As Goes Johnson County So Goes ...

Land Wars: Two Cases Shape Future of Land-Use in Wyoming

By Samuel Western, WyoFile, Guest Writer, 9-25-09

Buffalo – Few places evoke the Wild West of range wars and land feuds more than Johnson County, Wyoming.

The memory of the cattle war of 1892, the so-called “War on Powder River,” remains vivid today, although some in Johnson County wish it would fade.

Now, 118 years after that famous massacre, the county again finds itself in the middle of a fight. It’s a quieter battle this time, waged in courts and county offices, not on Nate Champion’s ranch, the center of the War on Powder River, which was a battle between homesteaders and open-range cattlemen.

As in the old conflict, the issue today is land use: who gets to do what with the land, and what is the public’s stake in the fight? A transition from large to small ranching was the root cause of the Johnson County War. The shift marked a decline in power for bigger cattlemen trying to stem the rise of the small rancher and settler.

Now Johnson County is making another transition: moving from an agricultural county to a mineral and residential county. The place has lovely landscapes and vistas, fertile ground for new housing developments for the energy workers, retirees, and second-home seekers who are moving in.

The rapid residential development pushes cultural hot buttons and raises a series of questions: What is “open space”? What value does it have? Is anyone willing to pay to keep land free of new roads and homes? What constitutes “agriculture?”

In the last few years, it has become clear that many people in Wyoming–of all ages and from all walks of life–care about open space. Attendance at Gov. Dave Freudenthal’s “Building the Wyoming We Want” conferences in 2008 and 2009 made that clear. People routinely complain about seeing new residential development eat up the open views of mountain and plain that they have long enjoyed. Some point out that subdivisions may be a lot more permanently destructive than oil, gas or coal development.

Notably, at the second “Building Wyoming” conference in June 2009, speakers increasingly emphasized supporting agriculture as a way to protect open space.

Agriculture and open space are not necessarily synonymous–but they can be. More and more people in Wyoming seem to think it could be good public policy to declare they are–at least when the agriculture at issue is ranching.

“Wyoming Open. Thank a rancher for preserving open space,” says a new ad campaign sponsored by the Wyoming Stock Growers Agricultural Land Trust and The Nature Conservancy, among others. It is an open question, however, whether the identification of ranch land with open space, and the concomitant alliance between ranching and conservation groups, will prove durable.

Two pending cases — one about county taxes, the other about conservation easements — could help answer that question.

The first case pits Johnson County assessor Dorothy Elsom against Sand Creek Ranch developer John Jenkins over how to tax hybrid developments that include both housing and agriculture.

Elsom, a respected longtime public servant with traditional ideas about interpreting real estate values, and Jenkins, a Princeton-educated entrepreneur, have a $16-million showdown before the Board of Equalization. They are battling over a new type of development that seeks to combine residential development with conservation of open space. The development occurs on a ranch, and the open space is the core ranch operation.

The second case involving Johnson County, Salzburg v. Dowd (previously, Hicks v. Dowd), has been before a variety of Wyoming courts for six years, although the parties involved are now in settlement negotiations.

The Salzburg v. Dowd case raised the question of whether a conservation easement, granted in perpetuity to protect ranch land from future residential development, can be revoked by the holder of the easement — in this case, the Johnson County commissioners.  Some legal experts said that the Salzburg case could have huge consequences for the state and nation, potentially undermining the viability of conservation easements. (In June 2009, a lawyer who had been advising on the case discovered such serious technical errors in the Johnson County Commissioners’ conveyance of the easement that the case may be moot.)

One question connects the Jenkins quagmire and the Salzburg case:  How willing are Wyoming people outside of Jackson–people in places like Johnson County — to protect open space?  The answer in both instances appears thus far to be: Not very.

Judging by Johnson County’s experience, there are significant obstacles to a long-term partnership between open space and agriculture.

A fierce attachment to the traditional ranching economy of yesteryear joins a strong belief in the principle of local control. Further, limited options for county funding lead to lack of the money and expertise needed to provide effective local control in today’s rapid market changes.  All these factors do not bode well for an alliance of open space and ranching.

