Ask the Expert: Scott Jones

The second session of the 111th Congress is already under way, and landowners have a lot at stake. With that in mind, The Land Report turns to Scott Jones to get the inside scoop on Washington’s next steps. Since 2003, Jones has been the CEO of the Forest Landowners Association (FLA), whose members own and operate some 40 million acres of forestland in 48 states. Founded in 1941, FLA offers education, information, and national grassroots advocacy with the goal of sustaining forestlands from one generation to the next.

With so many bold initiatives taken on by the Obama administration, what are the chances of a climate bill passing this year? Would it benefit forest landowners?

American voters believe that a climate/cap-and-trade bill may cost jobs; as a result, I would not be surprised to see the climate portion of the energy bill removed. If crafted properly, an energy bill could benefit private forest landowners by creating new markets for wood. However, the definition of “woody biomass” still needs to be fixed for landowners to truly benefit from the stripped down version of the bill.

The federal estate tax dropped to zero this year. Do you expect it to return to 55 percent with a $1 million exemption as scheduled in 2011?

There do not appear to be enough votes to bring the death tax back to life in 2010. Sen. Scott Brown’s (R-MA) recent election created a political barrier to retroactive death tax reinstatement. Unless legislative action is taken, the tax is scheduled to permanently return at a rate as high as 55 percent in 2011. But this is an election year, so anything is possible. Polls indicate 65 to 70 percent of Americans want the tax repealed.

Name one other issue landowners should follow closely.

The Clean Water Restoration Act is definitely legislation every landowner should keep an eye on. It seeks to expand the jurisdiction of the Clean Water Act by redefining “navigable waters” as “waters of the United States.” The consequences of this bill are enormous, and it has already created a firestorm in the Senate. Strong opposition convinced Rep. James Oberstar (D-MN) to delay introducing the bill on the House side. Oberstar now intends to move the bill through the House by the end of 2010.

Library: Working Dogs of Texas

Both the author and the photographer are valued contributors to The Land Report, and there’s no doubt in my mind that landowners from coast to coast will be able to identify with this book. So let’s begin by getting two misconceptions about this book off the table.

First off, Working Dogs is not a tribute to hunting dogs. Yes, there are great chapters on curs and feists, pointers, retrievers, and the fearless breeds that track wild hogs. The authors even tail a pack of hounds that are bona fide man-hunters à la Paul Newman in Cool Hand Luke. But at its core, Working Dogs is about the countless ways man’s best friend has been bred and trained to serve different masters, which is why this book is such a compelling volume.

“The one thing these dogs all have in common is that each has a job to perform,” Wyman Meinzer says. “It might be highly specialized task that requires enormous amounts of training like search and rescue or detector dogs. It could be a more traditional one such as herding cattle or guarding against predators. It could even be as important as providing friendship to an elderly person.” To that end the final chapter is titled “The Caretakers.”

The second element that needs to be dismissed is that Working Dogs of Texas suffers from geographic limitations because of its focus on the Lone Star State. On the water, in the woods, on ranches and farms, and at border checkpoint and international airports – Chappell and Meinzer covered an enormous amount of terrain researching this compelling project.

Available online at Amazon.com

Northeastern Landowners Get $165M For Natural Gas Rights

A coalition of landowners in one of the country’s emerging natural gas hot spots has reached an agreement to lease 30,000 acres to Fortuna Energy for natural gas drilling rights. The $165-million, five-year deal for Marcellus Shale drilling rights comes out to $5,500 per acre, plus royalties.

The Friendsville Group is made up of 600 property owners in Susquehanna and Bradford counties in Pennsylvania, and in Broome County, New York. Individual owners will have the option to extend the lease for another three years, making it a “one-size-fits-all” deal, according to Pat Flaherty, who helped negotiate the deal.

Other perks to landowners were included in the deal, including approval of developmental plans and retaining rights to other minerals on the property.

“It’s by far the best offer we’ve seen,” said Larry Barrack, a Pennsylvania property owner who spoke with Gannett reporter George Basler.

Fortuna , a subsidiary of Calgary-based Talisman Energy, is one of North America’s largest independent producers with more than 22,000 oil and gas leases.

