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Another Shot at Skyline: Last-minute legislative deal could preserve the forest 

Call it a Hail Mary pass, but a last-minute legislative maneuver has rekindled the possibility of a deal to preserve Skyline Forest in exchange for

Call it a Hail Mary pass, but a last-minute legislative maneuver has rekindled the possibility of a deal to preserve Skyline Forest in exchange for some limited development on the 33,000-acre tree farm just west of Bend.

Under the proposed legislation, which is expected to be introduced this week by Rep. Brian Clem (D-Salem), Fidelity National Timber Resources would be able to build up to 137 housing units on 200 acres southwest of Sisters. Another 2,300 adjacent acres would be placed in a conservation easement buffer. Most importantly, Fidelity, in exchange, would be required to sell the vast majority of the forest to the Deschutes Basin Land Trust, which has already set aside more than $1 million for a purchase.

The proposal represents a marked decrease in the overall development footprint on Skyline, where developer Fidelity had initially pitched 1,000 homes on 3,000 acres in exchange for a direct transfer of the remaining forest land- roughly 30,000 acres-to the Land Trust. But that deal, while well received by the Land Trust, never got any traction with the public after Fidelity entered into negotiations with the state of Oregon on a complicated development-land exchange deal (The company owns some 270,000 acres of land in Oregon that it acquired from Crown Pacific out of bankruptcy).The deal also drew fire from some environmentalists who didn't like the idea of 1,000 homes in the forest outside of Sisters, a town which itself only relatively recently surpassed 1,000 residents.

This time environmentalists are the ones pushing the compromise. Central Oregon Landwatch Executive Director Erik Kancler said he drew up the framework for the legislation after sensing an opportunity during the ongoing fight over development in the Metolius Basin. Rep. Clem agreed to tack the Skyline legislation onto a bill in progress that identifies several alternative sites for a controversial eco-resort dubbed The Metolian that he and others, including Gov. Ted Kulongoski, as well as a number of local conservation groups are seeking to block. While the issues are unrelated, it was a sure way to get a hearing on the Skyline bill in the middle of the busy session.

"It would be a way to get a community forest done on lands that are at risk of development that have forest value and wildlife value," Kancler said.

It's somewhat of a long shot, but in a legislative session that has been defined by the rapid-fire horse trading around Central Oregon's destination resorts, anything is possible. The proposal came together so fast that it has caught even the Land Trust off guard.

"This has all happened so quickly that my board has not taken a position pro or con," said Brad Chalfant, Land Trust's executive director.

However, he added, "the Land Trust see this as a huge opportunity to allow Fidelity to do what they're legally mandated to do which is deliver a return for investors while allowing the vast majority of the forest to be conserved."

Kancler said he and Clem came up with the 137 units by calculating the most units that Fidelity could develop on the 33,000 acres using the least restrictive forest zoning designation.The concept known as a transfer of development rights, or transfer of development credit, is a well-established conservation tool that has been used in other states, said Kancler. While it doesn't give developers additional rights, it does give them more flexibility. In this case, instead of scattering homes across the forest, a legal and logistical nightmare, Fidelity could cluster them together on the north end around an amenity like an equestrian center. The legislation notably prohibits golf course development and limits water usage to minimize impact on the groundwater table in the basin where federal and state fish managers are in the middle of a multi-million-dollar salmon and steelhead reintroduction program.

While the deal is being presented as a win-win for the community and the developer,

Fidelity's Chief Operating Officer Greg Lane said he was blindsided by the proposal.

"I was rather surprised to say the least," Lane said. "We had talked with the Land Trust and with Central Oregon Landwatch - one meeting was, oh my gosh, a couple of months ago and we were talking some legal concepts that we were at least going to take a look at and run some financial pro-formas and one of those was a density transfer concept."

In the meantime, he said the company has run some of those financial forecasts and the numbers don't add up - even when the Land Trust's purchase of the remaining forest land is factored. "It's just not financially viable. It's upside down," Lane said.

Landwatch's Kancler said that if a 137-unit development and a market value purchase of the balance of the land don't pencil for Fidelity, then he questions what the company is looking for.

"We've dramatically increased the amount of development they could do on this property versus what current law would allow," he said. "This proposal gives them the ability to master plan and develop at scales the current law doesn't allow, and with flexibility the current law doesn't allow. And it allows them to do this next to what would surely be a first-rate recreational amenity, Skyline Community Forest...There are no strings attached. This is as straightforward an opportunity as there could be. If this doesn't pencil out, I have to wonder what they mean by 'pencil out,'" Kancler said.

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