Skyline Forest timberland for sale: Priced well above current timber value

            The Asian-based owners of substantial timberland in Deschutes and Klamath counties have put up for sale a 33,000 acres portion of their holdings for a whopping $127 million, twice what they paid for that and other land acquired in a bulk sale of about 200,000 acres less than five years ago.

            The potential sale is listed on the website of ranch and land broker Mason & Morse of Colorado, which said the offering includes timberland, “providing high quality timber for harvest, great for logging industry development and liquidation.”

            Also noted is the possibility of large homebuilding sites, “private hunting and fishing, private parks and campgrounds,” as conditional uses on the property which is zoned F1 forestland. The minimum lot size is 240 acres as a conditional use, which would require county approval.

            “The property has significant long-term appreciation potential, with opportunity for sustainable timber management, conservation, abundant recreation, in combination with residential and mixed-use development,” the broker website noted.

            The listing information: https://www.ranchland.com/bull-springs-skyline-forest-bend-oregon-3431

            The announcement apparently caught the Deschutes Basin Land Trust by surprise, with the group quickly issuing a news release explaining its 15 year quest to have the property, which it has called Skyline Forest, preserved mostly for public recreational use and low impact sustainable timber harvest.

            In a news release Land Trust executive director Brad Chalfant said, “We remain fully committed to the permanent conservation of Skyline Forest for its wildlife, scenic views, and its recreational and educational potential,” adding that the group seeks to continue its efforts with the current owners.

            Although the name Skyline Forest took hold in the past decade, the property was originally known as the Bull Springs Tree Farm, an expansive intact acreage of numerous parcels stretching from Bend’s northwest border to the fringes of Sisters. The broker listing refers to the property as Bull Springs Skyline Forest.

            In the early 2000s Crown Pacific Timberland owned the land before losing it in bankruptcy to a subsidiary of John Hancock Insurance, which in turn sold it to Fidelity National Timberlands, then a subsidiary of publicly-traded Fidelity National Financial, which controls several of the nation’s largest title insurance companies..

            The Asian investment group, Shanda Asset Management, that now owns the property initially acquired it in 2015 through Whitefish Cascade Forest Resources LLC from the Fidelity timberland company. The Whitefish name apparently has its origin in the Whitefish, MT  business base of Bill Foley, chairman of Fidelity National Financial.

            A Securities and Exchange filing in 2015 by Fidelity noted the sale of the timberland to the Asian investors for $63 million. It is not clear from company annual reports and other documents how much Fidelity paid for the property. However, the 2013 annual report notes it recorded a "$6 million impairment" in 2012 related to “Cascade Timberlands.”

1: Boundary of Bull Springs Skyline - Mason & Morse

            The Shanda Asset principals at one time had addresses in Singapore, although online information indicates the bulk of the investors' wealth was derived from interactive internet and online gaming in the Chinese market. Other information shows that Shanda Group had a Hong Kong base.

            According to the broker’s estimate in the listing, the 33,000 acres is more than 93% Ponderosa pine, or 71,905 thousand board feet, with remaining stands of mostly White Fir. Ponderosa is a lower value species than others such as Douglas Fir and White Pine typically found in less arid locations of Oregon, Washington Idaho and Montana.

            Information posted online for the fall of 2019 by the University of Montana shows that the mill-delivered price of Ponderosa  for the western part of that state averaged $333 per board foot. Another online chart from an Idaho private broker estimated prices of $325 to $380 depending on the tree diameter.

            Assuming a higher price of $400 per thousand board foot, the 71,905 thousand board feet of Ponderosa estimated by the broker would currently be worth $28.774 million, or approximately $871 per acre.

            Current Deschutes County tax records list one of Skyline Forest/Bull Springs larger parcels of 12,543 acres at a “real market value of  $7,379,870, or $588 per acre. For the 2015-2016 year at the time it was purchased by the current owners the county estimated the real market value of that parcel at $4,865,730, or $387 per acre.

