Texas Bans Private Transfer Fees

Gov. Rick Perry signed into law legislation that bans private transfer fees to developers. With Perry’s signature, Texas joins 33 other states in banning or restricting private transfer fees.

A transfer fee is a percentage of a property’s sales price – typically 1 percent – that is remitted to a property’s original developer each time it sells.

Although not common in Texas, transfer fees are seen as a means to improve cash flow in down markets. The bill passed unanimously in the Texas Senate and 142-1 in the Texas House. Under the new legislation, new private transfer fees will not be allowed. Developers who have existing fees on properties must file a notice of the obligation in county property records by Jan. 31, 2012. Unless notice is filed and updated every three years, existing transfer fees will be voided.

Read more HERE.

For Sale: Vermont’s Teal Farm

Set at the western base of Camels Hump State Park, Teal Farm is a world unto itself.  Its 500 acres includes a sustainably-managed northern hardwood watershed with streams, pond, wetlands, extensive trail network, waterfalls, and mountain pastures.  The forest provides much of the property’s bio-fuel, as well as ideal wildlife habitat.  The fenced pastures support a mixed herd of grass-fed Devon and Angus cattle that is rotationally grazed, which adds to the healthy stewardship of the land.  The property has a 100-year master plan, which includes a 10-acre permaculture orchard, believed to be the largest in North America, featuring fruits, nuts, fuel-wood, berries and fertilizing groundcovers that grow in sculpted microclimates around the buildings.

The property is an integrated, ecologically-designed farmstead that was created as a prototype for perpetual food, building and energy systems that are responsive to climate change, fluctuating energy supplies and a shifting global economy.  The flagship project of not-for-profit foundation LivingFuture, Teal Farm is located in the Green Mountain State of Vermont and is being offered for sale to support LivingFuture’s next project.

Founder and Executive Director Melissa Hoffman describes LivingFuture’s work as “living systems design.” It is an approach that strives to mimic natural processes and evolutionary dynamics in the re-design of physical and cultural infrastructures so that they become perpetually life-enhancing and foster creative, adaptive communities at local and global scales.  Melissa believes that our actual survival is at risk, and as such it falls on us to begin the project now, to invent the structures, both physical and cultural, internal and external, which will allow our species, and the system of life as whole, to thrive beyond the enormous challenges we are only beginning to encounter.  To that end, her foundation undertook the Teal Farm project, whose mission is “to create an ecologically intelligent food, energy and building system that perpetually enhances the environment and serves the evolution of its occupants”.

The farm complex includes an 8,000-square-foot, green-designed, farmhouse that dates back to 1865. Other improvements include an iconic 12,000-square-foot Douglas Fir-framed energy barn that houses the property’s state-of-the-art renewable energy and heating system, a converted post-and-beam barn apartment studio, a caretaker’s residence, and a utility barn/garage.  The farmhouse and energy barn set a whole new standard for green design and construction by running on renewable energy systems that marry cutting-edge technology with exquisite design and craftsmanship.

Teal Farm is a place of inspiration, a creative retreat, and a living laboratory intended to support innovation around issues of global importance.  Tucked away in a charming New England town, Teal Farm is only one hour by plane from Boston and New York City. The property is not protected from future development, leaving conservation tax advantages available for the next steward to explore.

$15,495,000
(802) 434-7798
www.EarthAsset.com

 

On the Block: The Yellowstone Club’s 160-Acre Family Compound

Nestled in the heart of the world’s only private ski and golf community, the 160-acre Family Compound is without question the most unique offering ever presented in the history of the Yellowstone Club. The story of the property dates to the founding of the club itself when Tim and Edra Blixseth retained ownership of a 160-acre site inside its boundaries. The couple built two 2,240-square-foot, 3-bedroom residences that were to serve as guest homes for a main residence that was never constructed.

Situated at the end of a long, secluded driveway, each of the cabins features an open floor plan, vaulted ceilings, massive wood-burning fireplaces, and large floor-to-ceiling windows. Beautifully appointed bathrooms and well-designed kitchens round out the interiors, while an expansive outdoor living area creates an ideal setting for nights out beneath the Montana sky. Yellow Mule Creek runs year round through the property’s western boundary.

