Plum Creeks History in Other Areas.... By Jennifer Savage Forest Magazine, Spring 2008 The Swan Valley in western Montana is nestled between the striking peaks of the Mission Mountains Wilderness, which rise up more than 9,000 feet to the west, and the vast, rugged expanse of the Bob Marshall Wilderness, which stretches—for more than a million acres—to the east. The remote valley has a handful of year-round residents, offers endless recreation opportunities and is situated on the southern tip of one of the most ecologically diverse and intact ecosystems in the world. It is also a valley where one landowner, Plum Creek Timber Company, holds the deed to 64 percent of the private land. The company’s plan to sell some of its holdings in the valley at top dollar for real estate development is generating a flood of concern among citizens, lawmakers and activists. It has the potential to change the culture of the Swan Valley and, possibly, all of western Montana. Plum Creek owns 1.2 million acres in Montana and more than 8 million acres across the United States, making it one of the largest corporate landowners in the country. In 2000, the company announced its plans to divest itself of 1.7 million acres nationwide: 225,000 for development, 975,000 for recreation and 500,000 for conservation. Plum Creek is also reviewing another 500,000 acres for possible sale. In the past seven years, the company has sold 196,000 acres in western Montana—82,000 of which, it says, were sold to conservation buyers. At present, Plum Creek plans to sell up to 40,000 acres in western Montana for real estate development over the next ten to fifteen years. During its first ten years, Plum Creek operated as a timber company. It grew trees, harvested logs and fed them to its manufacturing facilities—nine of which still operate in Montana, employing more than 1,400 workers, or 70 percent of the company’s total workforce. But timber prices have fallen steadily since the early 1990s, and the company has begun to look at real estate and rural land development to make a profit. As a corporation, Plum Creek has a fiduciary duty to get the largest return it can for its investors, and these days rural land in western Montana is worth far more as residential lots than as timberland. The story of Plum Creek’s divestiture is a complicated one that resembles struggles played out over and over again throughout the West. From the outside, it looks like a new-millennium chapter of an old story: an out-of-state company cashing in on the resources of western Montana. It is a tale of the clash among property rights, land management, wildlife and state politics. It’s about environmentalists wanting to make the company toe the line and protect native fish and grizzly bears. But the story is also about the changing face of the rural West, its ecology, economics and politics, and why “old West” ways of negotiating—with few words and few decision makers—may not solve “new West” problems, which seem to be calling for everyone-at-the-table collaboration. Larry Swanson, economist and director of the O’Connor Center for the Rocky Mountain West, a regional public education program through the University of Montana, Missoula, says painting Plum Creek as the bad guy because it chooses to develop land is missing the nuance of a complicated problem. Everyone benefits, he says, if Plum Creek respects the new values placed on these lands. “It’s not that black-and-white,” he says, “and if we approach it that way, we’re missing the point. It took us decades in the West to get out of this black-and-white thinking. It’s going to be harder than that.” The land Plum Creek is attempting to sell for real estate development has already been developed, Swanson says, just in a different way. These lands were managed strictly from a harvest standpoint twenty years ago. Now, he says, the move is away from an extraction-based economy and toward an amenity-based economy, which changes the values of the land. “From the standpoint of Plum Creek, they can develop these lands in a way that doesn’t respect alternative uses or they can do it in a way that values and enhances ecosystems, wildlife, water quality and watersheds,” says Swanson. “The more they develop lands in a way that respects environmental values, the more money they’ll make.” WILDLIFE ON THE MOVE Chris Servheen, a bear biologist at the University of Montana, says once houses emerge on a landscape, they are there to stay. “One of the greatest threats to wildlife in the Rocky Mountains is real estate development,” he says. Because once it’s constructed, “no one takes a house down.” Wild animals, particularly grizzly bears, cross the Swan Valley frequently, traveling from the Mission Mountains to the Swan range. These mountains are connected habitats, and one of Servheen’s objectives is to maintain that connectivity. Plum Creek owns a lot of land in wildlife corridors, called linkage zones. Twelve years ago, Servheen, Plum Creek biologists and representatives from federal agencies sat down to establish a management system, formally called the Swan Conservation Agreement, for wildlife to move across the valley. The company agreed not to sell that land but to transfer it to the U.S. Forest Service. Plum Creek also monitors wildlife in the linkage zones. “They are pretty good to work with, but the challenge remains in the land outside of the linkage zones because those can be mortality sinks for wildlife,” Servheen