If there was a dictionary of names, you might find the name Van Vleck atop the definition: heritage and innovation. Van Vleck ranching roots run deep – 161 years deep – in the greater Sacramento area, and the family is employing cutting-edge strategies to ensure the land will continue to support cattle and wildlife yet another 161 years from now.
The main obstacle to this goal is cashflow. “Cattle ranching does not generate significant income,” Stan said in a recent interview. He said that while land values continually increase, the income stream from agriculture does not and that “the return is too low for the asset value.” Rather than try to convince future generations to work several jobs in order to keep the ranch and hope each successive generation is able to do the same, he had a radical idea: make the business much more profitable so it becomes a “good business decision” to keep the business and not just for the love of agriculture.
Eliminating the temptation to sell for development is no small feat. The ranch sits directly across the highway from 3,000 homes; the current average home price sitting at just under half a million dollars. And this price may keep climbing. The total estimated population of California in 1856, the year Amos Van Vleck staked a homestead in what is now the Apple Hill area, was just over 500,000. While it is unlikely the state will see another 8,000% population increase in the next 160 years, an additional 20 million people will call California home by the year 2050 per California Department of Finance’s long-range population projections.
Stan Van Vleck is no stranger to the temptation to sell. In fact, to ensure the ranch stayed in agriculture, he had to buy out the rest of the family. And although his two children would like to stay in the family business, the pressures that they and their children are likely to face down the road could mean that the ranch won’t make it to the 9th generation.
The Van Vleck story is the story of California ranching: drought, inheritance taxes, increasing land values, and a fluctuating cattle market creating a dark cloud on the horizon. It’s no surprise that other income streams are needed. From putting in vineyards or orchards, to running a hunting club, to hanging a shingle as a guest ranch, many of the popular methods of diversification often alter land use and operations to some degree. Stan means something totally different when the topic turns to diversification.
What if there were a way ranchers could get paid to graze their own land? And what if that cash could be used to invest in opportunities outside of agriculture? Even outside California? That is exactly what the Van Vleck family is doing by investing easement proceeds into commercial property strategically in business friendly states like Texas. On May 12, 2017, California Rangeland Trust’s first easement in Sacramento County – a 285 acre mitigation easement through Teichert Construction – closed on Van Vleck Ranch. While the Van Vlecks may be the newest addition to the Rangeland Trust tribe, they are no strangers to conservation. Nearly 800 acres of vernal pools, wetlands, uplands, and Swainson’s Hawk habitat on the ranch were conserved in 2009 through another mitigation easement with Westervelt Ecological Services. The proceeds from that easement were used to buy out family members who no longer wanted to be part of the business. Van Vleck stated “easements have become an important tool for our business by allowing us to pull equity out of the business without taking on debt or selling land and reducing the size of their cattle operation. Partnering up with CRT was one of the best decisions we made in this process. They were responsive, efficient and understood the needs of a commercial cattle operation like no other.”
It is now recognized that well-managed grazing preserves and improves the quality of wildlife habitat and that there’s a symbiotic relationship between agriculture and environmental stewardship. For this reason, developers often need to find ranch land to permanently protect before they can get a green light on their project. Under current regulations, developers must offset the habitat their project will impact by conserving a similar landscape in close proximity to the project.
These private deals are known as mitigation easements; and because they are private, they have the potential to be far more lucrative than traditional conservation easements. They can also take less time to implement. Like traditional conservation easements, the landowner agrees that the land will never be developed, subdivided, or turned into intensive agriculture. They can be more restrictive. Often the easement will require the land be grazed under a management plan. In other words, the landowner will be paid to ranch.
Unlike traditional easements where proximity to urban areas or prime cropland greatly affect the easement value as determined by an appraisal of the highest land use, mitigation conservation easements value land for habitat, the value of which is privately negotiated between the developer and the landowner. Under the right circumstances, this can create a seller’s market.
With two mitigation easements already in place, the Van Vleck family is looking forward to doing more. And yes, the entire family is involved. Stan and his wife, Nicole Montna Van Vleck, have brought their children, Christian and Tori, into the easement and investment decision process, truly preparing for generations to come.
