Railroads & Clearcuts

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Corporations in the News: 2008

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Plum Creek sells Montana land for $150M. Puget Sound Business Journal, December 17, 2008

Plum Creek Timber Company Inc. said it’s sold the first phase of its western Montana timber land — about 130,000 acres — to the Nature Conservancy and The Trust for Public Land for $150 million.

The Seattle timber company (NYSE: PCL) announced in June that it was selling 320,000 acres in the Swan Valley near Missoula to the two groups for $510 million.

The first phase of the sale will contribute about 40 cents per share to Plum Creek’s fourth-quarter earnings. The company said additional land sales will contribute another $65 million, which is less than the company’s earlier estimates of between $75 million and $85 million. With the one-time Montana sales proceeds, Plum Creek said fourth-quarter earnings will be between 48 cents and 53 cents per share; analysts polled by Thomson Financial Network expected 21 cents per share.

Other one-time charges the company said it expects to take in the fourth quarter include a $20 million loss, which is more than it expected, related to a loss in its manufacturing segment.

Plum Creek will report its fourth-quarter earnings on Feb. 2, 2009.

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How Wall Street is destroying the timber way of life. By Daniel Jack Chasan. Crosscut, December 12, 2008

The pressure for real estate and the short-term perspective of fancy Wall Street financial instruments have changed the old line companies utterly.

Montana’s forest products industry is staring extinction in the face, Kirk Johnson reports in Tuesday’s New York Times. Johnson describes a scramble "to save the historically important, culturally resonant timber industry — once a pillar of the state’s identity, now under siege as demand for housing and wood products has plummeted in the national economic downturn."

Welcome to the modern economy, where there’s no chance that in Montana, or any place else, the forest products industry of the future will look anything like the forest products industry of the past. Even before the U.S. economy tanked, traditional forest products companies operating under their traditional names and corporate structures had become as rare in the Northwest woods as the northern spotted owl.

The old forests on which those traditional companies once grew fat are, by now, mostly gone. By the early 1990s, when battles over the northern spotted owl and other old-growth-dependent wildlife shut down logging in the national forests, an estimated 85 percent of the Northwest’s original old growth had already disappeared. Just about all the remaining old growth was already protected in national parks and wilderness areas. The environmental battle focused on the last bit of unprotected old growth that still grew on federal land.

The Northwest Forest Plan, created by the Clinton administration to settle the owl wars, placed almost all of those trees off limits. The Forest Plan was supposed to protect habitat for the owl and a host of other species, including wild salmon, and still permit loggers to cut a billion board feet of timber each year in the national forests. A billion board feet was never realistic, but the Bush Administration has portrayed it as a solemn commitment and has been trying to loosen logging restrictions for the past eight years. So the battles continue. Fourteen years after the Forest Plan went into effect, environmentalists still fight federal agencies over the fate of the owl and its habitat. The upshot has been very little logging in the national forests. The mills built to process old growth logs have shut down. The curtain was coming down on the legendary business of the old Northwest.

But not on the forests themselves, ironically. Once upon a time, environmentalists — and some timber workers — worried that we were logging the forests at an unsustainable rate. At least in the national forests, we were. Now, the trees are growing a lot faster than they’re being cut.

To be sure, on the urban fringe a lot of the old forests keep disappearing, not because of logging but because growing houses is a lot more profitable than growing trees. "A continuation of the converstion of this land to non-forest uses seems inevitable, particularly in the Puget Sound region," states a 2007 report by the UW’s College of Forest Resources on The Future of Washington’s Forests and Forest Industries. "Forestlands are declining by more than 30,000 acres per year. . . . Higher and better uses attract values that are many times larger than forestry use values."

So the fight over our forests has shifted to a new front: real estate development in the exurbs and in the resort-rich Mountain West. "Objectives of protecting endangered species habitat and fish-bearing streams lack incentives and lead to unintended consequences," says the report. "Many ecosystem services are being provided by landowners at low cost to consumers, but at great cost to landowners." That's not likely to keep happening. In exchange for giving up potential profit, land owners get increased regulatory hassle. "Non-industrial owners are . . . in the path of growth and extremely frustrated by some of the rules and regulations," the report warns. "You can’t log trees as close to a stream as you can build a house."

At the same time, industrial forest-land owners have felt financial pressure to do nothing but grow trees. And here's where the story becomes not one about spotted owls but about the federal tax code and the Wall Street financial engineers. (If the following story has echoes of the mortgage-derivative frenzy in the housing market, you are not far off.)

Let's take the saga of Plum Creek, which led the way toward the current brave new financial world. It followed a long, winding path to get here. In 1864, Congress authorized huge land grants as a reward for anyone who built a railroad from the Great Lakes to Puget Sound. The Northern Pacific laid the rails and got the land. Eventually, after a big merger in 1970, the remaining land wound up in the corporate hands of the Burlington Northern Railroad. BN spun its land holdings off to Burlington Resources. Next, the timberlands went to a master limited partnership called Plum Creek. In 1999, Plum Creek reconstituted itself as a real estate investment trust (REIT).

At this point, the forest story of old-style timber barons becomes a tax-code story. As a corporation, Plum Creek paid income taxes at the corporate rate. As an REIT, it did not, since earnings were distributed to the investors, who paid taxes on individual capital gains. The REIT structure was an artifact of 1960s legislation aimed at making every man and woman a real estate speculator. (Shades of Fannie Mae and getting everyone a mortgage.) Until then, relatively small investors were frozen out of major real estate developments, which were primarily financed and owned by limited partnerships favored by the wealthy. The REIT got similarly favorable tax treatment for small investors and also shielded investors from liability, which a limited partnership did not. At the end of the 1990s, it wasn’t clear that a REIT could own and manage timber land, but Plum Creek persuaded the government to say that it could.

Since then, "Wall Street has become very interested in timber-growing as a long-term investment," says former Weyerhaeuser CEO Jack Creighton. "Pension funds started it," Creighton explains, "and now Wall Street has picked it up. They’ve come to the conclusion that the REIT is the way to go," Creighton observes. "I can’t argue with the financial logic, but to achieve that, you’ve go to isolate the timber in an REIT."

That's because there’s a big string attached to the tax break: You can’t qualify as a timber REIT if more than 20 percent of your assets consist of things other than timber land. So if a corporation wants REIT tax advantages, "you’ve got to get rid of everything else." In other words, once Plum Creek got the federal government to agree with this scheme, the advantages of the old vertically integrated forest products company were outweighed by disadvantages created by the federal tax code. Wall Street doesn’t want the timber without the tax breaks. A lot of traditional forest products companies have restructured accordingly.

Plum Creek’s transformation attracted a lot of outside capital. Plum Creek promptly used its new wealth to buy The Timber Company, which owned all of Georgia Pacific’s timberland. Thanks to the GP purchase, Plum Creek has supplanted Weyerhaeuser as the nation’s largest private land holder.

While old-line forest products firms have been transforming themselves, companies with no history of timber ownership have come into possession of vast forests. In 2003, Weyerhaeuser decided to sell off its 104,000-acre Snoqualmie tree farm. An environmental trust tried to buy it, but the deal fell through because Congress wouldn’t approve tax-free financing. Weyerhaeuser promptly sold the tree farm to Hancock Timber Resources, a subsidiary of Hancock Natural Resource Group, which was in turn a subsidiary of John Hancock Financial Resources. Ultimately, the Cascade Land Conservancy brokered a deal in which Hancock sold 90,000 acres to King County, but a lot of people feared the worst when the tree farm wound up in the hands, however indirectly, of a Boston-based financial services company.

Thus the irony of "the tree growing company" selling off productive forest land. Once the industry’s 800-pound gorilla, Weyerhaeuser now looks more like the last of the dinosaurs. It is the last big integrated forest products company left standing. And Wall Street wants it, too, to change.

At the beginning of August, right after Weyerhaeuser announced 1,500 layoffs, Scott St. Clair wrote in Crosscut that "starting a few years ago, Weyerhaeuser began spinning off assets. Always committed to focusing only on businesses in which it could be a major player, it now shifted to getting out of many of those businesses altogether. Its printing and writing-grade paper operations became, in a complex trade, part of Canadian-based Domtar Industries. And just last week, in perhaps the biggest blow of all, Weyerhaeuser closed on the sale of its packaging business to [International Paper]. Some 114 facilities, including paper mills, carton plants, and recycling centers, were sold for $6 billion. . . .What's left of the company represents more of what old Friedrich Weyerhaeuser founded over a century ago: land and trees. Wall Street effectively made the decision that it will no longer measure the value of Weyerhaeuser by what it makes but, rather, by what it owns."

BusinessWeek reported early last year that "shares of Weyerhaeuser kicked up 5.3%, to 71.93, on Dec. 15 [2006] when Franklin Mutual Advisers, which owns a 7.6% stake, filed a letter with the Securities & Exchange Commission urging the company to take action to boost profits and unlock its intrinsic value. . . . One option is to turn the company into a real estate investment trust (REIT) for tax advantages and to make it more competitive. On Jan. 18, Weyerhaeuser named Debra Cafaro, a well-regarded REIT executive, to its board. That sends a ‘clear signal that Weyerhaeuser will be looking at moving its huge timberlands into a REIT,’ says Mark Wilde of Deutsche Bank." (The company's stock price has since dropped to less than half its 2006 high.)

Creighton is suspicious of the explanation that "we want 'to unlock the value’ in timberland." What that means, he thinks, is to convert the company to a REIT and then sell off the assets. "I think the people who want W to turn into an REIT [are really just] in it for the short-term profit." In other words, they hope that conversion drives the stock price up,. If it does, they’ll simply sell.

Last spring, the massive federal farm bill included a tax break for Weyerhaeuser, intended to level — or almost level — the playing field, by dropping the company’s corporate rate from 35 to 17 percent. Weyerhaeuser had originally lobbied for a stand-alone bill. When that effort failed, "Weyerhaeuser officials, including Chairman Steve Rogel, continued to lobby lawmakers face to face, telling them the company's survival was at stake," Les Blumenthal wrote for the McClatchy Newspapers. "In the days after Weyerhaeuser reported a first quarter $148 million loss, Rogel, along with chief executive Daniel Fulton, urged lawmakers to include the [tax break] as a provision in the farm bill." Aided by Representative Norm Dicks and both of Washington’s Senators, they succeeded.)

Critics were saying 20 years ago that Wall Street’s myopic focus on quarterly results was a bad fit with the multi-generational perspective one needs to grow timber. Some people see that pressure to focus on the short-term as a reason for the industry’s re-structuring over the past decade. Others don’t. Both may be right.

"I put the pension funds in a totally different category" from the other investors, Creighton says. For the pension funds, "getting into it was a great decision." Timber gives them the cash flow they need over long periods, without losing the value of the underlying assets. Other investors may not have the same abiding interest in the long term. "On the Wall Street side I’m cynical, in that Wall Street comes and goes."

Creighton says that his critical attitude "is ironic to me because when I came to Weyerhaeuser in 1970, I was executive vice president of the country’s largest REIT." Nevertheless, he can’t escape the conclusion that "the Wall Street types . . . are driving integrated forest products companies out of business.’‘ And he doesn’t much like it. "I view this financial engineering negatively," Creighton says. "It’s destroying companies. It’s destroying communities. It’s destroying people’s jobs and ways of life."

Daniel Jack Chasan is an author, attorney, and writer of many articles about Northwest environmental issues.

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PLUM CREEK

Plum Creek Named to Dow Jones Sustainability World Index. Company news release, October 6, 2008

Plum Creek Timber Co. Inc. (NYSE:PCL) today announced that Dow Jones has named the company to its Dow Jones Sustainability World Index (DJSI World). The DJSI World comprises more than 300 of the leading sustainability companies out of the biggest 2,500 companies worldwide. The Dow Jones Sustainability Indexes are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide.

The DSJI World captures the top 10 percent of companies based on long-term economic, environmental and social criteria. The underlying research evaluates corporations based on a variety of criteria including climate change strategies, energy consumption, human resources development, knowledge management, stakeholder relations and corporate governance.

"At Plum Creek, we believe that our efforts to be socially and environmentally responsible contribute to our overall business success, and we are pleased that Dow Jones Sustainability World Index has recognized the company's ongoing efforts in this regard," said Rick Holley, Plum Creek's president and chief executive officer.

"Plum Creek has long conducted its business with a strong commitment to sustainability," Holley continued. "In 1999, Plum Creek was the first company to have all of its lands third-party certified by PricewaterhouseCoopers to the standards of the Sustainable Forestry Initiative(R). Today, Plum Creek continues this commitment and is looking forward to helping resolve global sustainability concerns by working on carbon sequestration initiatives and researching emerging alternative energy sources such as biofuels."

Plum Creek is the largest and most geographically diverse private landowner in the nation with approximately 8 million acres of timberlands in major timber producing regions of the United States and 10 wood products manufacturing facilities in the Northwest.

The Dow Jones Sustainability Indexes track the financial performance of the leading sustainability-driven companies worldwide. Based on the cooperation Dow Jones Indexes, STOXX Limited and SAM Group, the indexes provide asset managers with reliable and objective benchmarks to manage sustainability portfolios. The indexes cover companies in terms of economic, environmental and social criteria. Full details about the design philosophy, review methodology and index components are available at www.sustainability-indexes.com.

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PLUM CREEK - MAINE

Plum Creek told: Take it or leave it: Final changes made to Moosehead plan.
By Kevin Miller. Bangor Daily News, October 2, 2008

It’s officially Plum Creek’s call.

State regulators gave Plum Creek a formal answer Wednesday nearly 3½ years after the company unveiled Maine’s largest development proposal: Either accept our changes to your Moosehead Lake plan or risk walking away empty-handed.

Plum Creek officials, who have until Oct. 14 to respond to the Land Use Regulation Commission, said they were glad to see their proposal moving forward.

"We’re pleased to be at this juncture," Luke Muzzy, Plum Creek’s project manager, said moments after LURC unanimously endorsed the list of changes. "It’s been a long three years and we are really pleased to be at a point where you can see the finish line."

For Plum Creek, the "finish line" would be LURC approval of a rezoning plan for 975 house lots and two large resorts near Maine’s largest lake. LURC staff and commissioners are recommending a long list of changes to the plan. However, the two most contentious aspects of the plan — the total number of house lots and development on Lily Bay — remain in the proposal.

A final vote on the plan is not expected until early next year, and even then developers would need to receive a litany of additional approvals and permits before breaking ground on any of the Plum Creek projects.

LURC approval would also trigger the permanent conservation of more than 400,000 acres of forestland in the region, which commissioners have said was critical to their endorsement of Plum Creek’s historic development plan.

Plum Creek’s proposal has been controversial since the day it was announced in April 2005. While supporters view the planned growth and resorts as a model for economic revival, opponents predict the development will spoil the natural beauty that draws tourists to the region.

Thousands of people have weighed in on the proposal on all sides.

A number of audience members at Wednesday’s LURC meeting in Bangor vented their frustrations by accusing the commission of ignoring public opposition to the plan and, in particular, the proposal for a resort and subdivisions at Lily Bay.

LURC staff or commissioners sought to fend off the criticisms by pointing out that Plum Creek’s plan has changed significantly during the past three years. The agency held four well-attended public hearings, reviewed thousands of comments and spent hundreds of hours reviewing the proposal in public meetings.

"My view is everybody had an impact on where we are today even if we didn’t get to the position where you would want us to be," commission chairman Bart Harvey told the audience.

"This is certainly far and away the largest deliberative effort I have ever seen the commission participate in," said Stephen Wight, who has logged more than 20 years with LURC. "It’s quite an amazing effort."

Such comments did little to placate opponents, however.

Jym St. Pierre with RESTORE: The North Woods, who is a former LURC staff member, criticized the commission for taking it upon itself to craft amendments that would allow the plan to pass muster. RESTORE and other groups had urged the commission to reject the plan outright.

"I’ve never seen a situation like this where staff and now the commissioners have become the advocates for a rezoning petition," St. Pierre said.

But John Simko, the town manager of Greenville, praised the commission for inviting so much public participation on the process. Simko said he understands that not everyone will be pleased with the current version, but he said he was frustrated by some opponents’ refusal to compromise on a plan that he and others believe will benefit the area economically.

"I think most people in town feel that the plan is predominantly a good plan for the region," Simko said after Wednesday’s meeting. Greenville’s Board of Selectmen also has endorsed the current plan.

Earlier this week, four Plum Creek opponents were arrested in Augusta after locking themselves together and refusing to leave the office building that houses LURC. While lower-key than the protests on Monday, LURC’s meeting in Bangor still involved at least one arrest.

Members of the grass-roots group Native Forest Network, which has advocated a "no compromise" position on Plum Creek’s application, attempted several times to bring a cake reading "Congratulations Plum Creek" inside the meeting venue.

Each time they were instructed by police to leave the large cake outside. After the third attempt, Bangor police arrested a man — identified by group members as 59-year-old Peter Brenc of Dover-Foxcroft — and charged him with disorderly conduct and criminal trespassing.

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PLUM CREEK - MAINE

Maine Woods Face Condos on `Gleaming Silver Platter'

By Michael McDonald and Tom Moroney. Bloomberg, October 1, 2008

Henry David Thoreau envisioned a national preserve when he explored Maine's North Woods in 1853. Plum Creek Timber Co., the largest private landowner in the U.S., sees 975 homes and two exclusive resorts.

For three years, the Seattle-based company has been planning the biggest residential development in Maine history around Moosehead Lake, a gateway to the largest contiguous forest in the eastern U.S. Environmentalists and residents say that it would forever alter the wilderness around the 40-mile- long (64-kilometer-long) lake.

State regulators voted on the project today for the first time, endorsing the latest version of the plan 6-0. Critics including Restore the North Woods and the Natural Resources Council of Maine vow to continue their opposition.

``The new economy here is nature tourism, and if you destroy the nature you destroy the economy,'' said Christina Pritham, a nutritionist and registered Maine guide who lives in Greenville, on the southern tip of Moosehead Lake.

Greenville is the larger of the two incorporated towns on the lake, with a population of 1,623, and the only one with a traffic light.

Plum Creek's proposal is fueling a decades-old debate over the future of Maine's woods, which are largely privately owned and controlled by forest products companies. Many have closed paper mills, laid off workers and sold their land, opening the door to more development.

Dividing Locals

It is also pitting local residents against one another. Town and county leaders see construction and other new jobs reviving a largely moribund local economy. Piscataquis County, where Greenville is located, is Maine's second-poorest county, and had an unemployment rate of 8.6 percent in August, compared with the statewide 5.5 percent.

``Not only will our economy improve, we may be poised for an expansion,'' said John Simko, Greenville's town manager.

Opponents, including camp owners who offer fishing, hunting and ``Moose safari tours'' on the private logging roads that criss-cross the region, want Plum Creek to scale back its proposal.

The dispute may have turned acrimonious at times. Luke Muzzy, a project manager at Plum Creek in Greenville, said in an interview that his home and former office in the town were vandalized in 2005. Homes of other Plum Creek employees also were vandalized, according to newspaper reports. The crimes weren't solved and no one claimed responsibility.

Locked-Up Protest

This week, four members of the group Maine Earth First! were arrested during a protest in the state capital, Augusta, in which they fastened themselves outside the office of regulators with U-shaped bicycle locks wrapped around their necks.

The Moosehead Lake project would be Plum Creek's largest, and the first to include resorts, said Kathy Budinick, a company spokeswoman in Seattle. Plum Creek, a publicly traded real estate investment trust that owns 8 million acres (3 million hectares) of U.S. land, wants permission to develop about 16,000 acres over 15 years for homes and as many as 1,050 hotel rooms or condominiums.

The development sites stretch up the eastern and western sides of Moosehead Lake, described by Thoreau, a 19th-century philosopher, naturalist and writer, as spreading out ``like a gleaming silver platter.''

``We all believe in development but doing it in the right way in the right places,'' said Jim Glavine, a 54-year-old former sporting-camp owner who helped form the local opposition group, the Moosehead Region Futures Commission. ``These are natural resources that our tourism depends on.''

Land Set-Aside

The company has proposed putting as many as 392,000 acres into conservation. Plum Creek, whose share price has almost doubled in the past five years to $48.46, bought its 905,000 acres in Maine in 1998 for $180 million from Johannesburg-based paper company Sappi Ltd.

``For so long, folks have wondered what's going to happen to all this land,'' Muzzy said. ``This plan provides a permanent vision.'' The company has carved out smaller residential developments in its holdings in Georgia, Montana and Wisconsin.

Supporters say the plan is an improvement over haphazard development of vacation homes, such as the $15 million estate that Robert Greenhill, former Morgan Stanley president, built in Tomhegan Township, on the western side of the lake. Greenhill, who now runs Greenhill & Co. in New York, didn't return calls seeking comment.

There were 1,553 new housing lots developed in the Moosehead region from 1975 through 2004, even as the population held steady, according to data from the Maine Woods Coalition.

Public Comment

Today's vote was by the state's Land Use Regulation Commission, overseen by a seven-member board appointed by the governor and confirmed by the Legislature. Plum Creek has until Oct. 14 to respond to changes that the commission made in the development plan, and the public will get an opportunity to comment before a final decision is rendered, probably next year, said Aga Pinette, a senior planner at the commission.

``This battle is far from over,'' said Catherine Johnson, a senior staff attorney at the Natural Resources Council of Maine, an environmental advocacy group in Augusta.

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PLUM CREEK - MAINE

State officials talk with foes of Plum Creek plan

Environmentalists voice their concerns in a cordial meeting that followed protests the day before.

By KEITH EDWARDS, Kennebec Journal, October 1, 2008

AUGUSTA — Opponents of Plum Creek Timber Co.'s extensive development plans for the Moosehead Lake region got their audience with state officials Tuesday, one day after four Earth First! protesters ended up in jail.

The protesters, who locked themselves together in the Land Use Regulation Commission's headquarters, said they committed an act of civil disobedience because they felt their voices weren't being heard. All four were charged with criminal trespass and disorderly conduct, made bail and were released Monday night.

They were protesting the LURC staff's recommendation in favor of Plum Creek's plans to develop nearly 1,000 house lots and two major resorts in the Moosehead Lake area.

Two environmentalists – who were not part of the group of four – met Tuesday with LURC Director Catherine Carroll and state Conservation Commissioner Patrick McGowan to talk about Plum Creek's plans. The state officials had offered to meet with protesters at the start of Monday's incident, but the protest continued for hours until police had a locksmith cut the locks that held the four women together.

Tuesday's meeting lasted 45 minutes to an hour.

"It was very civil. We brought forth our concerns that money is speaking louder than the voices of Maine citizens," said Emily Posner of the Native Forest Network, who was outside LURC's offices with other protesters Monday but didn't enter the building. "Did they listen to us, the human beings? Yes, of course. But when you look at the power, clearly the residents of Maine are being disempowered in this situation."

Posner said the state officials, while attentive, also noted that the public record regarding Plum Creek is essentially closed.

Ethan Miller of the Native Forest Network also attended, as did Jeanne Curran, public information representative for the Department of Conservation.

"Both sides were very articulate, very congenial," Curran said. "There was a discussion about the process, the application. (Miller and Posner) said it was not a democratic process. The commissioner pointed out that (LURC) is a citizen board, confirmed by the Legislature, and it was a democratic process. Clearly there was disagreement, but people were cordial to each other."

That's a marked contrast to Monday, when Emily Paine, 22, of Portland; Kayla Hershey-Wilson, 26, of Thorndike; Megan Gilmartin, 24, of Searsmont; and Megan Wilson locked themselves together in the offices of LURC, within the state office complex located on the former grounds of the Augusta Mental Health Institute.

Gilmartin said she felt the group's message had finally been heard at least to some extent as a result of the protest, though she still didn't feel their concerns about LURC's Plum Creek process have been answered adequately. She plans to attend a LURC hearing today in Bangor, at which the Plum Creek plan could be finalized.

"We will continue to remind them the people of Maine need to have their voices heard," Gilmartin said.

Thousands of people have testified in person or in writing regarding the controversial Plum Creek proposal.

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PLUM CREEK - MAINE

LURC endorses Plum Creek plan. By Kevin Miller. Bangor Daily News, September 25, 2008

State regulators on Wednesday endorsed Plum Creek’s historic development plan for nearly 1,000 house lots, two large resorts and hundreds of thousands of acres of land conservation in the Moosehead Lake region.

Despite pleas and strong words from plan opponents, the Maine Land Use Regulation Commission did not make any substantial changes to Plum Creek’s unprecedented proposal during 17 hours of deliberations on Tuesday and Wednesday.

The commission plans to vote on and formally present Plum Creek with a list of largely technical and minor changes next week.

"It’s an all-or-nothing deal," Catherine Carroll, LURC’s director, said Wednesday evening. "They have to accept these recommendations and say they can live with them."

Plum Creek officials said they are cautiously optimistic that the plan will work for the company. "We’re hopeful," said Luke Muzzy, one of the plan’s architects. "We’ve been working on this for four years … so we are hoping we can get it through."

LURC is winding down its review more than 3½ years after Seattle-based Plum Creek first unveiled the largest development plan in Maine history.

Plum Creek is seeking LURC authorization to rezone roughly 16,000 acres in order to carve out 975 house lots and land for two resorts near Maine’s largest lake. The proposal also includes a package of conservation deals that will guarantee public access and commercial forestry on roughly 400,000 acres in the region.

Commissioners reiterated this week that the privately negotiated conservation deals — which will net Plum Creek $35 million — are critical to LURC approval of the development plan.

Not surprisingly, the commission’s endorsement did not sit well with the organizations that have steadfastly criticized Plum Creek’s proposal.

"I think Maine people really need to question whether this process worked," said Cathy Johnson of the Natural Resources Council of Maine. "The commission clearly did not listen to the Maine people who said Lily Bay is not an appropriate place for development."

Plum Creek’s proposal for more than 400 housing units — including a 250-accommodation resort — near Lily Bay State Park generated the most controversy in a proposal that has deeply divided Mainers.

Hundreds testified during public hearings last winter with supporters and opponents represented in roughly equal proportions. Thousands more from Maine and throughout the country have shared their thoughts, hopes or fears about Plum Creek’s plan in letters, e-mails and petitions.

Supporters predict the planned growth, high-end resorts and guaranteed public access to more than 400,000 acres of forestland will help rejuvenate one of the most scenic yet economically distressed areas of Maine. Without the 30-year concept plan, LURC would have far less control over where development occurs and the 430,000-acre conservation deal would be off the table, supporters say.

Plum Creek’s critics, however, envision sprawling subdivisions for wealthy out-of-staters spoiling the wilderness character of an area many consider to be the jewel of Maine’s North Woods.

They predict untold numbers of moose, deer and federally protected Canada lynx will die on local roadways due to the thousands of additional cars Plum Creek’s plan will draw to the area daily. Water quality and recreational fisheries could also suffer from the pollution caused by subdivisions, cars, boats and jet skis, critics say.

Opponents have managed to force significant changes to Plum Creek’s plan.

The company negotiated the two private conservation deals with The Nature Conservancy, the Appalachian Mountain Club and the Forest Society of Maine after the public demanded more land protection.

Plum Creek also shifted 180 house lots away from the water and relocated one proposed resort to Big Moose Mountain, an area just west of Greenville that already has a ski facility.

LURC staff reduced the number of lots on Long Pond and sharply decreased the amount of land near Lily Bay on which Plum Creek could build. The commission also tightened up language on other industrial uses — such as wind farms, water extraction and gravel mines — that would be allowed on conservation land.

But the plan’s critics failed to convince the commission on two key points: that 975 house lots was excessive and that Lily Bay was an inappropriate spot for a resort and houses. This week, groups accused the commission of placating Plum Creek in order to secure the conservation deals.

"It is not your role to negotiate the best deal that Plum Creek will give you," Phil Worden, an attorney with the Forest Ecology Network and RESTORE: The North Woods, said Tuesday.

Most of the commissioners described the Lily Bay developments as the most difficult part of the plan to stomach. But LURC has recommended adding additional checks and balances to ensure the agency has control over the size, scope and appearance of those developments during subsequent reviews.

LURC staff and board members also said their concerns about impacts at Lily Bay were tempered by the fact that much of the surrounding forestland would be placed under permanent protection.

"The commission feels that based on the rules in [LURC’s] comprehensive plan, they have no choice but to approve some development at Lily Bay," Carroll said. "They just want to make sure it is done right."

