Missoulian - Plum Creek steps up public relations

KALISPELL - The state of Montana's largest landowner, visible across some 1.3 million forest-acres, is set to become even more noticeable in coming months, with a new public relations campaign already under way.

“We're beefing up our efforts,” said Kathy Budinick, spokeswoman for Plum Creek Timber Co. “We're stepping up our communication effort in general, across the board.”

The company is meeting with public relations and marketing professionals in Missoula, and with economists and demographers, too, to help better target its message.

“We absolutely need to be more involved in the communities where we own land,” Budinick said. “We need to be more engaged.”

That's because “Plum Creek's business model has changed.”

The timber company is now firmly in the business of selling residential real estate, Budinick said, and sometimes of developing that real estate, too. The Plum Creek Land Co., a relatively new real estate division of the parent company, represents a fast-growing market for what were previously forestry professionals.

That business change, however, also represents a fundamental land-use shift. When homes replace working forests, many are affected, Budinick said. Hunters and anglers can lose access. Communities can shoulder added tax burdens. Land values can increase. Wildlife habitat can be fragmented.

“We're absolutely impacting more people,” Budinick said, “so we need to reach out and communicate.”

Budinick said she's still not sure what the company's message will be, nor has she pinned down what the new give-and-take might look like.

“We want people to understand who we are and what our needs are,” she said, “and we want to hear from them, too. That's why we're looking to hire a local firm.”

A communications and marketing firm will help Plum Creek determine who to meet with, when to meet and how to meet, she said. There could be local community forums and a Web site devoted to the company's Montana dealings.

“We just don't know yet,” she said. “But we know we need to be proactive in this public relations strategy.”

Missoula-based economist Larry Swanson said he's met with consultants from San Francisco, Seattle and Vancouver, all hired by Plum Creek, as well as with company staffers.

“They're laying the groundwork for some serious public relations,” Swanson said. “It seems to me that they're working on the new identity of the company, and how to position the company in the community.”

Swanson said the consultants were “very progressive,” and recognized that Plum Creek's changing face is part of a transition affecting the entire regional economy.

“It's like this,” he said, “how long can you afford to grow corn on Long Island? The values of this landscape are changing, and Plum Creek recognizes it's part of that change.”

Change can be painful, though, Swanson said, and only once Plum Creek learns to “do it right” can the company expect to dodge criticism for its real estate projects. Learning, of course, means listening, and that means a formal communication plan for reaching out to local stakeholders.

The company, he said, has asked him to help pin down the economic value of Plum Creek's Montana operations, including jobs and taxes - “Basically, the question is: ‘How important are we to the local area economy?' ”

That question was key during Montana's 2007 Legislature, where some lawmakers sought to tax the company to a greater degree.

Since 1999, Plum Creek has been organized as a Real Estate Investment Trust, which means it pays no corporate income taxes in Montana.

Instead, REITs pass through, as dividends, some 90 percent of their earnings to shareholders, who then pay personal income taxes to the states in which they live. Many shareholders do not live in Montana, however, and some lawmakers complained that profits made in Montana were being exported for tax purposes.

A proposal was made to end the tax exclusion those dividends now enjoy. To continue to allow the exclusion, lawmakers argued, would give REITs an unfair advantage over other Montana companies.

Taxing REITs here in Montana, they said, could net the state tens of millions of dollars every year. Proponents of the tax change said that money could relive the tax burden on Montana residents, and help fund schools.

Many Democrats saw the change as “closing a loophole” in the existing tax code.

Many Republicans saw it as a not-so-veiled tax increase.

Still, it seemed at first that the proposal might prove politically palatable.

“The correspondence I was getting from people was favorable,” said Jim Elliott, a Trout Creek Democrat who chaired the Senate Taxation Committee. “I wasn't getting a huge amount of mail either way, but it was bipartisan mail, and it was generally supportive. People were coming to me with offers to cross the aisle on this one. I'd call it pretty popular support.”

But not for long.

Plum Creek responded with another sort of marketing and public relations campaign, lobbying lawmakers to defeat the proposal.

“They buttonholed lawmakers in the hallways,” Elliott said. “They handed out pamphlets, knocked on doors, bought advertisements. I'd say they worked it pretty hard.”