It is this acreage and improvements that are to be auctioned by Edra Blixseth’s bankruptcy estate pursuant to a court-approved bidding and auction process. CrossHarbor Capital Partners has tendered a stalking horse bid of $10,850,000, consisting of $850,000 in cash and $10 million in a credit bid against CrossHarbor’s lien on the Family Compound. Per the court’s order, the minimum required for qualified competing bids by third parties is $11.1 million. Deadline for submission of the $11.1 million is 4:30 p.m. Mountain Time on May 16. The receipt of qualified competing bid(s) will result in an open outcry auction to be held at 9:00 a.m. Mountain Time on May 20, 2011 at the offices of Datsopolous, MacDonald and Lind in Missoula, Montana.

Membership to The Yellowstone Club is not included as part of this offering. The buyer may apply to The Yellowstone Club for membership, however, membership is not guaranteed. Independent investigation is advised. Additional information about the auction and the rules governing competing bids will be made available upon request.

To obtain a due diligence package and schedule a private viewing of the Family Compound at Yellowstone Club, please contact:

Bill McDavid
Hall and Hall
406-542-3762
mcdavid@hallandhall.com

Trump Buys Kluge Winery at Auction

Donald Trump has increased his holdings in the heart of Virginia’s horse country when he paid $6.2 million for the 776-acre Kluge Estate Winery and Vineyard. Trump bought the majority of the vineyard holdings at an April 7 foreclosure auction conducted by J.P. King Auction Company. Auction sales totaled $8.02 million.

“I’m really interested in good real estate, not so much in wine,” Trump told the Washington Post. “This place had a $28 million mortgage on it, and I bought it for $6.2 million. It’s a Trump deal!”

According to the Post, Trump will keep former owner Patricia Kluge, 62, and her husband, William Moses, on board to run the winery. Said Trump, “She has a great instinct for wine, which I don’t.”

Read the entire story HERE.

 

Bank of America Buys Kluge’s Virginia Estate

Bank of America paid $15+ million for Patricia Kluge’s legendary Virginia horse country estate at a foreclosure auction on the steps of the Albemarle Circuit Court House in February. The lender filed a foreclosure lawsuit last month after Kluge defaulted on $23 million in loans.

Among the bidders were representatives of Donald Trump from the law firm of Skadden, Arps, Slate, Meagher & Flom. Trump has already acquired 200 acres abutting the 100-acre estate and is rumored to be negotiating for Kluge’s 900-acre winery.

Completed in 1985, Albemarle is an eight-bedroom, thirteen-bath manor and was originally listed with Sotheby’s International Realty for $100 million in 2009. The price subsequently dropped to $24 million.

Market Watch: Tejon Ranch Sells Easements for $15.8M

Tejon Ranch (TRC) will sell five conservation easements covering some 62,000 acres of the 270,000-acre property to the California Wildlife Conservation Board for $15.8 million. The transaction is yet another step by California’s largest private landowner to monetize remote areas of the ranch with little near-term development potential.

The following, more complete account of the transaction was posted at Tejon Ranch’s website:

Tejon Ranch Co. (NYSE: TRC) announced today the California Wildlife Conservation Board (WCB), has approved the purchase, for $15.8 million, of five conservation easements covering approximately 62,000 acres of land located on various portions of the 270,000 acre Tejon Ranch. This furthers the implementation of the historic Tejon Ranch Conservation and Land Use Agreement signed in 2008. The 62,000 acres is a component of the 240,000 acres designated for protection under the 2008 agreement.

The $15.8 million purchase price represents the conservation easement value for the acreage as determined by an independent appraisal directed by the WCB. The WCB, at its November 18, 2010 Board Meeting, accepted the appraisal and authorized the use of existing bond funds approved by California voters in 2006 under Proposition 84 to acquire the conservation easements. Tejon Ranch Co. will retain fee ownership of the 62,000 acres and continue to operate current revenue generating activities including farming, cattle grazing, filming, oil and gas and other mineral exploration and production on portions of the acreage. The conservation easements will preclude the Company from pursuing any long term development on the 62,000 acres. This transaction allows the Company to realize an immediate value, as opposed to what possibly could have been realized through development of those areas sometime in the distant future.