Concept plan approval is just the first of numerous regulatory hurdles Plum Creek or developers would have to overcome before building anything. LURC would still review each subdivision and resort before issuing permits, and any development near Lily Bay would be subject to even stricter oversight.

If Plum Creek accepts the recommendations endorsed Wednesday, LURC staff will work with the company to write a final plan to be presented to the commission early next year. Opponents are widely expected to appeal the decision to Maine’s Superior Court.

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PLUM CREEK - VERMONT

Massive land tract in Northeast Kingdom to change hands. By Matt Sutkoski. Burlington Free Press, September 15, 2008

A Seattle-based timber company plans to buy a huge tract of forest land in Vermont’s Northeast Kingdom, but a conservation agreement guaranteeing public access to property will remain unchanged.

Plum Creek Timber Co. has completed a purchase and sales agreement with the current owner, Essex Timber Co., to buy the 86,212 acres that covers parts of 14 towns, said Mark Doty, of Plum Creek’s Fairfield, Maine office. The property is larger in size than Grand Isle County.

Doty and Wilhelm Merck, managing member of Essex Timber declined to reveal details of the sale pending the deal’s closing. The closing is expected later this month.

Essex Timber Co. a Massachusetts based group of investors, bought most of the 86,212 acres in 1999 for $7.5 million when Champion International paper company sold its Vermont land.

The state of Vermont and the Freeman Foundation paid $8.5 million for easements on the land that guarantee traditional uses, including logging and public access for hunting, fishing and other recreation. The conservation easement means little will change on the land with Plum Creek’s purchase, Doty said.

The Vermont Land Trust, which administers the conservation easement, will work with Plum Creek to help them familiarize themselves with the easement, said Elise Annes, Vice President for Community Relations at the land trust.

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PLUM CREEK - MAINE

Plum Creek process a dangerous precedent. By Jon Lund. Bangor Daily News, September 12, 2008

The process for consideration of Plum Creek’s Moosehead Lake development plan has gone badly astray and would set a dangerous precedent that Maine people would live with for years to come. That’s the substance of what I and seven other attorneys with decades of experience with Maine’s environmental and land use laws said in a recent letter to Maine’s Land Use Regulation Commission (LURC).

A follow-up discussion by this group of attorneys with LURC staff and consultants did nothing to allay our concerns. Rather, we remain as convinced as ever that the deal that LURC is trying to work out with Plum Creek is going in the wrong direction.

Here’s the problem: Plum Creek has proposed a very large development in one of Maine’s most special places, the Moosehead Lake region. The proposed development would have negative environmental impacts, so PlumCreek is required by statute and regulation to offset, or mitigate, those negative impacts by donating conservation lands to strike a "publicly beneficial balance."

Because the area of the proposed development has spectacular wildlife, aesthetic, recreational and natural resource values, the company has an obligation to propose significant mitigation. Plum Creek has offered as mitigation conservation easements on 91,000 acres of land where timber harvesting would be allowed, but most but not all development would be prohibited.

LURC evaluated both Plum Creek’s proposed development and their proposed conservation and concluded that the conservation side of the equation was insufficient. The "publicly beneficial balance" required to earn a permit had not been achieved. And here is where the process went off track.

Rather than require more conservation, or less development, the commission decided to consider a separate, privately-negotiated, paid-for land conservation deal between Plum Creek and The Nature Conservancy (TNC). In a set of proposed amendments to the Plum Creek plan, LURC would allow Plum Creek to claim conservation land in that deal as credit to offset the harm caused by the Moosehead Lake development plan. This is a bad idea that could haunt Maine’s land use and regulatory agencies well into the future.

TNC will pay Plum Creek $35 million for the land conservation deal, known as the Conservation Framework, near Moosehead Lake. That’s fine. Nobody objects to a privately negotiated contract to conserve land. But the TNC deal is irrelevant to Plum Creek’s application for rezoning around Moosehead Lake.

Linking the two creates the problem, because it means that Plum Creek would receive $35 million from TNC and then also receive a development permit from LURC on the basis of the same transfer of land rights. This amounts to double-dipping: Plum Creek would get two benefits for the price of one and escape the need to reduce its proposed development or increase its donated conservation.

Having served as Maine attorney general, I can anticipate just what will happen. If Plum Creek is allowed to double-dip in this fashion, then any attorney advising a future developer would be negligent if they didn’t encourage them to do the same thing. Shortchange the public with your proposed mitigation lands, negotiate a separate conservation deal with a land trust, threaten to walk from the conservation deal if you don’t get your permit, and then hope that you end up getting paid for land that you otherwise would have been required to donate as mitigation. What a deal — sell your land for cash and get mitigation benefits, too.

LURC is proposing that Plum Creek be required to complete the deal with TNC before they can receive a development permit. But unless one believes that TNC wasn’t serious about completing the transaction, this requirement would provide the public with no value that was not otherwise expected. More important, insisting on completion of the Conservation Framework does not make it any more relevant from the perspective of ensuring that Plum Creek’s Moosehead Plan meets the "publicly beneficial balance" test required by law.

The Conservation Framework is now having a prejudicial influence on the commission. Plum Creek has cleverly set this trap, and now it is up to LURC to find its way out. The proposed $35 million deal between TNC and Plum Creek cannot and should not be considered as mitigation, eligible to be balanced with the adverse development impacts from Plum Creek’s Moosehead Lake plan.

Although LURC has not made its decision, the commission’s staff and consultants seem prepared to accept this scheme. And that’s what is so unsettling to me and the seven attorneys who signed our letter to LURC.

The proper path for this proceeding would be for LURC to require that Plum Creek reduce its proposed development, preferably at an area like Lily Bay, which has received such strong opposition, and insist that Plum Creek donate additional, new conservation. That is how a publicly beneficial balance could be met.

It would be a tragedy if LURC fell for Plum Creek’s gambit. No developer should get paid for land that it should instead be required to donate as mitigation for the negative environmental impacts of a proposed development. Fortunately, it’s not too late for LURC to get back on track.

Jon Lund, of Hallowell, served eight years in the Maine Legislature and also served as Maine’s attorney general.

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Plum Creek Timber makes $783 million timber land deal. Puget Sound Business Journal, August 27, 2008

Plum Creek Timber Company Inc. said it’s making a deal with The Campbell Group LLC that will see the Seattle timber company receive $783 million after a joint venture between the two companies is formed

Plum Creek (NYSE: PCL) and Portland-based Campbell Group will create a joint venture, with Plum Creek contributing 454,000 acres of timberlands in Oklahoma, Arkansas, Mississippi, North Carolina, South Carolina and Georgia to the joint venture. The joint venture will then lend Plum Creek $783 million.

"We expect to utilize half of the proceeds from this transaction to retire existing debt. The remaining proceeds will be used for general corporate purposes, including continued repurchase of the company’s stock," said Rick Holley, Plum Creek CEO and president, in a statement.

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PLUM CREEK - MONTANA

Details on criticized Plum Creek land deal emerge By John S. Adams. Great Falls Tribune, August 10, 2008

HELENA — As conservationists and county officials await the outcome of a federal investigation into private negotiations between the Bush administration and Plum Creek Timber Co., the Great Falls Tribune has learned new details about road access agreements between the state's largest landowner and the Department of Natural Resources and Conservation.

As Plum Creek repositions itself from a timber company to a real estate corporation, it is working with the state to expand its logging road easements so that it can bring improved access and underground utilities to land that it can later subdivide into rural communities.

Some environmental watchdogs argue that the state is not doing enough to notify the public about the long-term fiscal and environmental implications of the agreements. They say the state and county governments could end up subsidizing services such as fire and police protection to far-off subdivisions at taxpayer expense.

According to DNRC director Mary Sexton, the state is in the midst of a multi-year, three-phase process of updating reciprocal access agreements with Plum Creek.

Phase I, which was completed in April 2007, upgraded Plum Creek's traditional 40-foot right-of-way deeds across state lands to 60-foot right of ways.

The agency is currently in phase II, Sexton said, whereby the state and Plum Creek are adding additional "all-lawful-purposes" rights to easements that were originally granted for natural resources uses such as logging, farming and ranching.

As part of phase III, DNRC officials are in negotiations with the Forest Service over cost-sharing agreements between the state and the Forest Service for the use and maintenance of roads that cross both state and federal lands.

According to Sexton, the changes to the easement came as a result of a new DNRC policy put in place after the 1999 Legislature passed a bill allowing the state to enter into reciprocal access agreements with landowners.

"Together (with Plum Creek) we wanted to make our access agreements more consistent, so it was a mutual effort that began in the late 1990s, although we've had access agreements with them for probably 20 or 30 years," Sexton said.

Sexton said the agreements allow the state to access isolated parcels of state land in exchange for allowing Plum Creek to access its land. In the process, she said, more state land is opened to public access.

Critics say the agreements make it possible for Plum Creek to develop isolated parcels of land, and that the DNRC has not done enough to notify residents or land planners about the negotiations. They contend that the DNRC ignored potential pitfalls of such agreements by not analyzing the likely outcome of widening the roads: more residential subdivisions in the forest at greater expense to taxpayers.

"The change of use isn't just the widening of the road. The change of use is anything goes," said Arlene Montgomery of Friends of the Wild Swan. "The state is not going to analyze the effects of each individual project beyond what happens on their land."

Critics say subdivision in the forest would harm air and water quality and wildlife habitat and dramatically increase wildfire protection costs for state and county governments, and that the state has turned a blind eye to those concerns.

Plum Creek, owns 1.2 million acres in Montana and more than 8 million acres nationwide, making it the largest private landowner in the state and the nation. In 1999 the company reorganized from a timber company to a real estate investment trust, and it is now increasingly relying on property sales to supplement the company's bottom line as timber prices fall. The company is considering selling up to 2 billion acres, though it hasn't disclosed where those lands are located.

In order to sell those lands for development, Plum Creek is seeking all-lawful-purposes rights on Forest Service road easements that were traditionally granted for timber and natural resources use.

Details of those negotiations have not been made public.

News of the negotiations between Plum Creek and the Forest Service first made headlines in April when Missoula County commissioners learned of the talks and demanded that the discussions be made public. Commissioners are concerned that the Forest Service is giving Plum Creek additional access rights that will pave the way for development deep in the woods and thereby greatly increase the burden on county government to maintain roads and protect homes from fire.

After hearing commissioners' concerns, Sen. Jon Tester asked the Government Accountability Office to investigate the matter. That investigation began last week and is still pending.

Sexton said that, unlike the Forest Service negotiations, the state's process of upgrading forest road easements has been an open and public process subject to the state's bedrock environmental law, the Montana Environmental Policy Act. That act requires an environmental review for any action that "may impact the human environment" and provides opportunities for public involvement. Also, the state Land Board — made up of the state's five top elected officials — must sign off on all state easements.

"We followed our process; it's got a two-step public process," Sexton said, noting that public scoping and environmental assessments were done in the late 1990s and early part of the 2000s on all 37 easements that were restated.

Montgomery said that for a program that deals with Plum Creek on hot-button issues like backcountry development, a more significant public process ought to be in place.

"I think people should be aware of it, and I think for the most part they probably are not," Montgomery said. "What newspaper do they notice it in? I've had them put notices in the Lake County Leader, but they don't deliver the Leader in this part of the county. Maybe people who (live near the affected area) are sent letters, but do other people know that this is going on around the state?"

Anne Hedges studies state land issues for the Montana Environmental Information Center, a Helena-based environmental watchdog group. She said the state didn't adequately notify the public that the environmental assessments that originally applied to 40-foot easements were used to upgrade the easements to 60-feet. She said at the time of the proposed upgrade the agency should have conducted a supplemental environmental analysis and notified the public again in 2006 or 2007.

Hedges said, "Clearly something changed, and now they're acting like this is just an administrative matter, that they're just making this consistent with their policies. This is absolutely not an administrative matter."

Sexton said the easements were originally scoped for both 40-foot and 60-foot right-of-ways, though the agency opted to go with 40-foot easements at the time. Sexton said no new environmental assessments were completed in 2006 when the agency was modifying the easement from 40-feet to 60-feet because the original assessments — some more than 10 years old — were still adequate.

Environmentalists contend that the DNRC is ignoring the potential impact that modifying the easements to 60-foot right-of-ways could have on state lands and county governments.

While the original right-of-way deeds allowed Plum Creek to use state-owned forest roads "for timber, land and resource management or utilization" and "for all lawful purposes," they were for 40-foot-wide easements. Historically, those roads were seasonal and used for activities such as logging, farming, ranching and mining.

But the new deeds allow Plum Creek to widen the roads to 60 feet and use them for virtually anything, including "the right to install and maintain utilities within the right-of-way."

That gives Plum Creek the legal authority they need to develop those lands, and the state did not adequately consider that possibility or analyze the potential environmental impact, environmentalists argue.

"There are at least three places in the (environmental assessment) where I think they could have analyzed the impact of subdivisions, and they didn't," said Bethanie Walder, executive director of WildlandsCPR, a Missoula-based environmental group that works on forest road issues.

Walder pointed out that the checklist the agency used to analyze the environmental impact asks questions about the potential effect on air and water quality. It also asks about demands on natural resources and government services, such as fire and police protection.

"They argue that there will be no impacts when there will clearly be impacts to air, water and land if they build subdivisions there," Walder said. "They say the project as proposed will have few if any adverse impacts to wildlife. But again, they know this project will involve subdivisions, which could have significant impacts on wildlife."

Sexton said the agency isn't required to analyze off-site effects under MEPA.

A provision of the 1999 reciprocal access law states that "the department is not required to analyze or consider the potential impacts of activities that may occur on private or federal lands in conjunction with or as a result of granting access."

"We are following what is our requirement under MEPA and we have not been required to scope ... for whatever the private entity or the federal entity may be doing on their property," Sexton said.

But Hedges said that the DNRC has known for years that Plum Creek wanted to upgrade the roads was so that it could legally subdivide its land, and the agency should have taken that into account.

For example, according to the 1999 environmental assessment for the McGregor Lake Reciprocal Access Agreement in Flathead County, the agency stated that the reason for granting the 60-foot right-of-way was "because (Plum Creek) plans to sell their lands that are adjacent to McGregor Lake," and, "if this land were to be developed in any way, county regulations would require a 60-foot-wide right-of-way."

The assessment also says, "Plum Creek has stated their intent to sell all of their lands that front on McGregor Lake," and that, "it is highly probable that the lands they sell would ultimately be subdivided into some type of home site or recreational lots."

Hedges said the agency had an ethical obligation to inform the public and the Land Board that the result of widening the roads would probably mean the development of residential subdivisions.

"Never once did they tell the Land Board why this was important. They just said it was to make it consistent with DNRC policies and goals," Hedges said. "I do not believe this Land Board was properly informed about the impacts of the decision it was making when it made that decision. It was made to sound like it was a clerical error that was being fixed instead of what it really is, which is allowing Plum Creek to open up countless acres to subdivisions."

Residential subdivisions had nothing to do with widening the road, Sexton said, because all of the state's reciprocal access agreements are being standardized to 60-foot widths.

While the exact details of the negotiations between the Forest Service and Plum Creek are unknown, a letter sent by Plum Creek CEO Rick Holley to Tester indicates that the Forest Service easements may contain more restrictive language than the state easements when it comes to wildfire issues.

Holley sent the letter to Tester in April after Tester criticized the company's "closed-door negotiations" with the Forest Service. Holley stated that Plum Creek consulted officials with the Forest Service's Wildland Urban Interface Program and the National Fire Protection Alliance on fire-protection measures. As a result, Holley said, the Forest Service easements impose covenants regarding compliance with firewise procedures. In the letter, Holley insisted that the Forest Service "will have no increased financial obligation ... to provide fire protection."

Observers point out that no such language exists in the new easements granted to Plum Creek by the state. They said that means the costs of protecting new backcountry homes from wildfire could be shifted to state and local governments.

"On the state renegotiations, the state is giving away development rights without analyzing development costs, firefighting costs, and other environmental costs," Walder said. "If there are going to be subdivisions, there will be increased demand for services, especially fire protection. This environmental assessment has not analyzed those costs at all."

But Sexton said the covenants Holley refers to are difficult to enforce.

"If you look at those firewise so-called covenants, they have no enforcement ability, they have no authority, and again, for our legal authority, we are concerned on activities on state land," Sexton said. "Adding those firewise statements were certainly a nice thing to do. They have no authority, have no enforcement. That does come down to local jurisdictions."

Sexton said that, in the end, the state followed through on all of the necessary laws and required public processes when completing these easements.

"We have an EA process; we scoped through the EA process; it goes to the Land Board; it's fully noticed at the Land Board; those meetings are public; the agenda's public; the discussions are public," she said.

Reach Tribune Capitol Bureau Chief John S. Adams at 442-9493, or jadams@greatfallstribune.com

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WEYERHAEUSER

Death by a thousand cuts. By Scott St. Clair. Crosscut Seattle, August 8, 2008

Pacific Northwest corporate history began with timber, and with the demise of Weyerhaeuser it's a fast-fading cultural heritage.

"Weyerhaeuser cuts take a painful toll," screamed the banner headline this week in The Seattle Times. That splash was accompanied by a large photo of a now-former employee of what used to be a forest products giant loading boxes of personal items into his car after receiving his pink slip.

While nothing can compare to the pain of getting fired from a job — in my years as an executive search consultant, I called it the "Royal Order of the Boot" — there is yet pain in watching the company's current machinations. Like the fellow in the photograph, one of 1,500 in this current go around, I'm also a member of the Weyerhaeuser chapter of the Royal Order.

In 1981, I was called into my boss's office at the company's massive Longview, Wash., manufacturing complex for a little talking-to. It was about my attitude and all the trouble I seemed to keep causing with the unions representing company employees.

"Kid, you're nice, but not here," my boss said. "Frankly, you scare the hell out of us." Harshly put, perhaps, but the labor relations office where I worked wasn't known for compassion. Nor, in my then relative youth, did I particularly care, which was my bad, not the company's. It was then I realized that I wasn't cut out to be a corporate guy.

Since then, it's been onward and upward — well, sideways at least. But that's another story.

This story, and it's a sad one, is about watching one more giant figure of the Pacific Northwest shrink into a shadow of its former self.

Decades before there was a Microsoft or a Starbucks, Boeing and Weyerhaeuser represented the business of Seattle and Washington. When Boeing beat feet to Chicago a few years ago, the big "W" was left as perhaps the only game in metro Puget Sound with deep and multi-generational roots — not just fathers and sons, but grand and great grandfathers who had handed jobs down from one to the other.

Founded in 1900 by German immigrant Friedrich Weyerhaeuser, the company grew from holdings of nearly a million acres of Washington Douglas fir timberlands to become an international player in solid wood production, the pulp and paper industry, real estate, rail and freighter transportation (two company vessels were torpedoed and sunk during World War II), and a myriad of industries.

Nothing beats the romance of the woods, and Weyerhaeuser was a huge part of that. Grainy photos of loggers with two-man crosscut saws standing next to old growth timber can be seen in every museum in town. The colorful and descriptive nomenclature of logging resonates with unique symbolism: Bull of the woods, choker setter, whistlepunk, and a term first coined in Seattle, but soon to be part of the national vocabulary, Skid Row or Skid Road.

Somehow, "techie" or "barista" lack the same cultural or emotional impact. And I suspect that neither wear black woolen long johns that go days or even weeks without a wash.

Trees growing on the land and the products made from them are, as much as anything can be, what the Bible calls in Psalm 24 "the fullness of the earth." For more than 100 years out of that fullness, Weyerhaeuser and kindred forest products companies literally built scores of communities, paid for schools from the proceeds of logging on state-owned land, and created thousands of good paying jobs. They left an indelible cultural stamp on the Pacific Northwest, affecting even those who don't know the difference between a couch (pronounced "cooch") from a dandy on a papermachine, or what it means to work the hoot-owl shift.

Only in a company like Weyerhaeuser could you see executives in $1,000 suits all sitting around a conference table spitting snoose into Styrofoam cups. Old habits born in the woods don't die hard — they don't die at all.

Over the years, Weyerhaeuser was in the fish-farming and grass-seed businesses, manufactured private label baby diapers and adult incontinent products, and became a major national player in real estate, home construction, and residential mortgages. Of these, only its interests in Puget Sound-area residential developer Quadrant remain.

During the late 1980s, throughout the 1990s, and into the new millennium, Weyerhaeuser, like its competitors Georgia-Pacific (once Portland-based, now headquartered in Atlanta) and International Paper, had to make a choice: aggressively grow or be taken over by an aggressively growing company. By choosing the former, Weyerhaeuser embarked upon an acquisition and construction program that was impressive by any standard.

The company acquired familiar names such as Vancouver, B.C.-based MacMillan Bloedel and Portland-based Willamette Industries, two Northwest iconic companies in their own right. It also built new facilities such as a then state-of-the art paper mill in Cedar Rapids, Iowa, that, for a time, operated as a quasi-independent entity called Cedar River Paper.

The Cedar River operation was looked at as a model for the future. Manufacturing packaging products out of recycled paper, it featured a mill design and concept — referred to in the industry as a "mini-mill" — tailor made to a raw material not of trees but trash. The mill's paper machine was precision crafted to turn out exactly the amount of product needed, not an ounce more nor an ounce less. Minimal waste, the least amount of energy necessary to get the job done, and a product that was the product of recycling — the only thing lacking were Birkenstock safety shoes.

How green was that valley?

Small, non-union, and team concept-based, it cherry-picked the industry for the best and brightest technical and operations people, salaried and hourly, it could find.

Now, once-crown jewel Cedar River is just another paper mill, owned not by Weyerhaeuser but by industry behemoth International Paper.

And the properties acquired from MacBlo, Willamette, and others? In large measure, gone, sold off, or shut down, never to be seen again.

Starting a few years ago, Weyerhaeuser began spinning off assets. Always committed to focusing only on businesses in which it could be a major player, it now shifted to getting out of many of those businesses altogether. Its printing and writing-grade paper operations became, in a complex trade, part of Canadian-based Domtar Industries.

And just last week, in perhaps the biggest blow of all, Weyerhaeuser closed on the sale of its packaging business to IP. Some 114 facilities, including paper mills, carton plants, and recycling centers, were sold for $6 billion. Besides Cedar River, included among them was another mill Weyerhaeuser built from scratch decades ago, a large complex in Valliant, Okla. Was that part of the Sonics deal?

It's a little like selling off members of your own family. And that ticket to out here just got voided.

With the I-P sale, of the company's approximately 38,000 world-wide employees, some 14,000 or 37 percent of them are now gone in one fell swoop. This cut was used in large measure to justify the cuts at Weyerhaeuser's Federal Way, Wash., headquarters — the hanging garden of Babylon you see driving southbound on Interstate 5 — and other company locations.

What's left of the company represents more of what old Friedrich Weyerhaeuser founded over a century ago: land and trees.

Wall Street effectively made the decision that it will no longer measure the value of Weyerhaeuser by what it makes but, rather, by what it owns. After all, God's not making any more land, and those trees do take a while to grow.

Still, the fact decisions now are made by MBAs who've never set foot off a carpet and on to the forest duff — not by forestry or paper science and engineering grads or old bulls from the woods or mills, most of whom are missing one or more fingers popped off in papermachine nips or sawmill accidents — is sad.

Of course, it's a business we're talking about, and businesses do need to make money to survive. But Weyerhaeuser is also a part of the culture.

As a Weyerhaeuser alum, that culture means a lot to me. I mark the changes both for what is lost in terms of necessary connections to our roots but also what they mean for today and tomorrow. It's no secret that additional change is in the offing at Weyerhaeuser, so the only question is, what's next to go? I sure hope it's not the name — it took me a long time to learn to spell it correctly.

I still have my Weyerhaeuser hardhat and the battered old briefcase all salaried employees used to receive when they were hired. In the garage, up with the transmission fluid and motor oil, there's an old Folgers' can filled with Mount St. Helens ash dumped on my first-ever brand new car down in Longview during the second eruption of the volcano in 1980. And rolled up somewhere are schematic drawings of Weyerhaeuser's Longview complex, purportedly once the largest manufacturing facility in the U.S. in terms of surface area.

So it's not like I don't have some souvenirs and mementos. But there are those who have nothing, or don't even realize the significance of what seems like the passing of the Weyerhaeuser Co. from the giant it was to the vestige it is now. Too bad — it's their loss too.

Maybe it's not a literal death, but wholesale change like this from what once was to what is now, in John Donne's words, "diminishes me."

Another bit of why this place was special is gone. Bummer!

Scott St. Clair is a freelance writer and activist who plays his bagpipe and looks at the world from his home in Kirkland, Wash. He recently became affiliated with the Evergreen Freedom Foundation as an investigative journalist, which frees him to become a former executive search consultant - even in late middle-age, we get second chances. He can be reached at scottstc@comcast.net.

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Weyerhaeuser cutting 1,500 corporate jobs, posts third consecutive quarterly loss.
By Drew DeSilver. Seattle Times, August 5, 2008

Struggling wood-products giant Weyerhaeuser said this morning it will cut 1,500 jobs at its Federal Way headquarters, as it moves toward being a smaller, more focused — and eventually, it hopes, more profitable — company.

The cuts will take place between now and the end of 2009, chief executive Dan Fulton said in a conference call with analysts.

His comments came as Weyerhaeuser reported a $96 million net loss for the second quarter, or 45 cents per share — wider than the Wall Street consensus of 23 cents per share.

About 2,500 people work at Weyerhaeuser's sleek, tree-ringed headquarters off I-5.

The U.S. housing slump has hit the company hard, both in its lumber and other building materials business and in its real-estate development segment. Weyerhaeuser took a $311 million pretax charge in the quarter to write down the value of its homebuilding and land-related charges, on top of a $56 million charge in the first quarter.

However, Fulton indicated that he plans to hold onto both those segments in anticipation of an eventual recovery, though he said one likely won't begin until late 2009 at the earliest.

Instead, Weyerhaeuser has spent the past two years unloading businesses deemed "noncore." Just Monday it closed the $6 billion sale of its containerboard and packaging business to International Paper; after taxes, that sale should generate proceeds of $4 billion to $4.5 billion, much of which will go to pay down Weyerhaeuser's $7 billion-plus in debt.

The company sold off its Australian operations last month, and has put its shipping and rail lines on the market. It also dissolved its Uruguayan joint venture, leading to a one-time after-tax gain of $101 million.

But Fulton characterized those sales, and other moves that might be down the road, as "fine-tuning the portfolio," and indicated that the company's plan now is to get as much out of its current businesses as possible.

He also hinted that the eventual conversion of Weyerhaeuser into a real estate investment trust, while not imminent, was still on the table. He told analysts on the conference call that, with the company smaller and more focused on its land-based businesses, it could choose "the right structure, for the right reasons, at the right time."

One bright spot in today's report was the pulp and liquid packaging board business, which saw higher market prices. Although those were more than offset by higher maintenance expenses and shipping and energy costs, the completion of most of the planned maintenance closures should mean "significantly higher" earnings from that segment going forward.

Weyerhaeuser also disclosed that it had earned $22 million in the first half of the year from leases and royalties on its mineral rights — largely due to oil and natural gas exploration on a tract of land it owns in Louisiana.

Weyerhaeuser shares closed down 60 cents, or 1.1 percent, at $53.96 today.

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WEYERHAEUSER

Weyerhaeuser under pressure for more change:
Weyerhaeuser faces intensifying pressure to shed more businesses and become a pared-down cash cow.
By Kyung M. Song. Seattle Times, August 3, 2008

In less than two years, Weyerhaeuser has jettisoned under pressure more than $7 billion worth of businesses — vanished revenues that taken together would rank as Washington's 9th largest corporation, just behind Nordstrom.

But Weyerhaeuser's mammoth contraction is hardly over. Wall Street is demanding changes that could turn the Federal Way timber giant from a diversified manufacturer into a pared-down cash cow for investors hunting for more lucrative returns on timber and real-estate assets.

That would mark a radical turnabout for a 108-year-old company that historically has embraced risks about as quickly as a Douglas fir grows. And it would emphatically repudiate Weyerhaeuser's expansion strategy, capped by its 2002 takeover of rival Willamette Industries after a lengthy hostile pursuit.

The clamor for change from big investors could intensify Tuesday, when Weyerhaeuser is expected to report its third straight quarterly loss. The company likely will finish the year without a profit for the first time since 1991.

Already, Chief Executive Dan Fulton has warned that the downsized Weyerhaeuser still has surplus workers and that it will require "action of a magnitude we've never seen before."

