The value of Texas ranches has increased greatly as a result of recreational activity, and Boone was among the first to recognize this potential for landowners in the northern parts of Texas.
In fact, Pickens has bought a number of working livestock ranches, improved them with his wildlife enhancement programs, and resold them.
“We always made a profit from the ranch sales,” Boone said. “But what I really feel good about is knowing that we left the land in better shape than we found it.”
Since before statehood, Texas ranch values were harnessed to livestock production. When Pickens began his ranch real estate business, few prospective buyers were interested in wildlife value. That attitude has changed dramatically. Recreational use, primarily linked to hunting, is a major reason why land values in Roberts County have escalated over the past decade. In an era of shrinking wildlife habitat, land that was traditionally used for livestock production is more valuable when improved for wildlife. Much of the increased value in Roberts and surrounding counties is due to Pickens’ continued efforts to promote the area.
The astute businessman is also creating a template for his neighbors to use in dealing with energy companies, which often own rights to explore for gas and oil under private property. Like many modern landowners, Boone does not own all the minerals under his sprawling ranch. Standard agreements call for exploration crews to restore any damage caused by their heavy equipment. The usual phrase is “restore to original condition.” Pickens sued one company that offered to pay a $60,000 settlement for the damage its machines had done. Most landowners would have gladly cashed a $60,000 check and considered it a windfall. But Boone has spent a considerable fortune improving his ranch, and he had the receipts to show just how much it had cost to transplant native grasses and trees. In arbitration, Mesa Vista was awarded more than $1.5 million. He quickly informed his Roberts County neighbors of the award to help educate them on the importance of ensuring that oil and gas operators treat them equitably.
In another case, a grove of 144 hackberry trees stood in the path of heavy equipment. Pickens requested that the pipeline company rolling across the ranch give him notice when they neared the grove so he could use a tree spade to relocate the trees. The contractor waited until his crew was within a few working days of the grove to give notice. It wasn’t enough time to rescue that many trees, so the company brought in a bulldozer and leveled the grove, then offered to reseed the damaged area until grass was established. Due to courtroom renovation, that case was settled in 2010 with judge, jury, and witnesses crowded into a 20-by-30-foot training room at the Miami Fire Station. Mesa Vista won on all but one count. The 144 hackberries cost the company $1,000 each.
“What we’re trying to do is change the traditional way that land has been treated,” says Pickens. “It’s going to be treated with respect.”
Roberts County sits over the Ogallala Aquifer, the largest groundwater reservoir in the United States and one of the largest in the world. The aquifer extends across eight Great Plains states and covers 174,000 square miles, much of the region sparsely populated. The Ogallala Aquifer is estimated to contain over three billion acre-feet of water, stretching from South Dakota to Midland, Texas. The Ogallala holds enough water to cover all fifty states with eighteen inches of water.
Boone’s geology background made it obvious to him that water would eventually become more valuable than oil. When he bought the first small piece of the ranch that would become a showplace, he knew there was groundwater beneath the sandy soil. He had no idea how much water was there, nor did anyone else at that time understand the eventual importance of a natural resource that most Americans took for granted. You turned on the faucet and the water came out. It was cheap and it was abundant, at least in the 1970s.
“When I made the first land purchase in 1971, we started drilling water wells for windmills and discovered that it was almost impossible to drill a dry well,” recalls Pickens. “The water was important for my wildlife plan, and that’s how I used it. We buried PVC waterlines to create a system of artificial creeks. Permanent water holes were created at intervals along the waterlines to provide surface water for all wildlife and for the quail in particular. The water was great, and it was readily apparent that our system of artificial creeks helped the quail, even in years when we didn’t get much rain. It took a while for me to realize that Roberts County was sitting over a veritable ocean of pure water, and it took even longer for the potential of that resource to sink in.”
Pickens wasn’t the first to buy water rights in the Panhandle, but with his legendary insight he soon realized that these vast water resources could and should benefit more than recreational ranching. Texans can cut back on the use of oil and natural gas and develop alternative energy sources, but they can’t do without water for a growing population. Aggregated in a partnership with fellow landowners, Boone has focused on the important role that the stranded, surplus water could play. He has championed prudent and equitable water use, believing the valuable underground resource can be redistributed from an area of low population and abundant water to cities where population growth overwhelms the water supply.