Landowners in Pennsylvania can expect payment within 90 days of signing the agreement, Fortuna officials said. Given the current moratorium on oil-and-gas drilling in New York, the Broome County leases – primarily in Binghamton and Vestal – will be structured differently, giving landowners $500 per acre when the lease is signed and the remaining $5,000 per acre once the moratorium is lifted. The New York Department of Environmental Conservation (DEC) plans to release results from an environmental impact report this fall.

Sold! Steamboat’s Perry Ranch

A well-known Rocky Mountain landmark, Colorado’s 470-acre Perry Ranch, sold for $11 million ($23,000+ per acre). The sellers paid $13 million for the Routt County ranch in 2007 intending to improve it and then market it as a conservation development property, but last year’s recession squelched those plans. Hall & Hall’s Brian Smith in Steamboat Springs represented the seller. Tim Casey of Mountain Marketing Associates in Breckenridge represented the buyer. The transaction closed on June 30.

The original asking price of $25 million dropped to $19.5 million and then to $16 million last year when the economy tanked. “This sale is very indicative of what we’re now seeing: 15 to 25 percent off market highs,” says Smith, referring to the spread between the sellers’ purchase price in 2007 and the 2009 sale.

“Buyers who are not trying to pinpoint the bottom of the market can find all sorts of opportunities. A lot of sellers, particularly those with a higher basis in a property, are recognizing current market conditions and adjusting their asking price,” says Smith. “What made this property such an outstanding opportunity was the size of the parcel and its proximity to downtown Steamboat Springs. The south fence line is literally one mile to the city limits. One minute you’re tucked away by yourself in a lush little valley with aspen groves and Soda Creek. Hop in your truck and five minutes later you’re on Main Street. Best of both worlds. It’s extremely difficult to find that combination near a resort town, whether it’s Steamboat, Vail, Aspen, Telluride, Jackson, or Sun Valley.”

For Sale: 19,079-Acre Pineywoods Mitigation Bank in East Texas

One of the largest wetland mitigation banks in the nation is on the market. Located in Angelina, Jasper, and Polk Counties, the Pineywoods Mitigation Bank is currently the largest wetland mitigation bank in Texas and is fully permitted with the US Army Corps of Engineers.

The Pineywoods Mitigation Bank is the result of six years of cooperation between The Conservation Fund and GMO Renewable Resources, entities that have spent more than $2 million extracting all of the permitting and execution risk out of the project.

A contiguous block of 19,079 acres of valuable habitat, the bank is located in the middle of the Neches River basin and provides a corridor between the Davy Crocket and the Angelina National Forests. Its large size and the concentration of sensitive wetland habitat on 13,000 acres are two of its many distinctions.

The Conservation Fund and GMO Renewable Resources seek to sell the bank as a whole to a buyer who can fully focus on the monetization of the $85 million in potential credit value. The estimated net present value of the wetland mitigation credits is about $40 million with an 18% discount rate.

“Pineywoods Mitigation Bank is truly a unique piece of property managed for the conservation of natural resources while providing mitigation opportunities,” says Tom Margo, Director of Real Estate Sales at AFM Real Estate, the listing broker. The owners recognized the importance of this area and put a plan in place focused on conservation and enhancement. All of the necessary approvals and permits are in place, a rare find for a property of this size and with these characteristics.”

The timeline for the bidding process is as follows:
• Indicative offers due September 1, 2009.
• Binding offers with deposit due November 1, 2009
• Closing prior to December 31, 2009.

For additional information, go to the Pineywoods Mitigation Bank website. For details of the sale, review the following letter from GMO Renewable Resources. For more information about AFM Real Estate, visit their website.

Western Massachusetts to Become National Forest?

Former Governor Mitt Romney’s proposal to designate the Berkshires and all of Western Massachusetts as national forest is being considered once again. Massachusetts is one of just six states without national forest designation, a situation the Romney administration sought to counter in 2003.

A key aspect of the proposal being considered is that the federal government would not acquire any private land. Instead, it would seek easements from local property owners to restrict development and thus allow the land to remain on tax rolls.

