Trading With Blixseth
Proposed Idaho Land Swap Exposes Shifting Attitudes, Shifting Economics
Idaho panhandle residents are up in arms over a possible land deal between the Forest Service and Yellowstone Club founder Tim Blixseth.
By Jonathan Weber, 7-22-09
On a pleasant Saturday afternoon in late May, a group of woodsmen, retired foresters, local landowners and others gathered in the school gym of the Idaho panhandle town of Potlatch to talk about a land trade. Specifically, they had come to rally opposition to something which, historically, a logging community like this would have praised: the proposed transfer of local U.S Forest Service lands to a private timber company.
In a deal known as the Upper Lochsa Land Exchange, the Forest Service is looking to swap a hodge-podge of parcels in the Palouse district of the Clearwater National Forest (as well as some acreage in the Nez Perce and Panhandle Forests) - 28,000 acres in all - for almost 40,000 acres of checkerboard land in the Upper Lochsa River valley, near the Montana border. Consolidating the Upper Lochsa lands into public ownership would greatly solidify the wilderness ecosystem in the Bitterroot Mountain range, and would link up with other lands that are being protected as part of the Montana Legacy Project. Elk hunters - and, notably, the Rocky Mountain Elk Foundation - are especially enthusiastic about the idea, and in fact just about everybody agrees that the Upper Lochsa lands should be in public ownership.
The rub is that the lands on the Western side of the Clearwater National Forest - unlike the Lochsa lands - are pretty close to Potlatch, Moscow, and other Idaho panhandle towns, and people use them. They have been managed relatively carefully over the years for “multiple use,” according to several retired Forest Service rangers, and while much of the acreage has been logged, it’s wet enough that trees return quickly. Some of the tracts, such as those near the resort area of Elk River, are good candidates for real estate development.
On top of all that, the person trading for the lands is Tim Blixseth, a well-known - and not very well-loved - timberland trader and founder of the famously troubled Yellowstone Club. The Upper Lochsa property, while spectacular, was heavily logged by Plum Creek Timber before Blixseth bought it in 2005, and much of it has burned in recent years as well.
“We all support blocking up the Upper Lochsa,” retired Forest Service ranger John Krebbs told the crowd. “But not at the expense of the Palouse district.”
Some of the opposition to the deal looks like classic NIMBYism: one speaker in Potlatch related, without irony, how he had gated his property to keep the occasional mushroom-hunter from crossing onto the public lands above - but nonetheless considered it an outrage that those very public lands might pass to private ownership and thus be inaccessible to him. The Forest Service, rather than being viewed as a protector of public assets, has often been seen in these parts as a usurper of property which, with a few skidders and chainsaws, could be put to productive use.
There’s also a lot of muttering about a back-room sweetheart deal allegedly engineered - albeit for reasons that no one can really explain - for the benefit of Blixseth. More rationally, there is nervousness that the public will come out on the short end of any trade with Blixseth and his company, Western Pacific Timber. Blixseth, after all, is perhaps the world’s shrewdest trader of mountain timberlands, and he bought the Lochsa parcels with the specific intention of trading for property that would be more valuable to him - for logging, for development, or for some combination.
But opponents of the trade, led by an ad-hoc group called Friends of the Palouse Ranger District, contend that the Palouse lands are well-managed and ultimately far more valuable than the Upper Lochsa acreage. The land to be traded to Western Pacific includes many separate parcels, and some of them are ripe for logging, some are regularly used by hunters and fishermen and berry-pickers and off-road vehicle enthusiasts, and some are good candidates for building.
Local politicians, some apparently caught off-guard by the public backlash, are now lining up against the deal.
“I’m doing everything I can to make sure this doesn’t happen,” said Gary Schroeder, a state senator who represents the area.
Forest Service officials stress that the trade is anything but done. An environmental impact statement, including several alternatives to the proposed swap, is scheduled to be released in the fall.
“I think we’ve developed a pretty good range of alternatives,” said acting Clearwater Forest supervisor Kara Chadwick. She said the options include “dropping out some parcels that people are particularly attached to,” though that could involve adding other parcels, which could then spur further disputes. Scrapping the whole thing is also a possibility, though Forest Service officials and conservationists are nearly unanimous in their belief that the Upper Lochsa land needs to be in public ownership.
