Montana Slate Ubrarv
3 0864 1004 5853 1
MAR 1 9 1975
STATE OF MONTANA
ENVIRONMENTAL QUALITY COUNCIL
PONDEROSA PINES RANCH
A Subdivision Case Study
Kenneth F. Porter
Senator Elmer Flynn
Fletcher E. Newby
MONTANA STATE LiBRARY
930 Eott Lyndale Avenue
■'■'•■ xifana 39601
A Once In a Lifetime Opportunity
The Best Land Investment Offer
EVER TO BE MADE AVAILABLE TO GUAM RESIDENTS TO PARTICIPATE
IN THE LUCRATIVE REAL ESTATE MARKET
$ $ $ BUY LAND AT THE IDWEST POSSIBLE MARKET PRICE $ $ $
We all want to own land for ourselves and for our children.
Some of us do own land; some of us don't. Do YOU own land
right now? Can you afford to buy land for your children?
If your answers are "yes", then you are certainly a very
fortunate person. If not, then you should certainly read
this ad (and then see us about it) because this is perhaps
just what you have been looking for! We are offering you
a very positive opportunity to become a living part of the
most lucrative business — real estate investment. At least we
think YOU should, for the following simple reasons upon
which the whole concept of real estate investment is premised:
1. land is the basis of money. If you own land, you
have money I
2. 'Hie price of land inevitably escalates, and often
sky rockets astronomically out of proportion to its
original cost. Whatever the price of land is today,
you can be sure that it will be much more tomorrow. . ,
The above is the beginning of an advertisement that appeared
in the Pacific Daily News, Guam, January 13, 1973. The land it is
advertising for sale is 13,000 acres of Montana — Ponderosa Pines
Ranch. It is being sold in Hawaii, Southeast Asia and Japan; none of
the land is being offered for sale in Montana.
Ponderosa Pines Ranch is In Gallatin County, adjacent to the
east side of the Missouri River and extending into the Horseshoe
Hills. The 13,000-acre ranch is being subdivided into 908 lots of
10 and 20 acres each. In addition to the immensity of the subdivision,
this land deal is significant because it exemplifies misleading sales
tactics and advertising, an absence of land use planning that could
create countless problems in the future, and an apparent immunity
from any subdivision or real estate law.
The ranch is presently being leased and operated by the former
owner, Mike Quinn, of Boulder. Some of the land is planted in wheat
and the rest is used to graze horses and cattle. Topography varies
from steep slopes to meadow land to timber land.
Quinn said he was approached by Lincoln-Green, Inc., Missoula,
which offered to buy his Horseshoe Hills ranch. The first document
filed with the Gallatin County clerk and recorder was for purchaser's
Interest (the purchaser is in the process of paying for the land, so
the title remains In the original owner's name until the land is
completely paid for), from Mike Quinn to Lincoln-Green, Inc. In June
1972. A transfer dated July 17, 1972 provided purchaser's interest
from the seller, Lincoln-Green, Inc., to the buyers, Morris and
Roberta Moche, Honolulu, Hawaii.
In February 1973, William Smiley, Bozeman, visited Morris
Moche 's Honolulu office at the request of the Gallatin city-county
planning director. Smiley posed as an interested buyer. Moche told
him about hunting (Including buffalo), fishing and skiing but never
explained whether these were available on the ranch. He told Smiley
the ranch lies in the center of 35 national parks and adjacent to
Yellowstone Park and Chet Huntley's Big Sky resort. To say the ranch
is in the center of 35 national parks, when the closest are 100-300
miles away, or that Yellowstone is "adjacent" when it is 100 miles
away Ls a deceptive ©vwetstemsnt « SK&ley wrote, "He (Moohe)
talked about boating on Flathead lake and shopping In 3r« a1 Pal Ls ai
though they were within walking distance." Flatheai is about 250
miles; Great Palls is about 175.
A potential purchaser is given a copy of a Montana Highway
Department brochure about Montana and a public offering statement
required by Hawaii law. Moche had no brochures about the ranch but
did have an album of snapshots. Smiley described the sales talk as
"high pressure tactics" and potentially misleading, especially to
a person unfamiliar with Montana and its land. For example, Moche
told Smiley that the Montana Power Company would install gas and
electricity at no charge. A Montana Power spokesman in Bozeman
later said that he seriously doubted whether the subdivision could
get these services free. He said it was unlikely tint one particular
subdivision could get special services.
The advertising campaign in Hawaii was widespread. Television
and newspapers were the most common media. The television advertisement
script was not available at this writing, but the video portion of the
advertisement, according to Smiley, was a "big lake with mountains and
trees." There are no mountains or lakes on the Ponderosa Pines Ranch.
In fact, there are no known ponderosa pine trees. The advertisement
also announced plans for a contest and a free trip to Montana.
Newspaper advertisements were made In the Japan Times and the
Pacific Daily News (Guam). They offered escape or lucrative investment,
Sales prices for lots on the ranch differ depending on topography.
