What happens when a timber company's land becomes too valuable for timber?
It's a question that vexed Potlatch officials in recent years, especially with some valuable land in the Brainerd Lakes area.
Company officials knew that skyrocketing development pressure meant the land was too valuable to keep for harvesting trees once every 50 years. But they also realized it was too valuable as forest land and wildlife habitat to sell off into so many more vacation homes.
The solution was a deal struck by Potlatch with the Trust For Public Land and Minnesota Department of Natural Resources and assisted by the federal government. It will keep the land a working forest and still capture its up-front value as real estate.
The key: Conservation easements, a little-used land-conservation tool that's slowly catching on in Minnesota.
Under the agreement, Potlatch will continue to own the 4,800 acres near Brainerd and manage it for timber production while also paying property taxes. That ensures the land will supply northern Minnesota mills with timber and the local community with taxes.
"The land is under such intense development pressure that we had to look at ways to recover some of that value,'' said Tom Murn, Potlatch regional resource manager.
"Conservation easements offer us a chance to capture some of that value up front and still continue to manage the land for our long-term forest-management goals.''
The state would hold conservation easements that prohibit development, guarantee sustainable timber harvest and guarantee public access for hunting, hiking and camping.
"We see it as a win, win, win. It helps the local economy, it helps keep land open to the public and it keeps some great wildlife habitat from going by the wayside,'' said Norm Moody, Cass County land commissioner.
For conservation groups, the key is that the land won't become a patchwork of vacation homes, retirement homes and condos but will continue to offer large tracts of unspoiled space for birds and wildlife, much of it adjacent to the Pillsbury and Crow Wing State Forests.
The deal also helps protect water quality, with much of the land along streams and small lakes. Potlatch, or any future owner, is permanently bound by the easements.
HIGH COST
The problem, however, was the deal's price tag. Easements will cost about $4 million -- roughly half the value of the land and more than the Trust for Public Land could afford.
But enter a surprisingly willing federal government, which, despite Bush administration cuts to many land-conservation programs, has continued to fund a program to keep timber lands active.
Under the Forest Legacy Program, Congress and the U.S. Forest Service pay up to 75 percent of the cost to buy conservation easements on forest land that's at risk of being developed. State and private groups are required to foot 25 percent.
So far, the feds have approved $2 million for the Brainerd Lakes project, the first time that the federal program has been used in northern Minnesota. Another $1.2 million may be coming in fiscal 2006.
And now, also for the first time, Minnesota state lawmakers are poised to use taxpayer money to buy large conservation easements. The Minnesota Senate and Gov. Tim Pawlenty have proposed $1 million for a Department of Natural Resources land acquisition fund in their versions of the state bonding bill. The House has approved $800,000, and the three sides must broker a compromise.
Legislation also is advancing that allows the DNR to use the land fund to buy conservation easements, not just land. In the past, the fund has been used mostly to buy small tracts of land in or near the boundaries of state parks and forests.
If the state and federal funding is approved, half the Brainerd Lakes deal could be signed this autumn and the other half within a year.
"If you look at the Brainerd area, all of northern Minnesota, really, and see how rapidly it's being developed, there's no doubt this project qualifies as `at-risk' land. This is some of the last private land in that area that isn't being broken up and developed,'' said Susan Schmidt, Trust for Public Land state director. "Conservation easements are just one tool in our tool box to protect land in Minnesota. But, in this case, it really seems like the right tool to use.''
MORE LAND PROTECTED
While some environmentalists would rather buy forest land to be set aside in parks or public forests, supporters say easements offer more bang for the conservation buck. Easements also draw support from local officials who sometimes oppose enlarging public land holdings and taking more trees away from loggers.
The price for conservation easements range from 30 to 70 percent of the land value and have been averaging about 40 percent, said Tom Duffus, Northeastern Minnesota program director for the Nature Conservancy. Conservation easement values track appraised land values, with swamp land at the low end and lakefront property on top.
"It lets us protect 100 acres for the cost of 40 acres. In an atmosphere where a lot of people are uncomfortable with seeing more public land, this is an option that seems to work,'' Duffus said.
Timber Invest Management Organizations, which have been buying large tracts of timberland, were formed to reap the largest return off the land as quickly as possible, he said. But they have been willing to sell conservation easements because easements provide cash up front to satisfy institutional investors -- often pension funds -- while also offering long-term land value appreciation and continued timber sale revenues.
"It seems to be something that these big Wall Street investors can live with,'' he said. ``We have to play by their rules now.''Duluth News Tribune