says. Real estate development can cause animals to lose habitat, because they begin to avoid the area that has been developed. Inversely, animals can become conditioned to domestic food waste and lose their natural fear of people, wandering close to homes and coming in contact with people who have never lived near wildlife before. “We are trying to better understand the relationship between humans and wildlife,” Servheen says, “and find better ways to educate people. We want to direct development where it’s okay and limit it where it could be detrimental for nature.” He calls the Swan Valley a microcosm and the collaborative work being done there “a test.” “It’s really important. It could impact grizzlies all through the ecosystem,” he says. “This will happen everywhere people are moving to private lands in the mountain valleys in the Rockies.” COSTLY PROTECTION It’s impossible to talk about land ownership in the rural West without talking about wildfire protection. The annual federal firefighting budget is threatening to top $2 billion by 2009. Each year this figure grows, as does the number of homes built in the wildland-urban interface, defined as land within 500 meters of a forest boundary. And every year, firefighters spend more time and resources protecting those homes when fires ignite in rural areas. The Swan Valley sits just north of where wildfires burned more than 36,000 acres in western Montana in 2007. The Jocko Lakes Fire—which threatened 3,000 structures—cost $1,000 per acre to fight. In comparison, the Chippy Creek Fire—which threatened fewer than 100 homes—cost $157 per acre to fight. Plum Creek pays twenty cents on each acre it owns in Montana for firefighting costs, amounting to $250,000 annually. Headwaters Economics, a Bozeman, Montana–based nonprofit think tank, recently released a study charting the amount of developed land in the wildland-urban interface in western states. In Montana, only 9 percent, or about 273 square miles, of the state’s wildland-urban interface is currently developed, meaning up to 2,751 square miles—an area about the size of the state of Delaware—could be built up in the future. Plum Creek owns 63 percent of this land. More development could have serious implications, says Ray Rasker, the group’s executive director. In the West as a whole, he says, only 14 percent of the wildland-urban interface actually has houses on it. But already, “we are spending millions of dollars a year fighting fire to protect those homes,” Rasker says. “We wondered what it would look like if 50 percent of the wildland-urban interface were developed. The amount of money to fight fires in that scenario would be more than the entire annual budget for the Forest Service.” Federal agencies currently pay firefighting costs, but Rasker suggests that the only way to get people to stop building in vulnerable areas is to have homeowners pay for fire protection. This study speaks to the frightening potential of what unchecked development could do in places like the Swan Valley, he says. “If I was a county commissioner I would start worrying right now. It’s the perfect opportunity to do land-use planning.” As it stands, he says, homeowners in wildland-urban interface areas, such as the land Plum Creek is selling in the Swan, don’t have to pay for firefighting costs because they get a bailout from federal agencies. But fire costs are going to bankrupt these agencies, he says. “There’s no accountability,” he says. “Homeowners don’t have to pay for the consequences of their actions.” Rasker says the political machine is already in motion to move these costs from the federal level to the local level, which means that counties would be responsible for firefighting costs. These counties would then pass these costs onto residents. “If the federal government transfers costs to states, then to counties, then we will see a whole different spin on land-use planning in the West,” Rasker says. “Those who are responsible for building the homes would be responsible for protecting the homes. The next time a subdivision is up for review, the county will consider who will pay for the costs of firefighting. They’ll either have to say ‘if you build a house we can’t protect it,’ or ‘you can’t build it at all.’” HEFTY PROFITS BYPASS COUNTIES In 1864, President Abraham Lincoln granted more than 40 million acres to help extend a railroad line to the Pacific. This land, doled out in a checkerboard pattern, was supposed to raise capital as railroad owners sold it to homesteaders. But much of the land ended up in the hands of large corporations such as Weyerhaeuser and Anaconda Copper Co. Plum Creek, in its current incarnation, spun off from Burlington Resources in 1989. Burlington Resources, and its timber assets, can be traced through a series of mergers and spinoffs to Northern Pacific, one of the original railroad companies granted land by Lincoln. Some say that Plum Creek has no business selling land that was given to corporations so long ago. Plum Creek contends that it paid Burlington Resources for the land when the company was formed in 1989, but critics say the land was not Burlington Resources’ to sell. Others are fighting Plum Creek’s development plans in court. In Flathead County, officials are suing the company, arguing that its land development is costing local taxpayers far more money than it is generating in property taxes and impact fees, resulting in losses to public coffers. The county contends