Who is Tim Blixseth of Western Pacific Timber

Central Idaho Post, Jim’s Corner, 10/14/11

On October the 5th I spoke at a “Stop the Swap” meeting at the Grangeville Senior Center, and while discussing the Bloomberg Business week profile of Western Pacific Timber, I misspoke when I indicated that they “had no transactions in the past twelve months.” I later found that the statement was intended for a similar company that Bloomberg was comparing to Western Pacific Timber. In fact Western Pacific Timber has annual sales of $2.5 to $5 million.

However, the more I find out about Western Pacific Timber and owner Tim Blixseth the more skeptical I become. I have found, on three different web pages, addresses in the states of California, Idaho and Oregon, all of which indicate they are the company headquarters.

In Idaho the company is located in Boise and prior to 2005 Western Pacific Timber owned some 178,000 acres in the McCall area and other parts of Southern Idaho. Then in 2005 they purchased 40,000 acres of logged over land from Plum Creek Timber lands, which expanded their holdings in Idaho to some 218,000 acres. (To put this in perspective, if this parcel was 3.4 miles wide it would be 100 miles long.)

In 2008, Western Pacific Timber sold the McCall-Southern Idaho properties to Potlatch Corporation for some $215 million. In an article written by William Cohan in February of that year, Cohan wrote that Blixseth is planning “another 5,000 unit luxury housing development, with eight golf courses and 100 miles of horse trails, somewhere in the Pacific Northwest, but he won’t say precisely where.”

In April of 2011 Tax authorities in the states of Idaho, California and Montana filed an involuntary bankruptcy petition against Tim Blixseth after learning he had transferred personal assets into a Nevada entity. It seems Blixseth owed $291,000 to the Montana Department of Revenue, $1.1 million to the Idaho Tax Commission and $1 million to the California Franchise Tax Board. Sometime during that same month, Blixseth stated he was planning to pay about $1.3 million in Idaho and California taxes, which is less than the $2.1 million the two states claimed he owed. (Currently this writer is trying to confirm if these taxes were ever paid.)

During the 1980s Blixseth engaged in several land swap deals and obtained at least ten Forest Service timber contracts on the Umpqua National Forest in Oregon. He apparently defaulted on these contracts and left the U.S. Forest Service holding an empty money bag worth some $7 million. By 1986 Blixseth and his wife declared personal bankruptcy, claiming $15.4 million in debts and only $4,400 in assets.

Following his bankruptcy, Blixseth rebuilt his business by co-founding Crown Pacific, LTD with Peter Stout, which became the leading timberland owner in Central Oregon. However, defaults and controversy followed him and in August 1989 the Pacific Northwest Region of the Forest Service recommended the “suspension and debarment of Timothy L. Blixseth, Edra D. Blixseth, Crown Pacific, Ltd — and any other business with which the Blixseths may be associated.” By 1992 Blixseth had sold his interest in Crown Pacific and had his eyes set on Montana, where he would start Big Sky Lumber.

About this same time, Ted Turner, the Nature Conservancy and Plum Creek Timber were trying to put 165,000 acres of timberland in the Gallatin National Forest into a conservation trust. However, in stepped Blixseth and his Big Sky Lumber partners, Mel & Norm McDougal and Charles Holliman, who cut a deal with Plum Creek and purchased the entire 165,000 acres for some $27.5 million. Ted Turner never got over being under-cut and felled by Blixseth, and in a 1996 speech referred to Blixseth as a “serial defaulter.”

It didn’t take very long and Blixseth sold the Belgrade Sawmill, which was part of the original Plum Creek deal, and a multiyear contract to Louisiana Pacific Timber Company for $9 million. While this was going on, or perhaps shortly after, Big Sky Lumber brought in additional partners and quickly sold 25,000 acres for $6.5 million. Those who bought the property developed the Moonlight Basin ski and golf resort. Blixseth became a beneficiary of what is now known as the Cave Mountain land exchanged between the Beaverhead-Deerlodge National Forest, and Moonlight Basin. This deal enabled the Moonlight development to occur next to the Cave Mountain Research Natural area. In 2009 Moonlight Basin filed for Chapter 11 bankruptcy.

In 1995 Big Sky Lumber sold 8,100 acres to the U.S. Forest Service for $16.4 million and then traded the remaining 101,000 acres for 47,000 contiguous acres and an additional $25 million. Following this sale Blixseth dissolved Big Sky Lumber, divided up the proceeds and kept tens of millions of dollars and 15,000 acres for himself.

The sales to timber companies, the U.S. Forest Service and developers grossed Blixseth’s team $56 million and 47,000 acres of prime real estate. The 47,000 acres was valued at over $100 million. It took less than three years to make all this happen and this cash and real estate became the foundation of what is now known as the Yellowstone Club Project.

It has been reported that during this time period Blixseth made hundreds of thousands in contributions to state and federal politicians. He twice persuaded President Bill Clinton and the U. S. Congress to allow creation of the Yellowstone Club in the Montana wilderness. With the help of Phil Lader, Clinton’s deputy chief of staff, Blixseth engineered the deals with the federal government that allowed Blixseth to get the land on which the Yellowstone Club was built. These land swaps required two separate Acts of Congress. The Gallatin Preservation Act of 1993 covered 38,000 acres (59 square miles), and the Gallatin II Act encompassed 54,000 acres (84 square miles).

In 2005, with his land selling for one million dollars an acre and being sold only in multiple-acre lots, Blixseth took in a reported $200 million. Early Club members included Steve Case, Dan Quayle, Bill Gates, and Mary Hart. Cyclist Greg LeMond along with four other associates became investors in the Yellowstone Club and each of these five investors paid Blixseth $750,000 for one percent shares in the resort.

Things began to fall apart when Blixseth’s wife, Edra, filed for divorce. About this same time LeMond and his partners sued Blixseth after they learned about a Credit Suisse loan to the resort of $375 million. Apparently, LeMond was upset when he found out that Blixseth had taken $209 million out of the loan money as a payout for his ownership. In 2007 LeMond settled for $39 million, but Blixseth defaulted on a $20 million payment, which was followed by Edra’s divorce and the bankruptcy of the Yellowstone Club in 2009.

As part of the divorce agreement, Blixseth transferred the Club and its debts to wife Edra and pushed the Club into bankruptcy protection. It was then sold to outside investors led by Boston-based CrossHarbor Capital Partners.

During the bankruptcy trial federal Judge Ralph Kirscher laid the blame for the Club’s financial woes on Blixseth and the Credit Suisse bankers. The judge described their actions as such “naked greed” that “shocked the conscience of the court.” Judge Kirscher went on to rule that the financial problems of the Yellowstone Club and Blixseth’s wife Edra “were caused largely by fraud and deceit on the part of Tim Blixseth.” Apparently this case was settled in early 2011. Blixseth was only held partially responsible and only owed between $20 million and $65 million.

Given Blixseth’s record of Forest Service defaults, bankruptcies, shady deals, and all the related lawsuits, why is the Forest Service and our County Commission continuing to do business with this man? I suggest that those readers who care about their national forests demand an answer to this question from the Forest Service, the County Commission and their representatives in both houses of Congress.

Quote for the Week: “You cannot have a proud and chivalrous spirit if your conduct is mean and paltry; for whatever a man’s actions are, such must be his spirit.”—Demosthenes (384BC-322BC)

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