Weyerhaeuser's unprecedented retrenchment amid a slumping economy raises the specter of further drastic changes at yet another major employer in the Northwest. Weyerhaeuser is one of the region's oldest and most iconic corporations, a global player with nearly 38,000 employees, including 7,000 in Washington.

The pace of home construction around the nation has fallen by half since 2006, a staggering falloff unseen in generations. That has hit hard both Weyerhaeuser's wood-products business as well as its real-estate operation, which includes Bellevue-based Quadrant Homes, Washington's largest homebuilder.

"I see a shrinking company that is a fragment of itself," said Leonard Guss, a veteran forest-products industry analyst in Woodinville who headed Weyerhaeuser's corporate marketing research in the late 1960s. "They are self-destructing."

Others disagree. Joshua Zaret, a forest- and paper-industry analyst with Longbow Research in New York, said Weyerhaeuser is undergoing a necessary reinvention.

The basic problem, as Zaret sees it, is that Weyerhaeuser's structure has fallen out of favor on Wall Street. Weyerhaeuser is among the disappearing ranks of vertically integrated timber behemoths; it is involved in virtually every step in the life cycle of a tree, from planting the seedlings to owning the railroads over which its products journey to customers.

Weyerhaeuser largely skipped the transformation that swept through the timber industry during the past decade. Competitors such as International Paper and Louisiana-Pacific sold off their land holdings to focus on manufacturing timber products from purchased logs.

Other timberland owners, including Seattle's Plum Creek, converted to real-estate investment trusts (REIT, pronounced "reet"), which do not have to pay corporate taxes and which are favored by pension funds and other investors looking for reliable returns.

"The last timber company of any meaningful size is Weyerhaeuser," Zaret said. "There is more institutional money chasing limited resources. They see timberlands as great assets."

Weyerhaeuser's management has fended off impatient investors for now, precluding a REIT conversion at least until 2010. Shares in the company have been pummeled this year, falling from $78 apiece in December to $55.78 Friday, above its recent $47 low.

Some analysts say only the hope of an eventual conversion has kept the stock from sliding further.

Weyerhaeuser spokesman Frank Mendizabal said a conversion would be a complex undertaking, and it isn't yet clear "how, whether and if" it would be good for the company.

Under federal tax laws, a REIT must generate almost all its income from real-estate-related businesses, including timberlands, and is required to distribute at least 90 percent of annual profits to shareholders. (See related story above.)

Switching from a corporation to a REIT would be a seismic transformation for any company. But for Weyerhaeuser — whose philosophy of long-term outlook has been as rooted as its trees — becoming a REIT would require a profound cultural shift, too.

That prospect dismays Thomas Power, emeritus professor of economics at the University of Montana. Power worries that as a REIT, Weyerhaeuser would face greater pressure to increase logging or otherwise extract quicker payoffs from its vast timberlands.

"Weyerhaeuser was satisfied with making returns over generations. But Wall Street won't put up with it," Power said. "It is one of the last of the old-fashioned holdouts."

In Montana, Plum Creek, the Seattle-based timber REIT, is about to forge ahead with a controversial plan to build a subdivision on a swath of mountain forestland. Plum Creek, the nation's largest private landowner, has identified a quarter of its 8 million acres of U.S. timberlands as more valuable if sold for development, recreation or other uses.

Because REITs must generate cash for investors, they are more likely than traditional timber corporations to sell land that won't produce near-term income, said Joe Taggart, a director with LandVest, a real-estate and timberland-consulting firm based in Boston.

Taggart said that all landowners, regardless of their makeup, face pressure to extract the highest prices out of their holdings. But corporations arguably can withstand it better, Taggart said, especially those with diversified businesses that can buffer them from cash-flow demands.

"If there is value to be tapped, it will be tapped," Taggart said. Still, "Weyerhaeuser can hold on for longer periods."

Even without a REIT conversion, Weyerhaeuser is already changing vastly. By fall, it will have shed at least 24,000 employees in two years by unloading a host of businesses. It spun off its fine-paper division last year, shuttered unproductive mills and agreed to sell its containerboard, packaging and recycling unit for $6 billion to International Paper.

Also up for sale is its four-vessel Westwood Shipping Line and four small railroads used to deliver newsprint, lumber and other Weyerhaeuser products as well as other companies' cargo.

Yet at the same time, Weyerhaeuser is embarking on ventures that would seem to fall decidedly outside the realm of a REIT.

For instance, it agreed to create a joint company with Chevron in February to develop biofuels from nonfood plants. More recently, Weyerhaeuser said it will work with a group of Austrian companies to create a new kind of nonwoven fabric from wood fiber.

It all adds up to uncertainty for Weyerhaeuser's remaining workers, including 2,500 at its Federal Way headquarters. The company has adopted a corporate mantra: "Trees define us." But no one yet seems sure of the exact definition.

Guss, the timber analyst and former Weyerhaeuser employee, is vexed that the implosion in the real-estate market seems to have shaken the company's belief in its core structure.

"Housing cycles are absolutely the norm in the U.S.," he said. "Weyerhaeuser survived each and every one of them."

Guss fears that selling off pieces of Weyerhaeuser is nothing less than selling off a century's worth of heritage.

Weyerhaeuser has always been all about the trees. But that world once stretched far beyond the edges of Weyerhaeuser forests, into businesses from mortgage banks to shipping lines.

Weyerhaeuser was "a company that was a grand example in many ways," he said. "But eventually, they will become nothing but timber sellers."

GROWING, SHRINKING

Expansion

1999:

Buys MacMillan Bloedel for $2.8 billion in stock, acquiring 6.9 million acres of owned and licensed timber, and 72 facilities.

2000:

Buys TJ International for $874 million in cash.

2001:

Buys 68,000 acres of timber in Uruguay.

2002:

Buys Williamette Industries for $8.1 billion in cash, getting 1.7 million acres of U.S. timberlands and 106 facilities.

During this period Weyerhaeuser also sold more than 829,000 acres of U.S. timberlands and its U.S composite panels business.

Contraction

2005:

Sells five softwood mills in British Columbia, 3.8 million acres of owned or licensed timberlands in Canada

2006:

Plans spinoff of fine-paper division in $3.3 billion stock deal to combine with Domtar. Includes eight fine-paper mills, 16 paper-converting mills and five other facilities.

Closes five box plants, three plywood facilities and a dozen other manufacturing plants.

2007:

Sells all 16 building-materials distribution centers in Canada, another 10 in U.S. to unidentified buyer; will keep another 40.

Sells stakes in New Zealand JV and New Zealand management company.

2008:

Closes several Canadian mills and sells timber harvesting rights to West Fraser Timber.

Sells 114 containerboard, packaging and recycling operations to International Paper for $6 billion.

Plans to sell Weyerhaeuser Australia and related operations to Carter Holt Harvey.

Plans to sell Westwood Shipping Line and four regional railroads.

During this period Weyerhaeuser also acquired homebuilder Maracay Homes, of Arizona; purchased 78,000 acres and opened a plywood mill in Uruguay; and launched a biofuels joint venture with Chevron.

Source: Weyerhaeuser; Seattle Times

WEYERHAEUSER AT A GLANCE

Employees

Worldwide: 37,900, in 13 countries

Washington state: 7,000

Federal Way headquarters: 2,500

Worldwide total includes 14,000 at the containerboard, packaging and recycling business, whose sale will close this fall.

Lines of business

Grows and harvests trees: $2.24 billion in sales (2007)

Manufactures and sells forest products: $13.48 billion

Builds homes and finances real-estate projects: $2.36 billion

Segment totals include $2.27 billion in intra-company sales and discontinued operations.

Source: Company reports

###

PLUM CREEK

REIT generated growth for Plum Creek. By Eric Pryne. Seattle Times, August 3, 2008

Seattle-based Plum Creek Timber restructured itself as a real-estate investment trust in 1999. Since then it has become a giant of the forest.

President and CEO Rick Holley says that growth wouldn't have happened if Plum Creek hadn't become a REIT.

The company now is the country's largest private landowner, with 8 million acres of timberland in 18 states. Since 1999 its revenues and assets have more than tripled. Its stock price has climbed 56 percent since it first announced its planned REIT conversion 10 years ago, far outpacing the major indexes.

Plum Creek's profits have shrunk lately, a consequence of the housing downturn. Still, in a bear market, its share price is up nearly 6 percent so far this year.

No wonder Wall Street is pressuring slip-sliding Weyerhaeuser to follow Plum Creek into REIT-dom.

REITs are companies that own, and usually manage, income-producing real-estate. Congress authorized them in 1960 to open commercial real-estate investing to those without the wherewithal to buy a big property by themselves or invest in a limited partnership.

REITS have restrictions. At least 75 percent of their assets must be in real estate, and that property must produce at least 75 percent of their gross income. They must pay at least 90 percent of their profits to shareholders as dividends.

But REITs can deduct those dividends from corporate taxable income. That means they pay little or no tax, which in turn means more money to reinvest, or return to shareholders. And REITs generally pay sizable dividends, making them attractive to investors.

Timber REITs have another advantage. While the bulk of most other REITs' dividends is taxed as ordinary income, timber REITs' dividends qualify for the lower capital-gains rate.

"The tax implications are pretty big, and pretty appealing," said Daniel Rohr, an analyst at research firm Morningstar who covers Plum Creek and other timber companies.

Most of the 200 or so REITs traded on the major stock exchanges own apartments or shopping malls or office buildings. Timber REITs are rare: There are just three.

Plum Creek was the first. It had been organized as an publicly traded "master limited partnership" (MLP), which, like a REIT, is largely exempt from corporate income taxes. But big, tax-exempt institutional investors couldn't own Plum Creek then; for them, the MLP's distributions would have been taxable income.

In the 1990s, Holley said, Plum Creek concluded that acquiring more timberland was key to the company's growth. To do that it needed to generate more capital. To generate more capital it needed those big institutional investors.

The REIT structure appealed because REIT dividends don't trigger the adverse tax consequences for institutional investors that MLP distributions do. But the concept of a timber REIT was so novel at the time that, before it converted, Plum Creek obtained a ruling from the Internal Revenue Service that timber would qualify as a real-estate asset for REIT purposes.

The REIT conversion helped Plum Creek by focusing Wall Street's attention on the company's millions of acres of trees — "an asset that gets more valuable over the long run even if the entire management team takes a vacation and the economy takes a flier," said Brooks Mendell of Forisk Consulting, a timber-economics firm in Athens, Ga.

Wall Street analysts like timber, he said, but it tends to be undervalued when they review the assets of a vertically integrated timber company, including high-cost, low-margin mills.

"It gets mixed up like a big salad or a big stew," Mendell said. Plum Creek's REIT conversion made the value of its timberlands more transparent.

In 2001 Plum Creek merged with The Timber Co., a Georgia-Pacific spinoff, more than doubling its timberland holdings to 7.8 million acres. Holley calls the transaction "the transforming event in our company's history ... If we hadn't converted to a REIT, we could never have done that merger."

Most of The Timber Co.'s owners were institutional investors. They couldn't have owned units in an MLP.

The Timber Co. merger put Plum Creek in the big leagues, says D.A. Davidson analyst Steve Chercover: "It went from being a pipsqueak that no one paid attention to, to being a component of the S&P 500 that people can't ignore."

Plum Creek paid for the transaction by issuing 113 million shares of new stock to Timber Co. shareholders. It also has borrowed to buy other timberlands; Holley said the company's size and health — both indirect consequences of the REIT conversion — have helped it get that money on more favorable terms.

Plum Creek owns taxable subsidiaries that engage in lines of business off-limits to the REIT itself: cutting trees, selling logs, manufacturing lumber and plywood, and developing some real estate.

But, in keeping with REIT restrictions, those subsidiaries account for less than 20 percent of the parent company's assets. And Plum Creek's overall tax bill is negligible.

Institutional investors now own 65 percent of its shares.

There are some important differences between Weyerhaeuser's situation today and Plum Creek's at the time of its REIT conversion. Weyerhaeuser, structured as a conventional corporation, has no barriers to institutional investors — they own more than 80 percent of the company.

And Weyerhaeuser's mills, real-estate arm and other nontimberland segments account for a much larger share of the company's assets than was the case with Plum Creek in 1999.

###

PLUM CREEK - MAINE

Plum Creek gives some ground, but not Lily Bay. By John Richardson, Portland Press Herald, July 15, 2008

The company agrees to shrink the development zone there but still insists on 404 building lots.

Plum Creek Timber Co. has agreed to scale back some of its proposed development zones around Moosehead Lake, but is holding its ground on plans to put 404 homes and resort units next to Lily Bay.

The Maine Land Use Regulation Commission had recommended that the company phase in construction on Lily Bay peninsula to make sure the activity and traffic do not harm Canada lynx or other wildlife in the area.

Conservation groups, meanwhile, have appealed for little or no development there because of the area's value for wildlife and remote recreation. The proposed development is across a cove from Lily Bay State Park.

But in a new round of filings on its historic development plans, the company made clear that the resort and homes at Lily Bay are critical to the overall plan and that even a phased-in approach is "economically unworkable."

More than three years after the landowner first unveiled the largest subdivision proposal in Maine history, the project appears to be heading for a final rezoning decision later this year. Plum Creek, several interest groups and about 1,500 individuals filed written comments before the deadline Friday, and the state's land use commission is expected to meet in September to review the feedback and decide the next move.

Plum Creek wants the commission to rezone forestlands scattered around the lake to make room for 975 house lots and two resorts. The resorts could include as many as 1,050 units, ranging from single-family homes to hotel rooms.

The plan also includes more than 400,000 acres of land to be conserved through sales and easements that limit future development.

The latest volley of comments focuses on a list of recommendations from the land use commission to reduce the project's impacts on the region's character and wildlife, two of the top concerns raised by Mainers during public hearings statewide.

Plum Creek submitted an extensive response Friday and agreed to go along with most of the changes.

It said it will remove proposed development from the north shore of Long Pond, although the home lots would be moved elsewhere.

It agreed to accelerate the sale of conservation easements to permanently protect more than 300,000 acres of working forest as a way of balancing out the impact of the plan. It also said it would reduce the area of the proposed Lily Bay resort by 2,600 acres. The land use commission recommended a reduction of 2,997 acres.

But the company also said there were some things it could not, or would not, change.

Luke Muzzy, the project manager, said Monday that Plum Creek needs a minimum of 1,800 acres of development area near Lily Bay, and it would need assurance upfront that all 404 proposed units can be built.

"We need to get predictability that we can do the 404 units, because you'd still have to build the infrastructure as though it were 404 units," he said.

The company argued in its filing that the proposed amount of development there won't hurt the lynx population on a regional level.

And, instead of studying impacts on lynx halfway through the development there, Plum Creek is proposing a longer-term monitoring program and, if necessary, lynx conservation projects.

"We just feel that we can adequately study for them and mitigate" any impacts, Muzzy said.

The development of Lily Bay has been a concern of conservation groups statewide. Groups such as the Appalachian Mountain Club have called for reducing the development there, while the Natural Resources Council of Maine and Maine Audubon have appealed to eliminate it entirely, even if it means opening up the possibility for future development elsewhere in the region.

Jim Glavine, president of the Moosehead Region Futures Committee, said Plum Creek's entire project is still too large and should be scaled back in such places as Brassua Lake and Indian Pond.

"Plum Creek has never been willing to reduce the number of their development lots," he said. "There's no demonstration that the area needs that many."

Lily Bay is a special concern because it is an important habitat area for Canada lynx, a species classified as threatened by the federal government.

"Having a resort there sets a dangerous precedent," Glavine said.

RECOMMENDATIONS

Plum Creek Timber Co. accepted these recommended changes to its Moosehead Lake region development plan:

Eliminate proposed development on the north shore of Long Pond and move half of the 110 house lots elsewhere.

Complete private land conservation agreements covering roughly 300,000 acres within 45 days of final state approval of the plan.

Remove a number of wetlands, wildlife habitat areas and one important view shed from development zones.

Remove nearly 2,600 acres from the 4,358-acre development zone on Lily Bay, although the Maine Land Use Regulation Commission staff recommended a 2,997-acre reduction.

The Company Did Not accept these recommendations:

Move forward with the Lily Bay resort and subdivision in two phases to make sure the activity and traffic do not harm Canada lynx.

Transfer primary enforcement of private conservation easements to the state.

Set tighter controls on water and gravel extraction, as well as the development of wind farms, in the conservation areas.

DISCLOSURE

Plum Creek's president and chief executive officer, Rick Holley, serves on the boards of directors of two companies affiliated with the Portland Press Herald/Maine Sunday Telegram: the Blethen Corp. and The Seattle Times Co.

Blethen Corp. is the majority owner of The Seattle Times Co., which consists of The Seattle Times newspaper, three other Washington newspapers and Blethen Maine Newspapers. Holley joined the Blethen Corp. board of directors in April 2006 and joined The Seattle Times Co. board in January 2007.

Blethen Maine Newspapers includes the Press Herald/Telegram, the Kennebec Journal, the Morning Sentinel and the Coastal Journal. It has a separate board of directors, and Holley does not serve on that board.

Sources: The Seattle Times Co., Plum Creek Timber Co. and the state of Washington's Office of the Secretary of State

### 

PLUM CREEK - MAINE

Moosehead's 'natural character' ignored. By Jon Luoma. Portland Press Herald, July 10, 2008

Regulators listen to hired planners and pay little heed to citizen critics of Plum Creek's sprawling project.

May, I sat in an Augusta conference room and listened as Maine's Land Use Regulation commissioners questioned their hired consultants on their recommendations for Plum Creek's Moosehead Lake area concept plan. It was a dismaying experience.

The two consultants (professional planners hired by LURC with money provided by Plum Creek) had a detailed list of recommended changes to the plan.

But they did not question the scope of proposed development: more than 2,000 residential and resort "units" and 400 units of that development on Lily Bay across from Lily Bay State Park. As conservation to "balance" all that development, land would be bought from Plum Creek (potentially with public money), rather than donated.

The consultants made it clear up front that they wanted "objective criteria," or, as they said, appropriate "metrics," to evaluate Plum Creek's plan for 500,000 acres under LURC jurisdiction. They wanted to rule out "subjective" or "emotional" considerations. This is no doubt why the all-important "natural character" values were absent from the May discussion.

The consultants, in effect, belittled these values -- and all who brought them up -- poisoning them as respectable topics for LURC consideration. But although there are fewer "metrics" for measuring character, it is still meaningful, and it has effects in the "real" world.

The commissioners themselves seemed to buy this approach. They praised the consultants and their work. They limited most questions to the nuts and bolts: subdivision layout, siding materials, dock placement, worker housing. Focusing on these worthwhile but secondary details let everyone avoid the larger, and controversial, "character" aspects.

LURC commissioners are citizen volunteers, but they should know better. They shouldn't hide behind their consultants, however well-qualified. All along, the greatest public concerns have revolved around exactly the area's "natural character" -- not easily reduced to numbers and statistics -- and the immense effects this immense development would have on it.

LURC's own Comprehensive Plan calls these aspects a major -- perhaps the major -- public value LURC oversees and protects: "Remoteness and the relative absence of development are perhaps the most distinctive of the jurisdiction's principal values due mainly to their increasing rarity in the Eastern United States."

Mainers have a strong attachment to the expansive, rustic and wild character of the Moosehead region, and rightly so. This attachment is partly emotional and subjective, but that is appropriate and justified: It measures the depth of public feeling and affection.

Several thousand Mainers testified eloquently at LURC hearings or wrote heartfelt letters, describing the importance of Moosehead Lake's natural character to them. If the decision in the end was going to come down to hired planners' "objective" considerations, then the hearings were just a cruel waste of citizens' time.

It appears the experts understand the "costs" but not the "values." The public's concerns may sometimes seem vague; they may have intuitive or spiritual dimensions; they may even be difficult to speak of at all. Likewise, "Life, liberty, and the pursuit of happiness" are unquantifiable. But they're real nonetheless -- they can be lost and gained -- and the words have inspired American citizens (and many others) for 200 years.

The large-scale, wildland context of the LURC jurisdiction has largely vanished from the Eastern United States. In Maine, we're lucky to have one of the few remaining large pieces.

However you measure it -- or even if you don't -- that wildland character will leach away, will disappear here too, proportionate to the number of golf courses, resorts, subdivisions, roads, marinas, boutiques and mini-malls we allow within it. How much we care about this, how much we want to preserve that part of our character, is no small matter; LURC shouldn't sweep it under the rug.

The Plum Creek development proposal is far too large; it would set a disastrous precedent. Certainly, the east shore of Lily Bay should be protected. The LURC commissioners, citizens like the rest of us, represent the rest of us. They must retrieve the Plum Creek decision from the experts and put "natural character" back in the center of the table where it belongs.

Jon Luoma is an Alna resident.

###

WEYERHAEUSER - NATIONAL

Weyerhaeuser is up a tree on Wall Street. By Jon Talton. Special to The Seattle Times, July 7, 2008

For its 108 years of existence, the kingdom and the power that is Weyerhaeuser has survived the Great Depression, world wars, booms and busts, environmental critics. But now it is facing a much more potent adversary: Wall Street.

Big investors are pressuring Weyerhaeuser to fundamentally restructure its business. The company is already shrinking, and more radical downsizing is likely. At risk are hundreds of high-paid corporate jobs at its Federal Way headquarters, as well as those in its real-estate units and the blue-collar work that is among the best-paid in small communities around the Northwest.

Weyerhaeuser will have nearly 50 percent fewer employees worldwide compared with early 2007 when it completes a deal to sell its container-board and packaging subsidiaries. It employed about 37,900 at the end of last year. But Chief Executive Dan Fulton has promised investors further "curtailments, shutdowns," and moves to "dramatically reduce overhead."

Weyerhaeuser's immediate troubles come from the same poisoned well that choked Safeco and still menaces Washington Mutual: the housing bust. Weyerhaeuser's first-quarter revenues declined nearly 24 percent, and last month it announced a write-off of up to $325 million, largely because of real-estate troubles. Impatient investors caused Weyerhaeuser shares to touch a five-year low on Thursday to close at $49.60.

A Weyerhaeuser spokesman declined to make Fulton available for comment, citing a "quiet period" ahead of the Aug. 5 earnings announcement. But in a May conference call with securities analysts, Fulton said the housing downturn has had "a devastating impact" on the company.

Its Weyerhaeuser Real Estate Co. unit has been hammered, especially by the cratering market for single-family suburban houses in California and Arizona. Quadrant Homes, one of six Weyerhaeuser subsidiaries nationally and the largest homebuilder in Washington state, has scaled back operations to building five houses a day instead of seven as home-deal cancellations hit 50 percent.

The housing recession also flattened demand for Weyerhaeuser products, and yet another challenge is higher fuel costs. A cheaper dollar that makes American exports more competitive is one of Weyerhaeuser's few consolations.

But investors are little consoled. They've been agitating for major changes, including transforming Weyerhaeuser from a public company into a real-estate investment trust, or REIT. A REIT manages a portfolio of property, which in this case would be timberland.

New direction for company?

At first glance the idea might seem a little loopy. Weyerhaeuser a REIT? It's one of the last true integrated forest-products companies, until lately doing everything from cutting the trees to making wood products to building houses — even owning small railroads in the United States and a shipping line to transport logs to Asia. It operates in 44 states and 13 other countries, and has scores of subsidiaries. Why not make General Motors a REIT, too?

REITs typically distribute most of the earnings directly to their shareholders, avoiding some corporate taxes. That tax advantage is a big draw for investors, and it was successfully used by Seattle-based Plum Creek Timber, which became a REIT in 1999.

Wall Street sees Plum Creek's experience as the way to best realize the value of timberlands.

Weyerhaeuser management has said it couldn't immediately convert to a REIT even if it chose to — the conversion costs would be too high. Still, Joshua Zaret, senior research analyst at Longbow Research in New York, said eventually "a REIT is likely." The move would have to be approved by shareholders.

Tellingly, last year Debra Cafaro, a top executive of several REITs and the treasurer of the National Association of REITs, joined the board.

The company may receive some tax relief in the controversial new farm bill, which might save it up to $100 million. But that break appears to run for only a year. So far, Weyerhaeuser stock "is propped up by the belief it will convert to a REIT," Zaret said.

The company could even be a takeover target for a private equity firm or go private itself, he said, adding that those are less-likely outcomes. What isn't negotiable is business as usual.

Deutsche Bank analysts recently criticized Weyerhaeuser as a "tortoise" compared with nimble Plum Creek.

Speculation and rumors

Fulton became president in January and CEO in April, moving over from the top job at Weyerhaeuser Real Estate Co. The company had already spun off its fine-paper business and agreed to sell its container-board, packaging and recycling businesses to International Paper. It soon put its Westwood Shipping Line and four small railroads on the block.

Fulton made the direction clear at the annual shareholders' meeting in May. "Trees define us," he said. "We will have other businesses, but we will only manufacture products where we have the technology, a unique skill or opportunity, and the ability to do so in a capital-efficient manner."

Zaret credits management with responding to investors. "It's unfair to say they're doing nothing," he said. "Their hands are tied by the economic environment." He said the asset sales should help earnings and that Weyerhaeuser's balance sheet is strong.

(He owns no Weyerhaeuser shares, and Longbow has no business relationship with the company.)

What happens next is a source of speculation and dire rumors in Seattle.

Two outcomes seem most likely. A return to its roots means Weyerhaeuser might shed its real-estate unit when the housing market recovers. And the already announced sale of subsidiaries, pressure to cut overhead costs and an eventual conversion to a REIT would mean far fewer headquarters jobs. Some of these moves might be announced this summer.

Future projects will be close to the core business, to judge from the remarks of Fulton and other executives, including its alternative-energy and carbon-offset projects.

In an area far removed from its own roots of sliding logs down the hill into Elliott Bay, one might ask: Does Weyerhaeuser even matter anymore?

It does. First, as a company that ranks 147th on the Fortune 500, it is a hub of talent, capital and decision-makers — a major asset for any metro area. Weyerhaeuser has made generations of Washingtonians rich, and some of that money arguably powered Seattle's rise into a global capital of technology and ideas. In addition, the company's forest holdings are so extensive that its future is of great consequence in a 21st-century world of climate change and rising energy prices.

To get a sense of those holdings, check out any detailed atlas. For example, on page 81 of Benchmark's Washington Road and Recreation Atlas, a huge part of the land around Grays Harbor is identified as "Weyerhaeuser Twin Harbors Tree Farm." Weyerhaeuser owns or manages 22 million acres of timberlands.

It's in those forests that Wall Street sees green.

###

WEYERHAEUSER - WASHINGTON

PUD approves deal to buy pulp mill in Cosmopolis. AP. Seattle Times, July 4, 2008

HOQUIAM, Wash. - A key step has been taken toward reopening the old Weyerhaeuser Co. pulp mill in Cosmopolis.

On Thursday evening commissioners of the Grays Harbor Public Utility District approved deal to buy the mill's power house.

Evergreen Pulp Cosmopolis would get $17 million for the two 7.5-megawatt turbines fueled largely by wood waste, and PUD General manager Rick Lovely and Commission President James Eddy say the utility is setting aside another $10 million for repairs.

Evergreen Pulp is negotiating with Weyerhaeuser to buy and reopen the mill, which was closed in October 2006. Evergreen would operate the mill and the PUD would handle power operations. PUD officials estimate the potential profit at more than $1 million a year.

###

PLUM CREEK - MAINE

Big landowner gets closed-door deal. By Karl Vick. Washington Post, MSNBC.com, July 4, 2008

New Forest Service rules could let largest private owner convert land

MISSOULA, Mont. - The Bush administration is preparing to ease the way for the nation's largest private landowner to convert hundreds of thousands of acres of mountain forestland to residential subdivisions.

The deal was struck behind closed doors between Mark E. Rey, the former timber lobbyist who oversees the U.S. Forest Service, and Plum Creek Timber Co., a former logging company turned real estate investment trust that is building homes. Plum Creek owns more than 8 million acres nationwide, including 1.2 million acres in the mountains of western Montana, where local officials were stunned and outraged at the deal.

"We have 40 years of Forest Service history that has been reversed in the last three months," said Pat O'Herren, an official in Missoula County, which is threatening to sue the Forest Service for forgoing environmental assessments and other procedures that would have given the public a voice in the matter.

The deal, which Rey said he expects to formalize next month, threatens to dramatically accelerate trends already transforming the region. Plum Creek's shift from logging to real estate reflects a broader shift in the Western economy, from one long grounded in the industrial-scale extraction of natural resources to one based on accommodating the new residents who have made the region the fastest-growing in the nation.

