Seeking to get more value out of its vast timberlands, Spokane-based Potlatch Corp. plans to sell this week a conservation easement that will cover almost 23,000 acres of its forests near North Idahos St. Joe River for $4.1 million.


The easement sale will be the second the big forest products company will have made on parts of its St. Joe timberlands. The easements allow Potlatch to continue to manage its lands, including harvesting trees for its mills, while protecting conservation values and assuring future public access.


To get an adequate return for our shareholders, we have to monetize certain values of our forests, says John Olson, a Lewiston, Idaho-based Potlatch vice president whos in charge of the companys resource management division. We believe that we get a fair price for the values that we are conveying in the easements.


The buyers of the easements are the state of Idaho and the San Francisco-based Trust for Public Land, which has been working with Potlatch on the program since 2001, says Nelson Mathews, the trusts Northwest program manager. Immediately after the sales, the easements are deeded to the state, Mathews says.


In September 2003, Potlatch sold a conservation easement on 2,700 acres of its St. Joe timberlands near St. Maries, Idaho. The second easement will apply to 23,000 acres that lie immediately south of the Calder, Idaho, bridge, says Olson. By 2006, Potlatch plans to have sold two more easements, providing protection to a total of 80,000 acres of its St. Joe River timberlands while reaping about $15 million in proceeds in the sales.


An easement is a right or privilege, such as for a right of way, one party obtains on anothers land. The value of the easements Potlatch is selling is established through an appraisal. In the sale of the easements, Olson says, Potlatch sells its development rights, and restrictions are placed on uses of its lands, public access is guaranteed, and the lands can continue to be used by sportsmen, other traditional users, and wildlife.


The easements call for special protections in some areas, Olson says. For example, in what he calls the St. Joe Rivers viewshed, which includes the river and the areas that travelers can see from the river, Potlatch will be limited to selective cutting of timberand will be forbidden from clearcuttingwhen it harvests logs, Olson says. The river is regarded highly for its trout fishing and scenic values and is used heavily by anglers, recreational floaters, and campers.


Under the easement that was expected to be sold this week, a 107-acre stand of 300- to 400-year-old trees will be protected from harvest, and protection also will be extended to a network of riparian corridors, good wildlife habitat, and Mica Meadows, a popular recreation spot for camping, snowmobiling, etc., Olson says.


Near streams, the company will observe wider setbacks, or areas in which it wont cut trees, than the state requires, Olson says. While the company will cut less timber in places because of the easements, in some cases, because of the way Potlatch has harvested in the past, there wont be much of a reduction, Olson adds. A well-managed forest is a well-managed forest.


The easements are specific about limiting development, such as the amount of area that could be developed under a mineral right, Olson says. Because the federal government puts up much of the money for the purchase of the easements, it restricts what the state can do under the agreements, and doesnt allow the states to sell them, he says. The restrictions would apply to any subsequent owner of the lands.


Mathews says that for this weeks planned sale, the state of Idaho obtained almost $3.5 million from the U.S. governments Forest Legacy Program, which is intended to keep working forests in operation. That money will cover 75 percent of the price of the easement. He says the trust has raised $305,000 to cover part of the required 25 percent, $1.1 million local match for the transaction. The state of Idaho provided a $30,000 grant, and Potlatch discounted the appraised market value of the easement by approximately $500,000. Both those amounts also will be part of the local match.


The trust expected to use $265,000 of its own funds to complete the transaction, Mathews says. The trust may attempt to fund raise to backfill part of this, but wants to turn its attention now to its program for next year, he says. He says contributions made for the purchase of the easements are tax deductible.


The trust, which has an annual operating budget of $60 million, uses its expertise in finance, real estate, and public-private partnerships to help land owners plan conservation programs, he says.


We use the tools of business to have conservation outcomes that we value, Mathews says. The trusts objectives, however, extend beyond conserving remote forests to providing parks in crowded urban areas, assuring timberland bases for rural mill communities, and, in general, providing land for people, he says.


Under the conservation features of the easements, tourism on the St. Joe River will be encouraged, Potlatch will continue to manage the land, the public wont have to pay for forest management, and the state will monitor compliance with the easements, Mathews says.


The easements are legally binding, he adds. Public access is guaranteed for perpetuity. All of this continues even if they sell the land to someone else.


Olson says Potlatch will give the state copies of its management plans for the lands covered by the easements, and the state will provide feedback to Potlatch on its land management.


Initially, he says, Potlatch set out to sell easements on as much as 600,000 acres of its Idaho timberlands in the St. Joe drainage and the Clearwater River drainage farther south. When other U.S. timber companies began to pursue conservation easements, it became apparent demand would soar for the federal money available under the Forest Legacy Program, and Potlatch scaled back its St. Joe program to 80,000 acres, he says. The company, however, still might pursue conservation easements in the Clearwater country, he adds.


Some other U.S. timber companies have opted to sell tracts of their timberlands outright, but Olson says Potlatch sees that as somewhat cannibalizing an asset that supports our other activities. Timberland can grow trees for harvest over and over again, and Potlatch prefers to manage its lands for the long term rather than sell them, he says.


Partly because of the growth of nearby cities, demand has risen for recreational property, and the value of timberland has increased, Olson says. It gets very difficult to justify holding lands in timber, he says. Still, Potlatch prefers to keep its timberlands intact rather than selling parts of them, which fragments forests, making it harder to manage them and to maintain ecosystem integrity and wildlife habitat, Olson says.


We like to work with conservation groups to protect working forests in perpetuity, he says. We like to participate, when we can, to preserve these contiguous forests.


Earlier this year, Potlatch announced that its 670,000 acres of timberland in Idaho had been certified by the Forest Stewardship Council, which is based in Bonn, Germany. That certification, which essentially deems the companys management of those lands to be environmentally friendly, came after Potlatch already had gained certification under the Sustainable Forestry Initiative, an industry standard. At the time, Potlatch said the certifications would help enable it to sell revenue-producing conservation easements.