Change Comes to Madison Valley—Land&People

Down a dusty dirt road outside the town of McAllister, in southwest Montana, stands a wooden entryway. Three steps lead up to a doorway capped by a crisp gable. But a knock on the door brings no answer. Open the door and, instead of entering a living room, you look out across an abandoned ranchyard.

The home of Lynn and Devonna Owens occupied this spot for more than 25 years until a few years ago, when newcomers began building houses on 40-acre lots at the upper end of the county road. The Owenses soon tired of traffic mistakenly turning into their driveway. And the dust kicked up by vehicles buried them in housework. They loved their land too much to relocate, so instead they moved the house a quarter mile farther onto the ranch.

But even though they physically feel comfortable again, the Owenses still fear they might have to leave some day. Poor ranching profits combined with inflated land values and increased property taxes brought on by development are straining their finances. In an attempt to hold on, they, along with other local ranchers, are studying a conservation tool that is growing in popularity across the West, especially among agricultural communities. Purchase of Development Rights, or PDRs, provide financial compensation to farmers and ranchers, enabling them to continue to work their land, while conserving open space forever.

"PDRs are voluntary, market-based land conservation tools that advance a common land use agenda shared by farmers, ranchers, conservationists, and public officials alike," says the Trust for Public Land's Ernest Cook. Many western political leaders, including governors Mike Leavitt of Utah and Marc Racicot of Montana, also have embraced PDRs. TPL has formed a partnership with the Western Governors Association to advance the understanding of how PDRs can protect agricultural land throughout the fast-developing West.

Westward Ho
Early pioneers in the wide mountain valleys of western Montana sought out the wooded draws to build their homes, but today's newcomers seem to prefer sun-drenched sagebrush flats. Their large homes often stand out on the landscape like piles of bleached bison bones–the first symbol of drastic change to Western landscapes and culture back in the nineteenth century.

With the people come dogs that often harass livestock and wildlife, and cats that kill songbirds. Horses can quickly overgraze small pastures. Newcomers often want water for lawns and gardens, but conflicts over scarce water are already a big part of life here. Moreover, as land use covenants within developments restrict commercial agricultural uses, ranchers find it more difficult to lease grazing land. "It's hard to get ahold of a piece of ground you can afford to run cows on nowadays," says Gary Clark, who lives outside Ennis, a former ranching community near McAllister that has been transformed into a tourist town. "Houses have crowded us out."

It's no secret that the greater Yellowstone region has become an "in" place to live. More than a million acres of rangeland near the tri-corner of Wyoming, Idaho, and Montana surrounding Yellowstone National Park have been subdivided into plots of 200 acres or smaller during the last decade.

Bozeman, about 50 miles southeast of McAllister, was once a small university and agriculture center. Now housing developments and strip malls dominate the landscape of Gallatin County. Over the last decade the county has experienced a 21 percent growth rate, compared to a 10 percent average for the state. Jefferson County to the north is booming at 24 percent growth. And development is expanding from both directions along the Madison River like warm bread dough, at a 15 percent clip.

Rapid development is not limited to Montana. In December 1999 the U.S. Department of Agriculture reported that an average of 3.2 million acres of land were lost to development every year between 1992 and 1997–an increase from 1.4 million acres annually in the decade of the 1980s. Much of this land consumption is occurring around urban areas. In Montana, however, the problem is exacerbated by the aging of the state's agricultural producers. The median age of Montana's 23,000 ranchers and farmers is 60 years: author Jack Wright predicts that one-third of the state's 90 million privately owned acres will go through estate proceedings within 20 years. Many heirs who cannot afford to pay off inheritance taxes end up selling the property to the highest bidder–often a developer.

The Owenses, who have been ranching their 1,400-acre spread since 1966, don't make much profit off the 120 mother cows they raise. But they could be living high off the hog if they sold out. They haven't yet because they like it here, just as it is. Sitting on their deck, a recent addition to their transported home, it's easy to see why. Across the broad valley, the snow-capped mountains of the Gallatin Range glisten in the sun. A few miles east of the two-block town of McAllister sits Ennis Lake, with good fishing. Just behind the Owens's spread loom the Tobacco Root Mountains, with miles of trails to explore on foot or horseback. Bountiful deer, elk, and game birds make for good hunting all around this paradise. These, of course, are also the reasons why the Owenses have so many new neighbors.

Although they admit the effort is 20 years too late, Lynn and Devonna Owens and other local ranchers have formed the Madison Valley Ranch Group to try to stem the impact on their landscape. "Our goal is not to stop development but to manage and control it," says Lynn Owens. "PDRs are one possibility that we're looking into."

The Z-Word
On a tour of the local subdivisions springing from the foothills outside McAllister, Madison Valley Ranch Group board member David Germann points out that "if we do nothing, this is what's going to happen all around. Everyone that moves out here helps decrease open space."

A few years ago, when he moved from Alaska back to Montana to take over operations on his family's ranch, Germann joined the county planning board, hoping to advocate zoning measures to slow the growth. Zoning has always been a dirty word in cow country, where independent people don't want the government telling them what they can and cannot do with their land. But attitudes are changing, says TPL's Craig Lee. "With widespread sprawl, many Westerners are now saying we need to do something about protecting our open spaces, but on our own terms and with our own political and economic interests in mind."

To date, the most useful alternative to zoning has been convincing landowners to voluntarily put parts of their property under conservation easements–the forerunner of PDRs. Once looked upon with mistrust by the agricultural community, conservation easements are gaining in popularity, says Rock Ringling of the Montana Land Alliance, which holds more than 300,000 acres of conservation easements across the state. "About 50 percent of the landowners [now putting their land into easements] are at least second-generation Montanans," he says.