The proposed Massachusetts model, which is being called a “family-forest based” designation, is being pitched as a partnership between private landowners, the state, and the federal government.

“”Landowners would retain the rights to own the lands, but sell their right to develop it,” said Lisa Capone of the state’s Executive Office of Energy and Environmental Affairs. “The land also remains a working forest, with some level of access to outdoor recreation and protection from commercial development. Massachusetts would be the first state to have the land-easement concept.”

Crescent Resources Files for Chapter 11 Bankruptcy

Charlotte-based Crescent Resources filed for bankruptcy protection in Austin on June 10 listing assets and liabilities in excess of $1 billion. Founded in 1969, the developer is owned by Duke Energy and Morgan Stanley’s real-estate fund unit and has interests in 35 residential and commercial projects in 10 states, including country-club communities, mixed-use developments, and Class A office space in the Southeast and Southwest.

Crescent lost $420 million in 2008, according to the Charlotte Observer, and will seek protection from as many as 10,000 creditors.

The company issued the following press release at its website:

Crescent Resources announced that, as part of its ongoing strategy to reduce the company’s debt level and improve its capital structure, Crescent Resources, LLC and certain of its subsidiaries have filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court in the Western District of Texas, Austin Division.

The company intends to operate its continuing businesses without any significant interruption during the restructuring process. In addition, the company has obtained a Debtor-in-Possession financing facility of $110 million from a group of its existing lenders, which will provide sufficient funds to operate its ongoing business activities.

Crescent also announced today that Arthur Fields, chief executive officer of Crescent Resources, has retired from the company and will continue to work with the company in an advisory capacity. Effective immediately, Andrew Hede, Crescent’s chief restructuring officer, will also serve as chief executive officer. Mr. Hede, a managing director with Alvarez & Marsal North America, LLC, has more than 15 years of financial restructuring and business experience. Mr. Hede has worked with numerous companies, including national and regional homebuilders and real estate developers, to develop and implement financial and operational restructurings and recapitalization strategies.

“We have been in active discussions with our lenders and other stakeholders as we work towards an agreement that will bring our capital structure in line with the current economic environment,” said Andrew Hede. “Those discussions are continuing, and we are pleased with the ongoing support we have received from our lenders. We believe this process will lead to a stronger financial foundation for the company and its stakeholders and that it will better position us to serve our customers and partners over the longer term.

“Despite the unprecedented challenges facing the real estate industry, we believe Crescent’s underlying business model is solid, and our assets remain very attractive. We are encouraged that our lenders have agreed to provide additional funding to support our continued operations and allow us to maintain the high level of service and amenities our customers have come to expect. We intend to reach an agreement on our new capital structure and emerge from bankruptcy quickly,” Hede continued.“

On behalf of the Board and all the employees of Crescent, I would like to thank Art for his tremendous service to Crescent and the entire real estate industry over his long and successful career,” continued Mr. Hede. “He was instrumental in building Crescent into one of the leading real estate development companies in the country, and we are pleased that he will continue to serve as an advisor to the company.”

“Crescent Resources has the best assets and more importantly the most dedicated and passionate employees in the industry. I am confident that this restructuring will position the company better for the future,” said Mr. Fields. “It has been a privilege to work with such a talented team. I can move on secure in the knowledge that Crescent will build on its track record as one of the leaders in the real estate industry.”

As part of its Chapter 11 filing, the company is seeking Court approval to make certain payments and to maintain key agreements with employees, customers, vendors and partners of continuing operations to ensure the company can maintain its commitment to delivering a high level of amenities and services.

About Crescent Resources

Crescent Resources, LLC, is a land management and real estate development company with interests in 10 states in the southeastern and southwestern United States. Based in Charlotte, Crescent Resources is a joint venture between Duke Energy and Morgan Stanley Real Estate Fund. Established in 1969, Crescent creates mixed-use developments, award-winning country club communities, single-family neighborhoods, apartment and condominium communities, Class A office space, business and industrial parks and shopping centers. Visit www.crescent-resources.com for more information.

Read the complete announcement at the Crescent Resources website, June 10, 2009.