Background: Land and markets in Johnson County

Although it might come as a shock to many, Johnson County has a master plan for land use–one that envisions retention of rural open space and ranches, and relatively compact development around the towns of Buffalo and Kaycee.

But the Wyoming Supreme Court some years ago made clear that a master plan has no authority unless a county also passes zoning ordinances.  That, Johnson County can’t quite seem to do, although it is trying.

Johnson County planner Rob Yingling, a former Navy chief petty officer and financial analyst who moved to Buffalo from Maryland nearly a decade ago, says the county has been working on zoning for several years.

“We’ve got a tough nut to crack. I’ll probably be retired by the time we get zoning passed here,” Yingling said in an interview with WyoFile.

Still, he said, “It’s better than it was ten years ago when we had people at meetings yelling and shouting at anyone who talked about zoning.”

Johnson County is bordered to the west by the Bighorn Mountains, which rise up to 13,167 feet in elevation. The Powder River drainage, roughly 3,670 feet in elevation, makes up the eastern part of the county.

This makes for a county of contrasts. The western mountainous region is highly valued for upscale real estate, particularly along the base of the range. In the east, scant rainfall and rolling sagebrush intersected by the rugged Powder River Breaks make this part of the county traditionally a place for large ranches.

Regardless of topography, Johnson County has long been a conservative bastion. Only tiny, poor, ancient (it has the state’s highest median age) Niobrara County on Wyoming’s eastern border with Nebraska has more registered Republicans and Libertarians than Johnson County.

Johnson County ranchers are only slowly moderating their views on zoning, which they have long seen as a personal challenge to their control over their own land.

“Lots of people in the agricultural community have the philosophy that we don’t need planning,” said Gerald Fink, chairman of the Johnson County Board of Commissioners. “Some years ago we had some zoning meetings that were very emotional and sometimes I wondered if they were about to erupt into violence. Very strong feelings.”

While they recognize that traditional ideas and feelings about land use do not address current problems, ranchers seem lukewarm about the standard solution, i.e., zoning regulation. Yet, they are beginning to endorse it. Wayne Graves, a tall, lean cattleman from Barnum who sits on the Johnson County planning and zoning commission, has watched land-use debates in the county for a long time. He says the rancher who today favors some zoning “is the one who wants to stay in this way of life forever. They can’t stand seeing the county chopped up into little pieces.”

Graves has seen this up close. In 2006, a neighboring rancher, Nicky Taylor, divided 53 acres of her property into “Outlaw Acres,” a 20-lot subdivision within sight of the Graves’s front porch.

About a dozen adjacent land owners showed up at the planning and zoning meeting to protest Outlaw Acres, according to Yingling. They objected to the new development as an intrusion into an area because “it was ranch country and should be maintained as ranch country,” said Yingling.

They also objected that the project was 17 miles from the nearest town, Kaycee, so that providing basic services would be a financial burden on the county.  Graves said the cost of plowing roads and providing ambulance service to subdivisions such as Outlaw Acres “would tax us right out of this nation.”

“It was not a good place for rural subdivision,” said Yingling flatly.

Not one lot in Outlaw Acres sold. The entire 53-acre subdivision is up for sale as a single parcel.

Still, Graves admits that for him, zoning has been– and still is– hard to embrace.  The idea that a bureaucracy, which he called a “panel of little white gods,” can tell a man what to do with his property clearly galls him.

“We’re approaching the situation where if a man’s barn door blows down on Friday night, he’s got to wait until Monday morning to drive 50 miles to town to get a permit to fix the door,” says Graves. “Meanwhile, what happens to his stock? Do we ignore the law or do what we have to do?”

Though that particular scenario clearly couldn’t happen, even in, say, heavily zoned California, it resonates in the imagination of a rancher.

As often happens, on issues ranging from wolves to guns in hide-bound Wyoming, if Johnson County remains resistant to zoning, most likely someone from outside the county will end up deciding what happens.  This is a bitter pill for Johnson County, whose attitude could be summed up in a bumper stick occasionally seen around Buffalo or Kaycee: “Johnson County: We haven’t trusted Cheyenne since 1892.”

