Discovering a new way of owning land that will adequately capitalize working ranches, increase the liquidity of human investment, and maintain whole, healthy landscapes
In the spring of 2002, our business partners announced their intention to sell their share of Twin Creek Ranch. As their children approach college age and the partners look forward to retirement, the cash return upon sale is appealing. For Twin Creek Ranch, it could mean a fate like most large tracts of private land in the west — fragmentation due to the lack of liquidity.
While selling parcels of the ranch to finance partner buyout is a looming possibility, we have stopped and asked the question: "As people's needs change and crises hit, how can investments be moved without fragmenting the land?" By testing different ranch capital restructuring scenarios we have set out to:
Here we articulate the questions and provide the choices for ranchers and communities to use as guidelines as they seek to integrate landscape and community values with ranchland ownership. Our goal is to discover the best combinations of land structure and interest ownership that will adequately capitalize working ranch operations, increase the liquidity of human investment, and maintain a whole, healthy landscape.
From this exercise we have discovered an alternative to the land-fragmenting tendency that traditional ranch ownership promotes. Community Ranch Ownership creates a mechanism for investors to own an undivided interest of the ranch property. Ownership of the ranch would be offered to those wishing to "be for a place," recreate, preserve their capital through ranch land ownership, and possibly develop a sustainable enterprise. Ownership of the ranch would be fluid, while keeping the integrated landscape functional and whole. By increasing the liquidity of economic investment, we will allow humans to "flow" across the landscape with a positive rather than intrusive influence.
We propose to offer Twin Creek Ranch as a model for solving the liquidity dilemma faced by ranches throughout the west. However, to enable the Community Ranch Ownership project to move forward we must acquire a bridge loan and/or conservation easement purchase to release the ranch from partner selling and fragmentation pressure. With this accomplished, Twin Creek Ranch will host a workshop with community stewardship leaders to hone the Community Ranch Ownership idea and further develop an implementation strategy. From there, we will seek interested investors and entrepreneurs and hold Enterprise Facilitation, Holistic Management, and teambuilding workshops with prospective community owners. Through community investments, the bridge loan will be repaid and Twin Creek Ranch will stand as a living example for others in the west struggling to find workable solutions to ranchland fragmentation.
Some might identify Twin Creek Ranch's problem as the partners wanting out, or the inevitable threat of subdivision, or drought, or poor cattle prices. However, after much reflection we have come to see the problem as traditional ranch ownership and the weakest link to moving toward our goal is the lack of liquidity.
Like many ranches in the west, Twin Creek Ranch has been held hostage to debt service and the ever-present problem of under capitalization is threatening this whole, healthy landscape. Many ranchers — especially during the transfer of their enterprise from one generation to the next, or with the threat of partners wanting to cash-out, feel they have little choice but to subdivide and sell their land. There certainly is no shortage of buyers. Recent census data show that rural counties in the West grew twice as fast as other counties in the region and nation during the last decade. For a while this growth was reserved for the Bozemans and Steamboats of the world. But now, as the "urban refugees" seek more and more isolation and limited access as a desirable attribute, places like Fremont County, Wyoming stand with the open arms of open space.
For most ranchers, the only real asset is the land itself. So, when a major financial need arises, the land is either sold outright or used as collateral to secure a loan. However, amenity values leave little chance for traditional production to cash flow these loans. The need to convert land into a liquid asset is particularly acute when parents die without an estate plan. State and federal estate taxes are based on the highest and best market value of the property at the time of the landowner's death, not the original purchase price or current agricultural use value. This can be a significant and debilitating tax burden for ranch families whose land values have appreciated over time, particularly if the appreciated value is due largely to increased development value.
When relying on traditional, commodity production, a ranch today is typically only big enough to support one family; if one sibling is to inherit the ranch, how will the rest be compensated in an equitable inheritance? How will the family pay burdensome estate taxes? If the parents have not resolved these issues before their death, it's unlikely the heirs will be able to keep the ranch whole. All too often, the solution is to sell the ranch, pay off remaining debt and the estate tax bill, and divide any remaining proceeds.
For Twin Creek Ranch, the family model broke down when the lack of diversity in knowledge and skill failed to recognize and meet challenges in the late 1970s and early 1980s nationwide deflationary spiral. When the patriarch of the ranch died over twenty years ago, the ranch was initially lost but then bought back. Later, three business partners who had financial and legal expertise, as well as the balance sheets to secure operational financing were brought into the business. It was thought that partners from outside of the ranching community provided the necessary knowledge, skills, and talents needed to execute the business acumen modern-day ranching requires. But after thirteen years, the partner model has broken down due to the lack of common values — those on the land want to keep the ranch whole and operational and the other partners want to reap the short-term financial rewards brought by fragmenting the landscape.
