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Early in 1992, The Nature Conservancy, with $10 million in backing from CNN founder Ted Turner, was trying to buy 165,000 acres from Plum Creek Timber Co., most of it inside the Gallatin National Forest.

The Nature Conservancy planned to trade some of that land with the U.S. Forest Service and launch an experiment in sustainable logging and recreational development. Negotiations dragged on for months, but fell apart after the news became public.

Within a few weeks, Tim Blixseth, along with partners Mel and Norm McDougal, announced they had bought the Plum Creek property. They paid $27.5 million for the land and a sawmill in Belgrade that employed scores of people. But before the papers were signed, they had arranged to sell some big chunks.

"We went to work and found buyers," Blixseth said in an interview.

He and his partners, calling themselves Big Sky Lumber Co., arranged for other investors to take a 25,000 acre parcel west of Big Sky, the Jack Creek property, for $6.5 million. Today, it has become the ski and golf resort called Moonlight Basin, a place where 20-acre lots are listed for $3 million.

At the same time, timber giant Louisiana Pacific bought the Belgrade sawmill and a multi-year timber contract with BSL for $9 million, Blixseth said. The mill shut down after the lumber contract was complete, and the property became bustling retail space on the west end of Belgrade.

The sawmill and Moonlight sales reduced BSL's overall price to $12 million, or about $86 an acre for the remaining 140,000 acres. The partners borrowed half of the purchase price.

Blixseth put up "about $3 million" in cash, he said. Today, condos at the Yellowstone Club cost more than that.

LOGGER FIRST

But it took a lot of work to make the Yellowstone Club happen.

Most of the Plum Creek land was in a checkerboard land pattern that stretched from Yellowstone National Park to the north end of the Bridger Mountains. Plum Creek had tried for decades to arrange land swaps that would allow it and the Forest Service to consolidate their holdings.

Some of the property was pristine, untouched and unroaded, while much of it had been heavily logged.

The Plum Creek swaps had a lot of support, but never made it past Congress.

Enter Blixseth.

He told the Chronicle in 1992 that he had come to saw logs and make money and wasn't worried about battles with environmentalists.

"Maybe someplace in this United States of America, somebody needs to draw a line and protect private property rights," he said at the time. "Maybe I'm the guy and that's the place."

He referred to the property as a "tree farm" and once said he was "tired of people saying clear-cutting is a bad word."

Statements like that got people's attention.

Meanwhile, he worked behind the scenes with members of Congress, the Forest Service and environmental groups to hammer out a deal.

By 1993, Congress had approved the first of two land swaps. BSL gave up 38,000 acres, mostly roadless land along the crest of the Gallatin Range, and got 16,300 acres of prime timberland scattered across western Montana. That property, lower in elevation and easier to reach, was logged and/or sold quickly.

By 1995, land prices were still climbing and BSL sold another 8,100 acres to the Forest Service in the Porcupine drainage - prime elk and grizzly bear habitat southeast of Big Sky - for $16.4 million, the appraised value.

Later, it completed another swap with the Forest Service.

By the time it was all said and done, the company traded to the government 101,000 acres in exchange for 47,000 acres, plus $25 million.

A GOOD DEAL

Once those swaps were complete, Blixseth and the McDougals dissolved BSL and divided the assets, which included tens of millions earned from land and timber sales. The McDougals got land in Bridger Canyon, which they sold, and Blixseth kept nearly 15,000 acres south of Big Sky, which he developed into the Yellowstone Club.

Making the land swaps happen required two acts of Congress, the support of the timber industry and most environmental groups, and a lot of work from the Forest Service, especially real estate specialist Bob Dennee.

Looking back, Dennee said the swaps made sense. They removed threats to ecologically sensitive areas and recreation as well as making the forest easier to manage. If the trades hadn't happened, there likely would be homes, roads and other development today in what now remain as roadless areas. And BSL already owned most of the land that later became the Yellowstone Club, so it probably would have been developed in some fashion anyway.

Before the Porcupine sale, some observers accused Blixseth of parking a metaphoric bulldozer at the entrance to that wild drainage n a place near and dear to the heart of conservationists and recreationalists of many stripes n and saying, in effect, "what will you give me to turn this sucker off?"

"Metaphoric or not," Blixseth said. "The best way to get a deal done is to keep everybody's attention on the deal. Everybody paid attention."

"They were good at that," Dennee said.

Plum Creek couldn't make the swaps happen because, as a public corporation, it couldn't make decisions fast enough, Blixseth said.

"We had the ability, on the spot, to say yes or no," he said.

The results are on the ground. Porcupine and the Gallatin Crest remain roadless and grizzlies still roam there. Elk still migrate through the Taylor Fork, undisturbed by subdivisions. The Yellowstone Club is a reality. So is Moonlight Basin. So is the booming new commercial district at Belgrade's Interstate 90 exit.

"I think overall the public got a good deal," said Michael Scott, director of the Greater Yellowstone Coalition. "Did we get everything we wanted? No. Did we get a big chunk of what was important? Absolutely."

Michael Clarke, a veteran environmental consultant, said he, too, sees the swaps as a good deal, though the "extravagant development" at the Yellowstone Club "makes me wince. But the die is cast and set. We can't change the template now."

The swaps preserved a lot of wild country. They helped create a lot of jobs. And they helped Blixseth make a lot of money.

Today, Forbes Magazine estimates his net worth at $1.2 billion, and most of that was made in Montana. For him, it started with about $3 million in cash.

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Montana's New Economy

The economy in the Gallatin County area has boomed in recent years, in large part because wealthy people have built homes here. That trend has spread a lot of money around.

In this series, the Chronicle takes an in-depth look at this new economy. Staff Writer Scott McMillion looks at business, philanthropy, agriculture, the environment and the people driving the new economy.

Opinions differ as to whether the new wealth is a godsend or an affliction. Either way, the effects are both profound and critical to the region's future.

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