The landscape is changing, however. Johnson County’s population grew from 6,145 in 1990 to 8,464 in 2008, a jump of 38 percent. Since 2001, 46 new subdivisions have appeared on Johnson County’s map. The number of building permits climbed, although nobody knows how steeply because Johnson County keeps no records of housing or building permits. (The city of Buffalo does, but lost all records of housing permits issued from 1990 to 2000.)

With the past year’s economic slump and a drop in prices for the natural gas Johnson County produces, now both the local population and its government are having revenue troubles.
Under economic stress, land planning efforts are usually the first to go.

“Unfortunately, with the declining economy goes the desire to control sprawl,” said Ray Rasker, head of the Bozeman, Montana-based Headwaters Economics.

Sprawl is too strong a word for what’s going on in Johnson County. As of 2007, there were 1.1 houses per square mile. Compare this to 14 houses per square mile for Gallatin County, Montana, or 166 units per square mile in Boulder County, Colorado.

Sand Creek Ranch

Until last year, the ten or so miles between the city of Buffalo and the Bighorn Mountains was a popular place to build subdivisions.

Developer John Jenkins calls these divisions “a dozen pans of fudge busted into ten acre squares.”

Jenkins and his wife Carol own the 856-acre Sand Creek Ranch that sits squarely in the middle of the development path. The fate of Sand Creek probably would have been sealed with another owner, but it’s fair to say Jenkins is not your typical Johnson County ranch owner.

Jenkins has a history of land development experiments, some more successful than others. In the 1980s, when water and energy issues were big, Jenkins unsuccessfully proposed a “pump storage” scheme on the Little Big Horn River.

In 1997, Jenkins and other business partners bought the Wagonhound Ranch outside Douglas, Wyoming.

They teamed up with Sotheby’s International Realty to list eighteen 40-acre homesites at $875,000 apiece. The eighteen landowners, through a “ranchstead association,” in theory would collectively own the remaining 13,500 acres of pasture, hay meadow, and mountain.

In 1999, before the project got substantially underway, Art Nicholas, who founded the Del Mar, California-based Nicholas Investment Partners, bought the entire property.

In 2002, Jenkins and other investors tried to open a ski area in Encampment, the Grand Encampment Mountain Resort. The development, which would have included 285 new homes, died when the Wyoming Business Council refused to loan the project $15 million.

Jenkins also owns mineral properties (Jenkins Minerals) and possess considerable political savvy. In the 1970s, he managed successful campaigns, including one for Democrat Ed Herschler for governor and another for Republican Malcolm Wallop for U.S. Senate.

Jenkins is a big man, 6-foot-5 and over 250 pounds, and a curious combination of humility and hubris. When he doesn’t understand something, he systematically reads, researches and asks a lot of questions.  When he does know something, it’s hard to shut him up. He is a man of enthusiastic convictions, known for his doggedness, ambitious ideas, and big words.

In developing Sand Creek, Jenkins has clearly riled some folks in the county. His success in obtaining a variance on road widths within Sand Creek (he wanted his roads narrower than local code allowed) endeared him to few.

But he impresses people, too.

“John’s a magician,” says planning commissioner Graves. “He knows how to hobble the hind legs of a cow so it won’t kick him.”

Now, as a real estate developer, Jenkins claims to do well by doing good. He has dialed in on the twin Wyoming anxieties of disappearing open space around cities and towns, and the fate of the working ranch.

The average Wyoming cattle or sheep operation runs a yearly profit of about 2 to 4 percent, “but that’s over the long term,” said Tex Taylor, a professor of agricultural economics at the University of Wyoming. “We have a lot of droughty years, too. There’s not a lot of wealth in this business.”

Such a low return might sustain one household, but most ranches are family corporations, many with multiple shareholders. As new generations arise, it is increasingly difficult to make enough money to support all shareholders. Real problems surface when one family member wants to be bought out of the ranch.

The solution is often to sell some–or all–of the ranch.

