ONE PLUM CREEK IS ALREADY TOO MUCH
Land Board Should Move Slowly, Carefully on Real Estate Biz
By Bill Schneider, 5-29-08
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A few weeks ago, down at the saloon, where I regularly get lots of advice about what to write about, I heard about the major western Montana landowner traditionally only interested in timber management but now changing its focus to real estate development.
Everybody already knows about Plum Creek, I replied.
But they weren’t talking about Plum Creek Timber Company, the largest private landowner in the USA, and it’s now-notorious plan to become the largest real estate developer in the USA. They were worrying about the State of Montana becoming “another Plum Creek.”
And it wasn’t just bar talk.
The Plum Creek Timber Company and its 8 million acres should be renamed Plum Creek Real Estate Development Company because it makes no secret about today’s business plan and officially, the company has already morphed into a REIT (Real Estate Investment Trust) to reap the tax benefits thereof. Right now, Plum Creek is in the process of selling off millions of acres of forestland for residential and commercial development, nearly a million acres in western Montana alone, and has been deep in controversy every step of the way.
The State of Montana owns 5.2 million acres, managed by the Montana Department of Natural Resources and Conservation (DNRC). The Board of Land Commissioners or so-called Land Board, made up of the state’s five highest elected officials, makes major decisions involving state lands. The Land Board and DNRC have a mandate to maximize revenue from state lands to help fund public schools in Montana.
Our school system is constantly hurting for money, so that endless shortfall creates a powerful incentive to squeeze every penny out of state lands. This is also why we should be concerned about the preparation of a Real Estate Management Plan for state lands.
As quoted in last week’s NewWest.Net feature by Robert Struckman, DNRC Director Mary Sexton assures us that whatever the state does in the real estate biz would not be behind closed doors, where Plum Creek does its business, but be an open process where communities can participate in the final decision.
The preparation of the real estate plan was open to the public all the way through the lengthy process. Nonetheless, I strongly suspect, most Montanans don’t even know it exists or that the state has already been selling state lands and plans to sell more.
I read through parts of the plan, and it reminded me how happy I am to no longer work as an editor for state government. I can also see why there wasn’t much public participation in the plan’s preparation. It’s general if not vague, a graduate course in bureaucratize, and as politically sanitized as possible. Nonetheless, it outlines a framework for “alternative” and “non-resource-based” methods of earning money from state lands, chief among them, selling the land for residential and commercial development.
After reviewing the document, I decided to have my own chat with Mary Sexton, who is always open and friendly with the press, and she shed some important light on the state’s interest in the real estate biz.
First, barroom chatter about “another Plum Creek” greatly exaggerates the gravity of the situation, but the potential is there. Even though the state owns much more of Montana than Plum Creek and in some cases has extremely valuable sections near municipalities, there’s little chance of the Land Board following the controversial path blazed by Plum Creek.
Instead, Sexton explains, the state has decided to go into “land banking.” This might sound like putting land away for future needs, but what it really means is “money banking.” Under the land-banking program the state sells land and uses the money to buy more land with potential for generating long-term revenue instead of making a one-time infusion into the school system. This helps the state consolidate lands for better management and often allows municipalities to get important land near the city limits for necessary development. If done correctly, it doesn’t seem too hard to actually increase state ownership by selling a pricey section on the city limits that probably should be developed and buying two or three times as much lower-priced agricultural land in non-urban areas.
“We’re already selling state land in municipal growth areas with city sewer and water, “ Sexton confirmed. “We focus on urban growth areas.”
As an example, she points to a section of state land sold to a land developer on the north edge of Kalispell, part of which was used for the new Glacier High School and the rest went to commercial development like Lowe’s. The state is currently doing a similar deal with a parcel on the north edge of Billings.
Sexton views these two sales and other forays into land banking as opportunities to protect long-term funding for public schools while meeting other community needs.
No doubt, the state has many such opportunities, but there’s also the opportunity for misuse, behind-the-scenes political deals, and to be out-negotiated by land developers, so I hope the state continues to move slowly and carefully with any state land sales.
All this leads me to what I see as the real opportunity, the chance to preserve important open space, wildlife habitat, and outdoor recreational opportunities next door to municipalities instead of facilitating more pavement, condos and big boxes. But, regrettably, allocating state land for outdoor recreation flies in the face of the mandate to maximize revenue for public schools.