Environmentalists, to their surprise, found that timber and mining were easier on the countryside.

"Now that Plum Creek is getting out of the timber business, we're kind of missing the loggers," said Ray Rasker, executive director of Headwaters Economics, a nonprofit that studies land management in the West. "A clear-cut will grow back, but a subdivision of trophy homes, that's going to be that way forever.

"It's kind of the ugly face of the new economy."

Rey said he, too, laments the ascension of "McMansions" over working forest, but he insisted that the law obliged him to accommodate Plum Creek's request for clarification of its rights to cross public land. Rey emphasized that during the private negotiations, Forest Service lawyers leveraged promises from Plum Creek to moderate the impact, including mandating "fire-wise" measures to reduce the danger from summer wildfires.

Under the new agreement, logging roads running into areas controlled by Plum Creek could be paved — and would thrum with the traffic of eight to 12 vehicle trips per day to and from each home, according to O'Herren. Critics say that will further imperil grizzly bears, lynxes and other endangered species in the Crown of the Continent ecosystem, a region of rugged peaks, glacier-carved valleys, and sparkling rivers and lakes that straddles the border between Montana and Canada — and that in parts remains as Lewis and Clark found it.

"For us, this is kind of an arterial bleed, and we're either going to get a handle on it or not," said Melanie Parker, executive director of Northwest Connections, an environmental group in the Swan Valley, 60 miles northeast of Missoula.

Parker recently eased an SUV through Glacier Ridge, a nascent subdivision marked by freshly scraped lots and sumptuous views of the Mission Range on one side, the Swan Range on the other and the still-sparsely populated valley in between. The spring-fed bottomland is prime bear habitat where her husband, Tom, a hunting guide, saw his first grizzly.

"Look at that, Tom!" Parker yelped, after a climb up a knoll revealed a three-story log home, still wrapped in Tyvek HomeWrap insulation. "They're like mushrooms. You get a few sunny days and they pop right up."

Most are the second, third or even fourth homes of wealthy newcomers who have transformed the local economy — 40 percent of income in Missoula County is now "unearned," from, say, dividends — and typically visit only in the summer. In Antler Ridge, across Highway 93, Web cameras installed over bird nests and a bear den beam photos to a hedge fund partner who visits his 200 acres just a few times a year.

"He was actually in France when the bear left the den," said "remote wildlife viewing" contractor Ryan Alter, on his way to install a camera at an owl's nest. "So I sent him pictures on his BlackBerry."

"I wanted to own land out there because I was always very interested in the concept of restoration, conservation," Paul Gurinas, the hedge fund partner, said by phone from Chicago. "The fact that it's almost become kind of a housing subdivision, that isn't what I was looking for. I guess I wish I had bought the whole thing up, and then I wouldn't have to worry about it."

That same impulse drives a different kind of land deal in the area: The buyers are the Nature Conservancy and other organizations that purchase desirable private land to preserve it. Since 2000, the groups have paid Plum Creek market rates to secure 280,000 sensitive acres in Montana alone.

Another 320,000 acres are being preserved under a provision that Sen. Max Baucus (D-Mont.) forced into the farm bill, which survived President Bush's veto. The measure includes $250 million to back bonds to buy Plum Creek lands that otherwise might be developed.

"This is like the last big, wild, intact landscape in the Lower 48," said Eric Love of the Trust for Public Land, a conservation group that with the Nature Conservancy announced the $510 million purchase on Monday. "If these lands are going to be sold, someone is going to buy them. The question is, who?"

Plum Creek said it has sold only 3,000 of its Montana acres to developers in the past five years, and it expects to sell even less in the next five, the company's president, Rick Holley, wrote in a recent op-ed in the Missoulian newspaper. But critics point out that its calculations may shift with the real estate market.

A decade ago, while repairing an image as the "Darth Vader of the timber industry," as one congressman put it, the company showcased good-forestry practices on a hillside above Flathead Lake.

That parcel is now Eagle's Crest, a gated subdivision with its own airstrip and lots on offer for $100,000 an acre. Remote corners of Swan Valley are selling for $11,000 an acre, with broker inquiries arriving from Europe. By comparison, the "net present value per acre of forest" runs at most $500, said Larry Swanson, director of the O'Connor Center for the Rocky Mountain West at the University of Montana.

"It's a pretty straightforward proposition: The region's economy is moving from extraction to amenities, and you would expect the same thing to happen with its largest landowner," Swanson said.

"It's a tough deal. Change is hard, and this is pretty fundamental change. But what's happening here is perfectly understandable."

Missoula County officials say their objection is not to change, which traditionally rural jurisdictions have struggled to manage, but to being blindsided by Rey's announcement of a far-reaching change negotiated in secret.

Plum Creek owns 57 percent of Missoula County's private land, a posture that under state law gives it veto power over any zoning. Over the decades that the Forest Service enforced limits on logging roads, the county came to regard federal policy as a firebreak against development.

"All these years, we've been told those roads are not for residential use," said Jean Curtiss, who chairs the county commission. "These are logging roads. They're for timber management."

If the deal goes into effect, the county stands to lose money in providing services such as snow plowing and ambulances to remote new developments. "You're looking at a real nightmare scenario in managing wildfires," Rasker said. "And you're going to have access issues: If these now become gated subdivisions, it's going to be harder for people to go hunt and fish, and that's pretty important to people in Montana."

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PLUM CREEK - MAINE

Groups call for Plum Creek to drop key piece of project: The Lily Bay peninsula is too sensitive and valuable to be developed, they say. By John Richardson, Portland Press Herald, June 13, 2008.

Two leading opponents of Plum Creek Timber Co.'s development plan for the Moosehead Lake region made an appeal Thursday to scrap a proposed resort and subdivision near Lily Bay State Park, even if it means allowing development on land now targeted for conservation.

Maine Audubon and the Natural Resources Council of Maine said the Lily Bay peninsula is too valuable for recreation and as wildlife habitat. And they vowed to fight the overall plan, in court if necessary, if the area isn't made off-limits to development.

"We think this is far and away the biggest stumbling block," said Brownie Carson, the council's executive director.

Lily Bay, however, has been a centerpiece of Plum Creek's development plan since it was unveiled more than three years ago. And while the acreage of the proposed resort has been scaled back, once by the company and once by state planners, the bay clearly remains a core piece of the project.

"Lily Bay is extremely important to the viability of this plan, and has been since Day One," said Luke Muzzy, project manager for Plum Creek.

The company's overall plan for the region calls for 975 house lots and two resorts, which could include another 1,050 hotel rooms, condos or homes. The plan also includes more than 400,000 acres of land to be conserved through sales and easements that limit future development.

The land that generates the most intense opposition sits on the eastern side of Moosehead Lake about 10 miles north of Greenville, and just across Lily Bay from the state park.

The quiet, wooded peninsula that slopes down to the lake shore is home to Canada lynx, a federally threatened species, and native brook trout, as well as logging roads and more than 100 camps, or rustic cottages.

Plum Creek's final proposal called for developing as much as 4,358 acres, including some shore land on Lily Bay and some of the highlands overlooking the bay and the state park.

The area would include 154 house lots and a resort with 250 units, as well as a golf course, marina and other facilities.

The Maine Land Use Regulation Commission has recommended that the Lily Bay development area be scaled back to about 1,350 acres because of concerns about wildlife and damage to the area's recreational value. Although LURC wants the company to monitor the effects on wildlife, it is not pushing Plum Creek to reduce the number of homes or resort units.

LURC is accepting written comments on its recommended changes until July 11. A final decision on the Plum Creek plan is expected this summer or fall.

"It's not too late for Lily Bay or Maine," said Kevin Carley, executive director of Maine Audubon. "Plum Creek development does not belong on Lily Bay peninsula. That's a message that LURC has heard from hundreds of Maine people and visitors."

Carley and Carson, of the nature council, said Plum Creek or LURC should eliminate development there and, in return, remove 33,500 acres on the west side of the lake from the conservation package. "The Lily Bay peninsula is far more ecologically important," Carson said.

Plum Creek will continue logging the land to the west whether or not it is part of the conservation area, but taking it out of the easement would effectively allow the company to propose development there later.

The groups clearly suggested that conserving Lily Bay would spare the company a drawn-out battle, including possible legal appeals down the road. They also hinted at using the Endangered Species Act to save Lily Bay, if necessary.

"The Lily Bay peninsula is really a very key place for the Canada lynx," said Jody Jones, a biologist with Maine Audubon.

Muzzy, the Plum Creek project manager, said he had no direct response to the idea.

"We're so busy analyzing LURC's (recommended changes) and, really, it's their game now," he said.

The company, in fact, has not yet decided whether all the changes recommended by LURC are feasible, Muzzy said.

"Lily Bay's a big issue," he said.

"They're proposing that we reduce the acreage by somewhere in the 70 percent range, and we have to take that and do an analysis to see whether we can site the units there and make the project viable."

Catherine Carroll, staff director of LURC, said the commission's members will consider feedback, including any suggestions floated by conservation groups. But she also said members want to avoid protracted negotiations.

The debate over Lily Bay is not new, and the agency's recommendation -- move forward with scaled-back development -- took the recreation and wildlife issues into account, Carroll said.

"Obviously, what I'm hearing from the applicant and the parties is that Lily Bay is very important to them," she said.

DISCLOSURE

PLUM CREEK'S president and chief executive officer, Rick Holley, serves on the boards of directors of two companies affiliated with the Portland Press Herald/Maine Sunday Telegram: the Blethen Corp. and The Seattle Times Co.

THE BLETHEN CORP. is the majority owner of The Seattle Times Co., which consists of The Seattle Times newspaper, three other Washington newspapers and Blethen Maine Newspapers. Holley joined the Blethen Corp. board of directors in April 2006 and joined The Seattle Times Co. board in January 2007.

BLETHEN MAINE Newspapers includes the Press Herald/Telegram, the Kennebec Journal, the Morning Sentinel and the Coastal Journal.

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PLUM CREEK - MAINE

Groups aim to protect Lily Bay. By Eric Russell, Bangor Daily News June 13, 2008

BANGOR, Maine - Two influential conservation groups pleaded Thursday with state regulators to alter Plum Creek Timber Co.’s ambitious plans for the Moosehead Lake region and keep the Lily Bay peninsula free from development.

Click here to view a larger image of the Plum Creek concept plan

The Natural Resources Council of Maine and Maine Audubon called on the Land Use Regulation Commission to block development of about 400 houses on the eastern and more wild side of Moosehead Lake. In return, the two groups said they would give back 33,500 acres on the lake’s western side that originally had been slated for conservation.

"It’s clear that the people of Maine don’t want 400 houses on Lily Bay," NRCM Executive Director Brownie Carson said Thursday afternoon at an announcement in Bangor. The groups also held a similar event in Falmouth earlier in the day. "LURC holds the future of this region in their hands."

Maine Audubon Executive Director Kevin Carley added, "The message is simple: Plum Creek does not belong on the Lily Bay peninsula."

Both environmental leaders indicated they are not opposed to development on the western side of Moosehead Lake, but stressed that Lily Bay should be off limits.

Thursday’s announcement came as LURC nears the end of its three-year review of an ambitious project that hopes to revive the Moosehead Lake region through a combination of economic development and conservation. Seattle-based Plum Creek, the nation’s largest landowner, is seeking to rezone about 20,000 acres for the development of nearly 1,000 houses and two resorts. The plans also would permanently protect more than 400,000 acres through easements and land transfers.

Last month, LURC sent back recommendations to Plum Creek that called for a scaled-back version of its plans, but those recommendations did not include blocking development on Lily Bay. In reality, LURC does not have the authority to modify Plum Creek’s proposal, only to make suggestions, which means Thursday’s announcement was largely symbolic.

"It’s not up to the commission to eliminate or not eliminate development. That’s entirely up to Plum Creek," said Catherine Carroll, LURC’s staff director. "The commission can only decide on what’s in front of them. We can only approve or reject the entire plan, not parts of it."

Luke Muzzy, Plum Creek’s project manager, said Thursday that he hadn’t seen the latest proposal from NRCM and Maine Audubon. He said the only group the developer is dealing with now is LURC.

"It’s in their court. We’re not really responding to any other groups," he said Thursday by telephone. "But Lily Bay has always been a critical piece of the development plan. Without it, it’s not viable."

Muzzy also pointed out that Lily Bay, which is home to a state park and about 150 seasonal homes, has never been exempt from development.

In addition to representatives from NRCM and Maine Audubon, two Moosehead Lake region residents attended Thursday’s announcement in Bangor.

Sheila Kelley, who lives in Beaver Cove to the south of Lily Bay, spoke about preserving the natural habitat of the region, particularly for wildlife such as the endangered Canada lynx.

"I implore our state agency not to allow development on this habitat," she said.

Ruth McLaughlin, who with her husband owns the Blair Hill Inn in Greenville, said Plum Creek’s proposal might provide an economic lift to the region, but "even they admit it’s short-term. Bigger is not always better."

Once Lily Bay is developed, McLaughlin said, there’s no going back.

"I believe that modifying [Plum Creek’s] development is essential to preserving the Moosehead region," she said.

Plum Creek and its opponents have until July 11 to submit comments to LURC, and Carroll said she expects a fair amount of public response. Those comments will then be reviewed by the staff in advance of a commission decision that’s likely to come sometime later this year.

READER COMMENTS

steve of orono, ME - 06/13/08 - Starting in the 1920s, my family benefited from the Greenville area. My grandfather operated woods camps in the Greenville area and eventually worked for one of the largest paper companies in the Greenville area into the 1950s. His stories, told by his daughter, my mother, were of thriving economy, which allowed him to raise 10 children and paid good wages so that his workers? families? could raise their families. It was a sustained economy of abundance and opportunity. Looking forward we need only look back; ?Before the Civil War, a few travelers -- notably Henry David Thoreau and James Russell Lowell -- sought the wilderness experience of northern Maine. The trickle became a flood after 1870 as entrepreneurs began to promote the Moosehead Lake region for hunting and fishing. Their market constituted middle and upper classes from Portland, Boston, and New York, who sought both recreation and relief from urban pollution. The new house represented a significant increase in the scale of tourism at Mt. Kineo, supported by the extension of the North American and European Railway (later Bangor & Aroostook) to Guilford. Way seems to have based his map largely on Charles Haven's ca.1870 map of Moosehead Lake [40]. ? This was a good ?creative economy? and can become again a positive creative, economy. See the Greenville area always used to be a working forest as well as a tourist destination, but some want to re-write history and make false claims about it's sustainibility. The only thing 'endangered' in the Greenville area will it's average everyday resident forced to leave with with no economic future. Let them eat blueberry pie say the opposition to PC plane.

Jay of cumberland, me - 06/13/08 - Whenever asked, the people of the state of Maine have been overwhelmingly against the Plum Creek plan to McMansionize Moosehead. Looks like it may soon be time to put this on a referendum where Plum Creek's game of smoke and mirrors will be frozen in its tracks by the voters.

Joan of Bath, me - 06/13/08 - please evryone read and comment on the portland press herald. southern maine does not get it. we need your voices!

Jay of cumberland, me - 06/13/08 -Rick Holley, Plum Creek?s president and CEO, told the Portland Press Herald on Oct. 7, 1998, that the company had no plans to sell land for vacation homes, camps or other types of development. In the Maine Sunday Telegram four days later, Bill Brown, Plum Creek?s vice president of business development, reiterated that Plum Creek wasn?t really in the development business. http://www.meepi.org/files05/pa021005.htm Holley and Plum Creek didn't make good on that pledge. Now did they? But Holley DID get himself a seat on the board of Blethen Corporation that just happens to have more newspaper and website audience in Maine than any other news reporting source. Where is the inquiry into that most bizarre coincidence? Does anybody believe in keeping promises and playing fair? Or is it all about lawyer lobbyists lining their pockets and legislators falling into step?

MaineCommenter of Portland, ME - 06/13/08 - The last gasp of failed confrontation-style environmentalism. One would have thought that the compromise on Sears Island would have alerted them that times have changed. As the saying goes if you're not part of the solution, you're part of the problem. Goodbye, NRCM/Audubon/RESTORE.

frank of Greenville, me - 06/13/08 - The recent response from LURC to Plum Creek to pre-approve 3 massive commercial zones, 2 of which are located in previously remote and undeveloped territory, largely ignored the written comments of the public, the testimony of those who spoke at the public hearings, the testimony from the workshops, and state laws. Written comments from the public were 20 to 1 to either reduce or deny the development. Public testimony was almost exactly equal at the hearing I went to in Greenville, but the plan had much less support at hearings in other parts of Maine. Many federal and state wildlife and conservation professionals testified at the workshops that a scaled back version with all of the development zones located between the two existing towns would be much more appropriate for this region and protect valuable and sensitive wildlife areas in the wilderness that lies to the north. Maine laws state that development of unorganized territory should be located adjacent to existing development unless a need to develop wilderness areas can be demonstrated. There really is a genuine economic need in the area for a large commercial and resort zone with an additional 500 to 700 residential units between the towns, and I am happy that one is appropriately proposed near Moose Mountain. However, for LURC to believe that the Moosehead region should sacrifice its most valuable wildlife resources to the north because of some incredible economic need in the area for 2 MORE additional, competing, mega-resorts is raw deal for everyone. So why did LURC allow this to happen? The answer is sad. Think about it like this. Option 1 for the LURC board is to call for a few minor changes, give the pubic another chance to vent through an ignored letter writing period (as if 20 to 1 left any doubt about what the public thought), approve the thing in the fall, and finally be done with a 4-year headache. Option 2, incorporate the comments from residents, wildlife professionals and conservationists and demand a reduction in the scale of the development and a relocation to appropriate areas between Greenville and Rockwood. If the company agreed, we would be a model of how planned development, balanced by the conservation of key wildlife areas, can provide a region with a diverse and sustainable economy and create a world class destination. Plum Creek has stated, even prior to the public’s first chance to formally comment on the proposed plan at the state wide hearings, that they have made three revisions, there will not be a fourth. This stance not only insults and degrades the thousands that participated in the process since then, but shows a blatant disregard for the permitting procedure. The public was falsely led to believe that the whole idea of the hearings was so that comments and concerns from life long local residents and concerned Maine citizens could be incorporated into the final draft of the plan. The company rhetoric left no doubt in LURC?s mind that if they called for the major revisions that were brought out in the hearings and workshops, the applicant would use what I call the nuclear option. Plum Creek would threaten to withdraw the application completely, which would bring unbearable pressure on the LURC board, or submit it as is. The applicant may be counting on the fact that if LURC denies it in the fall, Plum Creek would then have to revise the plan and resubmit it in the spring and the whole 4-year migraine starts again for LURC since public comment periods, state wide hearings, and workshops would be required all over again for the LURC board. After 4 years of hard work, this would not be realistic or practical for the already overworked LURC board members as other pressing issues like the CLUP and wind power demand increasing amounts of their focus for the coming years. Several members of the LURC board?s term will be up this year and understandably they want to get this resolved. So, if you were on the overwhelmed LURC board which option would you take? Option 1, get rid of this 4 year migraine now by approving the plan. Option 2, start years of unbearable headaches, criticism, and work for the LURC board in the future by demanding revisions that would protect the wilderness while still allowing the applicant to realize the economic gain from the rezoning and development of tens of thousands of acres of timberland for which they paid $200 an acre. Unless we can convince LURC that we need this wilderness that we all love, more than they need the temporary relief of aspirin, it sounds like they will take two and hope that this Plum Creek headache is gone ASAP.

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IRS Targets Billionaire's Lucrative Tax Strategy. By Jesse Drucker, Wall Street Journal, June 9, 2008

The Internal Revenue Service is fighting with billionaire Philip Anschutz to force the Denver-based mogul to pay back taxes totaling $143.6 million. The court battle is part of a broad attempt by tax authorities to crack down on complex transactions used to defer paying capital-gains taxes.

The imbroglio stems from transactions that Mr. Anschutz entered into involving shares he owned in Union Pacific Corp. and Anadarko Petroleum Corp. in 2000 and 2001. The deals netted him cash, as well as a share of any future rise in the stock price, with a total value of roughly $429 million. The arrangement ...

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PLUM CREEK - MAINE

Public to revisit Plum Creek plans. By Kevin Miller, Bangor Daily News, June 5, 2008

ORONO, Maine — State regulators agreed Wednesday to reopen the public record on the latest proposed changes to Plum Creek’s controversial development plan for the Moosehead Lake region.

Last week, the Maine Land Use Regulation Commission floated a series of changes to Plum Creek’s proposal that, if implemented, could help the company win regulatory approval for its historic housing and resort plan.

Beginning June 11, the public will have an opportunity to weigh in on those changes. The public comment period is expected to extend through July 11.

Plum Creek is seeking LURC authorization for a 30-year development plan that includes 975 house lots and two large resorts in the Moosehead region. Although the largest development proposal in state history, the plan put forward by the company also would protect more than 400,000 acres of forestland in the region through easements or land sales to conservation groups.

During deliberative sessions held last week, the commission and LURC staff did not propose reducing the number of house lots or the 1,050 resort accommodations proposed for Big Moose Mountain or Lily Bay.

The commission and staff did, however, recommend several significant changes to Plum Creek’s proposal. They include:

  • Requiring the company and its conservation partners to complete several privately negotiated land preservation deals encompassing roughly 300,000 acres within 45 days of final LURC approval of the concept plan. This would supplement the 91,000 acres of conservation land Plum Creek has offered to donate to offset the impact of development, as required for concept plan approval.
  • Cutting in half — from 110 to 55 — the number of house lots proposed for Long Lake, located between Rockwood and Jackman. Those house lots would be shifted to other areas proposed for development.
  • Removing nearly 3,000 acres from the 4,358-acre development zone on Lily Bay, adding that land to the acreage slated for conservation. The total number of house lots and resort accommodations at Lily Bay would remain the same.

Representatives of several groups opposed to Plum Creek’s original plan have criticized the commission's proposed changes as continuing to allow too much development. They have urged the commission to separate out the privately negotiated conservation deals, which are expected to generate $35 million for Plum Creek.

Plum Creek representatives, meanwhile, have been mostly tight-lipped about the recommended changes to their plan other than to say they have concerns. As the applicant, Plum Creek could reject the key changes but in the process would risk a LURC denial of the concept plan.

"We want to make sure it’s viable from both a forestry standpoint and a development standpoint," said Luke Muzzy, senior land asset manager for Plum Creek and an architect of the plan.

The commission will take into consideration comments from the public and intervening parties, as well as Plum Creek, before deciding whether to amend the plan further later this summer. A final vote on Plum Creek’s application could come in late summer or early fall.

To read the list of recommended changes to Plum Creek’s plan, go to http://www.maine.gov/doc/lurc

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WEYERHAEUSER

No Weyerhaeuser REIT soon. By Christopher Donville and Stewart Bailey. Bloomberg News, May 31, 2008

Weyerhaeuser doused speculation that the lumber producer will convert to a real-estate investment trust next year, sending the shares down the most in more than five years.

Chief Financial Officer Patricia Bedient, speaking Friday to investors in New York, said converting to a REIT next year wouldn't be "tax-efficient." But, she added, "That does not preclude the REIT option for Weyerhaeuser in 2010."

Weyerhaeuser's spinoff of its fine-papers business and the planned $6 billion sale of recycling and corrugated-packaging units has spurred speculation that the Federal Way company would convert to a REIT structure to reduce taxes on profit from timberlands.

Some investors hoped Chief Executive Officer Daniel Fulton, who took the helm in April, would expedite the 108-year-old company's conversion to a REIT.

But Weyerhaeuser's comments Friday pushed its stock down $5.11, or 7.6 percent, to $62.33. The stock is off 15 percent this year.

"It's the REIT," Longbow Research Analyst Joshua Zaret said, referring to the Friday stock plunge. "It's delayed, relative to people's expectations, by at least a year.

"There's a realization that conversion is a complex move and that the company's businesses need to come back to life before it can happen," said Zaret, who is based in New York and rates the shares "buy." He doesn't own the shares.

As a corporation, Weyerhaeuser's profit from tree harvesting and the sale of timberlands has been taxed at a corporate rate of as much as 35 percent. U.S. legislation recently passed as part of the farm bill will reduce that rate to about 17 percent, according to congressional aides, giving Weyerhaeuser a $182 million tax break.

As a REIT, however, the company could eliminate most or all income taxes by distributing profit to investors, as do REITs such as Seattle-based Plum Creek Timber and Spokane-based Potlatch, according to Robert Willens, a New York-based tax adviser. He said investors in REITS pay taxes of as much as 15 percent on those distributions.

"Weyerhaeuser has always said they couldn't become a REIT because of the requirement to show the IRS that conversion was for business purposes and not tax avoidance," he said. "That probably wouldn't be any easier in 2010 than in 2009."

Weyerhaeuser, which has slashed capital spending amid declines in U.S. lumber demand and housing construction, is weighing the benefits of a REIT structure, Bedient said.

By law, Weyerhaeuser must distribute its retained earnings and profit to shareholders by the end of the year in which it converts to a REIT, a figure it estimates will be about $6.5 billion and will be taxable, she said.

One option is to use stock for 80 percent of the value and borrow about $1.3 billion to pay the rest, bringing the company's debt to more than $5 billion, she said. Another method is to spin off the timber business, and then create the REIT, Bedient said.

Given "challenging market conditions" that Weyerhaeuser expects next year, nontimber businesses may be unable to manage the debt burden that a conversion would create, Bedient said.

"For these reasons, REIT conversion in 2009 would not be tax-efficient," she said, citing the debt issue.

In addition to lumber, Weyerhaeuser has investments in residential real-estate development and the production of wood pulp used to make disposable diapers and other consumer products.

Russell Croft, who helps manage $725 million at Croft-Leominster, said he was encouraged by comments from Weyerhaeuser executives Friday that the company will continue to sell noncore assets and trim head-office expenses. Conversion to a REIT will require that most of the company's profit is generated from investments in forests.

"They'd be jumping the gun if they said today they were converting to a REIT in six months," Croft said. "They need to continue to get rid of assets."

Weyerhaeuser said Thursday that it was seeking strategic alternatives for its Westwood Shipping Line and four regional railroads.

It agreed in March to sell its corrugated packaging and recycling businesses to Memphis, Tenn.-based International Paper for $6 billion. The transaction is expected to close in the third quarter. Last year, Weyerhaeuser spun off its fine-paper business in a transaction that created Montreal-based Domtar.

Decreasing home construction and losses at Weyerhaeuser's homebuilding unit led the company to report a worse-than-expected first-quarter loss of $148 million.

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PLUM CREEK - MAINE

Plum Creek plans to cut down 200-year-old trees. By Bridget Huber. The Phoenix [Boston], May 28, 2008

You would think the Plum Creek Timber Company would be doing all it could to avoid negative publicity right now.

The Seattle-based company’s proposal to build nearly 1000 homes and major resort destinations in the Moosehead Lake region has generated enormous controversy across the state, and still hasn’t been approved by the Maine Land Use Regulation Commission (LURC). Plum Creek has worked hard to put a green face on the plan, most notably by touting the benefits of the plan’s "conservation framework," which would protect more than 400,000 acres from development, though the framework would not prevent logging, mining, or water extraction on much of the land. (For more on the project, see "Up Plum Creek Without a Paddle," by Yanni Peary, November 28, 2007.)

But now Roger Merchant, a forester and educator at the University of Maine Cooperative Extension in Dover-Foxcroft, has blown the whistle on Plum Creek’s plans to log more than 250 acres of what may be old-growth forest between Monson and Greenville this summer.

Merchant approached Plum Creek with his concerns about the proposed cut last fall, but the company didn’t change its plans. So, last week Merchant sent a letter and photographs to LURC and a handful of state environmental agencies, calling for the site’s conservation and suggesting it as a potential eco-tourism spot.

Merchant is hardly your stereotypical tree-hugger — he supports Plum Creek’s plan for the North Woods and managed 100,000 acres of forest for the Dead River Company’s timber division in the 1960s — but he says this site is special. It shows no sign of ever having been logged and is home to many trees that are well over 200 years old.

"I’ve been walking through those woods for 15 years, and this is different," he says.

Merchant’s letter caught the attention of the Maine Natural Areas Program, which requested permission from Plum Creek to visit the land last week, and are waiting to hear when they might be allowed to do so. The Native Forest Network is also investigating the situation, and, on Friday, Plum Creek asked a forest ecologist from the independent Manomet Center for Conservation Sciences, based in Brunswick, to visit the site and make recommendations on how to proceed.

