Wooded realm to be sold on Shore

Protected habitats among 278,000 acres bought by timber firm

April 20, 1999|By Heather Dewar and Brenda J. Buote | Heather Dewar and Brenda J. Buote,SUN STAFF

In a business deal that could change the forested face of the Delmarva Peninsula, the Eastern Shore's largest private landowner has announced plans to sell practically all of its holdings to a timber subsidiary of the John Hancock Mutual Life Insurance Co.

The conservation-minded Chesapeake Forest Products Co. is essentially going out of business and selling 278,000 acres of timberland in Maryland, Virginia and Delaware, according to officials of its parent company, Chesapeake Corp. of Richmond, Va.

The company's holdings are some of the most pristine and ecologically valuable forests on the Eastern Shore, including several tracts that Chesapeake has voluntarily set aside for wildlife and water quality protection, company and state officials said.

About a fifth of the timber company's 56,000 acres on Maryland's Eastern Shore are logged only lightly or not at all because of their value as wetlands or wildlife habitat, said Larry Walton, the company's manager for the Delmarva region in Pocomoke City, Md.

Among them are pine- and hardwood-covered islands near the Nanticoke River in Dorchester County; a 4,000-acre hardwood forest on the Pocomoke River; and dense woods along Marshyhope Creek below the town of Federalsburg, Md.

Chesapeake Corp. will sell those forests, along with its pulpwood-producing tracts of loblolly pine, to Hancock Timber Resource Group of Boston for $186 million, under a letter of intent announced last week and scheduled for closing after July 1.

In a separate deal, the company announced that a Montreal firm will buy its two sawmills in Princess Anne, Md., and West Point, Va.; a chip mill in Pocomoke City, and a lumber plant in Milford, Va.

Walton expects the company's more than 70 Eastern Shore employees will keep their jobs.

"We're basically exiting a business we're no longer in," said William T. Tolley, Chesapeake Corp.'s senior vice president and chief financial officer.

In 1997, the Fortune 500 company sold the Virginia paper mill where pulp from its timberland was made into tissue paper and other products. Afterward, Tolley said, "We evaluated these assets on an investment basis and it wasn't worth it to our stockholders."

The company will hold on to about 55,000 acres of land it considers ripe for development. Most of that land is in Virginia, but about 2,000 to 3,000 acres are on Maryland's Eastern Shore, Tolley said. He declined to identify the land slated for development, describing it only as "several different tracts in different counties."

The company's Delmarva Properties division is a major subdivision builder in Virginia. Tolley said the company has no immediate plans to develop the Eastern Shore land it is keeping, but development there will probably happen eventually. "They are worth substantially more developed than managed for timberland," Tolley said.

In addition to new development, Eastern Shore residents could see more logging by the new owners.

Many of Chesapeake Forest Products' wildlife protection measures are voluntary, not mandated by state or federal law, and the insurance giant would not have to take the same steps, said Steven Koehn, associate director of the Maryland Forest Service.

"Chesapeake did an exemplary job," Koehn said. "They were actively managing their land not only for timber production but also for wetlands protection, endangered species protection, wildlife habitat and biodiversity."

Since logging is exempted from most federal wetlands protections, the new owner could log in Pocomoke River forests of very old and valuable cypress trees, sometimes referred to as "the redwoods of the East," Koehn said.

The federal Endangered Species Act has led to restrictions on logging in the habitats of some rare wildlife. But species considered endangered under Maryland law get only voluntary protection. There are several state-endangered species on Chesapeake Forest Product's land, protected by little more than company policy, Koehn said.

Daniel P. Christensen, the president of Hancock Timber Resource Corp., said no plans have been made for the land involved in this transaction. The company has a track record of working with environmentalists and conservation groups, he added. The firm owns and manages 3 million acres of forest land, though these will be its first holdings in Maryland.

Over the years, several national environmental groups, including the Conservation Fund of Arlington, Va., have sought to buy prime tracts of Chesapeake's Eastern Shore land, but couldn't meet the company's asking price.

The Conservation Fund considered making another move to protect some of the land at a board of directors' meeting in March, but took no formal action, said board member Dr. Norman L. Christensen Jr., who is not related to the Hancock Timber executive.

The Nature Conservancy, which also specializes in buying environmentally valuable land, has developed a good working relationship with Hancock, according to Rob Riordan, communications director for the conservancy's Virginia chapter.

In February, for instance, the conservancy bought a 1,500-acre tract in Sussex County, Va. from Hancock for $2.2 million.

"I'm confident we can maintain the kind of relationship we've developed with Hancock," Riordan said. "It could turn out to have a big impact on conservation in this region."

Hancock "is new to Maryland as a major landowner," said Koehn of the state forestry service. "They're something of an unknown quantity. If they want to be good neighbors, they'll continue doing what Chesapeake did."

Sun staff writer Chris Guy contributed to this article.

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