In exchange for $44 million, most of it taxpayer money from the Legacy constitutional amendment, the UPM Blandin paper company of northern Minnesota is agreeing to do -- nothing.
The marquee project of the fund created when state voters approved a sales tax increase to support the environment, recreation and arts is an unusual transaction. It purchases a permanent "conservation easement" on nearly 190,000 forested acres owned by Blandin and UPM Kymmene, its Finnish parent company. Under the deal, the company promises to continue doing what it's been doing for more than a century: cut trees for paper pulp and allow hunters, hikers, snowmobilers and others to use the land for recreation.
Promoters say the agreement ensures that Blandin will not do what other paper companies in Minnesota and elsewhere are increasingly doing -- selling off land for development and restricting access. Yet conservationists who are pushing for permanent state easements on the property acknowledge that the company remains an anomaly -- an international giant that has bucked the trend of selling its forestland for development.
Although the $44 million deal would purchase for the public something it has already enjoyed for decades, proponents have convinced most state lawmakers, and apparently Gov. Tim Pawlenty, that using taxpayer money to buy the easements is a once-in-a-lifetime opportunity that should not be missed because a corporation half-a-world away can change its mind at any time.
At a crowded conference committee hearing last week at the State Capitol, Tom Duffus of the Conservation Fund laid out what might happen to the land if the deal is not done, and the company either changed its philosophy or changed hands.
"It's very likely that this land would go to a timber investment management outfit that is representing an investment for institutional investors, primarily pension funds, high-net-worth individuals [and] foundations," he explained.
Those investors, he added, would be focused on the highest rate of return possible, and the best way for them to get that might mean selling to developers.
So far only a few legislators, including Rep. Rick Hansen, DFL-South St. Paul, have balked and pushed for more scrutiny. "People come to us with 'once-in-a-lifetime opportunities' all the time," he said. Hanson said that, as the proposal has been dissected in the Legislature's final days, supporters have been frustrated because "it's often difficult to want something very badly and have folks questioning it. [But] we have to be skeptical."
Making the case
Like others who back the project, Richard Peterson of the state Department of Natural Resources said the time to act is now. "I don't believe this deal would be there in two or three years," said Peterson, a project manager for the proposal.
But could the state simply be giving UPM Blandin money to continue doing what it has always done? "That's certainly a point," he said.
Peterson said he knew of no immediate buyers for the land, which is spread across seven counties but lies mostly in Itasca County. He added that while a big feature of the proposal would be permanent public access to 82 miles of snowmobile trails, which now depends on year-to-year agreements with the company, UPM Blandin and its predecessors have consistently provided that access for decades. The access, he said, dates to when "snowmobiles kind of came into their own in the '60s and '70s."
For the most part, UPM Blandin has had little to say publicly. Even at Thursday's conference committee meeting Robert Buckler, the company's lobbyist, deferred all questions to Duffus.
In a statement, UPM Blandin said it was "a willing participant" in the negotiations. The company added that its goal was a solution that "would require sustainable management of the property as it is today, regardless of who may own the property in the future."
Company spokesperson Sharon Pond said the Minnesota property was the firm's only forest holdings in the United States. She added that, since 1997, when UPM Kymmene bought the Blandin paper mill in Grand Rapids, the company has not sold any of the land.
The company, which consists of several merged forestry and paper mill corporations located around the world, has had mechanical paper mill operations dating to the 1870s, and its earliest paper mill in France produced handmade paper in the 15th century.
As early as last fall, as the Legacy amendment was being sold to Minnesotans as part of an ambitious Vote Yes campaign, conservationists were meeting in Finland with the company on the proposal and were eyeing state sales tax monies that the amendment might provide. "[We thought], 'You know, we just might have a funding source,'" said Duffus, who said he went to Finland and has helped broker the agreement.
The easement plan
The easement proposal recommends giving the project $36 million in Legacy amendment money over two years. Much of the remaining money would come from the Blandin Foundation, a private nonprofit based in Grand Rapids and onetime owner of the former Blandin paper mill that now belongs to the Finnish company. The paper mill, which began in 1902, was bought by Charles Blandin in 1917 and has been sold at least twice since then.
Though the paper mill and the foundation do not now have any formal ties, they have occasionally worked together on forestry projects. The 500-employee mill and the foundation are located across the street from each other in Grand Rapids. "[I'm] looking out the window at the Blandin mill," said James Hoolihan, the foundation's president, who said the organization met with the company over the proposal. In explaining the foundation's interest in the project, he said: "It's such a perfect fit."
In addition, Duffus is on the Blandin Foundation's forest advisory board and has been a paid consultant on conservation easement issues. The Conservation Fund, a Virginia-based nonprofit, also has been hired by the foundation to help with the proposal.
In Grand Rapids, where UPM Blandin is a major employer, the plan is being watched closely. "They've been good [land] stewards," said Mike Ives, who recently opened an 84-room hotel and relies on the appeal of the outdoors, including snowmobiling, for tourism. "They've always had their land that they have open to recreational opportunities.
"They've been good people to work with," said Ives, who sits on the Itasca Economic Development Council. "I can't say that about all big businesses, but I say that about them."Star Tribune
