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Torsten Kjellstrand, The Oregonian Travis Miller works on his family’s ranch near Glenwood, Wash., just southeast of Mount Adams. While many make a living in the woods in the area, Miller’s family also depends on forests, where their cattle pasture in the summers. Last year, Miller was one of several people from the area who traveled with the nonprofit Mount Adams Resource Stewards to New England to see how community forests work. GLENWOOD, Wash. — For 100 years, Ponderosa pines nourished this logging town of 500 nestled along Mount Adams’ southeastern flank. But in the past few years, a change has taken over the woods, unsettling residents and their relationship with the land.
Here and throughout the Pacific Northwest, investors have been buying millions of acres of forestland, betting on big payouts for their clients — pension funds, university endowments and foundations.
Today, timber investment management organizations and real estate investment trusts represent the largest private landowners in Oregon and across the country.
Over the past decade, investor-owners have used one big advantage as they’ve quietly replaced traditional forest products companies: They don’t pay corporate taxes. This month,Weyerhaeuser, the nation’s last major publicly-traded integrated forest products company, announced it will become a real estate investment trust next year.
Torsten Kjellstrand, The Oregonian The nonprofit Mount Adams Resource Stewards has found ways to tap the forests for new products and more work for residents. In 2007, the nonprofit raised $300,000 from private and federal grants to create a new business out of low-value, small-diameter wood from forests surrounding Glenwood, Wash. With timber prices flatlining and real estate values rising, many private forestland owners are shifting their gaze to building homes rather than growing trees. Landowners elsewhere in the country, under pressure to maximize returns, have looked to convert forests into subisions and resorts as trees become less valuable than the land they occupy.
The unprecedented change in land ownership raises concerns about the impact on wildlife and natural resources, as well as the increased costs of protecting residents from forest fires. Nationwide, about 1 million acres of forestland are lost to development every year. In the Pacific Northwest, it begs the question: What does the future for forestry look like in a region defined by it?
In timber-dependent towns like Glenwood, the change carries the fear of the unknown. As landowners come and go quickly, their financial decisions could create a patchwork of forests and rural sprawl.
View full size“Without the land, there’s nothing here,” says forester Jay McLaughlin, who lives in Glenwood. “If we don’t keep places like this going, they’re going to end up being playgrounds for the rich or turn into ghost towns.”
Investors take root
Institutional investment in timberland nationwide soared from $1 billion in 1990 to $40 billion in 2007, according to Yale University and other sources.
“When I first started in this business in the ’90s, my job was as a missionary trying to explain why forestlands were a good investment,” says Matt Donegan, co-founder of Forest Capital Partners, one of the nation’s largest timber investment management organizations, which has a Portland office. “Now, people are seeking me out.”
Between 1996 and 2007, 84 percent of the nation’s 70 million acres of privately-owned industrial forests changed hands, according to a survey by Portland-based consultants U.S. Forest Capital.
“It’s an astonishing rate,” says Tom Tuchmann, the firm’s president and a former adviser on timber issues to President Bill Clinton. “Increasingly, we’re seeing even more parceling off.”
Starting in the 1990s, federal limits on logging to protect wildlife species cut off a major supply of timber in the Pacific Northwest. With the constricted supply, timber prices shot up and private forests rose in value.
But as the bulky timber giants found themselves losing ground to competitors from Argentina to New Zealand, they narrowed their focus to operating mills and manufacturing wood products. In Oregon, timberland owners such as Boise Cascade and Georgia Pacific sold all their …
Read the original article at Oregonlive