Throughout the West we have seen and heard similar stories: the players and details are always a little different but the outcome remains the same — the land is either lost or divided. Knowing that we are not alone, we feel strongly that it is time to address the underlying problems associated with ranch ownership in a meaningful way. We need to design an alternative model of land ownership that promotes ecological health as well as social and financial well being.
At an elevation that ranges from 5,800 to 7, 500 feet, Twin Creek Ranch lies within rugged mountains, lush valleys and sage-covered rangeland. This spectacular place provides habitat for abundant wildlife such as eagles, moose, elk, antelope, beaver, migrating songbirds, mountain lion, bear, and coyote. It is home to four rare or endangered plant species as determined by the Wyoming Diversity Database and its petroglyphs and native artifacts give witness to the human inhabitation of this place for centuries.
Twin Creek Ranch lies on the north edge of the famous Red Desert, home for thousands of wild mustangs, antelope and a rare herd of desert elk. The Oregon Trail crosses the Continental Divide near here and the wagon ruts are still visible. Historic old ghost towns, the majestic Wind River Mountains, world-class rock climbing, the near-by-town of Lander, and the Wind River Indian Reservation are all within 40 miles of the ranch. A few hours of driving through breathtaking scenery will get you to the Grand Tetons and Yellowstone National Park. There are plenty of attractions around us, yet many of our ranch guests return finding the solitude and witnessing the biological diversity that they often miss when visiting nearby wilderness areas and nature preserves.
Twin Creek Ranch is the terrain where two ecosystems meet — the ecotone between the Wind River Mountains and the Red Desert. The higher south end of the ranch lies in a 10-14 inch precipitation zone, while the drier north end receives 8-10 inches. When either the desert or montane ecosystem changes drastically, due to drought, fire, or heavy snows, this ecotone provides the refuge for the survival and corridor for the migration of key wildlife species. As an ecotone, Twin Creek Ranch provides an anchor to the ecological health of a significant portion of the Greater Yellowstone Ecosystem.
The ranch lies along both sides of Twin Creek for approximately ten miles. Due to the recovery of the ranch's riparian areas and restoration of its fisheries, the creeks remain watered, even during the worst drought in over 100 years. The nearly 20,000 ecologically sound acres are divided among riparian areas, sagebrush steppe, and irrigated meadows. Driving up Twin Creek Canyon eight miles off of highway 287, we come to the ranch headquarters encircled with a view of red sandstone bluffs dotted with limber pines. Here there are many historic buildings, a lodge-pole barn, a 1930s era log home, an 1880s log cabin shaded by mature spruce trees, and a newly hand-hewn guest lodge constructed of logs gathered by horses.
Tony has lived on and operated the Three Quarter Circle Ranch since 1978, first with his father and uncle, and since 1988 with three partners. Since 1986, George "Pee Wee" Wesaw, a Shoshone, has lived and worked on the ranch, sharing his labors and intimate knowledge of the land. In 1990, the Three Quarter Circle Ranch started a ranch recreation enterprise — giving people from around the world the opportunity to experience real ranch life.
Under Tony's management, much of which is based on Pee Wee's observations and Allan Savory's teachings, the ranch's production has doubled while several studies have attributed the health of neotropical songbird, sage grouse, beaver, moose, elk, antelope, and mule deer populations to the innovative stewardship practiced.In fact, the ranch has received many conservation awards for the cutting edge resource management undertaken including: The Wyoming Stockgrowers Association Environmental Stewardship Award; The National Cattlemen Beef Association's National Environmental Stewardship Award; The United States Environmental Protection Agency's Outstanding Environmental Achievement Award, and; The Wyoming Natural Resource Conservation Service's Outstanding Environmental Achievement Award.
To benefit from the changing demographics of the West and to give people the opportunity to experience the uniqueness of a "working wilderness," the business has been transformed into Twin Creek Ranch and Lodge. In its second year of operations, bookings for retreats, "Country Cuisine Gatherings," eco-tourist vacations and educational seminars are growing exponentially. In the quest to continually have the business reflect our values, the ranch is in the second of a five-year plan to convert from a commodity producing cow-calf operation to a value-added, direct to the consumer grass-finished beef business.