“The Wildlife Conservation Board’s action gives the Company an opportunity to monetize, in the near term, potential long-term value associated with these remote areas of the Ranch that have little, if any, near-term development potential,” said Michael H. Winer, Portfolio Manager for Third Avenue Management LLC, the Company’s largest shareholder, and member of the Tejon Ranch Co. Board of Directors. “Further, it will preserve in perpetuity the environmentally important values of these lands through the imposition of conservation easements, administered by the independent Tejon Ranch Conservancy.”

The 62,000 acres represents the total acreage of five separate acquisition areas negotiated as part of the 2008 Conservation and Land Use Agreement. In that Agreement, the Resource Groups: Audubon California, Endangered Habitats League, Natural Resources Defense Council, Planning and Conservation League, and the Sierra Club, were given an option to acquire conservation easements over those areas. This action today by the WCB fulfills that option. The remaining balance of the property protected by conservation easements as defined within the landmark Agreement, approximately 178,000 acres, will be dedicated by Tejon Ranch Co. to the Conservancy over the next several decades as the Company achieves entitlement and ultimately develops the communities of Tejon Mountain Village, Centennial and the future 12,400 acre planning area at the base of the Grapevine.

Robert A. Stine, President and CEO of Tejon Ranch Company, stated, “today’s action by the WCB is the culmination of a long process involving many entities who came to the table with a vision and desire to create a new way to resolve the competing interests of land development and environmental preservation. In that regard, I am grateful for the role our partner in Tejon Mountain Village, DMB Associates, and its CEO, Eneas Kane, played in assisting Tejon Ranch in achieving the landmark agreement, which today’s action by the WCB fully embraces. This action is a major positive step forward for our company and its shareholders. It allows us to continue current revenue generating operations; to realize current revenue from the sale of easements on longer term potential land development opportunities; and proceed with Tejon Mountain Village, Centennial and the 12,400 acre development opportunities at the base of the Grapevine. All of these actions will result in greater shareholder value. Further, this is a major milestone in preserving in perpetuity environmentally important property for future generations of Californians to enjoy.” Additional steps are required before the sale of the easements will close, including the filing of various public notices, the completion of title review and the execution of the Grant Agreement between the WCB and the Tejon Ranch Conservancy.

Harry Patten Honored By Horatio Alger Association

“Let me tell you a story.”

It’s the signature line of real estate pioneer Harry Patten (shown here with much of the Patten clan). No matter if he’s addressing industry leaders, encouraging his companies’ managers, or explaining business fundamentals to school kids visiting the Patten Family Foundation’s Finance Park at the Junior Achievement World Huizenga Center, it’s the way Harry shares a lifetime of insights and experiences.

Effective storytelling is an art, a crucial means of conveying concepts and instilling purpose, and one of its greatest practitioners was the American author Horatio Alger, whose “rags to respectability” novels featured poor boys who made good through “pluck and luck.” Over a century ago, Alger published more than 100 of these stories, and their impact was such that in 1947 the Horatio Alger Association of Distinguished Americans was formed to build on his legacy. To date, the association has awarded $87 million in scholarships to at-risk students who were determined to earn a college degree. It also recognizes leaders who, like Alger’s heroes, have risen to great heights from humble origins “through honesty, hard work, self-reliance, and perseverance.” Ray Kroc has been honored by the Horatio Alger Association. So have Bob Hope, T. Boone Pickens, Oprah Winfrey, and Tom Brokaw. In April, this distinguished group will be joined by 11 new members, including Leonardo DiCaprio, Michael Bloomberg, and Harry Patten.

Harry’s own story took shape five decades ago when he single-handedly pioneered the development, marketing, and sale of rural land. To hear him tell this tale is to marvel at the characters he has befriended throughout his career, individuals such as the brilliant mutual fund manager Sir John Templeton, whose investment acumen helped propel Patten Corp.’s 1985 IPO and made it the third-best percentage gainer on the New York Stock Exchange the following year. Templeton’s investment in Patten Corp. and his subsequent interest in owning land became the springboard for a valued friendship. The memory of another key ally, a former board member who played a crucial role in Patten Corp.’s success, brings to mind the current real estate market. “One of the reasons we’re very, very aggressive about buying land right now is that it reminds me of the opportunities in Texas in the 1980s. It was John Connally who opened up my eyes to the great values there. My son, Michael, and I went down and looked at a lot of real estate and a lot of ranches and eventually purchased our first Texas ranch from Gov. Connally. Back then was a great buying opportunity, and today’s market has the potential to be just as good. Or even better,” Harry says.

