'Sense of urgency' on Skyline Forest

The Deschutes Land Trust continues its quiet pursuit of a land deal that would dramatically increase the organization's already substantial profile in the region. At issue is a 33,000-acre parcel of forestland, known as Skyline Forest, on the eastern slopes of the Cascades between Bend and Sisters.

This past spring, the Land Trust was offered a donation of 28,000 acres of the former Bull Springs Tree Farm to manage under a community forest concept. While the idea is still very much in play, administrative complications have forced the Land Trust to revise its approach.

The current owner of the property is Fidelity National Financial, a Fortune 500 insurance giant with multiple investment holdings. Skyline Forest is only one such holding. The original offer from Fidelity was to donate the 28,000 acres if Fidelity could obtain legislative approval of a planned development on 1,500 acres.

According to the Land Trust's Executive Director Brad Chalfant, that proposal fell through because the project grew to involve the State's interest in acquiring the old Gilchrist Tree Farm and "the complexity of the issues stalled efforts for a thorough public discussion."

Now, Fidelity has begun to sell off some of its holdings in the area, and a deal with the Land Trust has yet to be reached.

"There's definitely a heightened sense of urgency," said Chalfant. "It's not time for panic, but it's not a time that we can sit on our hands, either. In spite of what we hear about the real estate market, it is folly to think that Fidelity can't sell this land or break it up."

Chalfant explained that large, commercial forestlands are still selling in the current real estate market.

"Timberlands are being sought as solid investments that don't swing in value like the stock market or other real estate properties. People are definitely looking at commercial timberlands for investment, so Fidelity has a market for this land."

Central Oregon land already sold by Fidelity includes approximately 25,000 acres near Silver Lake.

"They're in a liquidation mode," said Chalfant, "and they sold it for more than they paid. Fidelity is in the investment business, and they have the expectation of making a profit."

So far, Fidelity has not sold off any of Skyline Forest, although Chalfant pointed out that about 4,000 acres were sold before the financial collapse of Crown Pacific, the previous owner. That acreage was included in half a dozen parcels near Bend and a few others near Sisters. Consequently, the Land Trust hopes to preserve as much as possible of what remains of the old tree farm.

With the demise of the donation proposal, the Land Trust is now forced to pursue acquisition of the land the old fashioned way - by buying it.

"First, we've got to strike a deal with Fidelity," Chalfant said. "So we're in the process of negotiating for a price. Second, then we have to go out and secure the funding."

Part of the seed money for the project has already been nailed down in the form of a $1.5 million federal grant from the Forest Legacy program, but much more is needed. Skyline Forest is wholly within Deschutes County, and the county has the ability to create a Community Forest Authority (CFA), which, in turn, can issue revenue bonds to raise funds for the purchase of forestlands. The bonds would be paid off by proceeds from the sustainable harvest of the timberlands.

Chalfant likened the CFA to the County's Community Hospital Authority, which regularly issues bonds for St. Charles Medical Center to build new medical facilities, with the bonds being repaid from revenue generated by the facilities.

"It's important to distinguish these revenue bonds from the kind of general obligation bonds that schools, cities and counties issue with a vote of the public and which the public pays for through property taxes," Chalfant noted.

Even though the county creates the legal framework for the CFA, the forest itself would be owned and managed by the Land Trust on behalf of the public. In fact, the law precludes county ownership of CFA lands and requires ownership by a private, non-profit entity, such as the Trust.

County Administrator Dave Kanner said, "It's fair to say that the Board of Commissioners has taken an interest in seeing that Skyline Forest is preserved and managed as a working forest."

Echoing Chalfant's description of the administrative roles of the various participants, Kanner added, "We don't envision a management role for the county. That would be left to the Trust and the Oregon Department of Forestry."

County Commissioner Dennis Luke agreed that the county's authority to issue revenue bonds is an integral part of the Community Forest concept. There was one point he stressed, however:

"I must make it very clear. The county will have absolutely no liability for the repayment of the bonds, and they will not affect our credit rating. Paying back the bonds will be the sole responsibility of the CFA."

Luke also used the St. Charles bond analogy.

"At this point," Chalfant concedes, "we're not likely to raise the amount of money necessary to acquire the entire property."

The Land Trust is not deterred, however, and is pressing forward with the expectation of closing a deal soon. While he declined to speculate on exactly how much of Skyline Forest might be preserved, Chalfant did say that he expected it to be "a substantial portion."

The Land Trust says it can sometimes be awkward to publicly discuss such deals while they are still in the negotiation process. The alternative, however, can also be disadvantageous.

"When the community is not hearing about us because we're trying to be discreet," Chalfant said, "it takes what we're doing out of the public eye."