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® - HASKILL BASIN WATERSHED tj?Z-3?(- cl DEED OF CONSERVATION EASEMENT THIS DEED OF CONSERVATION EASEMENT ("Easement") is granted this !sf day of F$r-7, 2016, by F.H. STOLTZE LAND & LUMBER COMPANY whose address is 600 Halfmoon Road, Columbia Falls, Montana, 599 1 2 ("Landowner"), to the MONTANA DEPARTMENT OF FISH, WILDLIFE AND PARKS, whose address is 1420 East Sixth Avenue, P.O. Box 200701, Helena, Montana 59620-0701 ("Department") and to THE CITY OF WHITEFISH, a Montana municipal corporation whose address is 1005 Baker Avenue, P.O. Box 158, Whitefish, Montana 59937-0158 ("City"). In this Deed of Conservation Easement, the Department and the City may be referred to collectively as "Grantees", and Landowner and Grantees may be referred to collectively as "Parties", or individually as a 'Party'. 7 Exhibits to this Deed of Conservation Easement include the following: Exhibit A - Legal Description of the Land ' Exhibit B - Map of the Land I. RECITALS A. The people of the State of Montana and the City of Whitefish recognize the benefits of protecting forest land, watersheds, riparian corridors and conserving open space that provides clean water quality and supply for the City municipal water system and clean water and habitat for native fish, wildlife and plant communities, while simultaneously managing commercial forests on the land, and have authorized the Department to acquire conservation easements by voluntary, cooperative means to conserve important lands and habitat; B. The Landowner is the sole owner of certain real property in Flathead County, Montana, comprising approximately 3020 acres and legally described in Exhibit A and depicted in Exhibit B, both of which are attached hereto and incorporated herein by this reference (the "Land"); C. The City has determined that the conservation of the Land under this Deed of Conservation Easement would satisfy a number of needs of, and provide a multiplicity of benefits to the residents and visitors of Whitefish, including the protection and preservation of the City's water supply, including the primary source drinking water supply for the City's municipal water system, (ii) the aesthetic protection of the scenic backdrop to the City, (iii) the preservation of important wildlife and fish habitat, (iv) the securing of nearby and accessible recreational opportunities, and the preservation of sustainable timber harvesting, along with all of the associated local job and economic benefits that come with such benefits. D. The City is authorized under Montana Code Annotated Title 7, Section 13, Part 43 and Title 7, Section 7, Part 44 to own, operate and maintain a municipal water system and to acquire land or rights in land or water in connection with such undertaking. E. The Land also has significant natural habitat, scenic and open space values as recognized in the Montana Open Space Land and Voluntary Conservation Easement Act, MCA Section 76-6-101 , et seq. ---PAGE BREAK--- F. The Land provides significant benefit to the people of the City of Whitefish, the State of Montana, Flathead County, and the United States by preserving and providing the following important resources, in perpetuity, in compliance with Section 1 70(h)(4)(A) of the Internal Revenue Code and Sections 76-6- 1 0 1 , et seq., MCA: I. Open-space lands which maintain the rural, natural scenic and agricultural qualities of the area and provide opportunities to continue traditional timber management practices and recreation opportunities in perpetuity, as encouraged and supported by the State of Montana and local land conservation policies adopted in Flathead County, Montana; and 2. Views of a working forest landscape that are enjoyed by members of the general public traveling along U.S. Highway 2, U.S. Highway 93 and Montana Highway 40 as well as the general public recreating on the Land and on adjacent public lands administered by the Flathead National Forest; and 3 . Open-space lands that provide for a variety values, including: a. The watershed that currently comprises approximately ninety percent (90%) of the source drinking water for the City; b. Outstanding fisheries habitat and spawning grounds (provided by Haskill Creek, 1 st Creek, 2 nd Creek, 3 rd Creek, 4 th Creek and 5 th Creek) for a variety of fish species, including, but not limited to, westslope cutthroat trout; c. Exceptional wildlife habitat for a variety of species, including, but not limited to, grizzly bear, Canada lynx, wolverine, elk, mule deer, whitetail deer, black bear, moose, gray wolf, mountain lion, hoary bat, pileated woodpecker, black-backed woodpecker, and numerous other bird species, many of which are listed as species of Greatest Conservation Need in the Department's Comprehensive Fish & Wildlife Conservation Strategy (20 1 and d. Important lands, which serve as corridors for the movement of wildlife and play a central role in ensuring wildlife l inkages between the North Fork of the Flathead River, Glacier National Park, the Whitefish Range and other ecologically intact areas of the Rocky Mountains of the northern United States and southern Canada. The uses and benefits described above are collectively referred to as the Land's "Conservation Values." G. The Land has a history of forest management, and maintaining the opportunity for a productive forest management program that sustains and enhances fish and wildlife habitat and protects the quality of the City of Whitefish's municipal water supply is of statewide and local importance. H. The 2007 Whitefish City-County Growth Policy specifically recognizes the importance of Haskill Creek and recommends