The Patten family’s ties to land date back to the Great Land Rush of the 1890s. The family homesteaded in North Dakota, but harsh winters and hostile Indians forced them back east. But Harry Patten Sr. had caught the land bug. In 1899, he paid $20 for his first parcel: 300 acres in Eastern Massachusetts. “My dad was a trader who bought and sold land, cattle, horses, timber. I was born being in business. He drilled it into me,” Harry says. This training led Harry to single out two factors: an endless stream of Bostonians and New Yorkers who wanted to own a few acres, and rural New Englanders who had their life savings tied up in farms but didn’t know the first thing about marketing. In stepped Harry Patten.

When Harry took his company public in conjunction with Drexel Lambert in 1985, annual sales rocketed from $18 million to $33 million and then $76 million. By 1988, revenues eclipsed the $100-million-mark. The Wall Street Journal described the rise of Harry Patten in a front page profile that ran above the fold:

“Sometimes it’s a place in the woods, a few hours’ drive from Boston and New York, where yuppies can rough it in their L.L. Bean boots. Other times it’s a pristine view of a sparkling Maine lake, a panorama of Vermont’s Green Mountains or a plot outside a picture-post-card Adirondack village. No matter. What’s important is that ‘people develop an emotional attachment to a piece of land,’ says Mr. Patten. ‘That makes it easy to sell.’”

Patten Corp. (now the publicly-traded Bluegreen Corporation) and National Land Partners/National Timber Partners, Harry’s current companies, have generated billions in revenues thanks to sold-out developments in 48 states and several Canadian provinces. But many current opportunities have little to do with the Pattens’ original business model. Nowadays, Harry and Michael, along with grandsons Brian and John Patten, sift through opportunities forwarded by bankers, other lenders, and even former competitors. While bankruptcy protection has become the refuge of some companies, the Pattens are working with hedge funds, pension funds, and international investors. Their lengthy track record and strong financial statements affirm their industry-leading status.

A new chapter in Harry’s story is titled the Patten Family Foundation. Harry’s philanthropy supports organizations that focus on health, education, and financial literacy. A particular passion of his has been educating children about the free enterprise system through Junior Achievement. The foundation funded Finance Park at the Junior Achievement World Huizenga Center, which opened in 2009 and now educates over 40,000 students per year. Harry is also a long-term supporter of Massachusetts General Hospital, and his foundation remains actively involved as the hospital expands its facilities and conducts major medical research. Recently he was asked to serve on the President’s Council at Massachusetts General. With his daughter Andrea, he co-wrote What Kids Need to Succeed, a book that outlines the four foundations of adult achievement: perseverance, hard work, discipline, and giving back to one’s community. What Kids Need to Succeed has been translated in four languages.

But Harry has no time to slow down. His deal-making acumen recognizes enormous opportunities in the current market for his family-owned businesses. An ever increasing number of entities seek to partner with him in new and promising ventures. And the success of his philanthropic efforts only makes him want to give more. “There are too many opportunities out there for me to even think about retiring,” he says.

Then he quickly adds, “Which reminds me … let me tell you a story.”

Sold! Boot Jack Ranch Goes for $47 Million

One of the country’s premier listings, Colorado’s Boot Jack Ranch, sold earlier this month for $47 million. Originally listed at $88 million more than two years ago, the price had been subsequently lowered to $68 million. The Pagosa Sun reports a sales price of $47 million, a reduction of almost 50 percent off the original asking price.

David and Carol Brown were the sellers. According to listing broker Bill Fandel of Peaks Real Estate Sotheby’s International Realty in Telluride, the buyer is a Colorado L.L.C. owned by a high net worth individual who plans to keep the Boot Jack intact and not develop it. “We hoped that the buyer would be an end user who would really want to preserve that valley. That’s definitely the case,” says Fandel.

Set at a base elevation of almost 8,000 feet about sea level, the Boot Jack features unmatched views of the San Juan Mountains, world class fly-fishing, and numerous improvements. The 3,151-acre tract is surrounded on three sides by the San Juan National Forest and Weminuche Wilderness and includes seven miles of the West Fork of the San Juan River and Wolf Creek. Two existing conservation easements total 1,322± acres. Six lakes and several ponds all connect to the San Juan. The main residence is a four-bedroom 13,825-square-foot sanctuary with countless amenities, including a library, two private offices, seven fireplaces, and a 1,500-bottle wine cellar. Four additional log cabins accommodate up to 18 guests. Structures on the ranch total 77,200 square feet.

