and external loans, and was completed on schedule in December 2008. But the Nature Conservancy ultimately needs to sell the lands – either to the state or to developers or conservation buyers – to pay back the loans, and in the meantime has to shoulder a heavy interest burden.
The second large chunk of land – 112,000 acres – was purchased in February of this year using $250 million from Qualified Conservation Forestry Bonds, the federal funding source that Senator Max Baucus successfully worked to include in the 2008 Farm bill. Those lands will be transferred to the U.S. Forest Service in April of 2010.
“That source of funding was great for us,” said Caroline Byrd, the Western Montana Program Director for The Nature Conservancy. “It was really an innovative new tool, and we need those tools.”
Funding for the third and final purchase – 70,000 acres of prime land located in the Mill Creek area and around Seeley and Swan lakes – is not yet secure.
“We’re looking under every stone we can turn over,” Byrd said.
Part of the remaining money may come from the state. This spring, the Montana state legislature approved the sale of $21 million of general obligation bonds, which the Department of Natural Resources and Conservation (DNRC) has committed to using to purchase 26,000 acres from the Legacy Project when the funds become available in two years.
A potential complication, though, is a provision in the bill that prohibits the state from increasing its overall in land holdings. That means the state must sell as much land as it buys – and the state, like everyone else, faces a very weak market for such sales. While the state has room for the 26,000 acres, it may not be able to make room for more, despite its declared intentions.
What’s an Acre of Forestland Worth?
A key question in all these current and future transactions, of course, is what the land is actually worth.
Over the years, Plum Creek Timber (and other timber companies from which Plum Creek acquired the land) heavily logged many of the sections that are included in project. Some of the areas were burned off in recent fires.
Matthew Koehler of the Wild West Institute, a fierce critic of all things Plum Creek, described the Legacy Project as “a color-coded map of the most depleted land in the state.”
A visit to some Legacy Project lands west of Lolo – in Township 11 North Range 23 West, to be precise – illustrates the issue. The property is in a checkerboard pattern, intermixed with federal land—a remnant of the vast land grants the federal government gave to railroad companies in the late nineteenth century. (Plum Creek was originally a subsidiary of the Burlington Northern Railroad).
On a bare hillside on one of the sections, there are straight walls of mature trees on all four sides of the 640-acre section and a web of sandy, weed-infested roads cut into the sides of the mountains. Two-foot tall trees are scattered over the open areas, giving the appearance of a miniature model forest. These sections were logged about 10 years ago.
The average purchase price of the Legacy Project lands is $1,570 an acre, and that’s far above what a section like this would be worth as timberland. But as conservation habitat … well, what is the value of healthy habitat? How do you place a price on the preservation of wildlife corridors? And what is the value of recreational lands?
The environmental groups and the Forest Service are convinced that their long-term value is very high indeed; a few decades from now, no one will care whether the price per acre was a few hundred dollars more or less.
Debbie Austin, Supervisor of the Lolo National Forest, is one who isn’t worried about the present appearance of the land. “I look at what this land is going to look like in 100 years,” she said. “100 years from now it’ll all be reforested.” The Lolo National Forest will get about 67,000 acres from the project.
“It’s an amazing landscape that needs time to come back,” added Chris Bryant.
But there is also the question of precedent. Plum Creek still holds more than 800,000 acres of land in Montana. Since Plum Creek converted to a Real Estate Investment Trust in 1999, more of its real estate is being put on the market. If it were to put another chunk of clear-cut land up for sale, it’s not clear whether the state or a conservation buyer could match the price paid by the Montana Legacy Project.
The state of Montana, moreover, uses its land holdings to generate revenue for public education. It cannot invest large sums of money in land that won’t produce timber for 40 or 50 years.
Price, though, may not be the most important question in considering whether the project is a good deal for Montana. At an informational meeting last month at the Seeley Lake Community Hall, a dozen residents sat in an open room while Bryant, who does community outreach for The Nature Conservancy, answered questions about the local impact of the Legacy Project. The question that comes up at every meeting is, “Will we still have the same access to the land we’ve been using for generations?”
Plum Creek has long allowed the public to hunt, fish, camp and gather firewood on its land, so long as people didn’t mess with the trees. The Nature Conservancy plans to maintain the same level of accessibility while they hold the land, but whoever acquires the land in the end will manage it according to their own plan.
Debbie Austin said that there were no plans to reduce access on the lands the Forest Service acquired but she did say the Forest Service doesn’t intend to maintain the web of logging roads that cover Plum Creek’s land.
Bryant said most of the community members he talks with favor eventual state ownership of Legacy Project lands. Under state ownership, land would be managed by elected officials whose decisions are subject to public desires for access and use, which could be a good thing for locals, who believe that federal and private land management plans might be less responsive to local interests.
How the ultimate owners of the land choose to manage it will likely be the biggest factor in shaping the legacy of the Legacy Project. Despite all the financial and other challenges, the political and ecological importance of the project makes it likely that The Nature Conservancy will find a way to get it completed.
And how it plays out will be watched closely across the West, as the fate of other railroad legacy lands in the region hangs in a similar balance.
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