Ron Marcoux, who works with the Rocky Mountain Elk Foundation, said his group has been looking for ways to get the Upper Lochsa land into public ownership for years. “When Plum Creek started talking about selling the property, we started talking to the Nez Perce Tribe to see if we could find funding to get it into public ownership,” said Marcoux. “But Plum Creek was wanting to sell quickly.
“Then Plum Creek sold to Western Pacific Timber, and we approached them to see what we could do to work with them.” Western Pacific, said Marcoux, was not interested in a straight sale but rather an exchange, “and we felt it was worth going through the process to see what was there.”
Blixseth, for his part, wrote in an email to NewWest.Net: “It is our position that the trade is in the greater good of the public’s interest, and is also a reasonable deal for the company, if accomplished similar to it’s current configuration. The company lands are very valuable real estate parcels in a spectacular area of the state. But, since our philosophy has been for over 20 years to consolidate private and government ownerships, the company lands fit nicely into the USFS ownership.
“The company in most of these trades would do better financially if it held on to it’s existing lands, long term, but believing that these lands should be consolidated, causes us to at least attempt this goal. If the trade fails to materialize, the company is very pleased to continue to own it’s lands in Idaho. One thing to note is that from the day the company bought these lands, we instructed our foresters not to cut one tree on the lands and let the forest grow and flourish.”
People involved in the discussions say Western Pacific has consistently indicated that it is not interested in simply selling the lands, though one person who asked not to be identified said that position seemed like it might be softening a bit. With the mountain real estate market in tatters, development of high-end real estate on the Lochsa lands looks like a much different proposition than it might have a couple of years ago.
And Blixseth may need the money. He faces substantial legal claims in the wake of the Yellowstone Club bankruptcy, and if he loses a bankruptcy court trial that’s scheduled to resume this fall he could be on the hook for as much as $200 million. (Western Pacific Timber’s other big land holding, about 70,000 acres in Klickitat County, Washington, is currently being auctioned off, according to the company’s website.)
Assessing the market value of any of these lands is very difficult, and that is in some ways the root of the problem. If people use a parcel of public property for hunting and hiking and camping with their family, how do you figure those activities - and the memories that go with them - into the value? How do you put a price on potential Elk habitat, or slightly cleaner water? If you own remote acreage that could, in principle, make for a gorgeous vacation home, but lacks reasonable road access and doesn’t have any ready pool of potential buyers, what’s the value there? The ground that now makes up the Yellowstone Club, after all, was worth a few thousand dollars an acre before the club was developed, and is now worth hundreds of times more.
These tricky questions are hardly unique to this land deal; the Montana Legacy Project, a far more massive endeavor involving more than 300,000 acres and hundreds of millions of dollars, has faced some criticism for over-valuing logged-over land. Yet supporters say that keeping the remaining Northern Rockies forest ecosystem intact is worth almost any price.
For residents of the Palouse, though, these discussions are mostly academic.
“The Panhandle lands offered in the exchange are tracts scattered over hundreds of miles which have been managed for multiple use. Exchanging them for the Upper Lochsa land provides no benefit to the Panhandle region,” says Marilyn Beckett, one of the leaders of Friends of the Palouse. “Our lands are cherished and used by the public, who realize once made private, access will be restricted, habitats and watersheds will be impacted, and a precedent will be set for further fragmentation and exchange.”
Even today, that sentiment may not be the dominant one in Idaho timber towns. But this time around, and increasingly in the future, it’s likely to carry the day.
This should be straight sale. There's no doubt that TB will squeeze the Palouse side for every penny and then some...and there is NO way in $*$%^# that 28 acres of Palouse is equal to 40 acres of slicked off high-mountain clearcut that is six feet deep in snow half the year. No way. Two acres for 40, maybe.
Comment By Fubar, 7-22-09HHMMMMM, I sent you this lead 2 months ago. Not news
Comment By Historian Colonel Bain- Author - Monk, 7-24-09Hey Thumbs Up from de Colonel to Johathan on this article...
To delay is to have patience.. sometime man lacks that understanding of the Creator.
Giddup
It isn't the actual land exchange where Blixeth begins the boulevard of broken dreams. It is what happens after he has the new lands. It is then that all bets, promises and agreements are off. It will his way or the highway for you, and he will lawyer up and go on the offensive. The agony and despair will still be there. That is the track record he has left behind. YC is just a stepping stone on a very familiar path. Idaho does not want the grief, believe me.