When a landowner puts land under a conservation easement, he or she agrees to give up most development rights to the parcel in exchange for some estate- and income-tax breaks. The easement often guarantees that the parcel will never be subdivided or developed. Often small-time ranchers don't consider using conservation easements because they wouldn't benefit financially from the resulting income-tax breaks. "We don't even make enough money to pay taxes," Owens says.

That's where PDRs come to the rescue. The Owenses could sell the development rights on their land to a conservation group, state or federal agency, local open space group, or a nonprofit land trust. The PDR would partially compensate the couple up front for any financial sacrifice they made by not selling out to a developer.

"Every spare penny we made went into the ranch," Owens says. "Now we're ready to retire, but we don't want to sell the ranch. We would like to get some money so we could live the way we want to when we retire–a little higher standard than what we've had." Owens is looking into a PDR, but insists it would have to be "a negotiated thing."

Many Uses, Many Benefits
PDRs can be a good deal all around, says TPL's Ernest Cook. "Through PDRs, the landowner can raise some money without losing control or ownership of the land itself," he notes. "If farmers or ranchers can get full value for their land by selling the development rights into a public program, the continued highest value for the land will be agriculture or timber. That stems sprawl development and the loss of open space. Plus, purchasing development rights is a way to achieve widespread permanent protection of the landscape without the kind of controversy that regulation brings with it."

Appraisers usually assess the value of a PDR by figuring out the difference between what a parcel of land could fetch on the open market with no restrictions and what it can be sold for once the agriculture-use-only restrictions are in place. Ranchers can still borrow against the remaining equity in their land. Moveover, by limiting the value of agricultural land, PDRs help keep land affordable to family operations.

Some state fish and game agencies have bought PDRs to maintain hunter access to particular areas, but unless such rights are negotiated in an individual contract, the public does not gain access privileges to the private property. Under PDR agreements, ranchers negotiate their own terms. For example, the Owenses could choose to set aside a couple of building lots for their children. Or they could decide to use the land as a hunting preserve or even develop a golf course. Sometimes a PDR could allow mining to take place. "But the highest and best use remaining after a PDR is going to be agriculture," Cook says.

Where to Get the Money?
The biggest challenge facing PDR programs appears to be their popularity, according to Cook. "Even the most active programs are not able to keep up with farmer or rancher demand to sell their development rights." American Farmland Trust found that for every landowner who sold easements to state or local programs in 1995, six others were turned away for lack of funding. Now, with agricultural producers in addition to conservation groups pushing for change, many western politicians are embracing PDR programs. This is particularly true where rapid development is pushing up land prices, inducing ranchers to sell out. A PDR offers financial incentives–without selling the farm.

Early in 1999 the Montana Legislature got into the game by allocating $1 million for PDRs. Although state representative Karl Ohs, a member of Madison Valley Ranch Group, originally pushed for $4 million, he still calls the program a "landmark bill."

"Montana is seeing a lot of growth, and we're just starting to come to grips with those problems," he says. "There's been a lot of misunderstanding about easements in the past. But this PDR legislation brought together some interesting bedfellows. Opposition came from a variety of places, along no particular political line. A lot of people just couldn't quite grasp it, but we got a lot of education out during the debate." Ohs admits $1 million won't finance many PDRs in Montana, but he points out that the money "can be used to leverage funds from other sources."

Other states have enacted similar programs. In early 1999 Utah created a program to provide state funding for the purchase of development rights on farmland. Arizona also has allocated open space funding to PDRs for agricultural land. Colorado earlier this year took a different tack by passing a law that allows ranchers who donate the development rights on their land for conservation to receive a credit against their state income tax.

In other parts of the country that have more experience with PDRs, communities have come up with innovative ways to fund programs. Virginia Beach, Virginia, dedicated a cellular phone tax, a 1.5 percent increase in local property taxes, and some county appropriations for PDRs. Several counties in Maryland use local real-estate transfer taxes supplemented by general fund appropriations to finance PDR programs. (Many eastern states and counties have successfully funded PDRs for years. New York's Suffolk County on Long Island was the first county to do so, in 1974, and Maryland the first state, in 1977.) And in Davis, California, developers help pay for PDR programs through a farmland mitigation program.

More Than Open Space
Funded by a grant from the David and Lucile Packard Foundation, TPL has been working in partnership with the Western Governors Association to promote PDR initiatives. "We'll be trying to identify jurisdictions where a PDR program would advance conservation," TPL's Craig Lee says, "either on a statewide or local level." During the process, TPL will help communities develop their own funding sources for PDRs, especially by taking public spending measures to the voters.

"We'll work with community leaders to determine if there is enough interest to set aside public funds," Lee says. "If there is, we'll also assist the community in developing the language for a ballot measure, and help organize a campaign."

For the individual rancher or farmer, a PDR can mean more than protecting a pleasant viewscape or important wildlife habitat. In his will, Dave Germann's father, Archie, has divided his 1,200-acre ranch evenly among his five children. Only Dave is interested in continuing to ranch, but there's no way he can afford to buy out his siblings and pay the inheritance taxes.

By selling a PDR on the ranch he might make enough money for a buyout, and also benefit from an inheritance-tax break. "PDRs may be a way to keep families on family ranches," he says.

Land & People, Spring, 2000

Mark Matthews lives in Missoula, Montana, where he writes articles for the Washington Post, High Country News, Wildland Firefighter, and other publications. His first book–the story of the conscientious objectors during World War II who became smoke jumpers for the U.S. Forest Service–is due out this summer.