Rancho Sierra, a 2,317-acre property northwest of San Antonio, has everything – rugged hills, a ranch house, springs and seeps that form the headwaters of two creeks, and Mount Smith, the tallest point in Bexar County.
It also has, according to surveys, an abundance of golden-cheeked warblers, the migratory songbirds that have made headlines for nearly 30 years as a symbol of the tug-of-war between property rights and conservation in the Texas Hill Country.
For the State of Texas, which purchased the land for $26.6 million to include in an investment portfolio used to fund public schools, the warbler population stands in the way of plans to develop the property and get a positive return on its investment.
At one point, the state planned for the property between Helotes and Boerne to be the site of a residential subdivision with 715 ranch homes, according to an August 2005 master plan obtained by The Rivard Report.
Today, Rancho Sierra remains undeveloped and for sale. Protections for the warbler’s habitat under the Endangered Species Act have restricted how it can be developed, lowering the value of the property by 35 percent, according to assessments.
“They’re stuck because the cost to get out of it is equal to the cost of the land,” said Gene Dawson, president of Pape-Dawson Engineers, which did an assessment of Rancho Sierra for the state in the late 2000s.
The Texas General Land Office has joined forces with the Texas Public Policy Foundation, a conservative think tank representing the state pro bono, against the U.S. Fish and Wildlife Service. The Land Office is suing in federal court hoping to get the warbler taken off the endangered species list.
The main argument centers on a recent study they say shows the bird is not actually endangered. Still, lawyers for the Texas Public Policy Foundation say Rancho Sierra is an example of how continued protections for the bird hurt property values.
“We had an actual data-driven, concrete property that demonstrated in real terms the impact of the Endangered Species Act on the value of a property the [General Land Office] is responsible for managing and investing for public education in Texas,” said Robert Henneke, a lawyer for the foundation.
Endangered species experts say the General Land Office has options available to develop the land or portions of it while also avoiding harm to the birds.
The state could have potentially avoided this situation by surveying Rancho Sierra for warblers before purchasing the property — at a cost of nearly $11,500 an acre — in June 2005.
It’s not clear whether the General Land Office surveyed Rancho Sierra for golden-cheeked warblers before buying it and, if it did, why it went ahead with the purchase. In February, Land Office spokeswoman Brittany Eck said she “could find no evidence” officials there knew about warblers on the ranch before they bought it.
Asked again in late March via email, along with several other questions about the Land Office’s plans for the property, Eck declined to comment, citing the ongoing litigation.
At the time of the purchase, property values in Bexar County were going up as demand for new housing reached a high point, Dawson said.
“It was the hottest it has ever been,” he said. “We were building 19,000 homes a year, which is twice the pace we’re building now.”
That caused demand for outlying properties on the fringe of San Antonio, he said.
“Big land bankers like the [General Land Office], they were looking for big tracts that development would come to, and it would protect their investments,” Dawson said. “You can see how that market cycle would have impacted decisions to buy and the development of the land.”
Warbler controversy from the beginning
At the time of Rancho Sierra’s purchase, the warbler had been on the endangered species list for 15 years. Scientists with the U.S. Fish and Wildlife Service put it there on an emergency basis, citing concerns about habitat destruction by rapid growth and development in the Hill Country.
Like other species of warbler, the birds have somewhat specific habitat needs. They nest in mature mixed oak and mountain cedar forests, weaving their nests out of strips of cedar bark and spider webs. After spending the summer raising chicks, they start flying south again in July.
Not long after the listing, the bird began generating controversy.
“Ranchers were dragging cedar trees behind their tractors down Congress Avenue” in Austin, said Susan Hughes, a San Antonio resident, longtime environmentalist, and former board member of the National Audubon Society.
In Hughes’ view, early media coverage of the decision led landowners to believe that the presence of warblers on a property means it can never be ranched, developed, or used in any way.
“What is critical habitat for those birds is nothing a rancher or farmer is going to care about,” she said, meaning land that’s not suitable for agriculture. “You’re really kind of lucky to have ranches that support the birds.”
Since the listing, scientists have studied the warbler intensely, with different researchers coming to different conclusions about whether the bird remains under threat.
One 2015 study by Texas A&M University Institute of Renewable Natural Resources estimated that Texas has 19 times more warblers and five times more warbler habitat than scientists originally knew about. Henneke’s group focused on that study in a 2015 petition to take the bird off the list.
Fish and Wildlife officials denied the petition in 2016, saying “habitat destruction, fragmentation and degradation remain a real and significant threat to the continued existence of the warbler,” especially in Travis, Williamson, and Bexar counties.
In their denial, agency officials wrote that 29 percent of the warbler’s breeding habitat was lost between 1999 and 2011 as the human population in its range grew 50 percent from 1999 to 2010.
That paved the way for the current lawsuit, filed in 2017.
“To me, on a personal level, there’s nothing more fundamental than the idea of the American dream and achieving that through economic security, which for many people is ownership of land,” said Land Commissioner George P. Bush in a video about the lawsuit produced by the foundation the lawsuit that depicts a rancher teaching his son how to build a fence.