that developments in the 2nd Creek and 3 rd Creek watersheds be closely evaluated and conditioned to protect the City's domestic water supply source. Landowner Acknowledgement: Department Acknowle: ti City Acknowledgement Haskill Basin Watershed Deed of Conservation Easement January 20,20 1 5 Page 2 of29 ---PAGE BREAK--- I. The Land provides important public recreational opportunities, including, but not limited to, hunting, fishing, trapping, trail running, mountain biking, hiking, cross country skiing, huckleberry picking, and wildlife viewing. J. The Conservation Values of the Land can best be protected by the Landowner granting a conservation easement to the Grantees, with the Landowner retaining fee title to and overall management of the Land, so long as management is consistent with the terms, conditions and purposes ofthis Easement (as described). K. The Forest Legacy Program, administered by the U.S. Department of Agriculture, Forest Service ("Forest Service") pursuant to Section 1 2 17 of Title XII of the Food, Agriculture, Conservation and Trade Act of 1 990 ( 1 6 USC Section 2 1 03C) and created "to protect environmentally important private forest lands threatened with conversion to non-forest uses", has awarded a Forest Legacy grant to the Department for a portion of the purchase price of this Easement. L. A portion of the value of this Easement is being provided by the City through the issuance of water revenue bonds to be repaid by an increase in the City's resort tax through January 3 1 , 2025; M. A portion of the appraised value of this Easement is being provided by U.S. Department of Interior, Fish and Wildlife Service ( "USFWS") grant funds under its Habitat Conservation Plan Land Acquisition Grants Program (Section 1 O(a)( I of the Endangered Species Act). Such grant funds are provided for acquisition of vital habitat for threatened and endangered fish, wildlife, and plant species. This Easement will be managed so as to protect and preserve the Conservation Values of the Land, which Conservation Values are consistent with the purposes of the USFWS grant. This Easement may not be encumbered, disposed of in any manner, or used for purposes other than those for which it was acquired, without prior written approval ofthe USFWS, Region 6, Denver, Colorado as well the City and the Department. N. If the purchase price for the Easement is less than the fair market value of the Easement, and Landowner intends that the difference between the purchase price and the fair market value shall be a charitable contribution by Landowner. 0. The fair market value of the Land both before and after taking into account the effect of the Easement was determined by a full appraisal in accordance with the definitions and methodologies of the Uniform Appraisal Standards for Federal Land Acquisitions, and the purchase price for the Easement is no more than the fair market value of such interest in the Land at the time of the grant of the Easement. The parties acknowledge that no part of the consideration paid for the Easement is being paid for public access to the Land since Landowner has had the long-standing practice of providing such open access and is agreeing to continue such practice as set forth herein. II. AGREEMENT In consideration of the sums paid by the Parties, and in further consideration of the recitals, mutual covenants, and terms contained in this Easement and pursuant to the laws of the Landowner Acknowledgement: Department Acknowl: ķ city AcknowledgemeV Haskill Basin Watershed Deed of Conservation Easement January 20, 20 1 5 Page 3 of29 ---PAGE BREAK--- State of Montana and in particular to the Open-Space and Voluntary Conservation Easement Act, MCA §§76-6-10 1 through 76-6-2 11, the Department's wildlife habitat acquisition authority, § §87-1 -209 et seq., MCA; and Title 70, Chapter 17, MCA, and the City's source water protection authority under MCA Title 7, Chapter 7, Part 44, Landowner grants and conveys to Grantees and Grantees accept this Easement in perpetuity consisting of the following rights and restrictions over and across the Land. A. PURPOSES This Easement is being acquired using the charitable contribution from Landowner described in Recital N and three different, but mutually consistent and compatible, funding sources in order to preserve and protect the Conservation Values of the Land. In the interest of protecting such Conservation Values, Landowner and Grantees agree that the purposes of this Easement (the "Purposes") are generally described as follows: 1 . Protect the City's municipal water quality and supply in 151 Creek, 2 nd Creek and 3 rd Creek and ensure that the water being diverted continues to remain as pure and clean as possible, free from sedimentation and pollution that the commercial, industrial or residential development of the Land would entail. 2. Further the goals of the Forest Legacy Program, in accordance with the provisions of Title XII of the Food, Agriculture, Conservation and Trade Act of 1 990 (16 U.S.C. 2 1 03c), to protect environmentally important forest areas that are threatened by conversion to non-forest uses and therefore also protect important scenic, cultural, fish, wildlife, recreational resources, and riparian areas. 3. A further purpose and goal of the Forest Legacy Program and this Easement is to protect the Land's capacity to produce economically valuable forestry products and to allow Landowner and its successors and assigns to continue to conduct commercial timber and resource management activities in a sustainable manner. 