that it is paying for the bulk of road development and other government services that it must extend to the rural lands Plum Creek is developing. The rub is made worse for some because the company pays no taxes on income earned in Montana. Plum Creek organized in 1999 as a real estate investment trust. This structure allows small investors to own shares in large-scale real estate investments, making it easier for Plum Creek to acquire more capital and buy more timberland across the country. As an investment trust, Plum Creek distributes nearly 90 percent of its profits to its shareholders, who then pay income taxes on their dividends. But most of the company’s shareholders live outside Montana, so their income tax dollars go to other states. Plum Creek spokeswoman Kathy Budinick says the company pays other kinds of taxes in the state, and is aware of its impact on rural communities. “We have an interest in the community in Montana,” Budinick says. “We recognize as our business model has changed over the years that it is even more important to be connected to the community. We have made a greater effort to reach out to communities, work with them and cooperate with them.” In 2006, Plum Creek paid $3.4 million in Montana payroll taxes, $3.6 million in property taxes, and more than $1.5 million in corporate income taxes for its subsidiary manufacturing plants. But these numbers pale in comparison to the tens of millions it might have paid if the company had a different tax structure. In addition, Plum Creek posted $1.5 billion in annual revenues last year that, to some, make the amount of taxes the company paid in Montana seem insignificant. Currently, Plum Creek real estate activities contribute 30 to 35 percent of the company’s total cash flow, but 50 percent of its profit in some years. Numbers like these prompted some lawmakers in the 2007 Montana legislature to push for a law that would have taxed the company to a higher degree. Plum Creek spent nearly $40,000 fighting the initiative, and the bill ultimately failed to pass. COLLABORATION NURTURES GROWTH Pat O’Herren of Missoula County Rural Initiatives, which studies rural issues and advises county commissioners on the subject, says the county’s hands are tied when it comes to controlling how Plum Creek develops its land. The company owns more than half the land in six of Missoula County’s nine planning regions. “Montana state law says that if a landowner owns more than 50 percent of the land in an area to be zoned, the land owner can protest and the county is unable to enact zoning,” O’Herren says. “So that landowner is a key player in [determining] whether zoning can happen.” In the case of Plum Creek, if the county were to try to enact zoning it would definitely want the company at the bargaining table, he says. But that can’t happen until the legislature gives counties the tools to oversee growth in rural areas. “Plum Creek has publicly stated that they are in favor of zoning because it protects land values,” O’Herren says. “Based on that, I’m cautiously optimistic.” In 2000, Plum Creek announced that it was going to sell off 20,000 acres in the Swan Valley for real estate development, leaving 60,000 acres in core timberland. So far, those 60,000 acres are still in timber production. Steve Brady, district ranger on the Swan Lake Ranger District in the Flathead National Forest, says if Plum Creek plans to develop more lands into real estate it will make his management of public lands more challenging. “As lands get sold…it bumps up the amount of urban interface we have to protect for fire and brings more people into a rural landscape. It usually entails a fair degree of road development as well,” he says. “There are also impacts to wildlife habitat and we have been hoping to find those lands which are most key.” Each year, the Forest Service waits for an appropriation from Congress to buy some of those lands. Every year the agency can buy a little less because of the rise in market prices. “Land values have tripled because of the beautiful landscape,” Brady says. “They keep going up and up and we pay the appraised value, so it extends our timeline for buying lands from Plum Creek.” Brady says the company has been a willing collaborator over the past few years, and others agree. “We have regular communications with Plum Creek representatives here,” says Swan Valley resident Melanie Parker, whose organization Northwest Connections leads educational trips into the wilderness surrounding the valley. “They are relatively up front about land sales and we are given an opportunity to put together conservation easements and conservation purchases before they offer the land to other buyers.” While not perfect, Swanson says, this sort of negotiation and collaboration is the best way to resolve land-use issues in today’s rural West. He says the story of how Plum Creek’s land divestiture in western Montana will unfold depends on all parties coming to the table to establish some guiding principles. “No one is served by degrading the environmental assets and I think Plum Creek knows that,” Swanson says. “My hope is ten and twenty years from now management of these lands will have changed to reflect the alternative values on these lands. The better we do growth, the more economically prosperous we’ll be.” Forest Magazine | FSEEE fseee.org/attachments/archives/index.php?option=com_content&view=article&id=200257
Posted on: Sat, 11 Oct 2014 03:51:17 +0000