Madeleine Pickens Presents Eco-Sanctuary Plan to BLM

Madeleine Pickens is no ordinary horsewoman. A lifelong equestrian, she has led numerous champions into the winner’s circle, including the Hall of Fame Thoroughbred Cigar, winner of 16 consecutive races. Now she is championing a new cause: America’s wild horses.

“Wild horses are a living symbol of the pioneering spirit of Americans and the America West,” she says. Her goal is to establish a 501(c)(3) eco-sanctuary for all horses currently in holding facilities on BLM lands. Similar to a national park, it would be a tourist attraction as well as a refuge. To that end she has submitted a proposal to the Bureau of Land Management to create a public/private partnership that would not only locate appropriate land with sufficient forage and water sources but allow wild horses and burros to be free‐roaming and able to form natural bands.

“While the primary objective of the project is to care for these wonderful creatures, we will also be stewards of the land,” she says.

In March during hearings on H.R. 1018, Restoring Our American Mustangs (the ROAM Act), Pickens testified before the House of Representatives Subcommittee on National Parks, Forests and Public Lands Committee on Natural Resources. She has also submitted a plan to initially alleviate conditions for 10,000 wild horses currently being penned in BLM short-term holding facilities.

“My view is for a wild horse sanctuary that will be a tourist destination similar to our national parks where Americans and tourists from around the world can come, observe and be a part of this great part of American history. We can use this treasure to promote ecotourism and at the same time provide for permanent retirement and management of these American icons to which we owe so much,” she says.

To that end, she is urging those who cherish the wild mustang and support her initiative to contact Interior Secretary Ken Salazar to stop the slaughter and confinement America’s wild horses and burros.

To join the thousands who have already petitioned Secretary Salazar as well as read more about her plan, The Land Report encourages you to visit her website.

Sold! Montana’s Yellowstone Club Goes for $115 Million

CrossHarbor Capital Partners LLC paid $115 million to buy Montana’s Yellowstone Club out of bankruptcy court yesterday. The Boston-based private-equity firm agreed to pay $35 million in cash and assume $80 million in debt owed to Credit Suisse. CrossHarbor will also infuse up to $75 million in working capital.

CrossHarbor’s principal, Sam Byrne, is a Yellowstone Club member, and has been closely following its fortunes. In 2008, CrossHarbor attempted to acquire the club for $450 million.

According to the Bozeman Daily Chronicle, the sale capped a week of non-stop negotations in the court of federal bankruptcy Judge Ralph Kirscher. The only other bidder was Credit Suisse, which in 2005 loaned $375 million to Tim and Edra Blixseth, the now divorced couple who jointly founded the club.

As part of the final deal, Credit Suisse will be allowed to co-invest in the club with CrossHarbor. Credit Suisse also received additional assets, including Yellowstone Club real estate and a castle in France that the Blixseths had acquired. Unsecured creditors were recognized by the court as $19 million was set aside to pay local vendors, tradesmen, and others.

This marks the second major bankruptcy ruling in as many months involving Credit Suisse. In April the Promontory Club outside of Park City, Utah, sold to the Pivotal Group for $30 million. Credit Suisse had put together a $350 million loan package for Pivotal, which it used to develop the resort community before seeking bankruptcy protection.

According to the CrossHarbor website, the LLC “is an active investor in the distressed securities market. We invest in a wide variety of securities including real estate loans, corporate loans, and structured securities that are suffering from stress including monetary and/or technical defaults.”

Read more at:
“Cross Harbor Wins Yellowstone Auction,” Bozeman Daily Chronicle, May 18, 2009.

For Sale: 1.2 Acres for $12.5 Million

Every now and then, a listing comes along that is a flat-out jaw-dropper. Some, like the Bell Ranch at nearly 500 square miles, defy comprehension because of sheer size. At 186′ x 300′ this residential lot in the Dallas suburb of Highland Park takes the prize for price: $10+ million per acre.

Go ahead and take a closer look at 4500 Lakeside Drive. I walked it myself. Took about two minutes. Can’t make it to Dallas? Check out the website of the brokerage with the listing: Allie Beth Allman & Associates.

P.S. No ag exemption.

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