Last time, I promised to explore whether the Whitefish Trail program is paying “full value” to the school trusts. Well, first there are a couple of other “conservation transactions” our intrepid Land Board approved Nov. 19 that provide some preparatory full-value context.
Alongside the Whitefish deal was the Milk River/Aageson ranch on the Canadian border. Eve Byron of the Helena Independent Record wrote a fine story with many sordid details, involving political contributions, political appointments, and a price paid that seems to be at least double “full value.”
Also on the hearing docket was the grand finale of another hinky transaction I wrote about in late 2010, the so-called West Swan Conservation Easement.
Long story short: As part of its “Montana Legacy Project,” the Nature Conservancy (TNC) paid Plum Creek $1,428 per acre for 9,350 acres, checkerboarded with the Swan Lake State Forest on Highway 83. TNC’s plan was to impose development restrictions, then flip the ground to Montana Fish, Wildlife and Parks and the Department of Natural Resources and Conservation (DNRC).
Clark Wheeler and Associates appraised West Swan at $2,331 per acre average for “full appraised fee purchase value,” or $21.8 million – a nice instant paper profit of $903 per acre for TNC, which the nonprofit has since strived to collect.
A conservation easement (CE), valued at $18.6 million or $1,952/acre, was to be “bought” by FWP with Bonneville Power Administration wetlands mitigation funds (paid by ratepayers). But in late 2010, BPA only had $14.8 million to give FWP, so a “bargain sale” purchase of development rights at $1,582/acre was approved by the Land Board.
Based on the 2010 Wheeler appraisal, the full value “extinguishment” price came to 84 percent of unrestricted fee full value. The “bargain sale” still compensated TNC for 68 percent of full fee value – but in terms of cold cash, the CE alone paid TNC 110 percent of their actual investment.
Even better, TNC remained in line for even more cash: After selling the CE rights, TNC still owned the land’s “remainder value,” basically timber harvest rights. For West Swan, the “remainder” was initially pegged in the Wheeler 2010 appraisal at $399 per acre.
At the time, I asked some timber professionals if they would touch that price. They laughed. But in May 2010, the Land Board gave preliminary approval to a “Montana Working Forests Acquisition,” to use $41 million (and counting) of escrow funds set aside by Pennsylvania Power and Light while PPL appealed the dam-site rent ruling to the U.S. Supreme Court.
The money was earmarked to relieve TNC of 54,170 acres at $756 per acre. Keep in mind that prior to TNC’s actual buy, TNC and Montana had signed a November 2010 agreement covering 16,539 acres of Swan checkerboard at $750 per acre – after imposition of the conservation easements.
Problem was, in February 2012 the U.S. Supreme Court dismantled the Montana Supreme Court’s dam-site ruling, the escrow money went back to PPL, and the scrambling started.
Wheeler and Associates conducted another appraisal covering 14,627 acres, all subject to three separate CE’s in the North Swan. Under the “restricted overall highest and best use” allowed under these easements, the appraised value came to $5,850,000, or $400 per acre – amazingly close to Wheeler’s 2010 “remainder” calculation.
The “bargain sale” left $749/acre of “remainder” and the aborted November 2010 purchase agreement was, yep, for $750.
So, let’s look at the $400/acre the Land Board finally paid TNC last week. Is this a good deal for Montana? The Land Board’s summary put the timber inventory at 7.8 million feet, a lousy 533 feet – basically a tree and a half – per acre.
As the 2012 appraisal reads, harvests since 2008 “have depleted merchantable stands within this area” west of Highway 83, and “estimates for commercial timber harvest remain at 15 to 20 years into the future.” Furthermore, “the subject property [14,000 acres] does not have existing merchantable timber located onsite.”
None?
Thanks to our Land Board, Montanans have just finished paying TNC $20.6 million for pounded-off forest that won’t produce a dime for schools for at least another 20 years.
How’s that for full value?