If the property has high recreational value–for example, it is scenic, or has good fishing or hunting–it can command top real estate dollar as an “amenity ranch.” As the saying goes, if the ranch is near a growing urban area, its last crop is houses.

Jenkins has been trying to figure out how to make money another way: keeping cash-strapped (or as Jenkins, fond of fancy terms, would say, “capital-constrained”) working ranches from being transformed into subdivisions.

Jenkins’ family has owned Sand Creek Ranch since 1968 but has never lived there. Until 1997, he leased the Sand Creek Ranch to a cattle operator “and it got beat to death as a winter feed ground,” he says. After 1997, he did not renew the lease and began plans to develop his land.

Sand Creek Ranch is now a housing development and advertises itself as the Sand Creek Conservation Community: “a brand new way for conservation-minded individuals, families and active retirees to own and live on an ideal ranch.”

The Sand Creek website advertises the development as “low density Ranch neighborhoods.”

Stripped of marketing’s verbal tinsel, Sand Creek Ranch could be described as a housing development of 99 one-acre plots.

But Jenkins’ plan calls for leaving 86 percent of the property–737 acres—undeveloped, with 508 acres in agricultural production. So Sand Creek also could be seen as an “amenity subdivision” Wyoming-style, with houses tastefully sited around a ranch instead of a golf course.

Jenkins’s vision of his ranch’s future is crystal-clear, at least to him: this is a new way to divide land to protect ranching and preserve open space. Sand Creek will be a hay/alfalfa-producing property with 99 owners. Each owner gets a one-acre lot set on a hill or away from an alfalfa field with a good view of the Big Horns. Each also gets a one-ninety-ninth interest in the ranch.

The Sand Creek Conservation Community so far has 15 buyers–11 at the time of the tax actions–who have paid an average of $168,369 each for a one-acre lot and the interest in the ranch corporation.

Sand Creek plans a sparkling new sprinkler irrigation system for the land dedicated to hay and alfalfa. That land will be much more productive when it goes under sprinklers, which the small ranch could not afford before, Jenkins says. The irrigation project is possible now thanks in part to government–federal and state–assistance.

Jenkins received federal Natural Resource Conservation Service financial and professional assistance in bringing water to his new on-farm sprinkler system.

He banded together with five neighbors to form the Hopkins Producers Irrigation District. The state gave Hopkins $703,500 to help upgrade irrigation water delivery. Jenkins estimates that he has put in $200,000 in unpaid labor to set up the Hopkins Producers Irrigation District, and that the combined six ranches have invested “upwards of $2 million in on-farm development,” meaning new pipelines, sprinklers and developing new pasture.

Jenkins calculates that when fully operational in spring 2010, Sand Creek Ranch with its new irrigation system could harvest about 2,000 tons of hay per year, which would make it one of Johnson County’s larger alfalfa and hay producers.

Taxes and Revenue

Sand Creek is an example what Wyoming Department of Revenue chief Ed Schmidt calls “hybrid land transactions.” The trouble is, such critters are new to Wyoming, and more particularly, to Wyoming tax assessors.

Most Wyoming ranches, even family ranches, run on a corporate structure.  Individual homes on a ranch, called “farmsteads,” are part of the corporation, but are taxed separately from the land itself. The house is taxed at fair market value; the land is taxed at its productive value. Thus, a rancher typically pays two different sets of taxes to the county: one for his/her farmstead and one for the ranchland.

Jenkins says he used similar economics to calculate what each shareholder would pay in taxes if they bought into the Sand Creek Conservation Community: One tax rate for the lot and house, another rate for the agricultural land.

Jenkins’ idea was that since each buyer would own one-ninety-ninth of the ranch, the homes would qualify as “farmsteads.” They would be valued at fair market value, but the tax assessed on them would be at a rate lower than “rural residential.”

Jenkins’ plan for “hybrid” land development is not unique.

