190,000-acre land deal leaves legacy of questions

Michael Kilgore does not want any distractions -- including what he calls baseless accusations of conflict of interest -- when a once-in-a-lifetime deal is finalized next month to preserve nearly 190,000 acres of forest in northern Minnesota at a cost of $36 million to taxpayers.

For Kilgore and many others, the Upper Mississippi Forest Project is exactly what Minnesota voters had in mind when they passed the Legacy constitutional amendment in 2008 to provide hundreds of millions annually for the outdoors, clean water and cultural projects.

No single project to date has gotten so much Legacy money.

Some state legislators are, however, questioning the way the project was selected and the rush to fund it.

The deal will hand the $36 million to UPM Blandin, the forestry company that owns the land and is promising to preserve it. At issue is whether giving so much money to a single corporation was what taxpayers intended for the fund.

Blandin said in a statement that its Minnesota management had been interested since 2004 in setting aside the land for conservation, and that its corporate headquarters in Finland became more interested when the state money became available in 2009.

The arrangement also focuses attention on the Blandin Foundation, an organization created by the founder of the company but now legally distinct, and Kilgore's relationship with it.

Jim Hoolihan, the foundation's president, said it didn't join the campaign for the constitutional amendment.

The Blandin Foundation was created by Charles K. Blandin, who also founded the paper mill and forestry company now owned by the Finnish corporation and known as UPM Blandin. Though the two organizations evolved from the same man and are located across the street from each other in Grand Rapids, Minn., today they are separate entities.

"I don't have a conflict of interest," said Kilgore, an associate professor of natural resource economics and policy at the University of Minnesota. "The Blandin paper company and the Blandin Foundation have no organizational or legal relationship."

Even before reports of his connections to the foundation circulated at the State Capitol in 2009, Kilgore said he sought the advice of Greg Knopff, a longtime Senate staff member. Knopff said he agreed with Kilgore that there was no conflict. "Mike and I have known each other for many years," he said. Though Knopff said he was not an attorney, he added that "I've been here 26 years, and I understand these things."

Pressure cited

Before Kilgore cast his vote in March 2009 for the project, other influential parties were already at work and had forged their own complicated relationships.

A month after Minnesotans passed the Legacy constitutional amendment in November 2008, the Blandin Foundation gave a $150,000 "technical assistance" grant to the Conservation Fund, a national preservation group, to help negotiate the conservation easement between state officials and UPM Blandin.

The Conservation Fund contributed at least $40,000 to encourage Minnesotans to pass the constitutional amendment, which called for increasing the state sales tax for 25 years to fund Legacy projects.

Hoolihan said the foundation took an arms-length approach to actively pushing for the constitutional amendment, and rejected a proposal to directly support a statewide "Vote Yes" campaign. He also said the Blandin Foundation has since been nationally recognized for its "landmark work" on forestry easements, including the Upper Mississippi Forest Project.

Rep. Jean Wagenius, DFL-Minneapolis, a leading legislator on natural resource issues, said she too was concerned over a blurring of roles. At one point, she said, Conservation Fund regional director Tom Duffus came to her office and introduced himself as a "neutral" facilitator between the state and project supporters. When she later learned that Duffus had been on an advisory council for the foundation, she said, she thought, "Well, this is not neutral."

"Of course, the Legacy amendment funding was mentioned as an important potential new source of funding for conservation work, but it had not gone to the voters so it was speculative," Duffus said.

Others were not optimistic. Rep. Loren Solberg, DFL-Grand Rapids, who was with Duffus in Finland, said UPM officials still were cool to the idea, and "it was not something that was on their radar."

Project endorsed

Things quickly changed after Nov. 4, when the Legacy amendment passed with 56 percent of the vote. Within two months, the Lessard-Sams Council had been formed.

At roughly the same time, Department of Natural Resources officials and other forestry experts met and endorsed the UPM project as "the highest priority forest conservation project" for the Lessard-Sams Council. Five months later, as the Legislature was to adjourn, a proposal setting aside $18 million a year over two years for UPM was endorsed by legislators.

Swept away in the debate was the fact that UPM, which had a long history of sparing forest land from development, would be getting millions in taxpayer money for essentially doing what it was already doing.

Lori Dowling, who chairs the Itasca County Board, said anyone thinking that a plan had been concocted to fund the Upper Mississippi Forest Project with Legacy money even before the amendment passed was misguided. "[It] was just very good timing," she said.

In August of last year the Nature Conservancy, a national conservation group that backed the proposal, gave the Lessard-Sams Council its 2009 government relations award, citing its "leadership in championing" the "historic" project.

"Some people," said Kilgore, referring to those who have taken potshots at the project, "just do not like forestry."