4. Further the goals of the Habitat Conservation Plan Land Acquisition Grants Program to manage floodplain, riparian areas, and stream habitats along certain fish bearing creeks on the Land as delineated on the map attached hereto as Exhibit B in a manner suitable to the long-term conservation of certain wildlife and native fish species. 5. Perpetuate the use of the Land as working forestland; to ensure the opportunity for long-term, professional management of the forest resources through sustainable forestry activities permitted hereunder; and to provide that commercial production of forest products is conducted in a manner compatible with the conservation of water quality, fish and wildlife habitat, recreation, and the Conservation Values. 6. Continue the Landowner's current practice of allowing members of the public with reasonable access to the Land for public outdoor recreational uses as provided for in Paragraph II.C. and subject to Paragraph II. I. Landowner Acknowledgement:;-..- / Department Acknowl#: City AcknowledgemeU _ Haskill Basin Watershed Deed of Conservation Easement January 20, 20 1 5 Page4 of29 ---PAGE BREAK--- 7. To prevent the Land from being converted or diverted to any use prohibited by Paragraph II.D of this Easement pursuant to the terms of §76-6- 1 07, MCA, or to any use otherwise inconsistent with the terms, conditions, Conservation Values or Purposes of this Easement. B. LANDOWNER' S RIGHTS Landowner reserves to itself, its successors and assigns, all rights accruing from ownership of the Land, including the right to engage in or permit others to engage in all uses of the Land that are not contrary to this Easement. Without limiting the generality of the previous statement, and subject to the specific restrictions on Landowner's activities in this Easement, the following rights are expressly reserved and are consistent with this Easement. As specified in the following paragraphs, Landowner's exercise of certain of these rights is conditioned upon prior approval by the Grantees under the procedures provided for in Paragraph II.G. of this Easement (hereafter referred to as "Prior Approval") and Landowner's exercise of other rights is subject to prior notice to Grantees also as provided for in of Paragraph Il.G. (hereafter referred to as "Prior Notice"). Furthermore Landowner's exercise of many of these rights is conditioned upon their adherence to the Multi Resource Management Plan executed by Landowner and the Grantees pursuant to Section II.E. hereof (the "MRMP"). The following rights are expressly reserved and are deemed to be consistent with the Conservation Values and Purposes of this Easement: I . Forest Management. The right to harvest, prepare for sale, and sell timber, timber products and other forest products or resources and to manage the Land including all aspects of commercial forestry in accordance with Applicable Law (as defined below); in accordance with good and sound silvicultural practices as addressed in the MRMP as defined in Paragraph !I.E. hereof. For purposes of this Easement, the term "Applicable Law" shall mean any federal or state regulation, rule or statute which may be in effect from time to time which regulates the harvest of timber or land management with respect to the Land, including, but not limited to, Title 77, chapter 5, part 3, MCA, and the associated Administrative Rules of Montana, Title 36, Chapter 1 1 , Sub-chapter 3, governing forest practices in the streamside management zone, as the law and rules may be revised or amended from time to time, and "Best Management Practices for Forestry in Montana, December 20 15" (the "BMPs"), with such changes as the parties may agree to from time to time. In addition, Landowner wil l harvest the timber and manage the Land and its resources in accordance with the MRMP required pursuant to the Forest Legacy Program and further described in Paragraph II.E of this Easement. 2. Regulation of Public Use. The right to regulate public use of the Land at all times, subject to the public's recreational access and limits thereon as described hereinafter in this Easement. The Landowner retains the right to temporarily restrict public use as required to protect and restore environmentally sensitive areas, sites damaged by public use or natural processes, or areas undergoing timber harvest or timber management activities such as reseeding or replanting; in emergency situations; for public safety reasons subject to the provisions of Section I; and in other areas or circumstances where the Conservation Values could be adversely impacted by public use. Landowner must give Grantees written notice of areas closed to public use as soon as practical after such closure. Restrictions to protect and restore environmentally sensitive areas or to address circumstances where the Conservation Values could be adversely Landowner Acknowledgement:, / Haskill Basin Watershed Deed of Conservation Easement Department Acknowl-- January 20, 20 1 5 City Acknowledgemev Page 5 of29 ---PAGE BREAK--- impacted by public use require mutual consent of the Landowner and Grantees. Consent of the Grantees is not required to restrict motorized use of roads; provided that non-motorized use is allowed. Grantees agree to assist Landowner in enforcing Landowner's right to restrict public use as outlined in this Easement and/or in the MRMP. Further, Landowner retains the right to temporarily suspend public access subject to the provisions of Section and 3. Structures and Improvements. Landowner may: a. repair, renovate, remove, maintain, or replace nonresidential improvements existing at the time of the grant of this Easement, provided that such repair, renovation, maintenance, or replacement does not expand the size or materially change the use of such