“What would it mean for future generations if we allowed the federal government to intervene in property ownership?” Bush continued.
Included as exhibits were two property assessments of Rancho Sierra showing an abundance of bird habitat.
Assessments show abundance of warblers
The assessments by Valbridge Property Advisors have no date, but they appear to have been done after 2010 because they cite experts who surveyed Rancho Sierra for warbler habitat in 2007, 2008, and 2010. The assessments don’t mention any warbler surveys before the land was purchased.
Averaged together, the three surveys found that about 84 percent of the property is covered in the kind of forest warblers use to build their nests. One map of the property shows only about 300 acres of land that is not warbler habitat.
That limits how the property can be developed, the assessment states, citing opinions by property experts with the Edwards Aquifer Authority, Pape-Dawson Engineers, and the Bandera Corridor Conservation Bank.
“From a bird standpoint, this was the property most impacted that I think we’ve ever been on,” Dawson said.
The money for Rancho Sierra’s purchase came from the Permanent School Fund – a portfolio of assets, including physical properties, that the state manages, harvests revenue from, and sells at a profit to fund Texas public schools.
The fund dates back to the 1800s and is part of a longstanding custom in Texas of using income derived from land holdings to pay for certain government functions. As of August 2017, the fund’s portfolio was worth $32.7 billion, with 7.4 percent of it in real estate, according to its annual report.
The purchase came at a time of expansion for the Permanent School Fund. In the early 2000s, the Texas Legislature approved a constitutional amendment that changed the way the fund could be used, said Jerry Patterson, who served as Land Commissioner from 2003 to 2015.
Patterson, who recently ran unsuccessfully against Bush for his former job, touted as one of his major accomplishments the General Land Office’s management of the Permanent School Fund.
“What we did was get the Legislature to allow us to invest [oil and gas] royalty income in real property interest,” Patterson said.
In the past, the General Land Office collected oil and gas royalties on land owned by the Permanent School Fund, audited it, and sent it to the State Board of Education, Patterson said. The change allowed the agency to reinvest that money into real property, which includes real estate but also a wide variety of other investments.
“We made a lot of money,” Patterson said. “We made $8.1 billion in 10 years.”
Due diligence
Asked about Rancho Sierra at a February campaign event, Patterson said he didn’t remember the name of the property. Asked about the warbler, he said the protection for endangered species is an issue “that frequently comes up.”
“It affects the property value, and it affects what you can do with it,” he said.
All purchases by the Permanent School Fund had to be approved by the School Land Board, which at the time included Patterson and two appointees.
Meeting minutes for 2005 show that the board reviewed Rancho Sierra three times that year. The final vote in May was to purchase Rancho Sierra “subject to … resolution of any environmental issues discovered in the Phase II investigation of this property,” the minutes state. The board unanimously approved the purchase.
The records included no appraisals or mentions of a warbler survey, although Bo Tanner, deputy land commissioner at the time, said that Land Office staff would have done an appraisal after the initial go-ahead from the board and before the final sale.
His group of staff members at the Land Office focused on identifying properties for purchase, while a separate group did appraisals, surveying, and other due diligence, he said.
“In my opinion, it was a good plan, to make sure no one group in the Land Office was doing the whole thing,” said Tanner, who left the office in 2007.
Tanner said he did not know whether the Land Office had done a warbler survey before 2005.
Two options
As long as the bird remains on the endangered list, the Land Office has two options, Dawson said.
A developer could build on some parts of the property, while leaving most of it undisturbed. The Valbridge report states that 500 acres could be feasibly developed with the remaining land used for warbler habitat. Fish and Wildlife officials oversee that process, which can take years.
The other option is enrolling the property in the Southern Edwards Plateau Habitat Conservation Plan. Under that structure, a landowner or developer pays per acre of warbler habitat into a pot of money that’s later used to preserve warbler habitat elsewhere.
“The big difference to the landowner is the process and the speed,” said Dawson, noting that putting the property in a conservation plan would be a quicker solution. “The cost is the same.”
Richard Heilbrun, a biologist with Texas Parks and Wildlife, remembers speaking with General Land Office officials about what to do with the property in the mid-2000s. At the time, they were considering turning it into preserve land.
“However, my understanding of the outlook at that time is it would not have brought in the revenue they wanted to receive,” Heilbrun said.
Asked about the possibility of the state doing this instead of trying to get the bird delisted, Henneke, the lawyer representing the state, challenged the premise of the question itself.
“It’s the role of the General Land Office in managing its assets to maximize the value of funding of public education,” he said. “To throw out there as an alternate a decision that would result in a lesser value for an asset … I think would be contrary to the fiduciary obligations the [office] has.”
The real issue, Henneke said, is the science of whether the bird has sufficiently recovered and the fact that the Fish and Wildlife has not designated critical habitat, or habitat that’s crucial for the bird’s survival.
Those issues could soon see their day in court, with U.S. District Judge Sam Sparks in Austin ruling in February that the Land Office’s lawsuit could proceed. No trial date has yet been set.
