Forest Capital Partners says it believes reduction in Sustainable Forest Incentive Act payment not true to contract
Lease holders and users of land made available to the public by Forest Capital Partners will likely not immediately see changes to public access, even if a cap on Sustainable Forest Incentive Act money from the state is approved.
That’s the message from a company official.
“This isn’t going to close our lands,” said Brian Kernohan, manager of wildlife and forest stewardship for Forest Capital Partners, speaking of the company’s short-term plans based on a potential one-year cap on payments the company receives from the state.
But he said he would be “concerned about the ability to continue this business model” if the proposed capped payments became permanent.
“Long-term persistence (of a cap) could impact forest land ownership,” Kernohan said.
A $100,000 cap proposed by Gov. Tim Pawlenty as part of the state’s unallotment plan for the next fiscal year would greatly reduce the company’s payment from more than $2 million this year. Kernohan explained that landowners involved in the program typically are paid in the fall, so a change in funding would affect the company several months after the state’s fiscal year starts on July 1.
Unless the Minnesota Legislature takes action to stop the payment cap, the governor’s proposal would take effect on July 1.
FCP has more than 267,000 acres of land enrolled in the Minnesota sustainable forestry program, and was paid $8.74 per acre this fall. If the cap were implemented, it would reduce payments to around 37 cents per acre.
Kernohan said that the company is against the cap and he found the limit to be in breach of a covenant between the company and the state signed when the company became involved in the program. Minimum payments of $7 per acre were promised to those who committed their land to the program.
The program agreement lasts eight years, and, according to the state tax Web site that describes the program, it takes about four years to remove land from the SFIA designation.
Placing a cap on the payments in the middle of the agreement effectively changes the contract, Kernohan said.
Kernohan said his company is fulfilling its end of the deal, and he expected the state to uphold its side as well. The company will continue to oppose the one-year payment limit, he said.
In part, the SFIA allows private land owners, such as FCP, to open their lands to the public for recreational purposes such as hunting, hiking, berry picking, all-terrain vehicle riding and snowmobiling. FCP has what is referred to in a letter by the company’s regional manager Craig Halla as an “affordable lease program” that is, in part, maintained through the SFIA payments.
Kernohan agreed that the SFIA payments were important for the company to continue public access to the lands and sustainable forestry practices.
In a letter addressed to fellow lease holders in November, International Falls City Councilor Tim “Chopper” McBride writes, “For the city, the fact that a substantial amount of economic impact is felt simply by lease holders shopping locally to use and sustain their investment helps keep people working. I know that just one lease puts in $1,000 from out of county and city individuals that would otherwise be spent elsewhere.”
McBride notes concern that if the payment caps are continued, the company may have to close roads and sell off properties instead of leasing the lands and making them available to the public.
Kernohan said that concern has already been raised about gates on the property, which he said are not in response to the proposed SFIA cap. The gates are not intended to limit public use, but instead were placed to protect roads from possible damage from vehicles, he said. Public access to these areas are still available, but vehicle traffic is restricted by the gates.