This spring, Danish pension fund manager ATP bought 92,000 acres of Adirondack forest lands for $32.9 million. The Nature
Conservancy was the seller. TNC had bought 150,000 acres or so from the Finch Paper Co., using John Hancock Ins Co money (remember Treasury Sec Paulson was TNC CEO recently) and the unsold lands are due to become 65,000 acres of additional State lands in NY, much of it with lakes, streams, and Hudson River frontage. The Danes will furnish logs to the Finch paper mill. Gee. They have a market, a place to sell logs, and from $358 per acre land. PCT, Blixeth, and the lot are disoriented as to what in what they believe their land is worth. There really does need to be an examination of appraisals on both sides, and lots of discussion before this trade comes about.
From me and the old hook tender: two thumbs down.
USFS is still conducting the EIS, a process of seemingly unstoppable momentum. The GAO stated in 2000 that the method of exchanging lands did not properly appraise lands, and therefore should be discontinued, yet nothing has happened to stop the process. Purchase is the answer (since we can't seem to call back the railroad checkerboard), but until about a month ago, neither USFS or WPT were interested in talking about that OR the option of dropping the deal, and those options were never mentioned to the Public as a possibility by either party until very recently after Public pressure.
Mr. Blixseth has been taking advantage of the flaws in the system for a long time (as Bearbait pointed out), most recently last Feb with the exchange between WPT and Washington State DNR (as JW wrote, now on the real estate market). His business model is making money as a dealer, not as a timber man, and his quote in the article should be understood as such. His idea that "the company lands are valuable real estate parcels" is offered as a threat. Not likely in this market, or on those lands.
More are learning about Blixseth and sharing what they know with friends and influential people. Prime public land should not be squandered, no matter what the carrot. Spread the word.
It did take a heck of a long time to see an article about this bad news land swap. What Weber didn't say in his article is that everyone and his brother is opposed to this deal and everyone thinks the Upper Lochsa should be retained by the Forest Service.
It brings up an important question--when other private forest owners like Potlatch decide to cash out what are we going to do? Folks just about had a hissy fit when they first learned they had to buy a permit to walk through Potlatch lands. What will happen when the checkerboard has paved roads and private homes? We need a real solution to put the private part of the checkerboard in public hands. After all this land ended up in timber's hands wrongfully. Check out http://www.landgrant.org/ Maybe they should just give it back to us.
Blixeth needs cash. If he does not, then he has committed a fraud. I believe he has some 'splainin' to do to someone in court sometime about where the money went.
No matter, the Feds have the LandWater Conservation fund, the royalties from off shore oil drilling and production, that is pledged to buying land. The Feds also have a zillion lawyers, up over 100,000 since the beginning of the Clinton years. Offer Blixeth $350 an acre, and if he turns it down, condemn. Eminent Domain was upheld by the Supremes in the Court not long ago, and one of my dings on the Bush administration was they did nothing to protect the private sector from that law being abused by government. Well, now is a perfectly good time to abuse Blixeth. Make him spend his money in court. Turn about being fair play and all. To my understanding, land is worth about 60% of what is was two years ago. What a perfect time for the Feds to move on condemnations. For all you Greenies who think that it is invaluable, but only want to offer $15 an acre, here is your chance. You buy it! Get the Feds to condemn it, sell it to you, and then you can give it to the Feds. Oh, maybe save out a section for David Letterman, but sell the majority of it.
A condemnation would do a couple of things. One, it would bring those lands into the Federal fold, and make a lot of ObamaNation greenies oh so happy. Two, it would piss off enough folks who think that governments need to be reined in on that practice. Revisiting the concept, and limiting the use to Federal land needs, not wants, and State and local needs for government purposes. Condemning land under eminent domain so that a government might sell that land to someone who can build anew to produce more taxes is convoluted thinking at the least. Instead of a private entity having to make an arm's length deal with each landowner, buying the property, influence resulting in having a blanket government condemnation put it into one easy piece for the private sector constituent invites a wagon load of fraud, injustice, bad feelings, graft, corruption, and tries to put the US on a journey to New Jersey political successes.....or Detroit (Monica Conyers, the bribe taking wife of the Chair of the House Justice committee) or Blagojevich of Chicago and his political spawn, Obama Senate successor Burris.