Prices range from:
$2,995 for 10 acres of steep slopes,
$3 j 995 for 10 acres of more gradual slopes,
$4,995 for 10 acres of still more gradual slopes,
$5,995 for 10 acres of meadow bottom, and
$6,995 for 10 acres of timber land.
Extra costs involved are $175 for a survey trust fund and $7 a year
for the "general maintenance" of the land. Prices for 20-acre lots
are not quite double the figures for 10-acre lots. Financing terms,
for example, for a 20-acre lot are a $595 down payment and a $56.99
monthly payment for 143 months.
The land is being sold on a contract-for-deed basis and the county
has no information on the number of lots under contract or when they
wil] be deeded to new owners. Immediate questions arise concerning
the deeding of parkland to the county, the assessment of this land,
and the difficulties the county may face in collecting taxes from
owners scattered over such distant areas. On the other hand, if the
owners choose to occupy their lots the county will suddenly be faced
with responsibility for a number of public services it may not be
prepared to provide.
Moche's stationery letterhead reveals sales outlets in Tokyo,
Guam and Hong Kong. Moche handles sales in Honolulu and a General
Investment Corporation (G-I-C) broker handles sales in Tokyo. The
City Realty, Inc., Agana, Guam has a franchise from G-I-C to sell lots.
Persons interested in seeing the land are instructed to contact the
Reely Brothers of Missoula, Montana. The Reely's are John, president,
and William, vice president, of Lincoln-Green, Inc., the real estate
corporation that sold the land to the Moches. Their Montana legsl
counsel is Milton Datsopoulos, Missoula.
The sales contract for Ponderosa Pines stipulates that the
"Buyer' agrees that neither the Seller not? assigns shall be held to
any covenant respecting the condition of any improvements on said
property, nor to any agreement for alterations, improvements, repairs,
access roads or utility services, unless the covenant or agreement be
in writing and duly executed by the parties."
The contract stipulates that if a monthly payment is late, a
charge of $3 or 10 percent, whichever is greater, is assessed the
purchaser. If the payment is late by 30 days or more, the seller has
the right to resell the land and retain all previous payments.
The contract gives the purchaser the right to an access easement
if there is no existing road running to or through the lot. The access
is to be no more than 30 feet wide and "shall be as close to boundary
lines as practicable and shall be designated by seller upon the com-
pletion of the survey of said development."
Purchasers are given the right to exchange their lots for others
(some lots are being held off the market for this purpose) if, when
they finish payment, the deed to their lots cannot be transmitted
(there can be a 120-day lag period). If they do not like their lots
upon inspection, within 36 months of the contract date they may exchange
them for others. If the exchange lot is of higher value, the contract
price will be adjusted accordingly.
The public offering statement required by Hawaii law contains
a number of potentially misleading statements, especially for persons
unfamiliar' with the area and Montana in general.
The description of the land's location is accurate, but the
statement does not explain whether a straight-line measurement (as
the crow flies) or a road mileage measurement was used. For example,
Three Forks may be 10 miles by air, but it is 19 miles by road. Helena
is about 87 miles by road rather than the 60 reported. Bozeman is
39 rather than 30. The statement describes the "easy commuting
distance," yet fails to mention that about 13-15 miles of a Journey
on any road would be unsurfaced. In addition, the statement suggests
that the trip to Helena is by freeway, which it is not.
The statement says "Yellowstone National Park is a little over
100 miles away, and there are many other state and national parks
nearby." But the closest other national parks, Grand Teton (200 miles)
and Glacier (300 miles), are hardly "nearby."
The discussion of topography is truthful but overly general.
This excerpt from the "Description of Land" is ambiguous: "These
areas are divided into lots of a size best-suited to the contour of
the land." The platting diagram reveals that drainage patterns and
slope were disregarded in shaping and sizing the lots. Further-mo 1 v ,
the contours and slopes of the land are not readily understood from
the platting diagram. Many of the lots appear to Include nothing but
steep hillsides, which leads to problems with Installing septic tanks
and erecting buildings. A real estate agent in Gallatin County, Paul
Dudley, commented, "In inquiring around (about the Ponderosa Pines
Ranch) , we found that one party — either he was a prospective buyer or
had already agreed to buy — had visited the ranch and found that his
particular tract was so steep and hilly that no building could be
The offering statement says, "The ranch contains numerous
wells, springs, and intermittent and permanent streams." Mike Quinn,
the former owner, said he knows of only three wells and .just a few
springs. In August he said no streams were running. The offering
statement makes it clear the developer will not provide water, power,
or communication lines to the subdivision.
Regarding taxes on the land, the offering statement reads,
"Gallatin County property taxes are less than $1 an acre a year."
This may be true in some cases, but it is not an accurate assessment
for developed residential land. The land is being sold "for residential,
recreational, or agricultural purposes."
In the "Public Transportation" section, the statement implies
that railroad service is available in Three Forks. It is not.