The idea is gaining popularity among rural planners in areas surrounding growing urban centers. Larimer County, Colorado, through its Rural Land Use Center, gives landowners in the Fort Collins area a number of incentives to keep open space when developing property. Brenda Gimeson of the Rural Land Use Center explained that Larimer County deviates from its standard zoning formula–which allows agricultural rates for developments with only four houses per 35 acres–if the developer will cluster, or use “special spacing,” for the lots and commit the rest of the property to open space for 40 years.

Typically in such a plan, the developer creates fewer total lots with the houses closer together than counties normally allow. He can usually charge more for the lots, however, because they are associated with the open-space benefits of views and legroom.

In Larimer County this hybrid development results in two tax classifications and two tax bills.

“The single family dwelling are taxed as ‘rural residential,’ the common areas or protected open space is taxed as agriculture,” Gimeson said.

Johnson County assessor Dottie Elsom doesn’t see Sand Creek that way. She sees it as an upscale housing project whose owners owe one tax bill–for a rural residential property.

Elsom has worked in the assessor’s office for nearly 49 years. She is petite, polite, but decidedly feisty. She is well-known and much respected for her hard work and her big heart through county’s economic ups-and-downs during the repeated cycles of boom and bust.

The difference between Elsom’s assessment and Jenkins’s own estimate of the valuation of the Sand Creek Conservation Community is $15.5 million.

In 2007, Elsom valued Sand Creek Ranch at $551,164: $484,714 for various agricultural lands, and $56,901 for residential land improvements.

In 2008, Elsom valued the same property at $17,425,809.  The reason for the difference was that Elsom added $16,668,531 for 99 empty, platted residential lots.

The difference between Jenkins’ idea of taxing the lots alone as “farmsteads” and Elsom’s idea of taxing lots-plus-ranch-share as “rural residential” is substantial. “Farmsteads” in Johnson County are valued for tax purposes at $4,030 per acre; “rural residential” valuations in subdivisions near Sand Creek range from $17,159 to $26,133 per acre. Elsom classified each one-acre lot in Sand Creek and its attached right to the ranch land, as “rural residential” and based the value on the sale price: $169,000.

This assessment made Sand Creek’s tax bill jump from $4,000 in 2007 to $120,000 in 2008. While each of the owners must pay the tax on their one-acre lot and a 1/99th share of ranch, the rest of that burden falls on Jenkins and his wife, Carol.

“That’s about $100,000 per year,” said Jenkins.

Jenkins called Elsom’s assessment “a fiction” and appealed the county’s 2008 assessment to the Board of Equalization, Wyoming’s tax court. He lost the first round at the local board in December 2008, and appealed to the State Board of Equalization, which heard argument on July 7. The decision is pending.

Jenkins also filed a lawsuit in district court against Elsom and the Johnson County Commissioners, alleging discrimination. He contends that while Sand Creek may have 99 owners, it still qualifies as a ranch under the Wyoming constitution and should be taxed as such.

Jenkins’ lawyer, Wyoming First Lady Nancy Freudenthal argued that use of the land is key.

“The constitution looks to the use of the land,” she said, referring to the Uniformity of Assessment clause of the Wyoming Constitution, which states that agricultural and grazing lands “shall be valued according to the capability of the land to produce agricultural products under normal conditions.”
“It has nothing to do whether you’re wearing cowboy boots or loafers,” she said.
Elsom disagrees. To her, the key issue under the law in force in 2008 is whether the land is platted into a subdivision.
“The law is very clear,” she said. “You cannot have agriculture in a platted subdivision. I cannot legally allow agricultural rates in this platted subdivision.”

Jenkins made his disagreement with Elsom fairly clear in an op-ed piece in the Casper Star-Tribune, in which he called Elsom’s assessment of Sand Creek “bizarre tax theory.”

As in most tax protests, it’s the amount of the tax bill, not the classification, that bothers Jenkins.

“I’ve calculated that Dottie Elsom’s assessment on Sand Creek’s 856 acres is more than [the assessment on] the ten largest ranches in Johnson County combined,” he said.

Elsom got her figure by adding up the purchase prices to arrive at a $168,639 assessment for each shareholder. (She disqualified Jenkins and his wife’s two lots from consideration for market value.)