One of the most important assets of the Boot Jack are its senior water rights of 103± CFS, which would yield approximately 70 million gallons per day when fully utilized. At present, 1,162 acres of pasture are irrigated. The ranch enjoys 200 inches of snowfall annually and is situated in close proximity to Wolf Creek Ski Area via U.S 160. Plentiful wildlife roam the ranch, including bear, elk, deer, and turkey; approximately 800 head cattle are pastured each summer.

“There’s a lot of listings out there but only a few truly remarkable pieces of property come on the market,” says Fandel. “The Boot Jack was one of them.”

Read the Pagosa Sun report HERE.

Historic Dahlstrom Ranch Conservation Easement Finalized

A conservation easement of historic proportions was purchased in the heart of the Texas Hill Country only a short drive from the Capitol of Texas. Hays County, the City of Austin, and the Hill Country Conservancy (HCC), with funding from the federal Natural Resources Conservation Service (NRCS), came together to purchase a conservation easement on the historic Dahlstrom Ranch, a 2,254-acre privately-owned holding located outside of Buda. This rare collaboration between a private landowner, county, federal agency, and city took shape in 2007 and will be the first private land preservation agreement of its kind. The privately-owned ranch will have the unique distinction of providing a 384-acre area for public education and nature programs proposed by a public access committee led by the National Parks Service and managed by Hays County.

“Through this conservation easement, Gay Dahlstrom, in partnership with Hays County, as guided by Precinct 2 Commissioner Jeff Barton, NRCS, HCC, the City of Austin and many others, has ensured that a majestic piece of the Texas Hill Country will not only survive, but allow our native wildlife and natural resources to thrive,” said David Braun of Braun & Associates, attorneys for Gay Dahlstrom. “Gay is an exceedingly modest and private person, but today she and her family have set a proud and important example for all conservation-minded Texas landowners.” The family’s history on the property dates back five generations. The Dahlstrom Ranch on Onion Creek has played an impressive role in Hays County’s heritage. The property also plays a key role in the area’s overal well-being thanks to its abundant aquifer recharge. The historic ranch features an impressive system of caves and sinkholes that directly convey clean water to the aquifer. Also, following a reduction in livestock grazing in 2005, the ranch’s wildlife habitat and native grasses have staged a welcome comeback.

In recent years, the Dahlstroms, like many other Texas families, were faced with the decision on whether to begin selling off their land to developers in order to pay estate taxes. Gay Dahlstrom chose to preserve the family’s heritage and legacy, retaining Braun & Associates to guide her through the process of obtaining a conservation easement that enabled her family to keep the ranch intact. This contract between property owner and conservation organization, while providing critical tax incentives, also allows the owner to protect the water resources, wildlife habitat, natural character, and other conservation values of the land. A conservation easement restricts the amount and type of development allowed on the property, and conveys the right to enforce these restrictions in perpetuity, while preserving the right to traditional agricultural uses and limited residential use.

“This partnership provides multiple benefits, keeping this land intact for the family’s ongoing use and enjoyment while preserving the unique caves and other karst features of the ranch and furthering enhancement of its ecology and wildlife”, said Frank Davis, Director of Land Stewardship at HCC.

“I am very pleased we are able to partner with Hays County and Hill Country Conservancy on this important project,” said City of Austin Mayor Lee Leffingwell, a longtime supporter of the use of voter-approved bonds designated for the acquisition of open space.  “As our region continues to grow, it is important that we lead in the effort to protect our natural resources, and acquisitions like this one ensure we are doing our part to protect and enhance our environment, particularly our water quality, and the heritage of the Aquifer region and Texas Hill Country.”

Gay Dahlstrom’s son, Jack Dahlstrom Jr., has plans for ecotourism and nature and wildlife-related art exhibits on the property, with the ultimate goal to further the community’s understanding of, and respect for, the area’s heritage and environment. The Dahlstrom family has a long-term plan for continuing to restore the land and its native wildlife. “At the end of the day, my mother did this because she loves this land and appreciates all that it has given us,” said Jack Dahlstrom Jr. “Now, it’s our family’s turn to give back to the land, and we appreciate the efforts of everyone who worked so hard to help us make that happen.”