Twin Creek Ranch is also the headquarters for Homelander, our not-for-profit organization whose mission is to: "Provide the resources for people to hone their community stewardship skills so that they may more effectively sustain the economy, ecology, and cultural life of the place they call home." Homelander is dedicated to providing high-quality, personalized services, meaningful research, and unique learning opportunities so that people are better equipped to make sound, place-based decisions. Having recognized the need for an integrated approach toward achieving sustainable human and ecological communities, we align our resources, knowledge, skills, and discoveries with those who care about their communities and land, so that they can further understand functional ecological systems and define supporting, economical practices.
For years the ranch has been an ad hoc laboratory and classroom for developing sound land management strategies. Building on this tradition, Homelander serves as: a vehicle for effectively disseminating our discoveries to the people who will find them useful in their daily lives; a venue for embarking on new research to answer compelling questions of the day; and a place for assessable exchange and learning.
To set an holistic goal decision makers: a. Define the quality of life they desire; b. Determine what forms of production are necessary to bring about that quality of life; c. Describe what the land and other resources need to look like far into the future to sustain the desired quality of life indefinitely. All decisions will be made to honor this holistic goal in its entirety. Holistic Goals are living changing statements of values. The following Holistic Goal is what we used to test the ranch restructuring scenarios.
Quality of Life. We are dedicated to being for a place and strive to make every action and thought life affirming. We value social, ecological, and economic diversity; quality interactions with a diversity of people; honesty and integrity; a healthy mind, body, and spirit; solitude; and a life of increasing awareness. We value having a livable homeplace to work, play, pray, find privacy, enhance the quality of our social interactions, and to nurture our identities. We value mindful and meaningful work and financial integrity. We appreciate the opportunity that ranching gives us to observe the result of choices over time. The quality of these choices are reflected in our personal knowledge, experience, and health; the relationships with others; and the ecological integrity of the landscape. We are passionate about sharing our place and experiences with people who care deeply about the world and who join us in our quest to be restoration ecologists and community stewards. We want to live on this landscape and in this community for our lifetime and suffer the consequences or reap the rewards brought by our choices.
Production. The Twin Creek landscape will provide a lab for research, a classroom for teaching, a protagonist for stories, and a place where learning, recreation, and just being imbue sensitivity and appreciation for the land and local communities. Our place will provide solitude and rest for our community, our family, and our customers. It will sustain healthy land and animals to sell for healthy food. We provide the following unique experiences so people will gain a deeper understanding of the beauty and significance of the western landscape and it's people:
Landscape. The Twin Creek landscape will continue to develop diverse and complex communities of plant, animal, and people life. We will have a covered soil surface, with a functional mineral cycle. Smith Creek, Box Spring, and Skull Gulch will join Twin Creek in being perennial streams with healthy fisheries. We will continually develop ecologically sound dwellings on the ranch so that people will have a place to stay, learn and gather as they interact with this place. The headquarters will demonstrate beautiful and comfortable zeriscape landscaping. We will move toward energy self-sufficiency and will grow as much of our food as possible on the ranch. Human organizing will be nurtured here, so that its intelligent, creative, adaptive, self-organizing, and meaning-seeking nature can be realized. Twin Creek will be an example of thriving agriculture and an economy that rewards ecological values. The soil and water are cared for and the needs of animals are priority - clean water, fresh air, the chance to grow up naturally. Complimenting this ranch is a flourishing community of people that want the best possible food, grown in a manner that enhances the health of those who enjoy it and the land that creates it.
Cause and Effect: Does this action address the root cause of the problem? By addressing the real cause of the problem you are likely to put resources where they are most effective and move towards a long lasting solution. Weak Link: What is the weakest link? The logic behind this test is that the strength of a chain at any one time is only as strong as the weakest link. This test helps you to identify where you need to put your time and resources first in order to move ahead. The weak link is applied in three different situations:
Marginal Reaction: Which action provides the greatest return, in terms of your holistic goal, for the time, money, and other resources spent? In applying this test you are asking yourself which of two or more actions will result highest return dollar, hour or unit of resource invested in terms of entire holistic goal, not just the financial portions. This test assures that your commitment of time, effort, and money provides the maximum possible movement towards your goal.
Gross Profit Analysis: Which choice contributes the most to covering the overheads of the business? The gross profit analysis test is used to compare two or more choices to determine which will contribute the most towards covering the fixed costs of the whole being managed. After associated costs of production have been factored in for each enterprise, the one that produces the most income for the least additional (variable) cost per year is chosen. Energy Source: Is the energy or money to be used in this action derived from the most appropriate sources in terms of your holistic goal? Will the way in which the energy or money is to be used lead you towards your holistic goal? With each choice, certain inputs of energy and or money are involved. This test will assist you in determining whether an action taken towards generating wealth is sound by addressing the source and use of inputs. With this test you are evaluating the appropriateness, in relation to your holistic goal, of where the money and energy come. You are also looking at how they are used.