With the Panhandle’s relatively few inhabitants, about 95 percent of water use goes to irrigation. Boone believes this is no longer the best use for such a valuable resource. Although farmers don’t use nearly all the water under their land, they object to the idea of water being moved from the Panhandle to densely populated cities. But Pickens sees no difference between moving surplus water to an area where it can be used and hauling locally raised crops out of the region to distant markets. And farmers are actually getting less for the water when mandated through grain production. “I’d like to see the legislature place all of the Ogallala Aquifer under a commission that would treat all landowners equally. The landowner would have an option of selling his water into the grid or using it to irrigate crops. Everyone would get the same amount of water.”
Pickens’ idea could have far-reaching consequences for wildlife. In a meeting at the offices of the Lubbock Avalanche Journal, he got into a conversation with the newspaper’s ombudsman, a woman whose family owned a farm north of Lubbock. Boone was outlining how the water could be better used. One of the executives said Boone’s ideas were bad because the Panhandle economy was built on farming. The ombudsman, however, was interested in what Pickens had to say because she knew her family was tired of farming.
“Well, you could sell the water that you’re now using to irrigate crops,” Boone said. “If you sell the water, you’ve got two options for what to do with the land.” He went on to explain that the family could either switch to dryland farming (growing crops that do not need to be irrigated) or put the land into a conservation reserve program (CRP), which pays farmers to let fields lie fallow. In fifty years, the fallow farmland reverts to a pristine prairie.
“Nobody loses in a deal like this,” says Pickens. “Whether you use water to irrigate crops or sell it for municipal use, everybody should have the same allocation — one acre-foot per surface acre of land. I think most people would choose to sell their water and let the land return to native habitat. We have the potential here to restore 23 million acres of wildlife habitat. In some of the Plains states, I’ve heard people get excited about saving several thousand acres of pristine prairie. Wouldn’t it be great for Texas to reclaim most of the Panhandle for wildlife?”
Moreover, Boone’s emphasis on wildlife and his desire to expand and improve his ranch holdings has put Roberts County and the entire Panhandle on the map of desirable areas to buy for recreational property, escalating real estate values. His focus on wildlife habitat and his water play have arguably brought more than $200 million into the Panhandle since 1997; that figure could increase dramatically by 2020. He’s been like a one-man chamber of commerce for a region that most Texans know only because they drive through it en route to New Mexico or Colorado.
Boone Pickens will be remembered as a good steward, a good businessman, and a good neighbor. He is a true advocate for change, a tireless steward of the land, a friend of wildlife, and a business genius whose selfless business deals will benefit the residents of Roberts County for generations to come, the generations he has yet to touch.
Reprinted by permission of Collectors Covey Gallery. Copyright© 2011 T. Boone Pickens. All Rights Reserved. www.collectorscovey.com.
Eye on the Market: Dean Saunders has chaired the Florida Real Estate Commission, is certified as an Accredited Land Consultant (ALC), and was awarded the Certified Commercial Investment Member (CCIM) designation in 2010. The Land Report asked one of the country’s leading land brokers for his take on current market conditions.
You’ve got a long history on the land. You’re a sixth-generation Floridian with deep roots in agriculture. What keeps you going?
I love what I do. I love the people I work with. I love getting outside and looking at land. Every day I wake up, I can’t wait to get going. It’s fun, and I get paid to do it.
When you were in the Florida Legislature, you helped craft key conservation legislation. Can that work as an investment angle?
Definitely. I’ve got one client, a rancher, whose primary investment has been land over the last 15 years, he’s tripled his acreage by skillful use of conservation easements.
What’s the strategy?
He buys a piece of land for farming, hay, sod, and cattle. Then he sells a conservation easement. With the proceeds, he buys another piece of property and starts the whole process over again.
Who are your foreign investors?