Crossing the Divide with Al Biernat

When it came to the Colorado hamlet of Creede, it was love at first sight for Dallas restaurateur Al Biernat (standing front and center with wife Jeannie and writer Trey Garrison). And what’s not to love about Creede? Nestled among high rocky cliffs on the eastern side of the Continental Divide, the historic mining town is the picture-perfect home of just 400 year-round residents. The rest of the year, tens of thousands of tourists and part-timers cruise through. Best of all, it’s not a ski town. Unlike Vail or Aspen, there’s no crush of obnoxious fashionistas clamoring for lattes or sashimi. Consequently, snug cabins and larger retreats range in price from ridiculously affordable to seven-figure splendor.

BY TREY GARRISON
PHOTOGRAPHY BY GUSTAV SCHMIEGE
PUBLISHED SUMMER 2009

But Creede is no backcountry village. A tiny little Whoville of sorts, Creede boasts a slew of incredible little restaurants, art galleries, and the Creede Repertory Theatre, which has won acclaim from high-minded New York drama critics. The hunting is so rewarding that people wait years to get a permit to stalk elk, moose, and other trophy critters. The fly-fishing on the Rio Grande and its tributaries attracts anglers from around the world. And just four percent of the land in Mineral County is privately owned. The rest is controlled by the U.S. Forest Service.

Enter Al Biernat, a self-made success who worked his way up from bussing tables at the Palm Restaurant in Los Angeles to running the Palm’s Dallas locale as its GM. When a lease came up on a prime piece of Dallas real estate, he signed on the dotted line and created the dining establishment that now bears his name.

Creede was a dream come true—a place of solace, relaxation, and recreation to share with his family and friends—so he and his wife, Jeannie, bought a 30-acre plot in a delicate Alpine zone at 10,600 feet. The land is regulated by the Mineral County Alpine Zoning Commission, and Biernat has a thick stack of regulations to prove it. Everything from the size of structures to the materials he could use is spelled out. Surrounded on three sides by Forest Service land, he believed his cherished investment would be protected from the over development that has plagued other Colorado towns.

Since 2005, Biernat has put a substantial amount of his hard-earned cash into his cabin and the surrounding property. “It seemed the perfect little secret place,” Biernat says. “I had no idea what could be coming.”

But he should have.

Until the mid-1980s, Creede was a mining town, site of Colorado’s last big silver strike. Since then, however, the only miners have been tourists, picking up bits of quartz and the occasional fleck of pyrite (better known as fool’s gold). Biernat was positive this peaceful oasis was immutable.

He was so sure of it that he believed mining could never come back. That’s why he signed his deed, despite a standard print disclaimer and warning right above the signature line stating that he was not buying the patented mineral rights to his land. And yet, from 2007 through the end of 2008, mining returned—exploratory mining for untapped veins of nickel, silver, lead, and gold.

The prospect sent Biernat and a good number of local landowners into a tailspin of worry and doubt. They weren’t just concerned about the light and noise pollution from drilling operations or the heavy truck traffic on narrow, winding passes. Biernat was in a bind because while he owned the surface rights to his property, someone else owned the patented mineral rights. And the implications are enormous.

Different parties often own the surface and the subsurface rights. These interests may have been created through the reservation of the minerals by the government or may result from a decision by a landowner to sell their mineral interests.

Mining claims are initially unpatented claims, which give the right only for those activities necessary to explore and mine. Much as farmers could obtain title under the Homestead Act, miners can obtain a patent (a deed from the government). The owner of a patented claim can put it to any legal use. Bottom line? If extractable ore were found beneath his property, the subsurface rights owner can force landowners such as Biernat to sell.

Beyond that, full-scale mining would shatter the sanctity of the Continental Divide. Biernat’s 1,000-square-foot, loft-style cabin is something out of a Ralph Lauren catalog. It’s cozy, rustic, gorgeously decorated, and at night you get a better view of the stars than the Hubble telescope.

Biernat had planned to build a larger cabin and turn his existing one into a guest house. He had already added a barn-style garage for his truck, his ATVs, and the snowmobiles that are the only way to and from the cabin in winter. Needless to say, the return of mining put an end to Biernat’s construction plans. But to many longtime locals, another possibility loomed:

Was their dream of mining going to come true?