With prime real estate near the city limits, it’s no mystery what option generates the most revenue. Selling land to developers for commercial and residential use puts the most dollars in the bank, even if it’s the “land bank,” but with the growing need for more open space for outdoor recreation near urban areas, I hope this need can become a priority for DNRC and the land board. And I suspect other states have the same need, and those wise enough not to sell off their state lands, should think about the same new priority.
The State of Montana already does a lot to keep state lands open to public recreation, but current policies emphasize hunting access in rural areas, which is a good thing, and the land banking process does the same--prioritizes “recreation,” mostly hunting, in rural areas.
With $5 gas around the corner and ever-growing need to conserve energy, we also need more recreational opportunity near the city limits. Hunting access is a constant struggle, and we should continue and expand current programs, but we need more opportunity for all outdoor activities, especially near the city limits. And the DNRC and Land Board are in an ideal position to help communities protect open space for outdoor recreation in or near the city limits.
Devoting state land near cities to outdoor recreation isn’t going to generate the big bucks for schools, but it could easily be the best use for the most people in the long-term and still generate some revenue. Next week, I plan to write about one place this should happen.
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Comments
If you could sell that land for grazing, and grazing only, the state keeping a hunting easement for hunting season only to be used by hunters with a drawn permit to hunt those lands, and sell them for $100 an acre, you would generate $60,000 which invested at 4% would bring in $2560 per year.
The land has a purpose, for it was given to Montana to provide for schools. It was to be sold, leased, rented or traded to provide the best possible return for schools. The state keeps the mineral rights, as they do on all tax foreclosed lands, and in my scenario, an additional hunting trespass right, and the land has a zoned use and a property tax responsibility to local government. In any event, you are talking about having a five fold increase in State revenue, and still having the open space and the hunting lands.
I am not proposing selling one acre, but the afore story problem is an example of how Montana and other Western states have to look at holding state lands. It does cost money to own them, to protect them, to manage them, and to defend them in court. And all that comes out before the schools get one dime. Oregon has almost 700,000 acres of high desert graze and some years, the return to the Common School Fund is about $100,000 or less after all the bureaucrat expenses are accounted for. if I owned 700,000 acre ranch, I know I could get Uncle Sugar to be prevailed upon by the likes of Baucus and others of his ilk to send me ranch welfare far more than $100,000 in worth. The schools are getting hosed on the land deal, and the school kids and teachers are hostage to open space issues, and the Big Green land grabs. My opinion. And use of some perhaps suspect junior high math.
As to the Plum Creek, et al, lands, the State of Montana and counties have the ability, I thought I understood, in the Baucus insert in the Farm Bill to sell bonds and buy Plum Creek land, all with the Feds helping out. If you let the NGOs participate, they will buy the lands, and at some time, sell them to the USFS for a 30% profit to "recover their costs." (How you get tax free donations, use them for their tax exempt purpose, and then get to additionally claim you have "costs" associated with spending donated money of which you do keep a large percentage of to "do business", which is paid begging for more donations, is a head scratcher for me). The USFS will then claim that they don't have the wherewithal to manage them, and will WFU all that are fired by thunderstorms and careless hikers.
I do know the Baucus, et al Democrat inserts to the Farm Bill also got Weyerhaeuser's taxes reduced from 35% to 18% so that they could operate on "a level playing field with the REITs and TIMOs." Which makes me wonder why Weyerhaeuser promoted their Real Estate Division chief, Fulton, to CEO due to Rogel's mandatory retirement. It is saving Weyco $182 million this year. Or is that costing us that much? Or raising the US debt that much? Hmmmm.
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A previous Democrat governor mandated that the Elliott Forest Common School Lands, made by trades and consolidations of sections 16 and 36 of each township, into a 90,0000 acre contiguous forest, should never yield more than 24.5 million board feet of timber in a year. The forest grows 90 million. It is high site in the Coast Range, all the regrowth from 19th century fires. The Common School Fund has lost as much as $150 million by that limitation. The Gov. is protecting endangered wildlife. So when was the mandate of Common School Lands to protect endangered wildlife? I thought it was to generate the most money possible for education.
Now if Common School Lands are to be used as conservation lands, then those who benefit should be paying the Fund for that benefit. If society as a whole is the beneficiary, then there should be a Montana or Oregon tourist tax, a motel tax, and a state income tax surcharge of pennies to make up for that conservation use. The land is for schools, by Federal mandate at Statehood, and any other use or misuse, or non-use, or lesser use, should be compensated for by the people who claim to need their benefit as other than maximum income generation lands for schools.