Plum Creek’s forester, Mark Doty, confirmed that Plum Creek plans to cut the parcel in the next few months. The trees there are certainly old, he says, but he says he couldn’t say whether or not they are technically old-growth until a company forester formally evaluates the site and makes a plan for how to proceed with the cut. Doty says the company always follows Manomet’s guidelines — which are designed to protect biodiversity during forestry — when logging.

Andy Whitman, the Manomet forest ecologist who will visit the site next month, defines old-growth stands as being made up of mostly 200- to 300-year-old trees. He says Manomet recommends protecting old-growth forest because it contains unique biodiversity, is socially and spiritually important to many people, and is a point of reference that shows what a forest looks like without human intervention.

Whitman says he thinks it is unlikely that the land in question is truly old-growth forest. "I’d be surprised, but I’m not ruling it out," he says. If it is, he’ll recommend leaving it untouched. If it’s simply older forest, he may advise Plum Creek to leave patches intact and cut half of the rest of the trees now and half in 10 years.

But Merchant says he’s seen other older-growth forest logged in this way, and that cutting even part of the forest will destroy both the integrity of the forest and its potential as an eco-tourism site.

Emily Posner, a volunteer with the Native Forest Network, says this situation only casts more doubt on Plum Creek’s plan for the North Woods. Even if the conservation easement were in place today, its guidelines would still allow Plum Creek to log this parcel. Calling the conservation easement "greenwashing," Posner says that Plum Creek is trying to profit three times from this land. First, she says, the company will cut and sell the existing timber, then sell the proposed conservation easement to the Nature Conservancy for $35 million, and still, even under conservation, retain the rights to continue to log the land. "This is the exact opposite of the direction we should be going in," she says.

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PLUM CREEK - MAINE 

Plum Creek deal hangs on conservation. Bangor Daily News, May 29, 2008

AUGUSTA, Maine - Members of Maine’s Land Use Regulation Commission indicated Wednesday that they could stomach an unprecedented amount of development in the Moosehead Lake region as long as it comes with land conservation on an equally historic scale.

It wasn’t an official vote, but the commissioners directed staff to fine-tune a proposal that would allow Plum Creek Timber Co. to create 975 house lots and two large resorts near Maine’s largest lake.

Several of the seven commission members expressed concerns about the scope of the development, particularly at Lily Bay. But those concerns were tempered in large part by the prospect of permanently protecting nearly 400,000 acres of forestland in the Moosehead region, commissioners said.

"That is extremely important," commissioner Rebecca Kurtz said. "In my mind, nobody is going to get everything that they want. But this proposal seems to offer the most benefit for every entity."

LURC’s review of the largest development proposal in Maine history is far from complete.

The commission will open the issue back up to public comment next week before potentially making more revisions. A final vote is expected sometime later this summer or fall.

Of course, that’s assuming Plum Creek will agree to the current compromise.

"We’ve got a lot to consider," said Luke Muzzy, a key architect of the plan with Plum Creek. "We’ll spend the next few days really digesting this ... But we’re concerned. There are a lot of changes here."

Plum Creek’s critics, on the other hand, contend that LURC hasn’t made enough changes to a plan they say contains too much development in the wrong places. And they are accusing both LURC staff and commission members of being so wooed by the conservation plan that they overlooked the potential harm caused by the development.

"It’s like they’ve given Plum Creek all of the development and everything they want with very little restrictions," said Bob Guethlen, a resident of Tomhegan Township on Moosehead Lake.

Plum Creek’s proposal has deeply divided Mainers in all corners of the state.

Supporters argue that Plum Creek’s plan for 975 house lots, two resorts and more than 400,000 acres of conservation will create jobs and promote tourism while permanently protecting the region’s natural beauty.

Opponents, meanwhile, predict that outlying vacation homes for the wealthy will not create jobs, funnel tax dollars into local economies or help fill shrinking schools. At the same time, critics say the resulting traffic, pollution and "wilderness sprawl" will spoil the very qualities that draw tourists to the region.

The LURC staff recommendations loosely endorsed by the commission Wednesday do not change the number of house lots or reduce the 1,050 resort "accommodations" proposed for Big Moose Mountain and Lily Bay. A resort accommodation could be a hotel room, rental condominium or a single-family house.

Muzzy said the company is concerned about the staff recommendation to relocate 55 house lots away from Long Pond and a proposal to remove nearly 3,000 acres from the Lily Bay development.

Perhaps the most significant changes dealt with the conservation lands.

Plum Creek has offered to permanently protect more than 430,000 acres, with one giant catch: The conservation deal is contingent on LURC approval of a development plan.

But LURC’s draft proposal turns the tables on Plum Creek by requiring that the company complete the conservation deals before it receives any permits for houses or resorts.

"This is a package," commissioner Gwen Hilton said in explaining why she could support the plan despite concerns about impacts on Lily Bay. "There is a potential for getting a lot of conservation land out of this."

Several groups opposed to Plum Creek’s application see that as a bad trade-off, however.

Critics pointed out that Plum Creek is donating only 91,000 acres for permanent protection. The company would receive $35 million from conservation groups for easements or land sales on the remaining 340,000 acres.

Those groups, which include The Nature Conservancy, have said they plan to seek grants from the state and federal governments to help pay the $35 million price tag. And that prospect of taxpayer dollars going into Plum Creek pockets angers critics.

"There is a public policy issue of a corporation benefiting twice, first from an extraordinary amount of development ... and then through mitigation being paid for by the public," said Jody Jones with Maine Audubon.

###

PLUM CREEK - MAINE

Plum Creek plan gets positive review. By Keith Edwards, Blethen Maine News Service, Portland Press Herald, May 28, 2008

Losses in scenic value would be offset by economic gains, LURC staffers say.

AUGUSTA — The Moosehead Lake region can absorb the impact of 2,000 new housing units that a Plum Creek development proposal could bring, Land Use Regulation Commission staff said Tuesday.

LURC commissioners met Tuesday for the first of two days of deliberations on the development proposal some fear would change the character surrounding Maine's largest lake.

Commission Chairman E. Bart Harvey said commissioners won't issue a final decision whether to approve the proposal until later this summer.

But staff members said they don't feel the estimated 975 homes and the resort accommodations for 1,050 people would have an overly damaging impact on the area.

They acknowledged that some areas, such as the now relatively undeveloped Indian Pond, could suffer from reduced scenic value.

But they said losses in scenic and recreational opportunities would be offset by Plum Creek's plans to put large parcels of land under conservation easements to protect them from future development.

Commissioner Edward Laverty, who early in Tuesday's meeting expressed concerns about the environmental and scenic impact of several specific parts of the proposal, said it is important to also consider potential positive impacts on the area's struggling economy.

"I'm also looking at the impact on what is becoming a rare, unique, endangered species: people who live and work there," Laverty said. "I think the area can absorb a substantial amount of economic development. I'm prepared to at least consider this, especially in light of the gains in conservation easements."

In the largest subdivision plan ever in Maine's North Woods, Plum Creek wants to rezone about 20,000 acres in the Moosehead region to accommodate development.

Plum Creek officials pledged, if their proposal is approved, to permanently protect more than 400,000 acres in the region through easements and land sales.

Environmental groups have criticized the proposal as too big and disruptive for such a rural area.

Although the commission did not allow public comment, many of the approximately 60 spectators at Tuesday's session wore stickers stating "Too much development: Save Moosehead."

LURC staff member Agnieszka "Aga" Pinette said numerous changes to Plum Creek's proposal recommended by staff are " a set of recommendations, if accepted, we believe would result in a concept plan that meets the review criteria."

LURC staff recommended that a large parcel of land near Moosehead's Lily Bay marked for housing development by Plum Creek be removed from the plan, though the resort there would be allowed to remain.

Commissioners expressed concern that development in that area would result in legal action by those concerned about Canada lynx habitat.

"The removal of that zone is a huge step toward making this development acceptable," said Commissioner Steve Schaefer.

DISCLOSURE

PLUM CREEK'S president and chief executive officer, Rick Holley, serves on the boards of directors of two companies affiliated with the Portland Press Herald/Maine Sunday Telegram: the Blethen Corp. and The Seattle Times Co.

THE BLETHEN CORP. is the majority owner of The Seattle Times Co., which consists of The Seattle Times newspaper, three other Washington state newspapers and Blethen Maine Newspapers. Holley joined the Blethen Corp. board of directors in April 2006 and joined The Seattle Times board in January 2007.

BLETHEN MAINE Newspapers includes the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal, the Morning Sentinel and the Coastal Journal. It has a separate board of directors, and Holley does not serve on that board.

###

PLUM CREEK - MAINE

Plum Creek fate in state's hands. By Kevin Miller. Bangor Daily News, May 28, 2008

AUGUSTA, Maine — The Moosehead Lake area could absorb the 2,000-plus houses and resort accommodations proposed by Plum Creek through a combination of careful planning, strong oversight and large-scale land conservation, state regulators were told Tuesday.

After three years of heated public debate on the matter, the fate of Plum Creek’s historic development proposal for the Moosehead region is finally in the hands of state regulators. Maine’s Land Use Regulation Commission took another slow, steady step toward a potential vote on the proposal later this year when they held the first of two days of deliberative sessions on the massive rezoning application on Tuesday.

LURC staff and consultants did most of the talking as they laid out their rationale for a long list of recommended changes they argue would allow much-needed economic growth while protecting the natural character of the region.

Arguably the most important moment Tuesday came when the staff and consultants explained why they were not recommending a reduction in the total number of lots that would be developed.

Plum Creek is seeking LURC authorization for 975 house lots and 1,050 accommodations in two resorts, one located on Big Moose Mountain and the other at Lily Bay. One resort accommodation could be anything from a hotel room to a single-family house located on resort grounds.

Evan Richert, a former director of the State Planning Office working as a LURC consultant, said the development will undoubtedly change aspects of the region. New subdivisions will diminish scenic views in some areas and traffic will increase in key communities, he said. Richert also predicted that outdoor recreation may shift to other areas in the region as some spots get developed.

But he said the 400,000-plus acres of conservation proposed as part of the plan, when combined with strict LURC oversight of the development, should help mitigate the impacts from 2,025 development "units," he told the commission.

"We could not find evidence that the cumulative impact of the proposed units would exceed the carrying capacity of this region as a whole," Richert said. "We think there will be some shifts ... but that is why we think the conservation [package] is so important to absorbing those shifts."

Plum Creek officials and the plan supporters insist the conservation component will help ensure the region retains the natural beauty that has made Moosehead a tourist destination for well over a century.

Plum Creek has offered to donate conservation easements on 91,000 acres of forestland in the region to offset the impacts of development, as required under LURC rules.

But the company also has put forward a series of conservation deals — contingent on LURC approval of a development plan — that would permanently protect another 340,000 acres. Those deals, which were negotiated with nonprofit conservation groups, would generate $35 million for the company.

At least two of the seven commissioners — Bart Harvey and Ed Laverty — indicated they could support allowing that amount of development as long as the conservation deals went through. LURC staff have recommended requiring Plum Creek to complete most of the conservation package before the agency processes any development applications.

"It’s an essential piece of the whole package," said Harvey, a Greenville native who now lives in Millinocket. "If we are going to say 2,000 units are okay, that’s a lot to swallow. So there has to be something on the other side of the equation."

The other commissioners present either did not speak on the issue or were noncommittal.

Critics of Plum Creek’s plan say the proposal is a bad trade-off for the state.

Cathy Johnson, North Woods project director for the Natural Resources Council of Maine, said she believes LURC staff and some commissioners are willing to "sacrifice" the beauty of Lily Bay and similar areas in order to protect other lands.

"It’s really horse trading that we’ll put up with all of these numbers [of units] if we get this conservation," Johnson said after the meeting. NRCM and Maine Audubon are partner organizations in the regulatory review.

Wendy Weiger of the citizens group Moosehead Region Futures Committee said she was disappointed the commissioners did not spend more time discussing whether this amount of development was needed in the region.

The commissioners will resume their discussions today at 8:30 a.m. Among other topics, the group will take up Plum Creek’s proposal for a resort and large subdivision on Lily Bay, which has consistently generated the most opposition.

The deliberative sessions, which are open to the public, are being held at the St. Paul Center located at 136 State St. in Augusta. The sessions are also being broadcast live online at www.maine.gov/doc/lurc.

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WEYERHAEUSER - NATIONAL 

Are Weyerhaeuser's days numbered? By Les Blumenthal, Oregonian, May 27, 2008

A $182 million federal tax break might not be enough to prevent a major restructuring of a longtime Northwest fixture and the nation's last integrated timber company still standing, which has Wall Street analysts asking . . .

A $182 million tax break for Weyerhaeuser, tucked inside the farm bill, was expected to help the century-old timber company fend off a major restructuring sought by Wall Street that could have forced the firm to sell off its mills and increase logging on its forests.

But Weyerhaeuser officials cautioned there are no guarantees the restructuring still won't happen.

Analysts believe the tax relief might not be enough to protect Weyerhaeuser. Its days as the nation's last, major integrated timber company -- growing its own trees and milling them into lumber and other forest products -- could be numbered.

Like Boeing, Microsoft, Nordstrom and Starbucks, the Federal Way, Wash.-based Weyerhaeuser is a quintessential Northwest company whose roots run deep in a region where logging and mill work for decades were a way of life.

The company owns 1.1 million acres of prime timberland in Washington and roughly the same amount in Oregon.

Nationwide, the company owns 6.4 million acres, much of it across the Deep South, from east Texas to North Carolina. The company also owns or manages vast forest acreages in Canada and South America.

Weyerhaeuser already has slimmed down. In 2007, it sold off its fine-paper business and is now selling its containerboard-packaging operations in a deal that could be worth $6 billion. Its work force has dropped from 50,000 to 25,000.

Besides the timberland, the company still owns 28 softwood lumber mills in the United States and Canada, where it produces lumber, plywood and other manufactured products; five pulp mills, with a worldwide buyers' list; and a real estate division operating in 10 states.

But continued pressure from Wall Street could force even more changes.

"They are the last of a breed," said Steven Chercover, an analyst with D.A. Davidson & Co., in Portland. "The world has changed, and Weyerhaeuser has to change with it."

Most of the nation's major timber companies have converted their timberlands into real estate investment trusts, or REITs. Wall Street loves REITs because they sharply cut a company's tax bill, with the bulk of a company's profits passed directly to stockholders, who have to pay the taxes.

Weyerhaeuser so far has been reluctant to form a REIT, because under complicated federal laws it might have to divest itself of all its operations not connected with actually growing and harvesting trees. The company has prided itself on being integrated.

Weyerhaeuser is taxed at a 35 percent corporate rate. Companies that have formed REITs, such as Seattle's Plum Creek Timber Co., have reduced their tax bills to virtually zero, though stockholders still have a 15 percent capital gains tax.

For more than a year, Weyerhaeuser lobbied for a change in the tax code to level the playing field and allow it to remain a fully integrated company. Initially a separate bill was introduced, the Timber Revitalization and Economic Enhancement Act. The act came close to being attached to energy legislation that passed Congress in December, but was dropped during last-minute negotiations.

Weyerhaeuser officials, including Chairman Steve Rogel, continued to lobby lawmakers face to face, telling them the company's survival was at stake.

On the House side, Rep. Norm Dicks, D-Wash., lobbied Ways and Means Committee Chairman Charles Rangel, D-N.Y., and the Democratic leadership. In the Senate, Washington's two Democratic senators, Patty Murray and Maria Cantwell, worked with the chairman of the Senate Finance Committee, Montana Sen. Max Baucus.

According to some reports, Baucus' support was cemented when the tax burden for Plum Creek and other timber companies with REITs was also eased. Plum Creek has major holdings in Montana.

"With the housing slowdown and global competition taking a toll, this provision will protect thousands of family-wage jobs in Washington state," said Murray.

In the end, the timber revitalization act was included in the farm bill. Weyerhaeuser and some small timber companies will see their tax rate reduced from 35 percent to about 17 percent, congressional aides said.

###

PLUM CREEK - MAINE

State agency: Plum Creek plan needs work. By John Richardson, Portland Press Herald, May 21, 2008

The developer wants to rezone 20,000 acres in the Moosehead Lake region for 975 homes and two resorts.

The state agency reviewing Plum Creek Timber Co.'s plan for homes and resorts around Moosehead Lake wants development areas scaled back and conservation lands protected by tougher restrictions.

The Maine Land Use Regulation Commission's staff recommendations, detailed in a 127-page document released Tuesday evening, do not take a stand on whether the project should ultimately be approved. But they include a long list of changes that the agency's planners and consultants believe are needed before the project moves forward.

Major recommendations include scaling back the proposed Lily Bay Resort area by nearly 3,000 acres to protect sensitive highlands and wildlife habitat, and scaling back a residential development around Long Pond from 110 units to 55 units.

The document is the first public feedback from the state agency that has been gathering information and testimony on the rezoning plan for three years, and it marks the beginning of the formal review process that could lead to a final decision later this year.

Members of the commission, a panel appointed by the governor, will take up the staff's recommendations during a two-day meeting next Tuesday and Wednesday in Augusta.

It's unclear whether Plum Creek will be willing to make the changes. A company official said Tuesday that it will need time to review them.

Plum Creek wants to rezone about 20,000 acres in the Moosehead region for 975 house lots and two resorts, which could include an additional 1,000 condos, homes or other accommodations. It has also pledged to permanently protect more than 400,000 acres in the region through easements and land sales.

It is the largest subdivision plan ever in Maine's North Woods and its fate could either speed up or slow down other development throughout the region.

Plum Creek officials, as well as a long list of critics and supporters of the plan, were eager to read the recommendations, which were posted on the land use commission's Web site. Here are some examples:

Remove nearly 3,000 acres from the 4,358-acre proposed Lily Bay resort and add it to conservation lands.

Reduce the residential development plan for Long Pond from 110 units to 55, and shift nearly 600 of the 1,500 acres of development area to conservation lands.

Take more than 100 acres from the proposed development zone near Big Moose Mountain and add it toconservation lands to protect wildlife habitat, including waterfowl habitat and deer wintering areas.

Reduce the maximum height of commercial structures from 100 feet to 60 feet.

Limit the number of docks and boat launches at variouslakes, such as a limit of one on Upper Wilson Pond.

Strengthen the role of a state-run management advisory team to monitor conservation lands.

Rewrite conservation easements to increase and clarify protections for ecologically valuable lands.

Require that a separate $10 million conservation deal to protect 266,000 acres be completed before construction.

Plum Creek's project manager, Luke Muzzy, did not return a message left after the document was posted, but said earlier on Tuesday that it will take time to sort through the details. The company also is eager to hear from the commissioners themselves about the need for any changes, he said.

"I'm just waiting to see what they have to say before we make any decisions," Muzzy said.

Critics of the plan also were reviewing the recommendations late Tuesday and are expected to issue statements and responses later this week. And despite the call for significant changes, at least some opponents are sure to object to the process.

"We've said there can be meaningful development in the Moosehead region, but that Plum Creek's proposal doesn't come close," said Jym St. Pierre, Maine director of RESTORE: The North Woods.

St. Pierre, a former member of the land use commission's staff, said the agency has never before given a landowner a list of what it needs to do to get a rezoning application approved.

"What LURC should do now is say to Plum Creek, 'The law only allows us to give a yes or no answer,'" he said. "LURC should say 'No' to Plum Creek and allow them to go back to the drawing board if they choose to."

Commission members are expected at some point to provide clear guidance to the staff -- as well as Plum Creek -- about which changes they believe are necessary.

Those recommendations are likely to be published early this summer, when the commission will accept another round of public comments.

###

Plum Creek says sale of 300,000 acres nears fruition. By Tristan Scott. The Missoulian, May 24, 2008

BONNER - Plum Creek Timber Co. says it is on the brink of selling about 300,000 acres of its woodsy Montana parcels for cherished public land use - such as hunting, hiking and fishing.

Sen. Max Baucus, D-Mont., together with a timber company executive and representatives from a pair of conservation groups, announced a blueprint for the land deal Friday afternoon during a rain-soaked news conference on the banks of the Blackfoot River near here.

The lands, which ultimately would be owned by federal and state governments, also would be managed as "working forests" with sustainable timber harvests.

"We are on the verge of protecting 300,000 acres of land in our state . . . and accomplishing the largest land conservation project in American history," Baucus said. "This will ensure that people who want access to public lands will have it."

The transaction will involve the sale of a full quarter of the timber giant's 1.2 million acres of land in Montana, and comes with a $500 million price tag. But according to Baucus, the deal in progress is a highlight of the senator's career, and comes on the heels of another memorable achievement - the recently enacted farm bill.

Baucus, chairman of the U.S. Senate Finance Committee, included a new Forest Conservation Bonding provision in the nation's farm bill that will provide $250 million for land conservation programs. The provision allows for the sale of federal tax-credit bonds to help finance land transactions and conservation opportunities like the Plum Creek deal.

In addition to the bonds, the deal in Montana will require $250 million in funding from other sources, such as state agencies (which will contribute about $100 million) and the two conservation groups - The Nature Conservancy and The Trust for Public Land, who will need to apply for the remaining balance through the U.S. Treasury. The $307 billion piece of legislation passed through the Senate on May 15.

Both conservation groups will "work hand-in-hand" with philanthropists and the state to match the federal dollars.

The parties will focus on large sections of private land abutting U.S. Forest Service parcels, Baucus said, adding that the transfer of the Plum Creek property to public ownership would mark "unprecedented new access" to lands.

Rick Holley, president and CEO of Plum Creek, said the deal will include lands in the Swan Valley, the Seeley Lake area and in Missoula County, but stressed that its finer points remain "a work in progress."

Baucus took heat over his action on the farm bill, Holley said, but the tentative land agreement that grew out of the bill is so meaningful that it has already been named the "Legacy Project."

Conservationists lauded the deal as a success for all Montanans who cherish their lands.

"This is Max's conservation legacy for the state of Montana," said Eric Love, The Trust for Public Land's Northern Rockies Director.

"Because of what starts here today, we will continue to be the last best place, with more emphasis on the best than on the last," Baucus said.

In Montana, Plum Creek sold 89,000 acres of land toThe Nature Conservancy as part of the Blackfoot Community Project. The Conservancy is now reselling those lands to public and private buyers, with conservation agreements.

Consolidation of these so-called checkerboarded private-public lands can lessen the costs and threat of wildfire to communities, while providing sustainable timber harvest that will provide jobs for communities, Holley said.

But congressional critics of the provision complained that the program's narrow criteria were met only in Montana. And while Baucus acknowledged that the provision appeared to be tailored for Montana, he also said it would be a model for other states seeking to conserve land.

"All of us have a moral obligation when we leave this place to leave it in as good of shape or better as when we got here," Baucus said. "And that's what we're doing."

###

Rey: Not prepared to release Plum Creek documents. By Michael Jamison. The Missoulian, May 24, 2008

KALISPELL - Agriculture Undersecretary Mark Rey says he is not yet prepared to hand over critical documents to Montana counties, despite increased calls that he do so, and his refusal is forcing a federal land use dispute ever closer to the courts.

"It's still under consideration," Rey said. Previously, however, he had said expecting him to provide the paperwork was "unrealistic."

"We're just waiting to hear what he has to say," said James McCubbin, deputy county attorney for Missoula County. "No decision has been made on whether to pursue litigation. That will depend on Mr. Rey's response."

*

At issue are decades-old road easements, signed between the U.S. Forest Service and Plum Creek Timber Co.

Many believe those easements are limited, allowing access only for timber hauling. But Rey, a former timber lobbyist himself, now argues the easements allow unlimited access for all purposes.

He and the company met behind closed doors for more than a year, negotiating an easement amendment declaring the access to be unlimited.

That alarmed many in Montana, where Plum Creek owns 1.2 million acres of land. Since 1999, when the Plum Creek reorganized as a real estate investment trust, the company's profit margins have relied more on real estate sales and less on timber harvest.

(Company real estate revenue has tripled over the past five years, to more than $330 million annually.)

That development, however, comes at a price - loss of public forest access, loss of wildlife habitat, impacts to water quality. Local governments complain the conversion of timberland into residential neighborhoods hurts taxpayers, as counties scramble to provide urban services to the far-flung homesites. Others worry about increased firefighting costs as homes pop up in the forested fringe.

County officials say taxpayers will subsidize Plum Creek's profits if Rey's easement amendment paves the way for wholesale development of company lands.

Rey insists the amendment is nothing more than a "clarification" of existing rights. The old easements, he said, are unambiguous in the broad scope of access they allow.

"We think the legal easements are clear," Rey said, "and we think the law is clear."

The law, however, states that if the easement language is at all ambiguous, then the access can be determined only by looking at the original intent; and all agree the original intent was to provide access for log hauling, not driveways.

"Obviously," Rey said, "when legal opinions are offered, they sometimes differ."

Indeed.

Jack Tuholske, a Missoula-based land use attorney, thinks Rey's reading is considerably wide of the mark.

"The simple truth," Tuholske said, "is if Plum Creek had all the rights that it needed, then it wouldn't need this agreement."

The reality, he said, is Rey's amendment does provide the company new rights, and as such it must go through a public process to determine what impacts it might have, including impacts to endangered species.

Trouble is, no one's quite sure what the original easements actually say, because Rey hasn't provided the paperwork. Instead, he has quoted from what he calls a "typical easement," implying that other easements contain the same or similar language.

That language, in part, gives the company access "for all purposes deemed necessary or desirable" for the "protection, administration, management and utilization" of its lands.

What Rey has not said, however, is that paragraph begins with the words "except as hereinafter limited."

The limitations that follow, at least in some easements, include a provision saying the Forest Service reserves broad authority to control access and set the rules of the road, and that Plum Creek may not allow public use of the road except as a trail.

"To suggest the language is both ‘typical' and ‘clear,' " McCubbin said, "is disingenuous at best."

"The Forest Service has refused to produce all the documents," Tuholske said, "and that makes it impossible to review the proposal."

McCubbin agrees. "You have to identify what you're amending before you amend it," he said. "That's a basic legal principle. Amending a document you haven't even identified makes no sense, on either a legal or a practical level."

This spring, McCubbin and the Missoula County commissioners fired a letter to Rey, asking for all the easement documents that would be affected by the amendment.

Rey did not respond.

Last week, Sen. Jon Tester, D-Mont., sent a letter of his own, telling Rey "substantive feedback will be impossible without further information given to county governments."

Tester asked Rey to back off the amendment process until first compiling a list of affected easements, and then providing that list to the counties for review.

"Not only will it help local governments get a full understanding of how they may be affected, it seems only prudent that the federal government know, specifically, how many easements it is amending and the locations of each before it signs the amendment," Tester wrote.

Rey said he's still mulling the request, but added that all easement records should be in the counties' files, and they can dig them up one by one if they wish.

That, however, is not the answer McCubbin wanted to hear.

"I've already reviewed several documents," he said, "and I've seen a fairly wide variety of language from easement to easement. I don't even know which agreements we're talking about, because it's not at all clear that there is any ‘typical language' as Mr. Rey implies."

In fact, Tuholske said, a simple unlimited-access easement is usually only a sentence or two long - not many paragraphs long as is the case with the Forest Service agreements. All those extra paragraphs, he said, are designed specifically to limit Plum Creek's rights and retain agency control over road use.

"I think the case is very weak for them," Tuholske said, "if they want to argue this in court."

Which leaves many wondering why Rey, who now works for the public, has been so quick to adopt the legal position of the company whose industry he used to represent. Rey, a Bush administration appointee, will be out of his post within the year, and some have suggested he's preparing a soft landing for himself with his old bosses in the industry.

Confronted with that assertion, Rey said only that he did not know what work he might turn to when his tenure ends. He did, however, say he was interested in signing the deal with Plum Creek before he leaves his post, a move that would almost certainly prove impossible were he to give counties time to review each and every road easement.

"His problem is the agency already provided a legal opinion on this matter," Tuholske said - an opinion that concluded the easements were for timber harvest only. "Now if he wants to change that, he has to hurry."

But Tuholske and McCubbin and others might slow him down.

"Yes, I've been retained by a number of private landowners to take a look at this and provide legal advice," Tuholske said. He's also been talking to conservation groups interested in learning more about the issue and the possibility of future litigation.

Likewise, McCubbin isn't ruling out a lawsuit from the county and said a court challenge is among the tools still on the table.

"The impacts of this amendment are enormous," Tuholske said, "and because of the way it was slipped through, the Forest Service hasn't even begun to assess what those impacts might be."

