September 22, 2008 News of Spatial Interest Vol. 1, No. 15

 

Four landowners in 2005 understood that the changing pattern of land use in Lemhi Valley would soon alter a rural economy.  The 200,000 acres of farms and ranches within Lemhi County were in demand - piece by piece.   New residents are attracted to the  river valley and the surrounding Salmon-Challis National Forest.  Real estate has commanded impressive prices for new homesites and  ranchettes, values that are much higher than ranch revenue.  A five to twenty acre parcel can sell for $35,000 an acre.  Compare that amount to the Idaho average annual cash rent  of $150 per acre for irrigated cropland.  After a mere 230 years, the cash rent approaches the real estate value!

 

These high land values present an obstacle that aspiring young ranchers cannot hurdle.  Ranchers planning for a retirement have a limited market of buyers - at least, limited for buyers intending to raise cattle.  In light of the  of current ranch owner demographic, the valley community anticipates an increase in the turnover of ranchland to other uses.  Lacking a destination resort in the Lemhi region, the land conversion wave has not crested yet, as it has in the Big Wood River Valley (Vol 1, Num. 14).  Assessed residential valuations in rural counties are an indicator of a region's status on the conversion curve.   While the Big Wood River Valley residential assessed values totaled $11 billion in 2007, Lemhi County reached $400 million.  The simple metric indicates there is a window of opportunity to explore landowner options before fragmentation of farms and ranches increases.

 

Four landowners resolved to search for alternatives, and through that commitment formed the Lemhi Regional Land Trust in 2005.   The relatively new Land Trust's mission is "to provide incentives and options for property owners of ranchland to preserve their agricultural lifestyles".   This year, 2008, will mark the first transactions.  Kristin Troy, Executive Director for the Land Trust, reports that several working ranch easements are in progress, including a draft agreement with the owner of a large ranch parcel.  Beyond easements, the Land Trust Board continues to explore other financial incentives.

Carmen and Freeman Creek: Photo Atlas

 Carmen Creek,  located five  miles north of Salmon, is a landscape with signs of a transition.  The photo atlas includes snapshots of family ranches, low density neighborhoods, and a recent subdivision ready for new homes.  Amid this canyon in transition, the Lemhi Regional Land Trust is working with a landowner on a voluntary conservation agreement.  When the two parties reach terms that are mutually acceptable, the property will remain a productive ranch.  After a conservation easement is in place, any future sale of the property will be based on the ranch characteristics, not the real estate development value.  Retaining the ranch value by a conservation easement reduces future estate taxes for a family, and offers an opportunity to ranchland buyers to acquire property without the speculative real estate value embedded in the price.

 

 (Select the satellite view in the Atlas for a general impression of irrigation's  green impact).

 



View Larger Map 
Old Lemhi Road and the Olson Ranch

Southeast of Salmon, the Lemhi River meanders through land that is bordered by two ribbons - one of asphalt (Highway 28) and the other gravel (Old Lemhi Road).    Along Highway 28, driveways enter the road, providing access to homes of variable parcel size, but many in the range of  5 to 10 acres.  The parcels are rectangular, reaching 500 feet towards the Lemhi River.    Between the river and the Old Lemhi Road, the landscape pattern is distinctly different.  The parcels are larger, distances between driveways greater, and the parcel boundaries often contoured, matching the flow of the Lemhi River. 

 

A striking property is the ranch owned and managed by Don and Kathy Olson.  There are no marks of a center pivot irrigation.  The channels that cross the property wind their way to the Lemhi River, bordered by bushes and shrubs that provide wildlife habitat. 

 

Don and Kathy have a conservation easement on part of the ranch, and the easement helped finance expansion of the operation.  Don is one of the Lemhi Regional Land Trust founders, but is quick to explain that conservation easements don't address all threats to ranching.  Although ranchers operate an independent business, their success often depends on other resources.   The green fields in the valley partially support the cattle raised by the ranch.  Every day, someone from the ranch needs to travel 50 miles to the starting point of  grazing allotments, and then ride horseback to keep the cattle out of riparian areas.  The ranch could not survive without the allotments for grazing on federal land.  "Without the allotment", Don explains, "you might as well subdivide the place." 

 

Allotments vs. lots - a worrisome choice for many ranchers, and a potential obstacle to reaching agreements on conservation easements.  These voluntary agreements do provide financial incentives, but once the landowner forgoes development, there are no alternative uses for the property.  If the grazing allotment were denied  or reduced in the future, the landowner would be left without a financially feasible business. 

 

Water, the liquid asset of a ranch in the valley, is also in demand.  Balancing water demands between ranch requirements and instream flows for endangered fisheries is a challenging management task.  Don understands the trade-offs between production and stewardship very well, through his 15 years of service on the Upper Salmon River Basin Watershed Project Advisory Board and as a member of the County Water District's Committee that negotiates instream flows.

 

The map below highlights the ranch location (select Satellite option to view fields and habitat). 

 

In the section below the map, view a slideshow tour.



View Larger Map
 
Olson Ranch Slideshow
 
 
Kidnapped

 

The Sacajawea Interpretive Center is located near the Olson Ranch on the edge of Salmon.  The displays tell the story of a baby  born in the Lemhi Valley who became the only woman to journey with the Corps of Discovery.   When she was a young girl, a competing tribe, the Hidatsas, kidnapped Sacajawea and held her in captivity in the tribe's more "urban" villages in North Dakota.  Through an uncanny series of coincidences, she and her husband joined the Corps of Discovery, and Sacajawea returned to her homeland.

 

Farm and ranch families in the Lemhi Valley face the threat of a different type of kidnapping.  Not due to physical force, but a kidnapping of a rural lifestyle caused by the underlying market forces that value amenity real estate over production of crops and livestock.   Federal tax policy offers landowner benefits for donations of conservation easements.  For land rich and cash poor landowners, the federal tax incentives may simply encourage turnover of workings lands to high net worth buyers who receive greater benefit from the income tax deduction.   But their land purchase may be motivated solely by the amenities, and not the  inherent productivity of the land.

 

The financial crisis and government bailout of financial institutions, one week after visiting the Olsons, is a painful reminder of markets drifting away from true wealth.  The real estate bubble was stimulated by speculators building new homes that had no buyers.  In  2006, over 20% of new construction in the domestic housing market was comprised of speculation homes.  The building  frenzy was compounded by loans approved without due diligence. 

 

Business owners like the Olson family know the resources worthy of investment - the liquid asset of fresh water, the productive banks of rich soil to grow hay, and the livestock that bears interest "in-kind" every year.  These assets are the natural capital that form the wealth of a rural economy.  Real estate developers estimate that the hiatus in their market will last 3-5 years.  The Lemhi Regional Land Trust Board faces a few critical years for their mission:  find market incentives that will sustain working lands and a rural lifestyle for the valley....in the time allotted.