“Yes,” Budinick said, “we were very concerned about that legislation, because we didn't feel that it was appropriate. We did a lot of communicating and educating on that issue.”

The company spent nearly $40,000 lobbying during the regular legislative session, and the National Association of REITs spent an additional $12,000, according to reports filed with the state Commissioner of Political Practices. (Lobbying payments made for the special session - when the REIT fight was arguably at its height - are not yet available.)

In full-page newspaper ads, Plum Creek made much of its role as a good corporate neighbor, keying on jobs and benefits.

“Imposing a special tax directed primarily at Plum Creek would make the company's Montana operations less profitable and therefore less likely to continue to invest in the state,” the ads said.

Plum Creek's taxable subsidiaries already pay about $3.4 million in Montana payroll taxes, the company said, and $3.6 million in property taxes, not to mention $1.5 million in income tax. Then there's the $350,000 or so in philanthropic contributions made in 2006, and the company's openness to selling at least some of its lands into conservation.

For Elliott, though, those numbers pale in comparison to the skyrocketing profits the company is capturing by divesting, not investing in, its Montana lands. Plum Creek recorded $1.5 billion in annual revenues last year, he said.

And in Flathead County, where most of Plum Creek's 1,300 Montana employees work, county officials are actually suing the company, arguing Plum Creek's land development is costing local taxpayers far more than it is generating, resulting in serious losses to public coffers.

Plum Creek's real estate development means more wildland firefighting costs, Flathead officials say, as well as more costs for roads, police and school services, courts, licensing bureaus and government agencies; and yet the company pays no taxes on income earned in Montana.

“Why should a REIT company in Montana be treated differently than 40,000 other Montana companies?” Elliott asked. “The answer is, because they can get away with it. You don't see a lot of everyday people lobbying for corporate tax reform, but you sure see corporations lobbying against it.”

In Billings, he said, the Rimrock Mall is a REIT, and so pays no real income tax in the state. But in Missoula, Southgate Mall is not organized as a REIT, and so must pay the tax. Between 2002 and 2004, lawmakers said, REITs operating in Montana enjoyed 21 percent income growth, well above the average of their non-REIT peers.

According to Elliott's view: “it's just good tax policy to make everybody pay the same, fair and square. Other Montana businesses should not be put at a disadvantage so this company can keep more of its profits.”

But Greg Barkus, a D.A. Davidson investor who also is a Republican lawmaker from Kalispell, said the REIT tax move, in truth, had nothing to do with closing loopholes.

“They are interested in taxing Plum Creek because they want Plum Creek's land,” Barkus said. State tax code offers a tax credit to companies that donate land to the state. But to have a credit, he said, you first must have a tax bill.

The REIT tax restructuring, Barkus said, was simply a move to take control of private timberland without having to pay for it with cash.

“I don't think there was ever any real bipartisan support for that bill,” he said.

Either way, what seems certain is that the REIT tax proposal will very likely be on the agenda come 2009, when lawmakers again meet to set public policy.

Between now and then, Budinick said, Plum Creek will continue to advance its public relations and marketing campaign, a communications effort she says is aimed at opening community dialogue.

Elliott, though, wonders whether at least some of that effort is really aimed at selling the company's position to lawmakers and the voters who elect them.

“I'm not surprised at all that they would start a communications campaign now,” he said. “I've seen firsthand how effective they can be when they put their mind to it.”

And while Budinick is careful to separate the emergent communications campaign from any attempt to turn public opinion with regard to corporate taxation, she does say that were the company to engage Montanans on the REIT issue, “education would be a key part of that, to help people understand why we think things are appropriate the way they are.”

“Of course they like the status quo,” Elliott said. “They helped create it. This is a very big deal to them, and to think they would begin a new communications plan and not include the REIT issue is just naïve.”

Still, Budinick said the “beefing up” of community communication has nothing to do with swaying opinions regarding controversial issues such as forest access or community costs or REITs. Rather, she said, it's a chance to open some dialogue and reach out.

It is, she said, just one more example of the company voluntarily taking steps it is not legally obliged to take.

“We're trying to be a good neighbor is all,” Budinick said. “And to do that, we need to be able to better communicate. It's that simple. We've said all along we want to be more involved with these communities. That's what we're trying to do.”

Reporter Michael Jamison can be reached at 1-800-366-7186 or at mjamison@missoulian.com.

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