Sustainability: If you take this action will it lead you toward or away from the future resource base described in your holistic goal? This is where you access the long-term environmental, economic and social consequences of your proposed actions relative to the description of the future resource base in your goal.
Society and Culture: After using all previous tests ask yourself: How do you feel about this action now? Will it lead to the quality of life you desire? Will it adversely affect the lives of others? This test directly addresses concerns about quality of life.
Peace of mind produces right values.
Right values produce right thoughts.
Right thoughts produce right actions.
Right actions produce work, which will be a material reflection for others to see of the serenity at the center of it all.
This process has given us the needed clarity to authentically look at the probing question: "As people's needs change and crises hit, how can investments be moved without fragmenting the land?" By testing different ranch capital restructuring scenarios we have set out to:
Here we articulate the questions and provide the choices for ranchers and communities to use as guidelines as they seek to integrate landscape and community values with ranchland ownership. Our goal is to discover the best combinations of land structure and interest ownership that will adequately capitalize ranch operations, increase the liquidity of human investment, and maintain a whole, healthy landscape.
Sell the Ranch. This scenario would offer the entire ranch for sale. From our perspective, this scenario could be an expression of the Holistic Goal if a Holistic Management practitioner purchased the ranch and continued the ranching heritage and eco-tourist philosophy. However, it is unlikely that a buyer with these qualifications would be able to purchase an entire ranch, given the current market. But if an adequately capitalized rancher with holistic principles purchased the ranch, this scenario would objectively pass the Holistic Goal. Given the current state of ranch real-estate buyers, an outside "conservation buyer" would be the one most likely to purchase the ranch for its amenities. This outcome would maintain the continuity of the landscape but does not pass any of the testing questions because it ignores the underlying problem of lack of liquidity. In displacing the families that live and work on this ranch, the local culture is fragmented, the ecological knowledge associated with the ranch would be lost, and the community attachment to place that is now allowed to flourish would most likely not be nurtured.
Sell Some Land. In this scenario the ranch would sell off enough land to buy out the partners. We would retain the lodge and enough land to run about 300 cows and their offspring for beyond organic beef. By selling some of the ranch, there would be a loss of critical spring/fall range and would disrupt the operation's integration. If the land were sold and eventually subdivided it would fail the testing guidelines. On the other hand, selling the land to a "conservation buyer" would allow this scenario to pass the cause and effect, weak link, marginal reaction, and gross profit analysis. Based on the history of "conservation buyer's" impact on western communities, this scenario would most likely not pass the energy source, sustainability, and society and culture testing questions due to the typical lack of absentee owners' involvement into local communities and their frequent failure to demonstrate an applied understanding of stewardship principles.
Replace Partners. If a partner was found whose values do not violate ours, this scenario would be simple. Given a partner who shares our goals, enhances the ranch vision, and adequately capitalizes the ranch, we can conclude that this action will pass all of the testing questions except cause and affect. The problem is lack of liquidity and a new partner could force a division of the landscape in the future, just as the three partners are doing today. A mechanism for liquidity must be established.
Conservation Easement Sale. In this scenario the future landscape description would be negotiated with a land trust and a conservation easement sold for an amount to buy out the partners and adequately capitalize the ranch. This action will pass all of the testing questions, assuming adequate present value calculations of the sale. However, such purchases are very rare.
Secure Landscape. In-holdings and adjacent properties to Twin Creek Ranch are presently in a state of flux, as far as ownership. One absentee owner as well as an adjacent rancher in the Beaver Creek Catchment has initiated selling their ranches; one owner in the Twin Creek Catchment has purchased property elsewhere and has indicated that he would consider unsolicited offers; and a partner breakup will put another property on Twin Creek in play. Consolidating these ranches in risk of further fragmentation would secure approximately 55,000 acres and about 13 miles of the Twin Creek Catchment. The opportunity to move toward an ecosystem approach to land management exists. In this scenario the existing infrastructure and management expertise of Twin Creek Ranch would be an incredible asset to the Secure Landscape Scenario. We would maintain responsibilities for the ranch operations to maintain ecological health for as long as we desire and would retain ownership of the ranch headquarters and lodge. The new "conservation buyer" would be rest assured that their asset was cared for and would not need to be bothered with the day-to-day workings of the ranch. This scenario addresses the underlying cause of fragmentation and the weak link of liquidity. In concept it passes all of the testing guidelines.