In fact, McCubbin said, the impacts are nationwide, as the amendment would apply not just to Plum Creek, but to all private landowners sharing similar road easements with the agency.

"The cumulative impacts are staggering," McCubbin said. "And federal law is clear - when the impacts are that great, you have to engage in a formal public process. Maybe Mr. Rey is correct. Maybe the amendment is a great idea. But that's not the point. The point is, the law is clear that the public has to be involved."

Rey, however, is adamant that there be no further public process, a position county officials simply cannot understand.

"At the county level," McCubbin said, "if there's any question at all, we'll always default in favor of providing more public process, not less. I think that's the obligation of government, because government works on behalf of the public. It really baffles me that, for Mr. Rey at least, that's an alien form of thinking."

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PLUM CREEK - MONTANA

Plum Creek: Farm bill includes land sale provision. By Michael Jamison. Missoulian, May 16, 2008

Montana could purchase vast forested swaths of Plum Creek Timber Co. land, valued at hundreds of millions of dollars, under a little-known provision tucked into the nation's farm bill.

That $307 billion piece of legislation passed through the Senate on Thursday, after clearing the House a day before.

Congressional critics called the provision "green pork," and complained the program's narrow criteria were met only in Montana, where Plum Creek owns 1.2 million acres.

The provision, pushed by Sen. Max Baucus, D-Mont., would allow states or nonprofit groups to issue $500 million in federal tax-credit bonds. Money raised would buy up critical forestland now being eyed for real estate development.

"Max doesn't want to see these prime hunting and fishing lands turned into golf courses, condos and strip malls," said Baucus spokesman Barrett Kaiser. "Private timberland is being gobbled up for development, and this provision gives states the tools they need for land conservation."

Local governments like that idea, worried as they are about the public costs of servicing new residential neighborhoods in the woods, and conservationists like it, too, as it ensures recreational access and wildlife security.

Under the provision, the state or a nonprofit would sell up to $500 million in tax-credit bonds to an investor. In return, the investor would receive a tax credit of somewhat more than the initial $500 million.

The state or nonprofit then would use a portion of the money to purchase key lands. The remainder would be invested, so that when the bond matured, the issuer could pay back to the federal treasury the $500 million in deferred taxes.

The provision would cost taxpayers an estimated $250 million over 10 years - the additional tax credit claimed by the bond buyer, plus the interest lost on tax money not collected.

An alternative allows the state or nonprofit to forego the bonds and simply receive a $250 million payout from the federal government for purchase of the forest lands.

It is a system modeled after the "Liberty Zone Bond" program, implemented to help rebuild New York after the Sept. 11, 2001, attacks.

To qualify for Baucus' "Forestry Bond" program, the woodsy parcels must be adjacent to U.S. Forest Service lands, must be at least 40,000 acres in size, and must be covered by a native fish conservation plan approved by the U.S. Fish and Wildlife Service.

(In 2000, Plum Creek signed onto just such a plan for its lands in Montana, ensuring fish would be protected even as logging continued.)

"However green it may seem, this provision is little more than a massive corporate subsidy for a single company," said Rep. Eric Cantor, R-Va.

"That's ridiculous," countered Melanie Parker. "This is about people and places, not corporations and Congress. The benefits all go to communities, not companies."

Parker is director of Condon-based Northwest Connections, working in an area where Plum Creek real estate sales have been notoriously hot, and money for conservation deals has been increasingly scarce.

"What this does," Parker said, "is help communities confront what is the one single issue that has the potential to change the entire face of western Montana."

The problem of timberland real estate sales, she said, is far bigger than the small efforts to make conservation purchases. A problem that size requires a big fix, she said, "and this provision is a heck of a good start in the right direction."

Kaiser called the provision "a nationwide template," and pointed to at least three more sites in Washington state and two in California that qualify under the program.

"It really is national in scope," he said.

But critics also called the provision a plum deal for Plum Creek, noting that the company has made significant donations to lawmakers in general, and Baucus in particular.

Kaiser called that suggestion absurd, however, given the far higher prices Plum Creek land would command as residential land, rather than as part of a public conservation deal.

"Our whole congressional delegation was supportive of the program," Parker said, "because it really is about serving Montana's taxpayers."

Currently, Kaiser said, "there is no deal on the table" between the state and the company, although Plum Creek officials and conservationists have said they already attended meetings to discuss what might be available for sale at what price.

Jamie Williams of the Nature Conservancy likewise wouldn't say if any official negotiations were ongoing, but he did note that "we are among many conservation groups and community members who have been encouraging Sen. Baucus to find new tools to help conserve important forestlands. This farm bill represents a tremendously significant milestone."

Once purchased through the bonding program, any lands bought must be placed into public ownership, with at least half of the acres given over to the Forest Service.

The provision requiring the acres to be adjacent to existing Forest Service lands, Kaiser said, will save taxpayers countless millions in firefighting costs, as wildfires are many times more expensive to suppress in forests full of homes than in traditional wildlands.

In addition, he said, the 40,000-acre minimum ensures a big ecological bang for the buck.

"This really ups the ante," Kaiser said, "and provides a valuable new tool for land conservation across the country."

The measure is particularly important to Montana, of course, where Plum Creek has been selling more and more of its 1.2 million acres. Since 1999, the company has been organized as a real estate investment trust, and profit margins have relied increasingly upon land sales.

That trend has worried state and county officials, who say fighting fires and providing residential services in far-flung forests places a heavy burden on local taxpayers. For years, conservationists, taxpayer groups and public agencies have worked to purchase Plum Creek lands rather than see them developed, but money for large deals has proved hard to come by.

"This is just one more tool they can use," Kaiser said.

And it is a tool not yet quite in the toolbox. President Bush has indicated he might veto the massive farm bill, Kaiser said, "but we feel we have veto-proof margins."

With an 81-15 Senate vote, and a 318-106 House approval, the farm bill appears to have far more than the two-thirds majority support needed to overcome a presidential veto.

"It's not over yet," Kaiser said, "but right now we certainly feel we can override a veto."

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PLUM CREEK - NORTHWEST

Constituency of One: The farm bill includes a plum deal for Plum Creek Timber. By David Freddoso, National Review, May 12, 2008

Of all of the current Congress’s attempts to manage the U.S. economy — housing bailouts, "stimulus" packages, an energy bill that bans light bulbs — the farm bill is probably the most exasperating. This year’s bill, should it ever pass, will further prop up prices for sugar, and it will encourage farmers to plant crops for which there would otherwise be no demand. And farm bills receive broad bipartisan support — even as they pay non-farmers for living on former farmland.

But this year’s farm bill contains a special-interest provision you’ve probably never heard of — the Qualified Forestry Bonds program. This provides federally funded tax-credit bonds for forest purchases that meet the following four criteria:

* The forest must be adjacent to U.S. Forest Service Land;

* Half of the parcel must be turned over to the U.S. Forest Service;

* It must include at least 40,000 total acres; and

* It must be subject to a "native fish habitat conservation plan approved by the United States Fish and Wildlife Service."

Your initial reaction might be, "What’s so bad about that?" The government does far more damaging things than forest-land preservation, after all. But this farm-bill provision offers a lesson on how things are sometimes done in Washington. Only one parcel of land in the entire United States meets the criteria set for the Qualified Forestry Bonds program. You see, the U.S. Fish and Wildlife Service has approved exactly one "Native Fish Habitat Conservation Plan," covering a 1.6-million-acre parcel that reaches from western Montana into eastern Washington State. And that parcel is owned by the Plum Creek Timber Company, the single largest private landowner in the United States.

Plum Creek Timber (PCL), with a market cap of $7 billion, began its corporate life in 1987 as Burlington Resources, spinning off of Burlington Northern to manage the railroad giant’s timber and mineral resources — some of which date back to the original railroad land grants of the Lincoln administration. In 1999, Plum Creek became a Real Estate Investment Trust, and began unloading its land holdings for high-end residential and recreational use. Today, with the real-estate and timber markets flat, Plum Creek has been looking to sell larger tracts of timberland to large institutional investors. The farm bill’s Qualified Forestry Bonds provision could provide up to $500 million to help sweeten such deals.

Plum Creek spent some $220,000 lobbying Congress in the first quarter of this year. Its PAC has spread $400,000 in campaign contributions between the parties in the last decade. PCL Employees have given $16,600 this cycle to Sen. Max Baucus (D., Mont.), chairman of the Senate Finance committee and the author of the bond provision. Baucus, whose staff did not answer inquiries, was enthusiastic enough about the forestry bonds that he put them into the Farm Bill (H.R. 2419), though they have nothing to do with agriculture. The bonds also didn’t have anything to do with energy when Baucus put them in last year’s energy bill.

In response to this blatant rent-seeking, Rep. Eric Cantor (R., Va.), is proposing a non-binding motion to remove the forestry bond provision from the farm bill. But Cantor tells National Review Online that he expects his motion to fail. Since half of the land sold under the provision will go to the federal government — preserving it as pristine wilderness and preventing its eventual development — pols courting the environmental vote are unlikely to stand against it. However green it may seem, this provision is little more than a massive corporate subsidy for a single company.

Cantor called the forestry bond program "a Bridge to Nowhere in the Farm Bill," referring to the infamous Alaska bridge that had been inserted into the 2005 transportation bill. "If it’s a legitimate program to preserve lands adjacent to federal forests, fine," says Cantor. "But to engage in backroom deals designed to benefit one landowner? That’s exactly why people distrust Congress and feel that Washington is broken."

The tax-credit bonds that would be made available for the sale of Plum Creek lands are not the same as bonds that are merely "tax-exempt." Tax-credit bonds, partly frowned upon by the non-partisan Congressional Budget Office as an inefficient funding vehicle, pay out 70 percent of their interest in the form of federal income tax credits that can be rolled from one year to another. In other words, the federal government pays 70 percent of the interest to the bondholders. If the government did this for your 6-percent, 30-year mortgage, your monthly payment would drop by about 40 percent, and you would be able to buy a more expensive, bigger home. Likewise, the forestry bonds could facilitate the sale of more of Plum Creek’s land at a higher price.

This is why Ways and Means ranking member Jim McCrery (R., La.), in floor debate, rejected the argument that this is not an earmark because the benefit cannot be said to go to the bondholders. "They’re not going to be the ones getting $500 million for a piece of property," he tells NRO. "It is one landowner."

The Joint Economic Committee estimates that the Qualified Forestry Bonds provision could cost the government $257 million over the course of ten years — a plum deal for Plum Creek. Now it’s possible that more "fish habitats" will be created, so that more landholders might benefit from this taxpayer largesse. (They’d better hurry: the fine print states that they must be established within two years to get a bond issue.) But if the farm bill passes as is, then there certainly will be plenty of money available to buy Plum Creek’s land, at least.

###

BURLINGTON NORTHERN SANTA FE RAILROAD - WASHINGTON

Rail and trail: staking a claim. Seattle Times editorial, May 7, 2008

After three years of long, complex discussions about an Eastside rail corridor, the conversation will broaden from government and private entities to include the public. This is all good news.

An enthusiastic and unanimous Metropolitan King County Council voted Monday to sign an easement agreement with the Port of Seattle, which intends to buy the 42-mile BNSF Railway corridor between Renton and Snohomish. Final approval is pending with the Port of Seattle Commission.The Port would pay $107 million for the corridor, preserving a key north-south route for public use. King County would pay nearly $2 million for the right to build a hiking and biking trail from Woodinville south. The county would also be the official trail sponsor, for federal purposes.

From Woodinville north, the Port would keep the corridor open for freight service, indirectly preserving future commuter options of the line.

A very valuable and very long corridor has been identified — and saved — for dual transportation and recreation uses. Reconciling these public goods, in the words of County Councilmember Dow Constantine, is the next phase.

Refining the choices, expense and sources of the revenue for what might come next will now be open for public discussions. The vision of dual use comes with a price tag, and with important political and geographical pinch points.

Options for high-capacity transit are wide open and there are competing visions, from public light rail to private commuter-train service. Physically narrow sections along the trail potentially put trail and rail at odds. For all these reasons and more, King County has put escape clauses into the agreement.

For now, celebrate the opportunities. A priceless corridor will be preserved in public ownership. It's a great, good start.

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BURLINGTON NORTHERN SANTA FE RAILROAD - WASHINGTON

King County OKs deal that could put trails in Eastside rail corridor. By Keith Ervin, Seattle Times, May 6, 2008

The Metropolitan King County Council approved a three-way deal Monday that could bring bicycles and commuter trains to an old Eastside freight-rail line.

If ratified by the Port of Seattle Commission, the Port would buy BNSF Railway's Renton-to-Snohomish rail corridor for $107 million and sell King County the right to build a hiking and biking trail on the portions south of Woodinville.

The Port Commission will review the package of agreements today, but President John Creighton said he didn't know whether commissioners would be prepared to vote today on what is expected to be the final deal. BNSF has set a May 15 deadline for signing the purchase agreement.

Port and county officials said the deal upholds the concept of "dual use" of the 42-mile corridor by rail commuters and trail users on foot or on bike. But many details wouldn't be decided for months or years, and there is no assurance that either a trail or passenger trains would be a reality in the near future.

"While the Port's interest in the corridor is first and foremost as a rail corridor and preserving that, we are also committed to seeing a trail built," Creighton told County Council members before they voted unanimously for the deal.

Council members, who hailed the agreement as "historic" and "transformative," said the most important fact is that the rail corridor BNSF put up for sale five years ago would be publicly owned rather than sold off in pieces.

"We are very, very grateful that the Port of Seattle made a commitment to step in and acquire that corridor on behalf of the public," said Council Chair Julia Patterson. She also praised County Executive Ron Sims, who worked for years to make a deal.

At one point Sims was negotiating a deal for the county to pay for the land by selling Boeing Field to the Port. That land swap died for lack of support from County Council members and Port commissioners.

Rail and trail boosters at the council meeting supported the latest deal Monday. However, one Kirkland resident said he didn't want a train running through his backyard.

Under the agreement, King County would pay the Port $1.9 million for a 26-mile easement, allowing it to build a trail between Woodinville and Renton and between Woodinville and Redmond. Port and county officials would jointly agree on the trail's placement after gathering public comment on use of the corridor.

Negotiations over the easement nearly derailed last month after Sims said the county should be compensated if a county-built trail had to be moved to make way for new train service. Port CEO Tay Yoshitani and Creighton opposed compensation.

The deadlock was broken last week when the county agreed to the Port's language in exchange for the right to drop the trail project up to five years after the deal closes.

Designing a trail to accommodate future rail uses will drive up trail costs considerably. Sims' chief of staff, Kurt Triplett, said a rough cost estimate for the trail is now $150 million to $200 million — well above the original $66 million.

### 

WEYERHAEUSER - NORTHWEST

Weyerhaeuser vows appeal of alder case. Associated Press, Seattle Times, April 30, 2008

A Portland jury on Monday ordered Weyerhaeuser to pay almost $28 million for unlawfully monopolizing the market for finished alder lumber.

The award will be tripled under federal antitrust laws.

"We are very disappointed with the verdict," said Sandy McDade, Weyerhaeuser senior vice president and general counsel.

"We are confident it will be reversed on appeal, because last year the U.S. Supreme Court decided in our favor a case presenting virtually identical issues. We fully expect that the Court of Appeals will apply that precedent."

Morelock Enterprises, of Bend, Ore., filed the suit four years ago, and it was later granted class-action status.

The U.S. Supreme Court last year tossed out a $79 million judgment against Weyerhaeuser.

In that suit, a Vancouver, Wash., company convinced an Oregon jury that Weyerhaeuser paid too much for alder logs it didn't need, with the goal of driving competitors out of business.

This class-action lawsuit was filed while that case was under appeal.

Morelock alleged that by controlling the logs, Weyerhaeuser was able to monopolize the market for finished alder, the Northwest's leading hardwood lumber that is used in furniture and specialty products such as guitars.

Weyerhaeuser, based in Federal Way, is one of the world's largest forest-products companies. Sales last year were $16.3 billion.

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PLUM CREEK - MONTANA

Plum Creek Considers Whitefish Project. By Michael Jamison. Missoulian, April 10, 2008

WHITEFISH - For the past eight years, Jim Lehner has been Plum Creek Timber Co.'s frontman in northern Maine, spokesman for a massive - and a massively controversial - real estate development there.

On Wednesday, however, Lehner found himself in Whitefish, where his company now appears to be eyeing real estate development at the headwaters of Whitefish Lake.

"We don't know," Lehner said when asked about the future of Lazy and Swift creeks, which spill off the Whitefish Range to feed the lake. "It's an area that we see does have potential for development, but right now, today, we don't have any plans."

But according to John Grassy, spokesman for the Montana Department of Natural Resources and Conservation, Plum Creek already has approached his agency to talk about gaining residential access to that site.

Lehner said his Wednesday meeting with Whitefish business leaders and urban planners was an effort to "begin a two-way dialogue." He began his career not far from here, 33 years ago, as a Plum Creek forester in the Seeley Lake area. Since then, Lehner has worked as far west as Idaho and as far east as Maine.

While in Maine, he was the lead pitchman for the company's controversial Moosehead Lake project. The largest development in Maine's history, it would convert vast swaths of timberland into residential lots, commercial space and even two full-blown lake resorts, rezoning in the process more than 400,000 acres of that state's famous North Woods.

The final project proposal now has been submitted for review, and Lehner has taken a new post as Plum Creek's first-ever national director of community affairs, with a desk at the company's Columbia Falls headquarters.

Previously, the company had indicated it would invest in a Montana public relations campaign to provide a company perspective (last year, lawmakers sought unsuccessfully to change tax laws thought advantageous to Plum Creek) and to better connect with the communities around which it cuts timber and sells forest real estate.

Such sales, in fact, have now come to account for

50 percent of Plum Creek revenue, and Lehner bought news Wednesday of the company's "changing business model."

His role, he said, is to gather community feedback and to address concerns as Plum Creek continues to shift from timber toward residential development. Since 1999, the company has been organized as a real estate investment trust.

And increasingly, community leaders have expressed concerns about timber availability, recreational access, firefighting bills and public infrastructure costs related to residential neighborhoods carved out of Plum Creek forests.

Lehner, who said his job is to engage locals in "big-picture" talks as well as to serve as point man on specific projects, discussed his company's commitment to "sustainable forestry," as well as its interest in reducing fire hazards, even as it sells home lots in urban fringe areas.

He talked about Plum Creek's 8 million acres nationwide - more than a million in Montana and nearly a million in Maine - and touted the company's $81 million paid annually here in payroll and benefits.

Lehner also discussed real estate sales - "probably the most controversial thing we do" - stressing that about 70 percent of all sales are for conservation, rather than development. Still, he said, "we do have certain lands that have a higher value than growing trees," and those "higher-and-better-use lands" are ripe for home sites.

Plum Creek still "grows trees and sells logs," Lehner said, and has no interest in getting out of that business any time soon. Neither does the company plan to cut off the historically free public access to its forests.

"Our goal," he said, "is to maintain a strong presence in Montana."

But the fact is, Lehner said, housing starts are down, and that means less demand for lumber, "and that does affect our bottom line."

It also makes real estate sales far more attractive, as timberlands are worth as much as 10 times more as subdivisions than as working forests.

But as to the specifics - particularly those company lands perched there in Whitefish Lake's headwaters - Lehner offered no news. His company will not, he said, provide Montanans a map of what lands might be for sale in the near future. And he did not bring up the Whitefish lands at all, but rather responded only when prompted by a concerned audience.

"In some areas, we do know where we're going to sell land," he said. "In other areas, we don't."

And anyway, plans can change as markets shift. Or as public opinion swings.

The lands above Whitefish Lake have proved important to sensitive species - such as grizzly bears - as well as to big game, and are a favorite among local hunters and anglers. In fact, representatives from the state Department of Fish, Wildlife and Parks were on hand to hear what Lehner had to say.

Which wasn't much, beyond a recognition that those high-profile acres above the lake have, in his words, "potential for development."

But, he repeated, the company has no firm plans for development there.

That despite his presence in Whitefish now, rather than in Maine, and also despite Plum Creek's continuing discussions with DNRC, where the company has recently come calling to negotiate access to the Whitefish acres, across state lands.

Lehner, however, instead focused on the broader marketplace realities facing this company in transition, noting that "the land value is becoming higher throughout the United States for residential properties."

There is, he said, "real opportunity there."

###

PLUM CREEK - MAINE

Public is Heard on Plum Creek Zoning: Moosehead Development is Scrutinized. By Patrick Marass. Maine Campus Online, April 10, 2008

Public comments regarding Plum Creek's current rezoning proposal closed last month and many Mainers are waiting for the Land Use Regulation Commission's reactions.

The commission has authority over land rezoning requests in the state. The commission is researching issues raised by the public in the Dec. 2007 and Jan. 2008 public hearings.

On April 11, the staff will compile a list of those issues and begin to form an agenda for their deliberations. The commission's deliberation report will not be finalized and posted for public comment before July or August of this year.

"Seattle-based Plum Creek will come and go, but the people of Maine will live with the decisions made in this rezoning process forever," said Brownie Carson, executive director for the Natural Resources Council of Maine.

Plum Creek's concept plan marked the largest development proposal in the history of Maine when it was first submitted in April 2005.

They have withdrawn and resubmitted a plan two times in the past three years. This is not the first large-scale development proposal made by Plum Creek, they have planned and executed development in Washington and Montana.

Plum Creek received the largest fine in Maine history for violations of laws protecting Maine's forests.

The roots of this proposal come from when Plum Creek purchased 900,000 acres of Maine land in 1998 from Sappi Fine Paper. Due to the zoning of the land, forestry and backcountry recreation, the land was bought for less than 200 dollars per acre. The 400,000 acres in the proposal lie in the center of Maine's North Woods surrounding Moosehead Lake.

"We often forget what we [as Maine citizens] own in the state, and when we do that, it makes us bad negotiators," said Sandra Neily, a member of the volunteer group Moosehead Region Futures Committee and a coordinator for a UMaine campus research project.

By rezoning the land Plum Creek can develop land, sell a percentage to developers and individuals and retain the rest as conservation land. If this rezoning is approved then the land values will increase and Plum Creek will gain significant returns.

Plum Creek's goal with this project is to aid local communities by bringing jobs and money into the local economy through development, which would provide economic stimulation for the region. The conservation easements would bring citizens and tourists to the area with the guarantee of access to the land.

The wildlife income in the state of Maine is a $900 million industry. This includes money gained from lodging for and activities such as fishing, hunting, kayaking, hiking and camping.

The Land Use Regulation Commission does have the final say on Plum Creek's proposal.

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PLUM CREEK - MAINE

Reject Plum Creek proposal. By Rip Stavin. Bangor Dailey News, March 29, 2008

A recent article by Kevin Miller, "Groups: Developer ignored concerns" (BDN, March 19) seems to suggest that Plum Creek has been more than patient with the public process involved with its major rezoning proposal in the wilderness area surrounding Moosehead Lake. Plum Creek seems to say that the time for dithering over details of the proposal is past and that it’s time for LURC to either give Plum Creek the rezoning it wants or reject the proposal.

Native Forest Network agrees. The time for debating these details is over and LURC should reject this demented rezoning application.

There is no middle ground in this controversy, and there shouldn’t be for a rezoning proposal of this magnitude. Since when does an individual landowner have the right to radically alter an entire landscape that large numbers of people and animals depend on for clean air and water, food, fuel and fiber? Only a multinational corporation has this amount of power to request a legislative process to make such sweeping changes to a landscape. There’s a reason why opponents outnumber supporters by more than 20 to 1, as Mr. Miller pointed out. This proposal would obviously result in "undue adverse impacts," which is the legal phrase that is pivotal to LURC accepting or rejecting this rezoning application.

But as the legal phrase "beyond reasonable doubt" can be manipulated by clever lawyers in criminal cases, Plum Creek is cynically manipulating the natural understanding of what an "undue adverse impact" is. Whether we look at the details of this development proposal and its impacts on wildlife, water quality, the local economy, its carbon footprint and its consequences for local climate change, or the fine print of the "conservation" easements, this development adds up to an undue adverse impact on an area that consists mostly of wild forestland. Plum Creek understands all too well the notion of "large print giveth, and small print taketh away."

The conservation easements are a case in point of this large print. Proponents keep exclaiming with exuberance what a great deal 400,000 acres of "permanent" conservation would be for the environment. But a close examination of the legacy easement shows that it is chock full of loopholes down in the fine print.

Plum Creek intentionally limited the easement holder’s power (in this case the Forest Society and Nature Conservancy) and retains many types of lucrative resource extraction and development rights. It allows for industrial forestry management practices resulting in even-aged stands of trees that hardly resemble a real forest. It allows for gravel mining and leaves open the possibility of commercial water extraction.

It allows for all manners of development within the legacy easement (the 350,000 acres proponents keep referring to). Plum Creek reserved the rights to build cell towers, power lines and any structures related to "forest management," a phrase that is vaguely defined at best.

The supposed intent of these conservation easements is to prevent parcelization and wilderness sprawl. But, paradoxically, Plum Creek’s reserved development rights could result in wilderness housing sprawl and parcelization anyway.

The easement holder has no decision-making power over what activities are permitted on easement land or what kinds of structures are permitted. The easements are being used as a leveraging device to coerce LURC into approval of the rezoning application. In the future it will be used as a marketing gimmick aimed at retiring baby boomers.

We don’t have the space to go into all the details of why the conservation easements are such a sham, because as a wise fellow once said, "it takes one minute to tell a lie and ten minutes to refute it." Perhaps that’s why this circus has gone on for three years.

For once, Native Forest Network agrees with Luke Muzzy of Plum Creek. The time for debate is over, and the facts are in. The time has come to reject Plum Creek and begin anew with a better vision of what a creative, localized land-based economy can look like in northern Maine.

Please contact nfnmaine@gmail.com for further specific information about our critique of the rezoning application and our alternative visions.

Rip Stavin is a volunteer with the Native Forest Network. He lives in Rockland.

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PLUM CREEK - MAINE

Plum Creek plan based on archaic principles. By Susan E. Melcher. Kennebec Journal, March 28, 2008

The efforts of Plum Creek to bring vitality to the Greenville area are based on archaic principles of growth. Although remote areas generally provide few economic opportunities for residents, creating prime real estate in pristine areas is not a viable solution.

One practical problem: All essentials will have to be trucked into the area, and increased residential and commercial traffic will necessitate more road maintenance, placing a toll on all the taxpayers in Maine -- rural roads, or potentially, an east-west corridor, will require expensive upkeep. Increased population growth in non-urban areas always places a toll on every taxpayer in Maine; the greater the distance from major service areas, the greater the economic and environmental impact.

People occupying these shorefront properties will be affluent: telecommuters, small plane owners or people unconcerned about the price of fuel and upkeep of a vehicle. Consequently, we will see gentrification of this area, as has happened throughout rural Maine.

Gentrification leads to NIMBY (not-in-my-back-yard), as those who can afford beautiful homes in remote areas generally do not like to look at ugly technology sustaining their lifestyles -- gas pipe lines, transfer stations, cell phone towers, windmills and the like.

We also may witness a rise in real estate prices and associated property taxes, discouraging egalitarian home ownership, and deterring low-income families from purchasing homes.

Lakes, forests and landscapes are not commodities available only to those who have chosen affluent careers and lifestyles.

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WEYERHAEUSER - WASHINGTON

Leading Pierce County Developers Adjust to Justice in Jobs and Housing. Washington State Jobs With Justice Update, March 2008

A community-friendly builder has now assumed the Salishan project after the state’s largest anti-worker builder cut and run from accountability. This shift improves developer accountability to workers and low-income residents. Next, the developer of Pierce County’s largest upscale property project Pt Ruston has begun to embrace housing justice and fair job standards. This now marks a new trend in an industry long-plagued with sweatshop conditions and corporate Robin Hoods. Despite resistance from Tacoma elected and appointed officials such as Council-member Rick Talbert and City Manager Eric Anderson, JwJ’s Developer Accountability campaign is propelling this new trend on the frontline between our community and developers. After laying a powerful foundation of a grassroots strategy, we are making concrete progress.

Tacoma Housing Authority’s mega-million dollar Salishan public housing project is now operating with local hiring, apprenticeship training programs, living wage jobs with benefits, and respecting workers’ voice to organize. Merlino Construction is supervising this "Phase 2" infrastructure stage and has a strong track record with building trades unions. Hiring and training Salishan and local residents will at least meet HUD Section 3 standards and contribute back to our local economy. City of Tacoma has awarded Merlino the $1.18B streets contract as part of the Salishan Revitalization project. It wasn’t but a few months ago when anti-worker Quadrant Homes, a multi-billion dollar subsidiary of Weyerhaeuser, paid a million dollar fine to back out of the Phase 2 contract. Community allies backed by JwJ’s mobilization capacity had demanded concrete community-friendly practices.