It wasn’t too long ago that we had a bunch of Venezuelans trying to get their money out ahead of Chavez. Today’s market is primarily influenced by Canadians, Brits, some Germans, as well as South Americans.
Are they all about farmland?
Seems like everyone is, right? I’m a member of the realtors land institute, and a lot of my buddies in the Midwest and the Delta have seen land prices triple these past few years. A big part of that is commodity pricing, but there’s also the market. Investors are also looking for a safe haven for their money. You can’t earn anything from banks. The stock market is so volatile. But if you buy the right piece of land at the right price, you can generate a 5 percent return from cash rents. Rising commodity prices mean farmers can pay higher cash rents. This increases the value of the land. So people are buying farmland as fast as they can find it.
JANUARY 3 UPDATE:
In late December, a deal was struck to sell the 80,200 acres of timberland in northern Wisconsin for $42.9 million dollars to two companies that manage timberland throughout the U.S.
According to LandVest, Inc. broker David Speirs, the Lyme Timber Company, which is based in Hanover, New Hampshire, has an agreement to purchase 72,800 acres. The Forestland Group, headquartered in Chapel Hill, North Carolina, is set to purchase the remaining 7,400 acres.
NOVEMBER 17 POST:
The Wausau Paper Timberlands offer approximately 80,000 acres of prime timberland located throughout the northern half of the state of Wisconsin. A leading producer of fine printing and writing papers, towel and tissue products, and specialty papers, Wausau has been divesting non-strategic timber holdings since 2005. Most of these 80,000 acres have been sustainably managed by Wausau since the 1940s for the production of wood fiber.
The acreage consists primarily of natural and planted northern pine species. In addition to timber value, the acreage offers an extensive number of land uses, including recreational and conservation opportunities.
Several funding entities, including Beaufort County and the U.S. Department of Agriculture, have pooled resources to acquire several key conservation easements on St. Helena Island as well as outright ownership of 19 acres on Hilton Head. According to news releases, these acquisitions will keep these lands from being turned into developments that would include some 300+ homes. In addition, the three easements allow the current property owners to continue farming the historic Beaufort County lands. More details of the transaction are available HERE.
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.
In one of the largest conservation purchases to date, Plum Creek (PCL) completed the sale of a huge swath of Western Montana to the U.S. Forest Service and Montana’s Fish, Wildlife and Parks Department. Swiss philanthropist Hansjorg Wyss jump-started the deal with a $25 million donation that he subsequently upped to $35 million. Other funding sources included the State of Montana, which contributed $65 million, and the Department of Agriculture, whose $250 million expenditure was arranged by Sen. Max Baucus.
Want an opportunity to meet the top gun on The Land Report 100 on one of his many ranches? Now you can, thanks to a Montana fundraiser. Tickets to tour Ted Turner’s 119,000-acre Flying D Ranch are still available, and they’re going for $1,500. Proceeds go to the Greater Yellowstone Coalition; Turner is a board member.
Your $1,500 fee gets you a driving tour of the ranch from the nation’s largest landowner, cocktails on his back porch, and a dinner featuring ranch-raised bison. Turner has the world’s largest private herd of bison, which he raises on the Flying D and markets through his restaurant concept, Ted’s Montana Grill, with over 50 locations in 18 states.
At last report 10 of the 60 tickets remained.
Read more at:
“Enviro Group Plans Fundraiser at Turner Ranch,” Billings Gazette, June 5, 2009.
Val Kilmer, star of Top Gun, Tombstone and Willow, has put his 5,970-acre Pecos River Ranch on the market for $33 million. John Watson of Orvis/Cushman & Wakefield has the listing.
The Pecos River Ranch features more than five miles of frontage on its namesake river. Kilmer’s 5,550-square-foot adobe home as well as an 1,800-square-foot caretaker’s home, additional guest homes, barns, garages, and outbuildings are included in the sale.
The ranch is located 8 miles from Pecos, 22 miles from Santa Fe, and 90 miles from Albuquerque.
Kilmer, who is rumored to be considering a run for governor of New Mexico, has owned the property for nearly 15 years. He previously listed portions of the ranch for sale in 2006, but found no buyers.