By Jon Cassidy | Special to Idaho Freedom Foundation
Former state Rep. Merrill Beyeler says it’s unfair that his son isn’t covered by Obamacare.
The adult son falls into a supposed “coverage gap,” where he is eligible for neither Medicaid nor Obamacare subsidies, owing to some sort of defect in the law—Beyeler says—that can be fixed by passing Proposition 2 next week.
The problem is, there’s a good reason the Beyelers aren’t eligible for health care subsidies: The family is rich.
The Beyeler family owns property worth more than $2 million in assessed value in Lemhi County, most of it a family-owned ranch in Leadore with some 800 head of cattle. Like many ranchers, Beyeler has benefited from government loans and hundreds of thousands of dollars in agricultural subsidies.
What sets the elder Beyeler apart is the story of how he turned four Hereford heifers into millions of dollars in cash payments—all funded by Idaho taxpayers and electricity ratepayers—and finally doubled the size of his ranch for free. In return for all this largesse, Beyeler was required to do … not much, really. He just had to keep ranching. In fact, Beyeler is such a fan of government giveaways that he now spends his time showing his neighbors how to collect. You may not have his connections in the governor’s office directing millions your way, but you can still get in on the game at a lower level. Beyeler will show you how.
Merrill Beyeler’s real occupation is neither politician nor rancher. Rather, he’s a sort of evangelist for a new form of green grift that takes advantage of what ProPublica calls “the single most generous charitable deduction in the tax code” and a “billion-dollar loophole.”
As chairman of the Lemhi Regional Land Trust, Beyeler shows his neighbors how they can file paperwork on their ranches to obtain “conservation easements” that can wipe out millions in tax obligations, without changing hardly a thing about how they work their property.
Since opening in 2005, the trust has been responsible for the creation of 13 conservation easements, covering some 14,000 acres, on area ranches, forever restricting that land from subdivision and development.
What is the purpose of those restrictions? Beyeler’s answer depends on who is asking.
The story for public consumption is right on the first page of the Land Trust’s 2017 annual financial statement. It’s to protect “cold, clear rivers, forests teeming with wildlife and ranches that have been passed down for generations” from despoilment by development. “If our private lands became subdivisions instead of ranches, taking with them prime fish and wildlife habitat, what would happen to our communities?”
Only that answer makes no sense if you’ve been to Leadore (pop. 107). It’s one of the most remote places in the Lower 48 states. Its main draws are the spectacular Sawtooth and Salmon National Forests and the whitewater rafting on the Salmon River, which is some of the best in the world. When the trust warns of subdivisions, it doesn’t mean tracts of suburban homes; it means one new home somewhere in town on a subdivided lot.
With a friendly audience, Beyeler is more straightforward: Leadore was withering away. Conservation money means jobs. It means kids coming home.
“This kind of work (conservation) takes a tremendous amount of planning and capacity,” he told an interviewer. “Our local contractors ended up with those bids. I cannot overstate the impact this conservation work has had on our valley.”
So Beyeler plays his part, talking up renewed fish habitats, even though the official numbers offer little proof that tens of millions of dollars spent to get salmon to lay eggs just a little further upstream has had much effect.
Beyeler’s land trust may fly a green flag, but its real business is tax avoidance. The U.S. tax code treats a loss in real estate value caused by a conservation easement as though it were a charitable contribution, even when no money or property changes hands.
Here’s how the land trust explains it:
“Let’s say you own 250 acres of agricultural ground that borders the Lemhi River. You work with Lemhi Regional Land Trust to craft an easement that allows agricultural uses and the construction of one additional residence, but prohibits subdivision and commercial development. The appraiser sets the fair market value of the property before the easement at $2,500,000 and the after (or restricted) value at $1,500,000. The charitable contribution value equals $1,000,000 ($2,500,000 – $1,500,000).”
You can then use that ethereal million-dollar loss to wipe out up to half of your adjusted gross income for up to 16 years, the trust advises. Better still, if your ranch is held by a limited liability corporation or partnership, you can spread the tax benefits around, despite federal restrictions on sharing charitable deductions. Beyeler Ranches, LLC includes his six sons and daughters-in-law as members, entitling them to a share of the profits on a half-million dollars in annual sales revenue, as well as any deductions.
Around the country, others are pushing the concept even further, sharing the tax benefits with private investors through a “syndicated” structure that has drawn fire from the Wall Street Journal, Forbes, and the Brookings Institution, not to mention the Internal Revenue Service. With a crooked enough assessor exaggerating the value of the encumbered property, investors can get $5 or $10 worth of deductions for every $1 they “donated.” However, the major ranchers in Lemhi County don’t appear to be taking things that far. A cursory skim through securities filings didn’t turn up notices of any offerings from them.
They’ve actually got a better game. Why risk an IRS audit when you can get paid up front for your easement?
That’s how, in 2010, Beyeler and a neighbor parleyed lands that are currently assessed at $1.5 million into a $3.4 million payout, courtesy of Idaho taxpayers and ratepayers. Not only did Beyeler get to keep his ranch, he more than doubled his deeded acreage, from 1,000 to 2,354.