That Blixeth was able to identify the Palouse USFS lands and begin the discussions runs counter to my experience of having the USFS offer the lands they have considered surplus or expendable. And, there are thousands of people who would like to exchange a half section here and a section there with the Feds to make a ranch work better or move the public better, that can't seem to ever get the time of day from the USFS, but here comes Timmy with a plan and USFS supplicants kissing his feet. Doesn't make sense. And when things don't make sense, I would think that is when US Attorneys would go looking.
Here's what really needs to happen...
The Feds have got to get out of their role as "default buyer" for slicked off land. Period.
Most federal buys, with devalued "Money taxed from other people's sweat," pay way, WAY more than, say, an institutional buyer could pay without being shot by the stockholders.
The Finch deal is illustrative. The 'Dacks grow wood pretty well, far better than Western Montana. The "rotation" is literally twice as fast as Montana forests. AND the 'Dacks don't burn as well, either. So these Danes paid what...358 an acre? And what is PCL getting for the Montana "Legacy" Project? 2232 down to 806 per acre? Does anyone smell the fertilizer?
So, when it comes to making an offer to Tim, perhaps the deal should be an outright buy, not by the Feds, but maybe the state of Idaho and/or the affected counties with backing for the purchase bonds from the Feds. No cash, just backing on bonds that can be paid for with the realistically-foreseeable income stream.
Skinner: Hear!! Hear!!! absolutely correct. have the Feds subsidize the State, rather than the Feds subsidize Blixeth, or TNC. I, for one, am damned tired of the old man selling his ranch in his dotage and dementia to Trust (oxymoron) for Public Lands, The Nature Conservancy, and then they sell to the Feds, and pick up a 30% or more over ride on what they paid. Back door TPL,TNC subsidy right from Congress, no less an egregious private pork deal than the so-called subsidy for timber or recreation. How a non profit 503 can make profits from selling to the Feds and claim that as a "cost" to them. They don't "earn" money, or should not. The money they get is tax deductible. If it is not taxed, then it could not have any "cost" basis in it. You give me a dollar. I spend it on something and want someone else to buy it from me for my "cost." I have no cost. I didn't earn the money. And the money I got was not taxed so where is this "cost" deal? Theft of public funds is what it is.
Comment By MT Backcountry, 7-27-09I lived in Moscow for 6 years back in the 90's and used those scattered forest lands quite a bit for hunting. It would be a shame to see that public access lost.
I live in western Montana now and use the upper Lochsa for fishing and backpacking and know it is important for elk and deer. I do want to see consolidation of these highly important lands - development would be heartbreaking.
However, I understand the opposition to this trade - it will cost those in northern Idaho dearly. By fixing one problem, the FS will be creating another one. Access near the Palouse is scarce.... Sportsmen need a place to hunt and fish...
I wish Blixseth would just sell the land to the FS instead of trying to screw up our western heritage by selling developments to rich out of staters....
WPT was incorporated 2/3/05 with Timmy's boy Mike Doyle listed as registered agent. The Central Cascade, West Simcoe, and Upper Lochsa property became holdings after that date. Central Cascade was dealt and put a cool 50-60 million in his pocket. Many of Timmy's trades/swaps came about because his connections in Washington. Most interesting, where did the WPT money come from to purchase or work trades. Hmmm, is there not some missing money from YC? The sealed court documents in the first case, specifically Timmy's deposition might shed some light. The Judge in Butte might just seize all those holdings truth be known. I say unseal the documents and let the chips fall where they may. Timmy with all of his history should be banned from land/timber deals. Any US official doing business with him should be investigated fully. I do believe land needs to be protected, but not by Blixseth making another dime. Condemnation would be cool especially if it was his land. Timmy no matter how much you repent you have no chance at heaven, just hell! My personal regards and admiration goes out to Jonathan Weber, thanks for the great articles.
Comment By Albert L Halverson, 7-30-09I am the landowner who gated my private land.You missed the point I was trying to make! Many private lands are being gated and gating is becoming the standard. We must preserve the public land we have left and not let it fall into private hands because private owners can & do restrict public usage. Mr Blixseth has made it clear he will not agree to public access if he is allowed to get this land. Never mind that he would get it at at a discustingly cheap price due to the forest service.s outdated method of valuing the lands. Private land just to the north of me sold for more than $3000/acre. My best guess (the forest service will not tell their values ) is that these lands offered by the forest service will be valued by them at closer to $300/acre. Don't let the forest service trade off these lands at firesale prices.
Comment By Doris Gerhart, 3-27-11Selling Idaho timberland that belongs to the citizens is going against ethics and probably legality too.
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