"Small Homestead, Large Landscape" Purchase. Lane Coulston's "Small Homestead" approach to acquiring an interest in land works like this:
Community Ranch Ownership. In this scenario, a mechanism would be created (such as a Limited Liability Company) for investors to own an undivided interest of the ranch property. Ownership of the ranch would be offered to those wishing to "be for a place," recreate, and preserve their capital through ranch land ownership. Ideally, young community members could invest in and use the ranch for twenty or more years and sell to a younger community member for a portion of their retirement nest egg. There would be covenants to protect ecological, economic, and social values. Ownership of the ranch would be fluid, while keeping the integrated landscape functional and whole. In addition, the Community Ranch Ownership scenario could give people wishing to pursue business opportunities a share of the ranch's production and future landscape description in exchange for their investment. In the spirit of the "Small Homestead/Large Landscape" concept, the investment would give entrepreneurs the opportunity to build an ecologically sensitive dwelling on the ranch, have access to the entire ranch for recreation, and using ranch resources, create an enterprise in-line with the ranch's Holistic Goal and land-use plan. For example, a mountain biking guide could invest to be a 10% owner. She could house her business from the ranch and have access to the lodge and the ranch for her guests. In the spirit of Enterprise Facilitation, entrepreneurs could share marketing and financial management resources. Decisions on appropriate enterprises would be agreed upon by the entire organization. Community entrepreneurs would have the ability to sell their dwelling as well as their business, thereby increasing community liquidity. Those with profitable enterprises would share a certain percentage of the profits with others in the organization as well as reap the benefits of others' successes. This scenario fully captures the Holistic Goal and passes all of the testing questions.
It has never been our national goal to become native to place. It has never seemed necessary even to begin such a journey. And now, almost too late, we perceive its necessity. [I am} dedicated to the idea that the majority of solutions to both global and local problems must take place at the level of the expanded tribe, what civilization calls community. In effect, we will be required to become native to our little places if we are to become native to this place, this continent. Although we have told one another on bumper stickers and at environmental conferences that we must "think globally and act locally," we tend to drift toward mega-solutions. Rather than get busy, we introduce new terms such as "sustainable" to apply to any perceived solution that catches our fancy. Instead of looking to community, we look to public policy. We hold a global conference in Rio. [This is a] challenge to the universities to stop and think what they are doing with the young men and women they are supposed to be preparing for the future. The universities now offer only one serious major: upward mobility. Little attention is paid to educating the young to return home, or to go some other place, and dig in. There is no such thing as a "homecoming" major. But what if the universities were to ask seriously what it would mean to have as our national goal becoming native in this place, this continent? We are unlikely to achieve anything close to sustainability in any area unless we work for the broader goal of becoming native in the modern world, and that means becoming native to our places in a coherent community that is in turn embedded in the ecological realities of its surrounding landscape. There are bound to be numerous surprises once we get into the inventory and assessment stage. The global market has given us so many intersecting loops and our economic ecosystem is so complex that the fanciest systems programs cannot accurately predict what we will be able to keep and what will be selected against. This alone is argument enough for that second major, the "homecoming major." I am not talking here about mere nostalgia. To resettle the country-side is a practical necessity for everyone, including people who continue to live in cities. To gather dispersed sunlight in the form of chemical energy in a fossil-free world will require a sufficiency of people spread across our broad landscape. This resettlement will be no small matter. It will have to be carried out by those who have a pioneering spirit, by those who see the necessity of such a dispersal, by those intelligent enough and knowledgeable enough about its necessity that they will have the staying power.
Wes Jackson Becoming Native to This Place
Wes Jackson's thoughts and the conversations that followed allowed us to discover the idea that most fully expresses our Holistic Goal: Twin Creek Ranch Community Ownership. We envision a community owned ranch that integrates individual investments with a healthy landscape. By healthy we mean a landscape that:
We see community owners and entrepreneurs creating a new ethic of land ownership and advancing community collaboration. Cooperatively developed community covenants will be instilled with the principles of Holistic Management and businesses will realize the benefits of Enterprise Facilitation.
In order for this all to be realized the following steps need to be taken:
John Wesley Powell was correct in his assessment that the western landscape would not conform to eastern section lines. It is time we address these problems in a meaningful way with guidance and support from contemporary leaders like yourself who have a grasp of the real west and how to design an alternative model of land ownership that promotes ecological health as well as social and financial well being. Based on our initial ideas and with the insights and experiences of people like you, we can discover a new way of owning land that will adequately capitalize working ranch operations, increase the liquidity of human investment, and maintain whole, healthy landscapes.
— Tony & Andrea Malmberg
© 22 July 2002
Posted 22 July 2002