On May 17, the Montana Land Board voted to give “preliminary approval” to a so-called “Montana Working Forests Acquisition.” This is former Plum Creek ground that the Nature Conservancy bought with the intent of selling it off to Montana as state trust lands.
On offer: 54,170 acres in four chunks, for $41 million ($757 per acre), using money won in the dam-site lawsuit against PPL Montana – “free money” that nonetheless hasn’t been collected yet. And … if it is, it will be collected from PPL customers one way or the other.
Even better, it appears the price is apparently a “discount.” The Forest Service paid $2,200 per acre (with your money) for its 112,000-acre share of the Montana Legacy Project. For the rest, 200,000 acres, TNC agreed to pay Plum Creek $240 million, averaging $1,200 per acre.
So, Montana’s getting discount ground using free money. What a deal, right?
First, let’s use a best case of what “Montana Working Forests” are really worth. Montana DNRC just put up a sale on a virgin section on Boorman Peak west of Kalispell surrounded by Plum Creek and Stoltze, all of which has been logged at least once. There were 581 acres offered, minus what looked like a trail/migration “corridor.” I walked it with some logger friends, nice wood on tough ground.
Charlie Parke (a Drummond logger with a share in Pyramid Lumber at Seeley Lake) bid $1.294 million, or $2,227 per acre in present cash-now value. If every tree was slicked off Boorman, the cash-now value per acre could be $4,500. But DNRC doesn’t do that, and I’m glad. Mr. Parke will also build roads for later management.
After Parke is done with Boorman, the land will have less cash value because of the wood removed and value captured for the trust beneficiaries. Let’s say we will rotate at 60 years half-and-half from here out. In 2040, DNRC will harvest the $2,227 worth of wood we left alone in 2010, while leaving the 2010 crop of new wood for harvest in 2070, leaving in turn the 2040 trees to grow until 2100.
Where does that leave us in terms of today’s dollars at six percent? The value of $2,227 in trees per acre in 2040 in cash today is $387.74, in 2070, $67.50. Taken together, the present value of Boorman after this harvest is $455 or so per acre.
Mind you, this is for properly-harvested-for-sustained-yield DNRC land after a first cut. I’m not considering the risk of bugs or fire, either. I’m also being optimistic on future growth. Much of what is there is far older than 60 years, including the leave trees we’ll harvest in 2040.
Bottom line: If DNRC, or any investor, was buying Boorman after Mr. Parke’s crews are done, as an income-producer it is worth $455 an acre at most. The multiply-mowed Anaconda/Northern Pacific/Champion/PCL land that is now on offer to the Land Board is clearly worth less.
In comparison, Oregon just bought a new state forest near Gilchrist south of Bend on the east side of the Cascades, paying Fidelity Investments $15 million for 43,000 acres, $348 per acre. Sure, it was slicked off in the 1990s, but it’s replanted, flatter, more productive and easier to harvest when the day comes.
So, is paying $757 per acre a sensible decision for the Land Board? In terms of producing income commensurate to the money invested, no way. But in terms of bailing out the Nature Conservancy from under some badly overpriced real estate, it’s simply terrific.
DNRC’s current director, appointed by Gov. Brian Schweitzer, is Mary Sexton. Her previous employer was the Nature Conservancy. Someone should ask her who she really works for.
Here’s something else: After I read that the forestry-hating Swan View Coalition had the gall to sign up for Plum Creek Foundation’s employee matching grant program, I just had to look. SVC only got a hundred bucks through that program.
But guess who (in 2007 and 2008) got the largest foundation checks? The Montana Nature Conservancy, $50,000 each year, for the “MT Big Sky Campaign.” Someone should question the timing, amount, fiscal relationship, and what that “campaign” was really about.