nonresidential improvements; b. construct, remove, maintain, renovate, repair, or replace timber platforms, bridges, culverts, road ditches, and other structures necessary for land management purposes not specifically disallowed in this Easement; and c. with Prior Approval, construct or place on the Land for temporary use one or more buildings or structures for resource-management purposes, including but not limited to forest management and road work. The temporary placement of equipment and machinery for log chipping, tree limbing or scaling, or otherwise preparing logs for loading or shipment from the Land is not deemed to be a "timber processing mill." However, such equipment or machinery may not be placed within the Streamside Management Zone (as defined in Paragraph I I.D. unless approved in writing by the Department. Any buildings allowed by this Paragraph II.B.3.c. must be removed from the property upon conclusion of the use for which the buildings were erected and the site reclaimed. 4. Roads, Road Maintenance, Road Easements, Trails and Bridges. _Notwithstanding the provisions of Paragraph IJ.B. l . the Landowner: a. may maintain and improve, or replace, ex1stmg roads, bridges, and culverts consistent with conditions and restrictions in the MRMP. This right includes the right to abandon or reclaim roads that are no longer used; b. with Prior Notice to the Grantees, may construct and maintain new roads necessary for exercising rights retained by Landowner under this Easement that are consistent with the MRMP. Any proposed new roads not in accordance with the MRMP require Prior Approval by the Grantees; c. with Prior Approval from the Grantees, may construct and maintain new roads and bridges within the Streamside Management Zone; d. shall control and be responsible for road access, maintenance, management, and use regulation, subject to any maintenance, management and access provisions governing "cost-share" roads, as contained in separate agreements among the Landowner and cooperating federal and state agencies; Landowner Acknowledgement: Cl.JW / D'l'mmml Mk"=''fX City Acknowledgement Haskill Basin Watershed Deed of Conservation Easement January 20, 20 1 5 Page 6 of29 ---PAGE BREAK--- e. may grant to third parties permanent or temporary, non-exclusive access rights to cross the Land on new roads to be constructed or on roads or trails existing at the time of the grant of this Easement. Prior to issuing any such access rights, Landowner must give Prior Notice to the Grantees and also provide the Grantees with a copy of any access easement or agreement to be granted to such third party. Documentation of roads or trails existing at the time of the grant of this Easement may be established through the Easement Baseline Report provided for in Paragraph II.F. Nothing in this Easement may interfere with a third party exercising any right of legal access across the Land that was in effect at the time of the grant of this Easement; f. with Prior Notice to the Grantees, may utilize roads existing at the time of the grant of this Easement or construct and maintain new roads across the Land in order to access other nearby or adjoining land owned by Landowner; and g. may grant to third parties permanent or temporary non-exclusive access rights for recreational purposes across the Land on new trails to be constructed. Prior to issuing any such access rights, Landowner must give Prior Notice to the Grantees and also provide the Grantees with a copy of any access easement or agreement to be granted to such third party. 5. Use of Motorized Vehicles and Equipment. The right to use motor vehicles, forestry machinery and equipment, and to maintain log yards, in the ordinary course of Landowner's timber and resource management activities and in a manner consistent with Paragraph II. B. I. 6. Chemical and Biological Agents. The Landowner reserves the right to utilize agrichemicals, fertilizers, biological agents, or other means for silvicultural purposes and for control of noxious weeds and pests, as defined by the State of Montana or other lawful authority with jurisdiction. Subject to Prior Approval by the Grantees, Landowner may use chemical or biological agents to control other nonnative plants not listed as noxious weeds or to control plants, fish, wildlife, insects, or other life forms that threaten the Conservation Values of the Land. Any such use or application must be in accordance with Applicable Law. Notwithstanding any of the provisions of this Paragraph JI.B.6., Prior Approval from the Grantees is required for aerial application of agrichemicals, fertilizers, and biological agents. 7. Habitat Enhancement and Restoration. The Landowner reserves the right to manipulate vegetation, conduct stream restoration projects, or engage in other habitat enhancement or restoration activities, provided that any such activity must be for the primary purpose of enhancing or maintaining fish and wildlife habitat, and such activity must be in accordance with the MRMP. If any such activity is not contained in the MRMP or otherwise specifically allowed herein, then Prior Approval by the Grantees is required. 8. Telecommunications Sites. The right to lease not more than one ( 1 ) additional site together no larger than one ( 1 ) acre, on the Land for the purpose of the construction and use of radio, television, cell phone or other communication signal transmission or relay facilities. Access roads to these sites must be gated and the sites must be fenced to exclude deer, elk, and bear. Landowner shall provide a copy of the lease to the Grantees. Any road construction Landowner Acknowledgement: City Acknowledgement O