2:Deschutes Co. Destination Resort Map (dark)

            By most measures, the $3,848 per acre price for the 33,000 acres listed at $127 million is a staggering jump when considering the current price of standing timber, or "stumpage." It’s reasonable to consider much of the non-timber residual value in the listing price could be based on potential “highest and best use,” an appraisal term, which might include residential single family homes or cluster development as noted in the listing package, with additional value in long-term forestland growth.
            A more complex discounted cash flow calculation would factor in a laddered future value of long-term timberland management, including such points as periodic harvest thinning and reforestration as well as related expenses.

            Another more elusive value might be assigned to the potential of carbon sequestration, the process in which timberland absorbs atmospheric carbon and releases oxygen. With climate change has emerged a "cap and trade" market whereby business and industry can obtain credits created by timberland to offset operations that contribute to greenhouse gases. Or they might trade a permit that allows a defined amount of emissions.         
            There had been  discussions with previous owners that portions of the land might be developed as a destination resort. But current zoning and a 2017 state law requiring that destination resorts be more than 24 miles from an urban growth boundary of cities of more than 100,000 population could be impediments.  The state law also requires counties to develop a wildfire protection that “demonstrates the site can be developed without being at a high overall risk of fire."

           Two wildfires, the Two Bulls in 2014 and Rooster Rock in 2011, have burned more than 10,000 acres of the property before the 2015 acquisition by Shanda Asset Group.

            Bend’s growth is fast approaching the population threshold related to resorts. And the property is not currently designated on Deschutes County’s comprehensive plan for a potential destination resort. (See map 2 - resort map area is south of Skyline). 

 

 Previous posts

Scenic forest between Bend & Sisters spurs conservation effort

 Massive timberland sale raises questions for Deschutes and Klamath projects

 

                                                                                                                                                                               

Mediation could move controversial apartment project forward

            A proposed apartment complex that has become a symbol of development tensions between Bend’s east and west sides as well as highlighted what some call a NIMBY (not in my backyard) backlash could be moving ahead.

            After an appeal in April to the state Land Use Board of Appeals, two prominent apartment opponents and the Evergreen Housing Development Group of Seattle have agreed in principle to a scaled down project of 141 units on three floors, instead of 170 with a fourth floor.

            The agreement as revealed at a late August public meeting would include 176 parking spaces as in an original proposal that had been approved by City of Bend planning staff in an administrative decision. A “modification of approval” filed with city planners in October noted the square footage of the building area would be reduced from 168,102 to 138,653 square feet, with no change in the footprint.

            Old Mill District developer Bill Smith and some neighbors had argued that the project as originally proposed would be out of scale for the location on Shevlin Hixon Drive overlooking McKay Park and the city’s new whitewater and river floating facility below the Colorado Street Bridge. There were also complaints that it would increase traffic congestion in the neighborhood.

            Evergreen’s proposal was approved after meeting existing city multi-family zoning requirements that are routinely decided at the planning staff level. But facing vocal opponents, the city planning commission then held two hearings before approviing the project with a change to the building height. Smith then appealled to LUBA, which stipulated mediation through the state agency’s proceedings.

            City reords show Evergreen started its pre-application process for the project in March of 2015. The revised proposal is set to go before the city planning commission before year-end.

            Evergreens’s project is working it’s way through city regulatory channels at the same time a new six-story apartment bulding is under construction less than one-half mile away on the former Ray’s supermarket site on the east side of SW Century drive near the Simpson Boulevard roundabout.

            That project, by Eugene-based Forum Westside LLC, is planned to include 200 apartment units over retail space in a five story building. The property was rezoned from general commercial to mixed use urban. As the new OSU-Cascades campus expands new businesses and housing are coming on the market to meet demand and changing the character of some west side areas.

            Together, the two apartment projects, a new hotel and the college’s recently opened dormitory will be among the tallest on Bend’s west side. Larger multi-story apartment complexes have been completed on Bend’s east side, incuding on the southeast corner of Pilot Butte off Highway 20 and to the north of Worthy Brewing on the east side of Highway 20.

            Some neighbors of the Worthy area complex have complained that narrow streets with parking on both sides in a retail and office area nearby have resulted in traffic and safety issues. as drivers avoid the congestion  by diverting through adjacent residential neighborhoods.