Elsom said she had no alternative, because in Wyoming “fair market value” is derived from previous sales.

Property taxes–which include ad valorem levies on mineral production–are the principal source of revenue for Wyoming counties.  If mineral tax revenues fall, as they have statewide in the past year, taxes on other kinds of property become even more important.

In a rapidly changing market, meanwhile, technology and training for county assessor’s offices can be crucial.  State legislators are currently trying to figure out how well and how fairly property taxes are assessed around the state.  Underfunded counties, of course, can have trouble getting new technology and training for their tax officials.

In Johnson County, both ranch owners and residential real estate agents have complained about the “obsolete system” at work in the assessor’s office, and its limited ability to deal with the county’s changing property values. They have argued that funds already set aside should be used to bring the office’s current systems up to date.  The county seems not to give upgrading the office high priority, instead focusing on the needs of the jail.

Elsom’s office made the front page of the local paper, the Buffalo Bulletin, the first week in August when state Rep. Mike Madden (R-Buffalo) went to Elsom to see why his property assessments had risen. He did not come away satisfied.

“Either her office would not, or could not, provide the sales that were used to calculate my home value,” Madden told the Bulletin.

He, too, went before the local Board of Equalization, which supported Elsom.

“Since they refused or were unable to tell me which properties were being used [to calculate his assessment], I walked out of there a total cynic,” Madden said.

Subdivision, Ranch, or Something New

At last December’s local Board of Equalization hearing in Buffalo, Debra Nagel Smith, who was Albany County assessor for 24 years, testified that in her opinion, Sand Creek was a subdivision, but still a ranch.

“I have ranches [in Albany County] that have platted divisions in them for a family,” Nagel said. “They’ve got four-acre here and two-acre there and–for the family or whoever else, I’m not in the genealogy business, ends up owning those.  And it’s still in the middle of an entire, operating ranch.  And it is–all the land around it–is still ag,” she said.

Elsom, of Johnson County, doesn’t see Sand Creek as farmsteads and ranch.

Sand Creek, says Elsom, is not agricultural.

“They don’t have barns or animals or farm machinery. Those houses can’t be farmsteads,” she said.

Elsom thinks Sand Creek is its own Land Economic Area, or LEA, the term used to describe subdivisions and filings valued by an assessor.  LEAs are often described as “neighborhoods.” According to Elsom, Johnson County has 72 neighborhoods.

“It’s a whole new neighborhood, a different concept, totally,” she said in an interview with WyoFile. “We can’t compare Sand Creek to Emerald Creek or Cloud Peak subdivisions [developments close to Sand Creek].  We have to assess [Sand Creek land] at rural residential.”

Sand Creek has one feature that makes it unique, truly a “different concept.” Sand Creek is the only housing development in Wyoming that includes a land conservation easement.

A conservation easement is a land use agreement that limits most commercial development, usually in order to protect open space or sensitive ecological areas. It’s a trade-off. The landowner retains ownership of the land but gives up future development rights, typically tract housing or a commercial enterprise. For this loss, the owner gets a federal tax deduction equal to amount he or she would have made if commercial development had proceeded.

In granting a conservation easement, the property owner conveys to a governmental entity or a charitable organization –a grantee –the rights to enforce the use limits of the agreement.

Jenkins couldn’t find a traditional organization, like the Nature Conservancy or the Wyoming Stock Growers Agricultural Land Trust, to be the grantee for his conservation easement.

Pamela Dewell, executive director of the Wyoming Stock Growers Agricultural Land Trust, said she was not working for the organization at the time Jenkins proposed his conservation easement.

“But I can tell you the most common reason why we reject being a grantee for many conservation easements: we do not see enough production agriculture,” she said. “It [the easement] has to have a net positive value for production agriculture. We like to see very limited development.”

At the same time, Dewell praised the idea of Sand Creek.

“It’s indicative of the evolution we’re seeing in Wyoming land use. People forget that the idea [of limited development] is just emerging in Wyoming. We need more tools in our tool box,” she said.

