A story BoiseDev members got first.
A proposal from Trident Holdings to purchase timberland in North Idaho and swap them for hundreds of acres of land controlled by the State of Idaho has been denied.
“IDL is denying your request for a land exchange,” Idaho Department of Lands Deputy Directory Bill Haagenson said in a letter to Trident sent today.
Trident hoped to acquire about 26 square miles of land that is part of the Idaho Land Endowment in and around McCall. The land includes the tree-covered areas that frame Payette Lake, several islands in the lake itself, a few parcels in Pilgrim Cove, and a large parcel near Deinhard Ln. in McCall.
The letter to Trident, obtained by BoiseDev in a public records request, details the grounds for the denial.
Fronted by Alec Williams, the Boise-based company looked to use a provision in Idaho law that allowed the state to entertain land swaps that traded two sets of land valued equally. Trident said it would acquire 32.52 square miles of forest land from private owners in the northern part of the state and then swap them to the Idaho Land Endowment in exchange for the McCall-area land.
IDL: Values don’t match
The Dept. of Lands said Trident significantly undervalued the Payette Lakes region land. The department performed a value estimate on both the North Idaho timberlands and Payette Lakes region ground. It found the McCall land was valued at $366,344,100, while the North Idaho land had a value of $74,343,500. That’s a difference of just more than $292 million.
IDL said it didn’t perform a formal appraisal, but the methods “used to arrive at the estimated values were conservative when valuing the (McCall area land) and generous when valuing the (land Trident proposed to buy and swap).” It said it provided an “average discount” of 25% to endowment land to allow for developer profit — while adding $35 million to the timberland, based on comparable sales. IDL staff noted it actually valued the timberland at nearly twice what Trident did in its proposal.
“If the potential exchange were to proceed, IDL would not expect that to be the final value of (the timberland), the analysis said. “IDL used this generous approach to valuation to ensure that Trident’s application was given fair consideration.”
The Dept. of Lands said it worked with an outside advisor to “verify the (department’s) approach for establishing land values on a large scale.”
The Payette region lands are currently owned by the State of Idaho – but aren’t typical public lands like you might think of in a state park or national forest. When Idaho formally became a state in 1890, it was granted and endowed with more than 5,600 square miles of land – or about 6.7% of the total land in the state. Those lands are mandated by both the Idaho constitution to produce a return – primarily for schools.
Trident hoped to show the state that swapping the timberland for the Payette region land would meet the constitutional mandate that the lands produce revenue – and show the N. Idaho timberland produced a greater return than the current revenue from the Payette Lakes region land.
But the IDL’s analysis said that due to the rapid increase in land value in the McCall area, holding on to the land would produce more revenue over time.
On a yearly basis, IDL’s estimate showed the Payette Lakes region land produces about $779,419 in revenue. The North Idaho land would produce $2.17 million per year in revenue from timber sales.
But the department notes that with land prices rising around McCall, looking past a single year provides a different calculation. It said land with proximity to the lake has been rising at 24% to 28% per year. Valley County as a whole has seen land value rise at between 11% and 13%.
But the department built two scenarios that used more conservative figures – six percent and 11%.
The IDL said it would see a net loss of $162 million to the endowment if the swap was completed in the six percent model. At the 11% level, the state would lose $398 million.
Trident ‘disappointed,’ pushes back on IDL
Trident Holdings provided BoiseDev a statement on the letter from IDL. It used its brand name, Preserve McCall, in the statement.
“Throughout the application process, Preserve McCall has stated and maintained the valuation of Payette Endowment Lands and timberlands proposed in exchange should be performed by an experienced third party,” Trident said in the statement. “In March, IDL estimated the value of these lands at approximately $40M (as stated in the Payette Endowment Land Strategy aka PELS). Now, with no new corroborating data, IDL is valuing the same lands at $366M. That is a staggering 915% appreciation in five months.”
Trident also pushed back on IDL’s commercial real estate analysis.
“Idahoans who love this area should be wary of this valuation,” the statement said. “If this recommendation from IDL is followed, it ensures segmented, private ownership of the entirety of the remaining shoreline and hillsides to the highest bidder.”
Trident said it offered “analysis, land data, and access to experts at IDL, but our offers to provide information have been repeatedly rejected.” It said it hoped to work collaboratively with IDL.
The bottom line, according to Trident: disappointment.
“Any professional appraiser can see this was not an accurate evaluation of the Endowment lands and we are disappointed.”
Third parties, Gov. Little weigh in
The state obtained a pair of second opinions on its analysis and decision to deny the application. Both also recommended denying the deal.
Timberland advisor Mason Bruce and Girard did an evaluation.
“In my opinion, there are better strategies for addressing issues surrounding the Payette Lake endowment lands that would provide a significantly more net benefit to the endowment than the proposed exchange,” Roger Lord with MB&G wrote.
He said the land is “less desirable and potentially worth less than the endowment land,” and the exchange would stop any future leasing opportunities and fragment endowment-owned land.
CenturyPacific LLP, which provides advice on commercial real estate, also looked at the deal. An advisor for the company said it did “not support pursuing the proposed exchange.” CenturyPacific said Trident didn’t provide evidence it could acquire the N. Idaho lands and echoed the departments’ analysis showing the values did not match, among other factors.
Gov. Brad Little chairs the Idaho Land Board, which has the ultimate say over endowment lands.
“The Idaho Department of Lands has an internal process for reviewing applications such as the one submitted by Trident,” spokesperson Marissa Morrison Hyer told BoiseDev. “In this instance, IDL determined that the proposal was not in the best interest of the endowment beneficiaries and denied the application.”
What Trident hoped to do
Trident said it would add conservation easements to portions of the Payette region lands it hoped to acquire. Williams described this as an expansion to Ponderosa State Park. Other parts of the land would be developed for home sites, Williams told BoiseDev. The proposal didn’t outline precisely where and what types of commercial development would take place. Williams also said he hoped to develop affordable housing for the community.
“We do have development areas… we do want the county and the city to have a leading voice in telling us where. You have a lot of flexibility as to where it goes and where it looks like. (But) you need to provide some economic engine that pays for this park. There does need to be some sort of economic engine for that.”
Trident filed with the Securities and Exchange Commission last fall to raise $60 million. Williams has steadfastly refused to identify additional investors in the project. A spokesperson told BoiseDev last month that Williams is majority owner.
“We didn’t want to list a bunch of Idaho families,” Williams said last summer. “It’s sort of my job to be the public face of this. There is a fair bit of distrust and fear. It’s not up to me to broadcast those names to Don Day so people might park in front of their houses to tell them if they’ve made a good decision or not. It’s not up for me to tell them how they should be involved.”