Since 1992, there had been plans for habitat restoration along the Lemhi River kicking around the bowels of local environmental bureaucracies. However, in 2008, several federal agencies, northwestern states, and Indian nations signed the historic Columbia Basin Fish Accords, which provided some $900 million for habitat restoration for salmon and other migratory fish, most of it payable by the Bonneville Power Administration, a federal agency that operates the 31 hydroelectric dams that have disrupted those migratory patterns.
Idaho was to get a $41.3 million share of that $900 million. Beyeler and his newly formed Lemhi Regional Land Trust jumped at the opportunity. Fish, after all, don’t have wallets. Somebody would need to get that money on their behalf.
Gov. Butch Otter ordered that all $41 million be run through his Office of Species Conservation, which quickly spearheaded a plan for the Lemhi River that would end up using most of the money. Over the last decade, the project has spent $15.1 million on easements and land acquisitions, and another $9.2 million on habitat improvements.
The first priority: pay for easements on three neighboring ranches around the remote village of Leadore (pop. 107): Beyeler’s 1,000-acre spread, the 1,350-acre Cottom (cq) Ranch eight miles up the road, and some 9,000 acres of the Tyler Ranch in between the two.
In 2010, the BPA paid $3,426,523 for the first two easements. First, The Nature Conservancy bought the Cottom Ranch, and then transferred title to Beyeler. Beyeler didn’t have to pay for the land. Instead, he merely had to agree to put an easement on his own ranch that has little practical effect on his operations. Public records from the BPA are unclear about how much of the $3.4 million went to reimburse The Nature Conservancy for a purchase that cost a fraction of that, and how much went to Beyeler.
The current assessed value of the two ranches combined is about $1.5 million, according to property records. Both ranches have access to federal lands, where his cattle spend the summer grazing.
After that deal, the BPA subcontracted with Beyeler’s Lemhi Regional Land Trust to negotiate an easement with his neighbor, Karl Tyler, owner of a chain of Chevrolet and Cadillac dealerships in Montana. It took another five years, but Tyler agreed to an easement on 4,682 acres of his ranch, in exchange for $7.3 million. The land trust also wrote another $1.36 million into the deal to be paid out for “stewardship” of the property, which the trust itself also handled.
The BPA paid out $2.4 million to another rancher 37 miles away for one more easement in 2017.
Not all of Idaho’s share of the fish money went to pay ranchers to keep ranching.
As the state’s plan was to try to restore some of the headwaters flowing into the Lemhi River, Beyeler had to agree to surrender some rights to draw water from Big Timber Creek, the tributary that the Office of Species Conservation wanted to reconnect, and instead draw it from the Lemhi. The region’s creeks often run low or dry, and have done so since farmers and ranchers started working the area more than a century ago. The hope of the environmentalists is that the reconnected tributaries will eventually provide more habitat suitable for spawning. According to a recent state report on the Lemhi River work, it’s not yet clear to scientists that habitat restoration benefits fish populations, notwithstanding the $900 million being spent on habitat restoration.
The report concluded that in the Lemhi River basin, from 2009 to 2016, the “(e)xtent of salmon spawning locations did not increase substantially….” As for spawning beds in the headwaters, “No Chinook Salmon redds have been documented in any of the priority tributaries.”
For his part, Beyeler talks up fish counts and the like to the media, which never notice his anecdotes are cherry-picked.
"One of those fish moved out of Big Timber Creek, down the Lemhi and pinged through every PIT (Passive Integrated Transponder) station from here clear to the Pacific Ocean," Beyeler told the local news. “I think that was a great win for not only ranching, but our environment.”
Actually, officials tagged more than 3,000 fish over eight years in Big Timber Creek, the tributary. Most of them were the comparatively plentiful steelhead trout, not the endangered Chinook salmon. Of those, just 103 fish made it the short distance back to the Lemhi, nevermind the 825-plus miles back down to the Pacific.
Beyeler, like Otter, talks up a supposed “coverage gap” in Idaho health care. And it’s true that some people, like the Beyelers, are too wealthy to qualify for government assistance in this area. But it’s clear from his own history that Beyeler sees the federal government as a special sort of cow – the kind rural Idahoans can milk, and milk, and milk some more.
As he told a national news network, “If you want to look where Medicaid expansion can play a significant role, it's in our rural areas, no question about it.” The folks who would benefit “are people that are in animal production — that’s ranchers, crop production, those that are in construction, those that are in hotels, those type of folks.”
Like the conservation work, where “our local contractors ended up with those bids,” Medicaid is just another stream of public money for healthy adults who could make it on their own.
If taxes can be likened to a river, it is the Beyelers of the world who are the downstream beneficiaries, the giant hydroelectric dams of this metaphor. The common taxpayers are at the other end – the creeks, the headwaters, slowly drying out, less capable of sustaining life, because the downstream powers that be pay no mind to the bigger picture. What they take for themselves, they take from others.