After more than a year of raising the pressure on $1B Pt Ruston developer Mike Cohen, he has pledged to provide mixed-income housing and pay living wages. Mr. Cohen insured that living wages and benefits were paid to the workers installing the utilities and infrastructure pads for his first 34 luxury homes on Stack Hill. He also signed for the entire Pt Ruston project a local hire and apprenticeship "LEAP" contract as well as a letter of intent that insures some skilled workers will earn living wages. Now Mr. Cohen is pursuing a "LID" contract with Tacoma to install all Pt Ruston public works infrastructure through a process that insures living wages, benefits, apprenticeship training, and a voice on the job. These are firsts for Mr. Cohen but they are half-measures and he can revoke them anytime.

Additionally, Mr. Cohen has announced he might build mixed-income affordable housing in conjunction with his Pt Ruston project. In a draft environmental statement, Mr. Cohen offered to explore building 15 to 30 "affordable" units depending on government grants and other tax-funded and charitable subsidies. The entire project will have up to 1000 units with prices running between $2 million and $300,000 in addition to a hotel, major retail space, and other profit-making enterprises. It is unclear why Mr. Cohen needs more of our tax dollars and charity to subsidize these units when he benefits from tax breaks at some of his market-rate projects and federal oversight at Pt Ruston.

We are seeking binding commitments and higher standards. While Mr. Cohen is starting to change his practices despite an anti-worker and exclusive luxury builder track record, we must organize with more capacity to ensure that he and all local developers and elected officials step up to build a sustainable economy for all.

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WEYERHAEUSER - US & MEXICO

Weyerhaeuser sells container-board unit. By Woody Baird. AP / Seattle Post-Intelligencer, March 17, 2008

International Paper, a global supplier of packaging materials and uncoated paper, announced Monday that it is buying the container-board unit of Federal Way-based Weyerhaeuser Co. for $6 billion in cash.

Memphis-based International Paper said it will pay for the purchase through increased debt.

The company has greatly cut its debt and improved cash flow since starting a major reorganization in 2005 to move away from forest products and focus on producing uncoated paper and container board.

"This is just the exact reason we paid down $7 billion of debt a couple of years ago ... to keep the financial flexibility so if something came along that was an opportunity for International Paper, we could take advantage of it," said John Faraci, International Paper's chairman and chief executive officer.

The planned purchase, which would make International Paper the largest container-board producer in North America with a 29 percent market share, drew cautious reactions from market analysts.

The increased debt led Moody's Investors Service to revise its outlook on International Paper to "negative" from "stable."

Goldman Sachs downgraded International Paper to "neutral" from "buy," saying its analysts "view the transaction as relatively expensive and a strategic negative for IP," though they remain positive on the longer-term prospects.

Weyerhaeuser, meanwhile, will use "substantially all" of the money from the sale to pay down its "lofty debt load," Credit Suisse said.

International Paper said the purchase will increase its market presence in the United States and Mexico for the company's core products and boost profits over the long haul.

"It makes International Paper a lot stronger and better company," Faraci said in a conference call with market analysts.

Weyerhaeuser, one of the world's largest lumber and packing producers, had been considering a sale of the division as it worked to make the transition to more of a pure timber, wood products and real estate company.

The sale comprises nine container-board mills; 72 packaging locations; 10 specialty-packaging plants; four kraft bag and sack locations; and 19 recycling plants.

About 14,300 employees work at the container-board packaging and recycling business.

Weyerhaeuser has packaging locations in Bellevue, Moses Lake, Olympia and Yakima, and a recycling facility in Kent.

Tim Nicholls, International Paper's chief financial officer, said financing includes a term loan for about $2 billion to be repaid in five years.

"The costs, without going into numbers, is roughly equivalent of the debt that we retired through the buyback as we went through the transformation program," Nicholls said.

With an expected tax benefit of $1.4 billion from the purchase of Weyerhaeuser assets, International Paper put the net cost of the deal at about $4.6 billion.

The sale is expected to close in the third quarter of 2008, subject to regulatory reviews and completion of financing, International Paper said.

Weyerhaeuser shares rose $1.09, or nearly 1.8 percent, to close at $63.06 Monday, while International Paper shares fell $2.79, or 8.7 percent, to $29.47.

LOCATIONS AFFECTED BY THE SALE

Weyerhaeuser Co. plants, mills and locations affected by the $6 billion sale of its container-board packaging and recycling unit to International Paper Co.:

Nine container-board mills (Alabama, California, Iowa, Kentucky, Louisiana, Oklahoma, Oregon, Mexico)

72 packaging locations (Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Tennessee, Texas, Virginia, Washington, Wisconsin, Mexico)

10 specialty packaging plants (California, Georgia, Illinois, Indiana, Kentucky, North Carolina, Ohio, Oregon)

4 kraft bag and sack locations (California, North Carolina, Oregon, Texas)

19 recycling facilities (Arizona, California, Colorado, Illinois, Iowa, Kansas, Maryland, Minnesota, Nebraska, North Carolina, Oregon, Tennessee, Texas, Utah, Virginia, Washington)

###

WEYERHAEUSER - US & MEXICO

International Paper buys Weyerhaeuser units. Bloomberg News, March 17, 2008

International Paper, the largest maker of forest products in the world, agreed Monday to buy the containerboard, packaging and recycling operations of Weyerhaeuser for $6 billion to expand in the United States and Mexico.

The cash transaction includes nine containerboard mills, 72 packaging factories and other sites, which together have 14,300 workers. The net purchase price is equal to about $4.6 billion including tax benefits, International Paper said.

International Paper, based in Memphis, Tennessee, expects to save $400 million in expenses by integrating the factories of Weyerhaeuser, which is based in Washington State.

North American paper companies are merging and cutting capacity to defend profit margins, under pressure from higher costs for fiber and energy. The chief executive of International Paper, John Faraci, has sold timberlands, sawmills and beverage packaging units to focus on fine paper and corrugated cardboard, two markets where prices are holding up better.

"This deal represents a compelling opportunity," Faraci said in the statement. "We expect the combined packaging business will generate stronger cash flow" and higher margins than either standalone business.

International Paper's shares are little changed this year, giving the company a market value of $13.8 billion.

Shares in Smurfit-Stone Container, a rival U.S. maker of corrugated boxes, have dropped 29 percent this year.

International Paper will finance the transaction through debt, and the company has commitments from several lenders.

The acquisition will add to earnings in 2009, with 40 percent of the targeted benefits coming through within 12 months of completion.

The company's new mills will serve the United States and Mexico, Faraci said.

The mills will be added to a portfolio that includes a corrugated box factory in Morocco, a pulp and paper mill in Brazil, and a 50 percent stake in Ilim Group of Russia, which makes pulp, paper and board.

"All of this will make our packaging business more competitive, more profitable and better able to serve customers," Carol Roberts, the senior vice president, said in the statement.

For Weyerhaeuser, the deal is another reversal in an expansion strategy from the 1960s in which it diversified into timber-related markets through acquisitions. Weyerhaeuser, the largest timber company in North America and founded more than 100 years ago, sold its fine-paper assets to Domtar last year.

International Paper exited its lumber division through a deal with West Fraser Timber of Canada last year. West Fraser became the second-largest lumber producer in North America with this purchase.

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PLUM CREEK (MAINE)

LURC should pare Plum Creek plan for good of Maine. Kennebec Journal & Morning Sentinel, January 27, 2008

The prolonged battle over Plum Creek's development plans for the Moosehead Lake region has taken place on two levels: the actual and the symbolic.

Most of the time, the symbolic has overwhelmed the actual.

Here is what Plum Creek actually proposes: It wants the state to rezone hundreds of thousands of acres in the Moosehead region to allow it to develop two large resorts and almost 1,000 house lots. The proposal is the largest development plan ever submitted to state regulators.

Included in the proposal is a conservation easement on 91,000 acres that will remain a working, industrial forest. That proposal is targeted as mitigation for the development and as such, must improve forest management to counterbalance the loss of habitat and wild landscape in the lands slated for development.

Another, separate easement -- that company officials say will be secured only if the development proposal is allowed to go through -- would conserve about 340,000 acres in the region. The latter easement also would allow forestry operations on a significant portion of the conserved land.

Now, consider the symbolic level on which this discussion has taken place.

Several conservation organizations have partnered with Plum Creek on the larger easement and tout the plan as a way to protect important segments of the North Woods. But a number of prominent groups have cast Plum Creek and its plan as the death of the North Woods as we know it, as a visitation on the pristine and holy wilderness by the worst of urban depredations. "Save Moosehead!" read the bumper stickers.

On the other side of this symbolic battle are those who tout Plum Creek and its plan as the savior of the North Woods economy. "I believe the plan will give people hope and the confidence to move to Greenville," one struggling area resident told the Bangor Daily News.

Greenville's town manager said, "the proposal could cure and solve a lot of issues we have here."

Chambers of Commerce have roundly praised the plan, the organization representing rafting companies in the state has endorsed it and many local residents have taken a dim view of those fighting it.

"They're not here in the winter, when nobody's working," said one elderly clerk at a grocery store.

The reality -- the actual, predictable effects of the Plum Creek proposal -- falls between the hyperbolic extremes. Development means a loss of wildlands and the species that depend on those lands. It means potential for damage to the lands that remain. It means increased use of fragile adjoining ecosystems.

And so any mitigation offered must be meaningful and Plum Creek's current easement proposals, which allow cell towers, wind farms, gravel mining, sewage sludge spreading and water extraction and incorporate only vague guidelines for forest management still fall short of what we would consider adequate protection of conserved lands.

These are not the end of the North Woods as we know it, but they likewise don't represent the best deal the people of Maine can get.

Nor does the current scope of the development proposed represent the best offer for Maine. Plum Creek is a real estate developer and surely knows how to wrangle deals -- and it's a time-tested routine that you go in asking for far more than you expect to get.

The proposal for almost 1,000 house lots and two large resorts still strikes us as too much in terms of the carrying capacity of the local landscape. Perhaps 500 lots? 600 lots? Given that Plum Creek bought the land for about about $200 per acre and will sell lots for development at a huge premium, it probably can live with a smaller project.

Will Plum Creek's success mean success for the Moosehead region? We documented in this newspaper that the demand on infrastructure extension and services would strain local government. But the influx of people and dollars also will bring back vitality to a region long bleeding jobs.

You can find a study that fits one or the other extreme point of view -- that the development will either redeem or ruin the region -- but Moosehead's storied past featured a lot of tourists and recreationists who contributed to its economy, and it's possible to do that again. Differently, but again.

After years of back and forth, of testimony and analysis and public pressure, the good, patient and long-suffering Land Use Regulation commissioners -- who surely cannot earn enough money in a lifetime to compensate them for the work they're doing on this proposal -- now must make a decision.

No property owner is owed a rezoning; and the most intractable opponents to development cannot just give lip service to the needs of the people who live in the area. We hope the commission can strike a deal with Plum Creek that allows development, but not at a level that substantially changes the natural attributes of Moosehead.

The region needs development and growth, and it is not reasonable to say absolutely no to the Plum Creek proposal in hope that a "better" proposal will magically come along. Instead, the commission should drive a hard bargain with Plum Creek, and Plum Creek should accept it.

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PLUM CREEK (MAINE)

Next move on Plum Creek with state regulators. Bangor Daily News, January 26, 2008

The fate of Plum Creek’s development plan for the Moosehead Lake region is now in the hands of state regulators.

With an anticlimactic crack of the gavel, the head of the Land Use Regulation Commission brought to a close on Friday one of the most extensive public reviews of a development plan in Maine history.

Now, LURC staff and board members will have to decide what to do with the hundreds of hours of testimony presented on Plum Creek’s controversial development proposal.

"This is quite a ways from being concluded," Bart Harvey, LURC’s chairman, told the crowd moments later. "We have a lot of work to do still."

Most of that work will be carried out by LURC staff, at least in the coming weeks. The commission directed the staff to work with a representative of the Attorney General’s Office to put together a list of potential changes to Plum Creek’s plan before submitting a recommended decision.

No time frame was given for staff to submit the recommended changes. The record will remain open in the meantime to allow the public to continue commenting on the proposal.

Plum Creek officials have indicated a willingness to some changes to clarify the intent of their 30-year concept plan. The big question, however, is how the company would respond to any attempt to dramatically scale back the scope of the development.

Seattle-based Plum Creek is seeking LURC authorization to carve out 975 house lots and two large resorts on roughly 20,000 acres that the company owns in the Moosehead region. It is the single-largest development plan in state history.

The proposal includes conservation easements on 91,000 acres of forestland. Additionally, Plum Creek has negotiated a separate, $35 million deal — contingent on LURC approval of the development plan — that would protect another 340,000 acres through easements and land sales to conservation groups.

LURC has held more than 200 hours of proceedings on Plum Creek’s plan, including four public hearings and four weeks of technical sessions with dozens of interested parties.

Testimony during the public hearings focused heavily on the emotional aspects of Plum Creek’s plan — namely, whether the development would help revive the region’s ailing economy or wreak environmental havoc on the local lakes, forests and wildlife.

The technical hearings focused on the minutiae of the plan, from lot size and the legal obligations of homeowners associations to potential impacts on Canada lynx, brook trout and backcountry recreation guides.

One theme that surfaced repeatedly during the technical hearings was lack of specifics when it came to house lot locations and the types of resorts proposed for Big Moose Mountain and Lily Bay.

Some opponents suggested Plum Creek was attempting to hide the company’s true plans until they were able to set in stone the number of house lots and resort locations. They predicted that, as currently written, the concept plan would weaken LURC’s ability to stop inappropriate development.

Plum Creek officials insisted that plans for each subdivision and resort plans would have to be approved by LURC. But officials said the company needed flexibility to ensure the plan would work financially, especially if Plum Creek sells off its development rights on the 430,000-plus acres in the conservation plan.

"This is the second-largest conservation deal in U.S. history and, thus, there is a degree of certainty that we are seeking," James Kraft, a senior vice president and general counsel at Plum Creek, said Friday.

Commissioners and parties on all sides said they were pleased with the civil tone of the hearings, despite the passions and differences of opinion.

Luke Muzzy, Plum Creek’s senior land asset manager in Maine, credited LURC staff with running a smooth and orderly process. He also reiterated a willingness to address concerns expressed by LURC and opponents.

"We’ve been at this for two months, and there were a lot of great comments," Muzzy said. "We’ve indicated throughout our testimony that there are areas we feel we can make things clearer."

Members of the Moosehead Region Futures Committee, a grassroots organization of Moosehead-region residents, said the hearings made clear there are "significant problems" with both the development plan and the conservation proposal. They called on Plum Creek to respond by making major changes to its plan.

"We remain optimistic that the LURC process will eventually result in a plan that balances ‘smart growth’ near existing communities with meaningful conservation, a plan that will support the region’s nature-based economy for generations to come," the group said in a statement.

Written comments on the Plum Creek proposal should be sent to: Land Use Regulation Commission, 22 State House Station, Augusta, ME 04333-0022. Comments can also be e-mailed to lurc@maine.gov.

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 PLUM CREEK (MAINE)

Final hearing held on Plum Creek plan. By Kevin Miller. Bangor Daily News, January 21, 2008

GREENVILLE, Maine - State regulators wrapped up public hearings on Plum Creek's Moosehead Lake development plan on Saturday the same way they began them: before a deeply divided crowd of several hundred people in this North Woods community.

During the past seven weeks, regulators have listened patiently as well over 400 people offered their thoughts on whether Plum Creek’s historic proposal represents a pathway to economic revival, environmental disaster, or something in between.

More than 25 hours of testimony later, regulators still have a long road ahead as they grapple with the largest and one of the most controversial development proposals in Maine history.

The public hearings will be followed by technical hearings that could finish as early as Friday, and the Land Use Regulation Commission’s review of the plan is expected to take several months after completion of the technical hearings.

The four public hearings made abundantly clear that Mainers from all backgrounds and regions of the state are deeply and passionately split over a proposal that all sides acknowledge will change the face of Maine’s North Woods.

"I hope there’s a special place in heaven for you," said one of the last of the 150 or so people to address the Land Use Regulation Commission on Saturday.

Proponents and critics of Plum Creek’s plan were nearly equally represented among those who spoke during Saturday’s hearing, held at Greenville High School. Speakers reiterated many of the themes heard at the three previous hearings.

Supporters predict Plum Creek’s plan for 975 house lots, two resorts and more than 400,000 acres of conservation will create jobs and promote tourism while permanently protecting the region’s natural beauty.

Opponents, meanwhile, argue the luxury homes and vaguely defined resorts could spoil the wilderness quality of the area, thereby undermining the backbone of an already ailing economy.

Saturday’s hearing did help illuminate regional differences of opinion, however.

The vast majority of residents who testified strongly urged LURC to approve some version of Plum Creek’s plan.

Diane Bartley said locals are not so naive as to think Plum Creek’s proposal will solve all of the region’s problems, which include above-average poverty rates, shrinking schools and hospitals struggling with too few patients. But the plan offers a good balance of growth and protection, she said.

"I hope you will listen to the local people," Bartley said.

Other locals reminded the commissioners of the heyday of the region’s tourist economy, when 500 or more people could stay at Hotel Kineo alone and dozens of steamships plied Moosehead Lake.

While Plum Creek’s plan probably wouldn’t bring back such times, supporters said, it would create much-needed jobs while guaranteeing public access to about 430,000 acres in the area.

"I believe the plan will give people hope and the confidence to move to Greenville," said Joe DiAngelo, who has worked seven different jobs to support his family since moving to Greenville.

But for almost every supporter who spoke Saturday, there was someone who urged LURC to reject Plum Creek’s plan.

Loren Ritchie said he loves his community. A retired educator who graduated from Greenville High School, Ritchie said he supports and volunteers at the local school system and literally owes his life to C.A. Dean Memorial Hospital in Greenville. But he is unconvinced Plum Creek’s plan would bring positive changes.

"I just can’t find it in me to support this proposal," Ritchie said.

Others sought to cast doubt on the benevolence of Plum Creek’s conservation proposal and, instead, portrayed the company as a money-hungry corporation with little regard for the local community or environment.

Stephen Perkins of Sangerville was among several speakers who criticized Plum Creek for proposing subdivisions and a 250-accommodation resort on Lily Bay north of Greenville. Perkins, who owns a camp on the bay, predicted the development would spoil his camp and nearby Lily Bay State Park.

"Are you willing to trade the call of the loon for the ring of the cash register?" Perkins said. "Say no to Plum Creek."

LURC will resume its enormous review of Plum Creek’s proposal on Tuesday as commissioners, staff and interested parties continue to probe the details of the plan during a fourth week of technical hearings.

Catherine Carroll, LURC’s director, said the commission hopes to finish the technical hearings by Friday, but she left the door open for future meetings should Plum Creek propose additional changes.

No other public hearings are planned at this time, but the public record likely will remain open for a month after the technical hearings are complete, she said.

Speaking Saturday evening, Carroll said she was extremely pleased with the civility and respect both sides demonstrated during the public hearings.

"My impression is the people who testified took this very seriously and took time to craft their arguments," Carroll said. "And I found most of the comments to be very constructive."

In an unprecedented move, LURC asked for a heavy police presence at all of the hearings. Plum Creek officials, who have been the targets of vandalism and threats because of the development plan, also were guarded by a team of ever-present private security guards.

Luke Muzzy, Plum Creek’s senior land asset manager and one of the key architects of the development plan, said he too was pleased with the tone of the hearings.

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PLUM CREEK (MAINE)

Last LURC Public Hearing. Greenville's survival tied to Plum Creek. Kennebec Journal & Morning Sentinel, January 20, 2008

Enrollment at Greenville schools has dropped more than 100 students -- greater than 25 percent -- in the last decade, said Superintendent Heather Perry on Saturday.

Speaking on behalf of the Greenville School Committee at a public hearing on Plum Creek's plan to create 975 house lots and two resorts on 20,000 acres around Moosehead Lake, Perry spoke of the struggle her community faces as enrollment drops and shrinking state subsidies shift costs onto the shoulders of local taxpayers.

Unless there is change, Perry said, that challenge will only get more difficult.

While Perry spoke neither for nor against the Plum Creek plan, her comments underscored the hunger for economic growth in a community that is struggling to maintain a critical mass of people and jobs to support its schools and hospital.

Saturday's hearing was the fourth and last of a series of public hearings held throughout the state by the Land Use Regulation Commission.

Participants spoke for up to three minutes in the Greenville High School auditorium while commission members listened from the stage, where they sat in front of a huge painting of Moosehead Lake.

Next week, the commission, which serves as the planning board for the unorganized territories, will hold four days of party sessions, when lawyers and experts from groups with legal standing in the process will question witnesses.

Those sessions -- the last scheduled for the Plum Creek plan -- will be held at the St. Paul Center on State Street in Augusta. The public is welcome, although no public comment is allowed.

Saturday, supporters and opponents of the plan were divided largely by whether they saw it as an economic good, or a profit grab that would forever mar an area that has long served as a mecca for sportsmen and nature lovers.

As a group, Greenville residents appeared to be much more in favor than against, with 11 Greenville residents supporting the plan in the first half of the meeting while two were opposed and two others said they were neither for nor against.

A total of about 50 people spoke between 10 a.m. and 1 p.m.

Greenville is the largest town near Moosehead Lake and the area's service center.

Edward Olivier, who serves as the chief financial officer of C.A. Dean Memorial Hospital in Greenville, said the small hospital is under utilized and can't get any smaller without ceasing to be a hospital.

"The simple solution for C.A. Dean is more patients. The Plum Creek plan will bring jobs and will bring new tourists and new residents, some of whom will need services at the hospital," Olivier said.

Olivier said health care is a critical resource that is at least as important as the natural environment to the people who live and work in the community.

"If you approve this plan, you vastly increase the chances that the people of this region will continue to have access to quality health care," he said.

Representative Stacey Fitts, R-Pittsfield, said the Plum Creek plan is critical to the area's economy.

"This is the only place I have ever seen where a McDonald's sits boarded up," said Fitts.

Fitts said the plan had the support of economic development groups, municipal officers, legislators and most of the people.

Elaine Bartley, of Greenville, said the areas that Plum Creek's plan would develop also supported housing or resorts in the past.

In 1885, the Kineo Hotel could accommodate close to 400 people, and tourists held regattas, yacht races and other sporting events on a daily basis. Seasonal people even had their own baseball team, she said.

"All we want is the opportunity to eventually recapture a portion of what we once had," said Bartley.

Many who attended the hearing, however, came from far away to advocate saving a place with storied past.

Joan Welsh, of Rockport, former president and CEO of the Hurricane Island Outward Bound School, said Outward Bound has been taking students into the North Woods and contributing to the local economy for decades.

Staff and students are drawn to the area by its beauty and remoteness, said Welsh.

If the wilderness environment becomes compromised because of sprawling development, the integrity of courses taught in the North Woods will be jeopardized, she said.

Nevin Christensen, of Simsbury, Conn., came to the hearing after visiting Moosehead Lake over the summer.

"I am your token yuppie Connecticut flatlander come to say 'Hi,'" said Christensen, by way of introduction.

"As I used to go to school, cows used to cross the road and the bus had to stop," said Nevins, describing his home town.

Now, he said that rural environment is replaced by urban sprawl and it is unsafe to even ride a bike.

This summer, he spent two hours in a thunderstorm on Moosehead Lake's Spencer Bay with his two children. It was an "amazingly intense" experience, he said.

Christensen said he came to the hearing because he promised his 3-year-old.

"So I could look him in the eye and say I did what I could to preserve Moosehead Lake," said Christensen.

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PLUM CREEK (MAINE)

Plum Creek plan's fans cite community's gains. Its foes come to Greenville to say the Moosehead development would damage natural wonders. Maine Press Herald, January 20, 2008

Enrollment at Greenville schools has dropped more than 100 students -- more than 25 percent -- in the last decade, Superintendent Heather Perry said Saturday.

Perry spoke on behalf of the Greenville School Committee at a public hearing on Plum Creek's plan to create 975 house lots and two resorts on 20,000 acres around Moosehead Lake. She described the struggle her community faces as enrollment drops and shrinking state subsidies shift costs onto the shoulders of local taxpayers.

Unless there is change, Perry said, that challenge will only get more difficult.

While Perry spoke neither for nor against the Plum Creek plan, her comments underscored the hunger for economic growth in a community that is struggling to maintain a critical mass of people and jobs to support its schools and hospital.

Saturday's hearing at Greenville High School was the fourth and last of a series held around the state by the Land Use Regulation Commission.

Next week, the commission, which serves as the planning board for the unorganized territories, will hold four days of party sessions, when lawyers and experts from groups with legal standing in the process will question witnesses.

Those sessions will be held at the St. Paul Center on State Street in Augusta. The public is welcome, although no public comment is allowed.

On Saturday, supporters and opponents were split largely by whether they saw the plan as an economic good or a profit grab that forever would mar an area that has long been a mecca for sportsmen and nature lovers.

Greenville is the largest town near Moosehead Lake and the area's service center. As a group, Greenville residents Saturday appeared to be much more in favor of the plan than against it. Eleven of them supported the plan in the first half of the meeting, while two were opposed and two others said they were neither for nor against.

Edward Olivier, who serves as the chief financial officer of C.A. Dean Memorial Hospital in Greenville, said the small hospital is underutilized and can't get any smaller without ceasing to be a hospital.

"The simple solution for C.A. Dean is more patients. The Plum Creek plan will bring jobs and will bring new tourists and new residents, some of whom will need services at the hospital," Olivier said.

Olivier said health care is a critical resource that is at least as important as the natural environment to the people who live and work in the community.

"If you approve this plan, you vastly increase the chances that the people of this region will continue to have access to quality health care," he said.

State Rep. Stacey Fitts, R-Pittsfield, said the Plum Creek plan is critical to the area's economy. "This is the only place I have ever seen where a McDonald's sits boarded up," Fitts said.

Fitts said the plan had the support of economic development groups, municipal officers, legislators and most of the people.

Elaine Bartley of Greenville said the areas that the plan would develop also supported housing or resorts in the past.

In 1885, the Kineo Hotel could accommodate close to 400 people, and tourists held daily regattas, yacht races and other sporting events. Seasonal people even had their own baseball team, she said.

"All we want is the opportunity to eventually recapture a portion of what we once had," Bartley said.

Many who attended the hearing, however, came from far away to advocate saving a place with storied past.

Joan Welsh of Rockport, former president and chief executive officer of the Hurricane Island Outward Bound School, said Outward Bound has been taking students into the North Woods and contributing to the local economy for decades. The area's beauty and remoteness attract staff members and students, Welsh said.

If sprawling development compromises the wilderness environment, it will jeopardize the integrity of courses taught in the North Woods, she said.

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PLUM CREEK (MAINE)

Mining Moosehead? Kennebec Journal & Morning Sentinel, January 18, 2008

Supporters of Plum Creek Timber Co.'s proposal to develop 20,000 acres in the Moosehead Lake region tout the company's plan to permanently conserve roughly 430,000 acres.

From a mathematical point of view, it seems like a good deal.

In return for zoning changes that would allow for 975 residential lots and two resorts in the heart of Maine's storied Moosehead Lake area, Plum Creek Timber Co. would permanently conserve a chunk of land roughly twice the size of Baxter State Park.

But the plan is only as good as the legal language that determines how that land can be used, and those who oppose it say there are big loopholes.

Supporters say the easement delivers conservation on valuable land and links already-preserved parcels to create a barrier to development stretching from Quebec to Mount Katahdin.

The plan is under review by the Land Use Regulation Commission, a seven-member panel that serves as the planning board for Maine's vast unorganized territories.

The last public hearing on the plan is scheduled Saturday in Greenville at the Greenville High School auditorium. Registration to speak begins at 9 a.m.

Cathy Johnson, Northwoods project director for the Natural Resources Council of Maine, which opposes Plum Creek's plan, said the easement gives little to Maine people they don't already have.

Plum Creek, however, would receive "huge rights" in the 20,000 acres and be able to continue to use easement land for commercial forestry and in other ways.

The easements would allow septic waste spreading, cell phone towers and gravel mining, and, in the case of the 266,000-acre easement, commercial wind development, according to Johnson.