The Nature Conservancy rejected Jenkins’s easement because the group concentrates on large habitat projects, but Paula Hunker of the Conservancy visited Sand Creek and said, “I applaud John very much for what he’s trying to do.”

When interviewed by WyoFile, Wyoming Stock Growers President Jim Magagna said he was familiar with Sand Creek and thought the project qualified as “viable agriculture.”

Magagna said, however, that the balance between housing and agriculture in Sand Creek “wasn’t ideal.”

“It needs to watched closely,” he said. “But there’s a lot of 40-acre parcels that currently qualify as ag land. Agriculture is the key to open space.”

Jenkins, unable to enlist the Stock Growers or Nature Conservancy as grantee, turned for help to Governor Dave Freudenthal, who sits on the State Land and Investment Board.

The State Land and Investment Board consists of Wyoming’s five statewide elected officials. The board manages the state’s 3.6 million surfaces acres and 4.2 million mineral acres.

Freudenthal’s interest in Sand Creek “began because I’ve known John [Jenkins] forever,” he told WyoFile. “I became intrigued because the Sand Creek Ranch seemed like a vehicle for those who hadn’t been blessed by an oil well.”

Freudenthal said he was “bewildered” by the Stock Growers’ refusal to be grantee of a Sand Creek conservation easement.

The governor said he went to Johnson County and visited the property, which so impressed him he brought the matter of the conservation easement to the April 7, 2005 meeting of the State Land and Investment Board.

At the governor’s urging, the State Land and Investments Board became grantee of the Sand Creek conservation easement. The vote was 3 to 2, with Freudenthal, State Treasurer Joe Meyer, and Superintendent of Public Instruction Jim McBride voting yes.  State Auditor Rita Meyer and Secretary of State Max Maxfield voted no.

State Land and Investments Board documents show Jenkins said the easement was worth between $1.5 and $3.0 million and that the entire property was worth between $6 and $8 million. Jenkins told WyoFile he took a $2 million deduction off his federal income tax.

The Board did not ask for or receive an independent appraisal of the value of Sand Creek ranch.

The Sand Creek conservation easement is the only one the State Land and Investments Board holds, because in its next session, in 2008, the Legislature passed House Bill 111, forbidding the State Land and Investments Board to sponsor more conservation easements.

“Many of us felt doing so [holding the easement] was outside the scope of the board’s duties,” said Kermit Brown (R-Albany), one of the bill’s sponsors. “The State Land Board needs to stick to what it was created to do, and it needs to do so without any potential conflicts about its mission or its loyalty.”

Stock Growers president Magagna, who 12 years ago was Gov. Jim Geringer’s director of the Office of State Lands and Investments, also supported the bill to prevent the Board from becoming grantee for more conservation easements.

“Our belief is that the function of the State Land Board is to manage state lands,” Magagna said. “Getting into the conservation easement business did not fit the mission of the State Land Board.”

The 2008 legislature, however, also passed a bill designed to encourage “conservation development.” The legislation, Senate File 11, titled “Subdivisions–Large Acre Parcels,” allows counties to give developers who protect open space incentives in the form of fewer subdivision requirements.

In 2009, the legislature passed House Bill 10, sponsored by the Joint Corporations, Elections and Political Subdivisions Interim Committee. It allowed agricultural operations within subdivisions, platted or non-platted, to be taxed as agriculture.  This would seem to solve John Jenkins’ problem with platted subdivisions, assessments and rates.
Lynda Cook, an attorney for the Legislative Service Office who worked on the bill, said it was not special-interest legislation.

“It wasn’t pushed by anyone,” said Cook. “It was the work of the interim council.”

Not everyone agrees.

“Mrs. Freudenthal was actively lobbying for Mr. Jenkins for the passage of the bill,” said Rep. Pete Illoway (R-Laramie), a member of the Joint Corporations, Elections and Political Subdivisions Interim Committee.

This legislation potentially offers great benefits to Jenkins for this and later tax years. Elsom has already announced she will follow the new law when assessing Sand Creek for 2009.

