OSI's Plum Creek analysis is lauded

October 6, 2009 - When Maine’s Land Use Regulatory Commission (LURC) approved the Plum Creek Timber Corporation’s revised development plan for the Moosehead Lake region last month, it closed one momentous chapter in the state’s land use history and opened another. The Open Space Institute played a pivotal role in the former and is poised to help shape the latter.

In late 2005, Plum Creek—the nation’s largest private landowner—introduced a concept plan for extensive residential development across 426,000 acres in Maine’s Northern Forest. But before Plum Creek could move on the development of 975 homes and two large-scale resorts, it needed Maine’s LURC to rezone the land to permit more building than existing zoning laws allowed.

While Plum Creek’s plan called for some conservation measures to complement its development, the proposal was still highly contentious, leading to months of debate. OSI’s Conservation Research Program entered the discussion in 2007, conducting objective economic analysis on a number of different development and conservation scenarios. Ultimately, Plum Creek significantly revised its proposal.

LURC’s unanimous decision to approve the revised plans, made almost five years after Plum Creek submitted its initial development plan, came after the company made several important revisions, which redirected the location of development and greatly expanded the amount and quality of permanent conservation. The original concept plan covered more than 400,000 acres that Plum Creek owned around Moosehead Lake. About 96 percent of the land (392,500 acres) will now be permanently conserved, restricting future development to the remaining 4 percent.

Three LURC commissioners, including Chairman Bart Harvey, cited OSI’s analysis as having a major impact on their thinking. Specifically, he and others repeated a central point OSI made in its reports and in testimony before LURC—that the issue raised by Plum Creek’s proposal was not whether there would be development, but where and how to implement it. The commissioners referred to OSI’s analysis, conducted by Jerry Bley and Industrial Economics, Inc., which indicated that even if Plum Creek’s plan were rejected, under existing zoning regulations the company could still develop as many as 618 residential units (plus additional resort units bringing the total to 1,418 units overall) on 25 lakes and ponds. The just-approved plan now calls for 818 and 2,025 units, respectively, across only six lakes and ponds.

“The OSI report was significant for me, I think, in recognizing what would take place, whether or not this concept plan was approved,” said Commissioner Ed Laverty, echoing comments made by commissioners Harvey and Rebecca Kurtz. “I think it led us to recognize that doing nothing was not a viable option.”

OSI’s analysis of the profit Plum Creek stood to make from approval of the original plan, the subject of another report, was not directly relevant to LURC’s review process. But it did set the stage for LURC to secure a series of changes in the plan. To be feasible, any alternative had to be financially attractive to Plum Creek. OSI’s research showed that Plum Creek shareholders stood to make approximately $106 million from development under the original plan—because it called for more and quicker development—compared with $67.3 million without it. Put differently, the plan was worth about $39 million to Plum Creek.

Although Plum Creek could earn more under the original plan, it could redesign its development to concentrate development on fewer lakes with fewer shorefront lots and expanded conservation measures and still earn a significant return.

And this is, in essence, what happened. LURC staff helped to guide changes that clustered development and strengthened conservation without jeopardizing financial feasibility, thereby achieving what the commissioners felt was a more acceptable balance of conservation and development. The resulting conservation easements and fee lands, totaling nearly 400,000 acres, represent the largest conservation set-aside ever required for a development project in the U.S.

OSI declined to take a position one way or another on the company’s plan.

“We recognize and applaud the many parties, on both sides of the issue, for their insights and participation,” said Peter Howell, OSI’s executive vice president. “We particularly salute LURC for its diligence, thoroughness and evenhandedness. Its staff and commissioners proceeded carefully and thoughtfully to achieve what they thought was the best possible outcome.”

LURC’s decision appears to bring to an end an important chapter in the history of Maine’s North Woods. But it also highlights the challenges and opportunities that lie ahead throughout the rest of LURC’s 10 million-acre jurisdiction. What is the long-term economic viability of the region’s vast forestlands? What is the proper balance of conservation and development there? And what mix of regulation and incentives can best achieve that balance? As LURC grapples with these and other questions, OSI stands ready to assist in the search for answers with objective and practical research.

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