"This is an easement that was written by Plum Creek to have terms that are favorable to Plum Creek, instead of what we believe is appropriate," she said.

A memo written by Assistant Attorney General Amy B. Mills to the Bureau of Parks and Lands details several areas of concern in easement language and also suggests that the Bureau scrutinize language in other areas.

About a section on mineral rights, Mills said, "The language is unacceptable as it effectively allows mining activities on the property without regard to the conservation values of the easement."

The language also appears to make it difficult for the holder of the easement -- the party responsible for enforcing its terms -- to hold Plum Creek's feet to the fire.

Before siting structures and improvements or charging the public access fees, for example, Plum Creek is only required to "consult" with the easement holder.

Alan Hutchinson, executive director of the Forest Society of Maine which would holder the 91,000-acre balance easement, however, called Plum Creek's easement "as good as the best we have here in the state."

Hutchinson said the language that deals with enforcement and forestry practices in Plum Creek's proposal are similar, if not better, than in other large-scale working-forest easements.

"You want the conservation in the right locations and the development where it belongs," he said.

Plum Creek's proposal not only protects huge parcels of land in an area under increasing threat of development, it also connects to other conserved land to create a network that adds up to more than 2 million acres, said Hutchinson.

"It is almost like the Great Wall of China, right on the parts where the development pressures from the south are eroding into the North Woods," he said.

Hutchinson said the easements are written to allow for septic spreading, gravel mining and cell towers because of the needs of local communities.

Towns have historically used land that would be included in the easement for waste disposal, he said, and they need gravel to maintain roads. Cell phone towers are a public safety issue.

"Without a concept plan, the future of the area looks dismal to us," said Hutchinson. "Zoning is temporary. What we have on the table right now is permanent."

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BURLINGTON NORTHERN (WASHINGTON)

Eastside rail forum sketches ideas for commuter line. By Ashley Bach. Seattle Times, January 17, 2008

The effort to save the BNSF rail line from Snohomish to Renton was struggling last year while the region debated Proposition 1, the roads and transit ballot measure.

Then Prop. 1 failed, and the idea of an Eastside commuter-rail line became much more attractive, rail-preservation advocates say.

"That's the reason the political momentum completely flipped on this," said Bruce Agnew, director of the Discovery Institute's Cascadia Center think tank.

About 70 people came to a forum on Eastside commuter rail, organized by Cascadia, at Kirkland City Hall Wednesday night.

And several political leaders, including Snohomish County Executive Aaron Reardon, Kirkland Mayor James Lauinger and Metropolitan King County Council members, have expressed support or interest in keeping the tracks for a passenger-rail line, Agnew said. Lauinger was there Wednesday, and Reardon is set to attend a forum tonight.

The Cascadia Center has also formed an umbrella group — the Eastside TRailway Partnership — designed to help raise money and gather the disparate groups pushing for commuter rail. These groups — including All Aboard Washington, Eastside Rail Now! Transportation Choices Coalition and the Cascade Bicycle Club — have different motivations and strategies, but the same goal, Agnew said.

The Port of Seattle is in final negotiations to buy the 42-mile line from BNSF. The idea of preserving the tracks, and focusing immediately on building both a recreational trail and commuter-rail line, has met with strong opposition from King County Executive Ron Sims and some other regional leaders.

The new partnership's goal is to build support among several key agencies — including the Port of Seattle, which is set to own the corridor, and Sound Transit, which could help operate the new line.

A commuter line could cost $100 million to $250 million, with a "substantial portion" coming from private investors, Agnew said. Developers could build along the line, and help bankroll much of the project, like Paul Allen and other developers did with Seattle's South Lake Union streetcar.

A pilot line, running every hour or so from Bellevue to Snohomish, could be running within a year or two, organizers said.

At Wednesday's forum, Cascadia consultants and members of the advocacy groups displayed sketches of station designs. They spent much of their time taking questions from audience members about cost, neighborhood impacts and ridership numbers.

Commuter-rail advocates shouldn't get too far ahead of themselves, as the Port of Seattle purchase isn't final yet and the rail proposal will undergo many changes, organizers said. Cascadia is holding another forum from 5:30 to 7:30 p.m. today at Angel Arms Works, 230 Avenue B, in Snohomish.

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PLUM CREEK (MAINE)

New test for developers in Maine: climate change. Huge development around Moosehead Lake would create 500,000 tons of CO2 over 50 years, environmentalists say. By Mark Clayton. Christian Science Monitor, January 16, 2008

A plan to build thousands of new homes next to a lake in Maine's north woods faces an environmental test that may one day challenge developers nationwide: What's the carbon footprint of a new subdivision or land development?

At hearings last month, Maine environmentalists unveiled for state regulators what is being called a first-in-the-nation study of the greenhouse-gas emissions expected from a huge development planned for Maine's Moosehead Lake. Some observers call it a new front in an emerging battle between environmentalists and developers that started in California two years ago.

"What we're asking in the [Maine] case, for the first time, is to consider the net carbon impacts of a major proposed development," says Michael Stoddard, deputy director of Environment Northeast, the Boston environmental research group that did the study.

So how much carbon does a development emit? Environment Northeast estimates that the plan to clear 14,000 acres of forest to build about 2,300 apartment units and homes could generate up to 500,000 metric tons of carbon-dioxide emissions over 50 years, if emissions of vehicles traveling to the distant site are included. The US emits some 12,000 times that amount in a single year.

The developer, Plum Creek Timber Co., disputes the analysis.

"Our plan in Maine is very sensitive to the carbon-footprint issue," says Kathy Budinick, spokeswoman for Seattle-based Plum Creek. "If our plan is approved, more than 400,000 acres of land will be permanently conserved in perpetuity for sustainable forestry, representing the second-largest conservation easement in US history. It's really quite a phenomenal carbon outcome."

At issue is not just the size of a development but the amount of driving it encourages. By being so far from major cities and accessible only by car, the Plum Creek project would produce, conservatively speaking, an additional 9,500 tons of emissions annually, according to the Environment Northeast study. That's the equivalent of putting an extra 1,850 vehicles on the road.

"It's our belief that we can't meet the nation's transportation goals for climate change just by improving automobile technology," says Alan Caron, president of GrowSmart Maine, an antisprawl group that lobbies for compact urban planning and public transportation systems and helped sponsor the Plum Creek study. "You have to pay attention to where things are located."

States eye impact of developments

Other states are beginning to scrutinize the climate impact of real estate developments.

At least 35 states have climate-action plans or are in the process of developing them, says Reid Ewing, executive director of the National Center for Smart Growth Research and Education at the University of Maryland. Of those, 17 states have set emissions targets for greenhouse gases.

But laws that allow direct action are still limited. Only California, Massachusetts, and King County, Wash., have specifically incorporated climate-change analysis into the state environmental-review process as it applies to land development, experts say.

"It's mostly talk in the other states," Dr. Ewing says. "But that's only because at this point nobody is exactly sure how to get there. A lot of people are talking about it and many are following California's lead."

California's attorney general has also been a driving force in challenging development because of its climate effects. Last April, he sued San Bernardino County, claiming its development plan didn't go far enough in evaluating greenhouse-gas emissions as required by the California Environmental Quality Act. The attorney general also sued ConocoPhillips over a refinery expansion plan in Contra Costa County. Both cases saw settlements last year that require action to take greenhouse-gas emissions into account.

Liability-conscious California cities and towns are now rushing to include basic greenhouse-gas assessments in their development plans, experts say. At least 148 land-development filings under the environmental quality act last year cited greenhouse-gas emissions as a key issue – compared with just two known cases a year earlier.

"We've seen a substantial increase over years past," says Scott Morgan, senior planner with the California Governor's Office of Planning and Research. "Climate change has kind of permeated everything with regard to land use."

A major challenge for California cities, counties, and developers is the lack of specific threshold standards for greenhouse-gas emissions, he adds. But his office expects to develop such standards by 2010.

Environmental groups, meanwhile, are stepping up their legal challenges to new land developments.

In 2006, the Center for Biological Diversity, which specializes in legal action to protect endangered species, sued Banning, Calif., a city of about 30,000, for its alleged failure to evaluate the impact on climate of a proposed development of about 1,500 homes.

"We wanted them to take their carbon footprint into account and really look at the greenhouse-gas issue," says Matt Vespa, an attorney with the center. "They just ignored us."

Officials for the city say they hope the case, which is awaiting a judge's verdict, will validate the city's earlier environmental impact assessment of the development.

"Banning is very concerned about being a green city and being protective of the environment," says Julie Hayward Biggs, Banning's city attorney. "There was no requirement to take greenhouse emissions into account at the time the city approved the development – and there still are no standards."

Plum Creek decision this summer?

Meanwhile, the last hearings on Maine's Plum Creek project are scheduled for this week.

State officials are expected to rule as soon as this summer on the company's request to rezone hundreds of thousands of acres for development.

"Climate change will be the defining issue for urban planning and land development in the years ahead," says Ewing. "It will trump everything."

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PLUM CREEK (MAINE)

Judge sets earlier date for lynx plan. The U.S. Fish & Wildlife Service must issue a new critical habitat proposal by Feb. 15. By John Richardson, Portland Press Herald, January 16, 2008

Protections for Canada lynx habitat in northern Maine and western states are under review by federal officials.

A federal judge in Washington, D.C., has put protections for Canada lynx habitat in Maine and western states on a fast track.

U.S. District Court Judge Gladys Kessler ordered the federal government Tuesday to issue a new critical habitat proposal by Feb. 15, several months earlier than planned. Once the proposal is published, Kessler said, the government must gather public comments, consider the input and issue a final rule designating critical habitat by Feb. 15, 2009.

The U.S. Fish & Wildlife Service originally planned to issue the proposal in August, but has accelerated the effort and expects to meet the deadline, said Mark McCollough, a biologist with the agency in Old Town.

This will be the second round for the lynx habitat rule.

The Fish & Wildlife Service, under a court order, issued a proposal in November 2005 that included 10,000 square miles in northern Maine, as well as 8,000 square miles in western states, as critical habitat.

Critical habitat designation means that any federal activity in that area, including the issuance of federal permits, requires a review of potential effects on lynx. The cat is considered a threatened species under federal law. Maine is the only eastern state with a breeding population.

Despite the proposal, a final rule published in November 2006 excluded all of the Maine habitat from the protected area. Now, the Fish & Wildlife Service is reconsidering the decision because of improper influence by a former Interior Department appointee.

Meetings between Julie MacDonald, the appointee, and representatives of Maine timberland owners, including Plum Creek Timber Co., led to the decision to drop the Maine land from the habitat area, the agency said. MacDonald also ordered federal forest lands removed from habitat areas in the West, it said.

Kessler has been overseeing the case since conservation groups first sued to demand habitat protection.

The habitat proposal due Feb. 15 is expected to again include virtually all of northern Maine.

There will again be debate and lobbying over whether the Maine timberlands are in the final habitat rule. It has already started, according to McCollough.

"The forest industry really is adamantly opposed to being included in critical habitat. Plum Creek has come to talk to us, as have other companies" and the Maine Forest Products Council, McCollough said. "And they say the designation carries a real nonregulatory burden with it, in that it diminishes property values."

Conservation advocates have already threatened to take the Fish & Wildlife Service back to court for not protecting the lynx as required by the Endangered Species Act.

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PLUM CREEK (MAINE)

Plum Creek Proposal: Committee now turns its focus to land conservation. By John Richardson. Kennebec Journal & Morning Sentinel, January 13, 2008

The promise of 430,000 acres of protected forest land around Moosehead Lake is, for many, the biggest selling point for Plum Creek Timber Co.'s development plans.

But the conservation piece of the plan is as complicated and contentious as the part of the plan that calls for two resorts and 975 house lots scattered around Maine's largest lake. Where some see a golden opportunity to preserve forests, others see a legal maze of exceptions and loopholes.

The mix of land sales and easements -- some to be donated and some to be sold -- will soon be the focus of a state panel that resumes its review of the project this week in Augusta.

The Maine Land Use Regulation Commission will hear arguments ranging from whether hiking lodges, gravel pits and other uses should be allowed in conservation areas to the bigger questions: Are the limits on future development enough to compensate for the project's potential impact on the wildlife and character of the region? How much of the overall conservation plan should be counted as balance for the development.

The deal, if approved, would be one of the largest land preservation packages in the country, perhaps second only to a 763,000-acre conservation easement on Pingree family timberlands across northern and western Maine. The conservation plan proposed by Plum Creek covers an area roughly twice the size of Baxter State Park.

"It's land on either side of Moosehead Lake that we and others have been trying to (conserve) for over a decade," said Alan Hutchinson of the Forest Society of Maine, a participant in the conservation deal. "This connects the pieces that form a wall between the development pressure pushing form the south and the real heart of Maine's North Woods."

Critics say the promise of conservation is only as good as the detailed language in the easements that limit land uses by Plum Creek and future owners.

"We don't think it's enforceable," said Ken Spalding, Maine woods project coordinator for RESTORE: The North Woods, an opponent of the plan. Even if it is, he said, the agreements are so flawed they don't provide enough protection beyond what's already in place.

"You really have look at what you're getting," he said.

Conservation is more than just a selling point in the plan. It's a legal mandate.

Plum Creek is asking for a large-scale rezoning of commercial timberland under rules that require the owner to balance the impacts with public conservation benefits. It's up to the landowner to offer what it thinks is appropriate balance.

In Plum Creek's case, the company wants 20,000 acres rezoned for homes and resorts. As a balance for that, the company is offering to donate an easement that would restrict future development on 91,000 acres surrounding the homes and resorts.

The "balance easement," as it is known, would allow Plum Creek or future owners to continue logging operations. It also would allow a limited number of other uses: communications towers, gravel removal, transmission lines for wind farms, septic sludge spreading, water extraction and so-called back country huts to provide accommodations for hikers or skiers. No residential development would be allowed, and public access would be guaranteed.

In addition, Plum Creek has agreed to sell a much larger easement on 266,000 surrounding acres. The so-called "legacy easement" would have slightly more permissive rules than the balance easement. It would allow full-fledged wind farms, for example.

Plum Creek also has agreed to sell two other sensitive parcels of forest totaling 74,500 acres. Those lands would become nature reserves.

The company would sell the legacy easement for $10 million, and the reserve lands for $25 million to The Nature Conservancy, which would likely seek federal and state grants to help pay. The sales will happen only if the company's rezoning plan is approved, according to Plum Creek.

Critics of Plum Creek's plans say easements that limit future development are a good thing, but do not balance out the loss of wildlife habitat and other impacts from resorts and subdivisions that they say are misplaced and too sprawling. And, they say, the list of allowed uses waters down the value of the easements.

A total of six lodges, or back country huts, could each cover 5,000 square feet and be four-stories tall, for example. Three are allowed in each of the two easements.

"It's not that something like this is necessarily bad," said Kathy Johnson, North Woods project manager for the Natural Resources Council of Maine. But, Johnson said, "it is significant development. We don't know where they'll be."

Opponents also say the easements don't give the state enough authority to make sure Plum Creek and future owners practice sustainable forestry and protect wildlife.

Some of the language in the easements, for example, promises the landowner will consult with the state on management issues.

"Consultation may be better than nothing, but it certainly does not ensure the forest will be properly managed," said Johnson.

Some state officials also want more enforcement authority.

A memo written in December by Assistant Attorney General Amy Mills concluded that the easements mostly give the state the ability to provide advice. "As currently drafted, this office has significant concern about the value and enforceability of the conservation easement," Mills wrote.

State and federal wildlife agencies have said in written testimony that they negotiated changes in the easements last fall that would guarantee more conservation and public benefit. Plum Creek, for example, is promising to create an advisory team of government biologists who would meet once a year and provide guidance to the company.

With some more minor changes, the Plum Creek proposal "will offer Maine significant plant and animal conservation benefits and assurances in perpetuity as well as a continued tradition of access for hunting, rapping and fishing," according to written testimony from the Maine Department of Inland Fisheries and Wildlife.

One of the additional changes that government agencies are calling for, however, is to give the advisory team more influence in planning and management. Without it, according to the U.S. Fish and Wildlife Service, "the success of the easements in providing for conservation of natural resources may be considerably less."

The company and groups involved in the agreements say they allow for strong enforcement and guarantee protection of a region that is otherwise sure to face gradual development pressure.

"The development is going to happen up here absent a plan," said Luke Muzzy, project manager for Plum Creek and a Greenville resident. "It has been and I don't know why it wouldn't continue."

Exceptions that would allow some uses of the conservation land were all included because of regional needs and requests from the community, not any plans that the company has, Muzzy said.

The Appalachian Mountain Club recommended the huts exception, for example. Other uses, such as septic spreading and telecommunication towers, are included so that the easements don't create hardships for area communities .

"This easement's in perpetuity and it's so big and you have communities that depend on this land and if you don't try to think out as far as possible, you're really limiting some of the things that can happen," Muzzy said.

James Kraft, Plum Creek's general counsel, said the agreements already have strong language that would guarantee the company and future owners stick to the promises. "There's no doubt the easements are fully enforceable," he said.

The advisory team of government biologists, he said, will provide an additional way government biologists can collaborate with the company. "It was not meant to create a new regulatory body that has control. But it was meant to create a platform for constructive dialogue," he said.

The Nature Conservancy, which would be the holder of legacy easement, is confident that the agreement would be enforceable, said Mike Tretreault, executive director of The Nature Conservancy in Maine.

Tetreault also said the organization supports allowing limited uses so surrounding communities aren't put in a bind. "The biggest threat ecologically is intense residential and commercial development," he said. "And this easement definitely extinguishes those things."

One of the biggest issues facing the Land Use Regulation Commission is whether to take into account all of the proposed land conservation or consider only the 91,000-acre "balance easement" when deciding whether to approve Plum Creek's rezoning plan.

Critics want the "legacy easement" and land sales to be considered private side deals because Plum Creek would get paid for them, partly with public funds. At the same time, all 430,000 acres hinges on approval.

"Is that or is it not part of the (rezoning) plan? The jury's out on that. We're still taking that into consideration," said Catherine Carroll, executive director of the land use commission. "That's still a big question that's out there."

It's possible that the commission might never answer that question. If members of the commission decide that the development side of the plan is not needed or too harmful, the issue of balance would be pointless.

It's unclear if the conservation plan or any pieces of it would be salvaged if the development project dies. It's certain, at least, that the cost of the deals would go up.

Those involved in the deals say an opportunity to protect such a large area of the Moosehead region won't come again.

"If you walk away from this concept plan, you walk into a whole lot of uncertainty," said Tetrault. "And there hasn't been a lot of talk about what's plan B."

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PLUM CREEK (MAINE)

Troupe stays in step for Plum Creek. By Bill Nemitz, Columnist for Portland Press Herald, January 11, 2008

It's no secret that Plum Creek Timber Co. has hired all kinds of local talent -- lawyers, lobbyists, beefy security guys with little plugs in their ears -- to help pitch its proposed mega- development around Moosehead Lake.

But a choreographer?

It happened last month in Portland, at the Maine Land Use Regulation Commission's hearing on the Plum Creek proposal. And the award for best stage management goes to Barton & Gingold, a Portland-based public relations firm hired by Plum Creek to, shall we say, keep supporters in step.

"We have a large team of foot soldiers tomorrow," exulted Elizabeth Swain, a partner with Barton & Gingold, in an e-mail sent to nine co-workers on the eve of the Dec. 15 hearing at the Holiday Inn by the Bay. It was one of four public hearings to be held around the state by LURC to gather input on Plum Creek's plans for two resorts and 975 house lots in the northern Maine woods.

Swain's e-mail -- reportedly recovered from a waste basket at the hotel and circulated since among Plum Creek's opponents, offers a rare glimpse into just how carefully the LURC hearings -- the last comes Jan. 19 in Greenville -- have been orchestrated by those on Plum Creek's payroll.

There's this advice from Swain to the "B&G people" who might testify to LURC:

"In the VERY unlikely chance you are asked where you work (the commission never asks public witnesses questions, but let's be prepared) you should say that you are speaking in your capacity as a (fill in the blank) resource economist, former journalist, community development specialist, or whatever, and that you work for Barton & Gingold but others in the firm have been much more directly involved in the project than you ..."

There's this assignment for Tobey Williamson, a Barton & Gingold associate, regarding the numbered tickets handed out by LURC on what was intended to be a first-come, first-speak basis:

"Tobey -- help trade tickets in order to accommodate speaking requests ..."

And this for Randy Seaver, another associate:

"Randy -- help match up speakers with tickets for time slots, keep track of comments to ensure all our points get made."

And this for associate Jim Cyr:

"Jim -- identify and watch media and make sure we have as much interview time as the press is giving to the opponents."

To be fair, both sides in the Plum Creek debate have engaged to some degree in message manipulation. But Judy Berk of the opposing Natural Resources Council of Maine said her group's efforts included no talk of "foot soldiers" and ticket swapping.

"Basically, we'd ask you if you'd like a button," Berk said. "Then we'd know you're on our side."

Contacted Thursday, Barton & Gingold's Swain said none of the firm's current employees ended up testifying after all. She also took issue with the suggestion that Plum Creek's presentation was choreographed from the moment supporters arrived to the moment they stepped up to the microphone.

"I would like to think of us as organized," Swain said. "Not choreographed, but well organized."

So is a chorus line.

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PLUM CREEK (MAINE)

Plum Creek trust may be forced to pay income tax: The bill's sponsor says the legislation is meant to address loophole concerns. By John Richardson, Portland [Maine] Press Herald, January 5, 2008

Maine lawmakers are concerned that Plum Creek Timber Co. could avoid corporate income taxes if it moves forward with lucrative development plans for the Moosehead Lake region.

Legislation submitted this week could make Maine the first state to force real estate investment trusts, including Plum Creek, to pay corporate income tax on windfall profits. The trusts, or REITs, pay little or no tax on income at the corporate level because they pass their earnings directly to shareholders, who pay income taxes in their home states.

But the situation is not as simple as it might appear, according to the company and some tax experts.

Plum Creek already intends to pay Maine income taxes on its Moosehead development, just as it has on a past development project nearby, according to a spokeswoman. That's because real estate development, unlike timber sales, is carried out by a subsidiary that pays taxes in the conventional way, said Kathy Budinick.

The legislation would affect any REITs that sell real estate in Maine and is intended to make sure that a new generation of large northern Maine landowners don't shift the public costs of development onto other taxpayers, said Rep. Robert Duchesne, D-Hudson, the bill's sponsor.

The proposal, however, clearly reflects the intense statewide focus on Seattle-based Plum Creek as the landowner's Moosehead plans undergo regulatory review by an independent state land use commission.

Plum Creek stands to make a huge windfall -- tens of millions of dollars, at least -- if it wins approval of its plan.

The company bought nearly 1 million acres of Maine timberland in 1998 for about $200 an acre. Rezoning would convert about 20,000 acres of that timberland into much more valuable lots for 975 vacation homes and two large resorts. The plan also includes the sale of a conservation easement on about 400,000 acres of its land for $35 million.

At issue in the Legislature are millions of dollars of potential state income tax revenue from land sales over the next 30 years.

The bill -- An Act to Reestablish Fairness in Corporate Taxation -- was printed this week, and lawmakers and state officials said they have yet to study it. It's based on a proposal that was rejected last year by the state Legislature in Montana, where development by Plum Creek also has led to complaints about a tax loophole.

Duchesne concedes that he doesn't know how much of the company's potential land sales and development profits would already be taxable by the state without any new laws. Despite the company's assurances that taxes will be paid, he said that Plum Creek's unusual tax structure bears a closer look by the state.

"We've never had that kind of discussion," he said. "We have a lot of questions and no answers."

If profits from land sales over the next 30 years could be passed through as part of the REIT, then Maine would never receive income tax revenue to help pay for road improvements and other potential costs of the development. And, he said, the rest of Maine's corporate and individual taxpayers would be left to pick up that cost.

"What I don't want to happen is that the only one who will be exempt from paying the taxes to pay for (road improvements and other public costs) is the one who caused it to happen in the first place," he said.

Duchesne said the bill isn't meant to be anti-Plum Creek or anti- development. In fact, he said, he supports most of Plum Creek's development plan.

"There are going to be a lot of people who say this is an attack on Plum Creek," he said. "To me, it's 'How can our tax policy adjust to the changing land ownership in Maine?' "

Several other Democrats, including leaders of the Legislature's taxation committee, have signed on as cosponsors.

Duchesne said the bill is not intended to impose new taxes on the operating incomes of REITs, including Plum Creek. Maine has about 20 REITs, according to the National Association of Real Estate Investment Trusts, and they primarily invest in office buildings or shopping centers and earn income from rents.

The bill would tax one-time gains from asset sales using the state's existing corporate income tax rate. The rate changes from 3.5 percent for gains of less than $25,000 to 8.93 percent for gains of more then $250,000.

Revenue from the tax would be dedicated to the Land for Maine's Future Program, a land conservation fund that has historically been financed with voter-approved bonds.

Budinick, the Plum Creek spokeswoman, said the bill could make it difficult to operate in Maine because, intentionally or not, it could change the tax structure of its core business -- selling timber. That would put the company at a disadvantage compared with other landowners who pass along earnings and do not pay income taxes at the corporate level, she said.

Plum Creek already generates about $2.3 million in annual taxes for the state, according to Budinick. Much of that is from property taxes and payroll taxes, but it also pays some corporate income taxes to Maine based on the profits of its taxable subsidiaries, she said.

Although Plum Creek's core timber business is operated as an REIT, its real estate sales and development operation is part of a subsidiary that does not qualify for the corporate income tax exemption, she said. It was that subsidiary that created an 89- lot subdivision around First Roach Pond in 1998.

"Full taxes were paid on that," she said.

The same will be true of lots sold as part of the pending Moosehead plan, Budinick said. "In terms of our development projects associated with the (Moosehead Lake) concept plan, we will pay full corporate tax rates on these projects," she said.

It was not immediately clear if profits from the sale of easements would be subject to state income tax. It also wasn't clear if the Duchesne bill would cover that income.

State records on income tax payments are confidential, and officials would not disclose data on Plum Creek. Property tax assessments, however, are public information.

Because most of Plum Creek's land in Maine -- roughly 950,000 acres -- lies in the unorganized territories, it pays about $1 million in annual property taxes directly to the state, according to Maine Revenue Services.

A study commissioned last year by Plum Creek said tax revenues from the plan would far outweigh the public costs.

Planning Decisions Inc. of South Portland reported that the increased property taxes, tourism sales taxes and payroll taxes generated by the project would generate about $185 million in tax revenue in a period of 14 years, based on current tax rates.

In that same time frame, costs associated with the project were estimated at about $30 million, about one-sixth of the estimated revenue, according to the report.

  • BOARDS OF DIRECTORS -- PLUM CREEK'S president and chief executive officer, Rick Holley, serves on the boards of directors of two companies affiliated with the Portland Press Herald/Maine Sunday Telegram: The Blethen Corp. and The Seattle Times Co.
  • THE BLETHEN CORP. is the majority owner of The Seattle Times Co., which consists of The Seattle Times newspaper, three other Washington newspapers, and Blethen Maine Newspapers. Holley joined the Blethen Corp. board of directors in April 2006 and joined the Seattle Times board in January 2007.
  • BLETHEN MAINE Newspapers includes the Portland Press Herald/ Maine Sunday Telegram, the Kennebec Journal, the Morning Sentinel and the Coastal Journal. It has a separate board of directors, and Holley does not serve on that board.
  • Sources: The Seattle Times Co., Plum Creek Timber Co. and the state of Washington's Office of the Secretary of State.
  • THE REAL ESTATE Investment Trust was created by Congress in 1960 to allow small investors to own shares of commercial real estate.
  • REITs traditionally operate like mutual funds that invest in real estate instead of stocks and bonds.
  • AN REIT must distribute at last 90 percent of its taxable income to shareholders in the form of dividends, as well as meet other requirements. Shareholders pay personal taxes on their shares of the income, but the REIT itself pays no state or federal income taxes at the corporate level. State income tax revenue goes to the shareholders' home states.
  • PLUM CREEK Timber Co. became the first timber company to convert to an REIT in 1999. The tax advantages of an REIT apply to its core timber business. The company also operates taxable subsidiaries, including real estate and manufacturing operations, that are subject to corporate income taxes.
  • PLUM CREEK is one of 200 publicly traded REITS nationwide and one of 20 that own real estate in Maine, according to the National Association of Real Estate Investment Trusts. Most invest in shopping centers, office buildings or housing complexes and earn income from rents.

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