Passenger service is available in Bozeman three days a week. The statement
mentions that the Burlington Northern Railway runs along the front of
the ranch. But it does not stop there. Also, the statement mentions
that two railroads pass through Three Forks. One Is the Burlington
Northern that does not stop and the other is a freight service, which
of course does not provide public transportation.
The statement asserts that there are "complete shopping facilities
in Three Forks, 10 miles'.' Three Forks does have some shopping facilities,
but as a town of 1,200 it could hardly be described as having "complete"
The statement says "sewage disposal would be the responsibility
of the individual buyer." Buyers are not informed of the possibility
that septic tanks might not be allowed. They are not informed about
Montana's laws concerning sewage disposal and that if sanitary
restrictions on the land are not lifted, they would not be able to
"No new roads are being constructed on the property, and none wil]
be constructed by the developer," the offering statement reports. A
county road reportedly runs along the front of the ranch for three miles.
Numerous trails and small dirt-gravel roads meander tlu>ough the property,
cutting through the middle of lots in some places. Most of the lots
presently have no access whatsoever. No estimate is given for the
cost of installing access roads, though the offering statement says
easements for roads and utilities will be provided for in each parcel.
The offering statement is not only misleading but ignores all
reasons for proper planning. If people do begin moving in, the sei*-
vices they will require (roads, road maintenance, schools, school
busing, medical facilities, waste disposal, fire and police protection)
will put a burden on county government , as well as a tax burden on
other Gallatin County residents, who will end up paying for the
developer's lack of planning. In addition, there is no assessment of
or regard for the area environment (water quality and availability,
soil characteristics, wildlife populations, community impact and best
use of the land) or of the potential effects such a huge development
will impose on it.
Because the current sellers, the Moches, are Hawaii residents
and are not selling the Ponderosa Pines subdivision in Montana, their
actions are not regulated by the Montana Board of Real Estate. Since
the lots are all larger than five acres, the Moches were not required
to register the subdivision with the U.S. Department of Housing and
Urban Development under the Federal Interstate Land Sales Act. The
only regulatory body involved is the Hawaii Department of Regulatory
Agencies that requires the public offering statement (describing the
development and its surroundings) to be filed and presented to all
prospective buyers. The department also regulates advertising to
some degree. Obviously, the Hawaiian government cannot adequately
evaluate the accuracy of the offering statement or advertising, much
less investigate the effects of a subdivision in Gallatin County,
Apparently, Ponderosa Pines Ranch is not subject to the 1973
Montana Subdivision and Platting Act, which states:
"It is the purpose of this act to promote the
public health, safety, and genera], welfare by
regulating the subdivision of land; to prevent
overcrowding of land; to lessen congestion In
the streets and highways; to provide for adequate
light, air, water supply, sewage disposal, parks
and recreation areas, ingress and egress, and other
public requirements; to encourage development in
harmony with the natural environment; and to require
uniform monumentation of land subdivisions and
transferring interests in real property by reference
to plat or certificate of survey."
According to a recent opinion by Montana's attorney general, Robert
Woodahl, "the Montana Subdivision and Platting Act does not govern
the recording of deeds prepared and executed under contracts for
deed prior to July 1, 1973 > but not present for recording until after
June 30, 1973 •" The documents filed for purchaser's interest of
Fonderosa Pines Ranch (essentially the same as contract for deed) were
recorded prior to the law's effective date, meaning that the division
of the land occurred before the law went into effect, and would thus
not be subject to the law.
Woodahl 's ruling is supported by a 1972 Montana Supreme Court
decision, which states that the land purchaser (for example, someone
buying on a contract-for-deed basis) in effect is the "real" owner.
This would mean that the Moche's were the "real" owners, or titleholders
of the land before the Montana Subdivision and Platting Act went into
effect, thus exempting thein.
The Montana Subdivision and Platting Act is clearly intended to
control land deals such as the Ponderosa Pines Ranch. It is unfortunate
that this subdivision, which illustrates many of the reasons the law
was enacted, is outside the law's jurisdiction.
This case, however, also demonstrates the need for a strong,
comprehensive land sales practices act that would require registration
of all lands to bo subdivided, regulation of land sales pracl ' ,
and criminal penalties and hearings for failure to comply. Such an
act should require that no developnent could offer or dispose of any
lot or subdivision in Montana without the filing of a registration
statement and approval of it by the Montana Board of Real Estate.
The land sales practices act would also regulate advertising and sales
methods, thus preventing; the misleading of interested purchasers.
Such an act was introduced in the 1973 legislature, but killed.
The intent of the law will be included in the ongoing Environmental
Quality Council land use policy study, which will be presented to
the V~>7 r; legislature.
A land sales practices act, coupled with other Land development
laws, would protect Montana land, Montana people and prospeel Lve
buyers. In the case of Fonderosa Pines, only the developer will
profit from a Montana resource, its land. Montanans and buyers are
stuck with the social and environmental costs.
VAN'S C ' Id! si
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