First of its kind: Land exchange would be major windfall for DNRC

2014-02-07T00:00:00Z 2014-08-19T16:44:06Z First of its kind: Land exchange would be major windfall for DNRCBy BRETT FRENCH The Billings Gazette

A Texas businessman has proposed a land exchange with the state that, if approved, would give the Montana Department of Natural Resources and Conservation a 14,400-acre wheat farm and cattle ranch southeast of Winifred — a first-of-its-kind exchange in state history.

“Most of the other major land moves we’ve done were through land banking,” said John Grassy, DNRC spokesman. Land banking involves selling state parcels, banking the money and then purchasing similar properties when the opportunity arises.

The proposed land exchange is still in its infancy. Comments on the proposal will be taken until Feb. 28. The Montana Land Board meets on March 18. If the board gives its OK, further fact finding and appraisals would be conducted, Grassy said. No public dollars would be involved in the purchase.

“The real nuts and bolts appraisal of this property wouldn’t start until after the board approval on March 18,” he said.

The land exchange was proposed by David Killam, the CEO of Killam Companies, a family-owned Laredo, Texas-based oil, gas and real-estate business that also owns two Texas ranches that are outfitted for hunting.

Early last year, Killam purchased the 60,000-acre Dana Ranch at the base of the Big Belt Mountains, about 30 miles south of Great Falls. The listed price for the Cascade and Meagher county ranch, located between the Smith and Missouri rivers, was $45 million.

The Dana Ranch has a significant patchwork of state lands within its borders, totaling more than 14,100 acres. Most of the state land is not accessible to the public, although public hunting access has been allowed through the state’s Block Management Program.

To put the proposed land exchange together, Killam has a buy-sell agreement with the owners of the X Hanging Diamond Ranch. He is offering to buy the ranch and deed it to the DNRC in return for the state’s inholdings in his Dana Ranch. Sweetening the deal for the state is the fact that the ranch abuts another 3,600 acres of Bureau of Land Management and state lands that are now inaccessible to the public.

The X Hanging Diamond Ranch, located in Fergus County 40 miles north of Lewistown, was recently listed for sale at a price of $14.6 million. Killam’s request for the land exchange lists Robert and Annette Bold as the preferred tenants on the X Hanging Diamond Ranch, meaning they are being recommended as lessees of the ranch’s grazing land and would share-crop the farmland if the state agreed to the exchange. If acquired, all of the ranch would be opened to recreational use.

The Bolds own all of the ranch buildings and a feedlot on the X Hanging Diamond, property that would be excluded from the sale.

According to a 2011 Chapter 11 bankruptcy filing, the ranch is equally owned by Jeanne Skierka and Annette Bold. The bankruptcy case was resolved in 2012. Asked if the state had any concerns about leasing the ranch back to the current owners given their history of bankruptcy, Grassy said, “I think the financial problems of the owners was related to the feedlot and not to the income” potential of the farm and ranch.

Good for access

Gaining access to such a large, contiguous chunk of public land — 14,405 acres plus the 3,600 adjoining public lands — is enticing to recreationists.

“My first impression is that for the ordinary sportsman and individual it’s a real good deal, especially for the sportsmen down in the Lewistown area,” said John Borgreen, a longtime Great Falls hunting advocate.

His main concern is that the Dana Ranch adjoins the Beartooth Wildlife Management Area at the head of Hound Creek, where a working group composed of hunters, state wildlife managers and landowners have cooperated to manage a large, transient elk herd.

“If that ranch is not an integral part in how that all works up there, it’s going to be a hard deal,” Borgreen said.

Chase Hibbard is president of the Sieben Live Stock Co., which owns land in the same area. He said he has already talked to Killam and his ranch manager about the working group’s efforts and said he’s hopeful the new owner will be just as involved as the old one.

“We have a unique wildlife management situation up there that’s worked quite well,” Hibbard said. “I’ve talked to them about it and hope that they will embrace the ideals we’ve put together.”

Hibbard, a former Helena state legislator, also said the land exchange makes sense since it would remove landlocked public acreage at a time when public access to public land continues to be a contentious issue in the Montana Legislature. The Montana Department of Fish, Wildlife and Parks has estimated that 1.2 million acres of the state’s 5.1 million acres of state school trust land is landlocked.

In the last session, sportsmen pushed a bill that would have allowed the public to cross from public land to public land at corners. The bill was defeated but could arise again and, if passed would “provide some challenges to landowners with checkerboard ownership,” Hibbard said.

Adding the numbers

On paper at least, the land exchange would appear to benefit the state, a requirement for approval of the proposal. The DNRC would trade 14,136 scattered acres, most of it inaccessible to the public, for 14,405 contiguous acres on the X Hanging Diamond Ranch.

A website advertising the X Hanging Diamond noted the ranch “is a well diversified farm and ranch property with about half of its acreage in crop and forage production and the balance in pasture; it has one of the top feedlot facilities in Central Montana.” The property also contains 28 reservoirs.

According to the DNRC, which has requested the public’s comments on the proposal, the Dana Ranch state lands are valued at $9.67 million and produce annual revenue of about $67,000. The X Hanging Diamond Ranch lands proposed for acquisition have a value of $12.5 million and a projected return of $200,000 annually.

Wildlife habitat

If approved, sportsmen would gain access to a large area south of the much-coveted Missouri Breaks that is home to a variety of wildlife, including pheasant, mule deer and elk.

“Eighty-three percent of the property is in a sage grouse core area,” said Sonja Smith, a Fish, Wildlife and Parks wildlife biologist based in Lewistown. “There’s a sage grouse lek on the state holding and good timber on the east side that provides good elk habitat.

“For wildlife habitat, I would say it’s very good,” she added.

The proposed land exchange comes at an interesting time in the Montana political and social climate.

In 2012, ranchers in north-central Montana were outraged when the Montana Fish and Wildlife Commission and DNRC jointly purchased the 4,500-acre Milk River Ranch, arguing, among other things, that the price was too high and out of concern that the land would be a place to relocate disease-free Yellowstone bison on public lands, which they adamantly oppose.

Many sporting and conservation groups have pushed for the return of bison to public lands to restore the Great Plains animal to its historic landscape, from which it was nearly exterminated, as well as to provide another game animal for hunters.

Parking cash

Although many ranchers have opposed the government purchase of any lands as hunters and anglers have lobbied for more, out-of-state buyers have found a favorable place to park large sums of cash in Montana property in recent years. As those lands have been purchased, many have been closed to public hunting access that old-time owners had provided.

A 2013 Forbes magazine article noted Killam’s purchase of the Dana Ranch as one of many recent ranch purchases by “energy titans” who have acquired new oil wealth as the country’s fracking boom has exploded. Fellow Texans, billionaire brothers Farris and Dan Wilks, gained the most notoriety for land purchases in Montana, buying the well-known N Bar Ranch southeast of Lewistown in 2011 and expanding outward from there.

The Wilks brothers were listed at No. 28 on the 2013 Land Report 100, a list of the top 100 landowners in the United States, with 276,000 acres. The Killam family was ranked No. 33 with 255,000 acres. In addition to the Montana ranch, the family also has properties in Kansas and Nebraska.

Copyright 2015 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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