After the closure of the last active mine in 1985, Creede recreated itself as a tourism hub. But tourism is a fickle trade, which even opponents of mining admit. Ed Vita, an ex-techie who moved to Creede to get away from the rat race, owns two businesses in Creede. In the winters he runs San Juan Snowcat, and he owns the popular Old Miners Inn, where you can enjoy a mean pizza and the requisite adult beverage.

We sat outside on the inn’s upstairs deck, and Vita admitted he tentatively supports the return of mining. “It’s all exploratory. Until I see the numbers and the contracts, I’m not counting on anything. I know there will be some impact on the tourist industry, but it can be hard surviving here in the winter months when it’s just the 400 locals circulating the same dollars,” Vita says.

But businessmen like Avery Auger, president of Creede America Group, love the idea of mining coming back to Creede. Creede America is developing custom homes that start in the $300,000 range. Auger is not concerned about mining. In fact, he expects to draw potential buyers from the mining operations, at least from among those in management and high-tech positions that command six-figure salaries. His development overlooks Creede and is protected by an earthen berm that blocks sight and dampens noise. “This town needs this kind of business to grow,” Auger says. “This is only going to increase property values and bring money this town needs.”

Brian Egolf agrees. Egolf first came to Creede with his grandfather when he was only two years old. As years passed, Egolf thought someday he would relocate to Creede permanently. After finding his way he watched the mines close. He swore one day he would reopen them.

Over the last decade, Egolf gathered patented mineral rights for large swaths of land around Creede. A savvy businessman, he knew that the depressed price of minerals wouldn’t last forever and approached Idaho-based Hecla Mining. Egolf wanted Hecla to come to Creede, test the mines, and, if profitable, oversee production.

“I’m really hoping that we can revitalize Creede, so that people can stay and earn a good living and that their children won’t leave as soon as they graduate high school, because there will be opportunities here,” Egolf says.

Hecla’s exploratory plans called for three years of exploratory mining in a 36-square-mile area, an investment of more than $12 million. But when mineral prices declined, Hecla suspended operations. Although it promises to resume exploration in the near future, many in Creede are doubtful it will return anytime soon.

That’s no relief to Biernat, who is still considering a new house, a new well, and solar power. If commodity prices rebound, mining could come back. “Do I put the money in and risk losing my investment?” Biernat asks. “I don’t know.”

Active mining operations around a recreational retreat could drive down property values long before Hecla might acquire Biernat’s cabin. Although it’s appraised at $550,000 right now, it would be worth much less if mining resumed.

When Biernat first saw his land, everything convinced him his investment would be protected. Set in an Alpine zone, it is surrounded by Forest Service land. Brokers emphasized how mining was dead and that the town had been reinvented as a cultural and recreation hub. But unless an area is declared a wilderness, the U.S. Forest Service allows activities on federal land like mining, timber harvesting, and grazing.

To be fair, the fact that Biernat would not own the patented mineral rights wasn’t exactly in fine print. Biernat is a smart businessman and took a risk. And, he admits, despite all his anxieties, he doesn’t think he’d do anything different.

“I knew I was taking a little bit of a gamble,” Biernat admits. “I should have read things more closely. But I’ll be honest. If I could go back and do it again, I would, no matter what the stress and worry has been. Just the memories I built with my children and my wife make it worth it. I just wish I could be sure our investment would be safe over the long haul.”

While some of the specifics of his case are unique to Colorado law, the issue of patented mineral rights is a federal one. From coast to coast and everywhere in between, the potential for profit from subsurface minerals means that if a landowner hasn’t secured those rights, it could place their investment at risk.

Caveat emptor should be every landbuyer’s watchwords, even if they have competent lawyers and erstwhile brokers on their side. Should you find that dream spot, it just may not be possible to acquire the mineral rights to go with the surface estate. At that point, you have to measure the risk, and decide if it’s worth it.

For Biernat, it most definitely has been. But it’s not something he takes lightly. Every time he talks about the issue, you can see the concern etched on his face and the troublesome pall on his otherwise optimistic visage.

“I love that town, I love the fact that it’s an artists’ community, and I love the people,” he says. “It’s taken me so long to really start to fit into the town, and I’d hate to have to leave it. But I’m blessed. I have that option. What about the guy who doesn’t have that choice?”

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