“That is absolutely not true, Jenkins says. “Dottie Elsom has sent us a 2009 assessment for ‘rural residential’ and ‘vacant land.’ No agriculture. She won’t even follow the law even though the statutes provide for what we’re doing.”

Close Connections

The Sand Creek Ranch controversy includes many examples of the closely connected, overly familiar nature of Wyoming politics.  Not only did the governor take a personal interest in Sand Creek because he has known John Jenkins “forever,” but his wife Nancy, a partner in the Sheridan-based firm of Davis and Cannon, is Jenkins’ attorney.

Nancy Freudenthal was Gov. Ed Herschler’s attorney for intergovernmental affairs for eight years; John Jenkins worked on Herschler’s political campaign. John Jenkins brought a case before the Board of Equalization, Ms. Freudenthal represented him; Ms. Freudenthal had been chairman of the Board of Equalization from 1989 to 1995.

In July 2009, Gov. Dave Freudenthal appointed to the State Board of Equalization Debra Nagel Smith, the former Albany County assessor who testified last year for Jenkins at the local tax board hearing. She has recused herself from matters concerning Sand Creek Ranch.

Elsom is unhappy about Ms. Freudenthal’s role in the whole case.

“I can’t tell you how wrong I think this is,” Elsom said to WyoFile. “The governor’s wife taking a case against the county.”

The case reveals the push-pull Wyoming has with open space. No one interviewed for this article had a bad word to sat about the concept of the Sand Creek Ranch.  Even Elsom says she appreciates what Jenkins is trying to do.

“I’ve got nothing against this type of development,” she said.

Yet there is little agreement about who should pay for open space. The public–not without dissent–supports the ranching business with federally subsidized grazing, soil conservation, and irrigation programs. The state also offers ranching economic help, and the counties, too, give ag a break.

But preserving open space is not exactly supporting a business, it’s more like sponsoring an aesthetic. It’s an aesthetic with a good payoff, as tourism is big business in Wyoming and most tourists do not to come here to work cattle. There seems to be a growing, if uneasy, acceptance of federal income tax-subsidized conservation easements, at least for “big” ranches. With his longstanding political connections, Jenkins got his $2 million tax deduction, but it’s unclear if another hybrid development could similarly succeed.

There seems to be some reluctance here to pay to preserve what conservationists call “view sheds,” those undeveloped areas near our towns. Wide-open spaces, the very definition of Wyoming, used to just come with the territory; they were free. Who wants to pay for the long sightlines that have always been a given?

The county’s tax 2008 assessment will not make or break Sand Creek, but the revenue involved matters to Johnson County. The county seems reluctant to take a revenue hit for the sake of open space on John Jenkins’s land. Most county officials are well aware that, as University of Wyoming studies have shown, rural residences cost Wyoming counties more money than they bring in new revenue.

Many people interviewed for this article did not like the idea that Jenkins or any of the residents of Sand Creek could be getting any special treatment, tax wise.

Take the opinion, for example, of planning and zoning committeeman Wayne Graves.

An unapologetic agrarian, he represents a sector convinced of the virtues, both economic and philosophical, of agriculture.  A conservative Republican, Graves has learned that there are many sides to the zoning debate.

Still, county finances matter to Graves. The 99 eventual homeowners at Sand Creek, he says, will put more pressure on county services than would a single rancher. Thus, Graves is convinced that Elsom is doing the right thing.

“I buy into the whole Sand Creek concept,” he said. “But it has to be taxed as rural residential. I can’t see a bunch of self-centered elites in a subdivision being taxed as agriculture.”

This piece comes from WyoFile.com a non-profit investigative news organization devoted to covering Wyoming.

More information:

http://www.uwyo.edu/enrsupport/projects/Wyoming%20State%20of%20the%20Space0720_comp_final.pdf

http://www.nature.org/wherewework/northamerica/states/wyoming/press/press3918.html

http://www.trib.com/articles/2009/08/10/editorial/columns/2d9ea7c75fdc18ab8725760d0020f8dc.txt

http://slf-web.state.wy.us/webboard/0407/c-2.pdf

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