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Wednesday, September 5, 2007

Huge Redwood Forest Deal on North Mendocino Coast

Over 50,000 acres of Redwood Forest Next to Sinkyone State Park and the King Range is Saved from Development

June 15, 2007

Group buys forest to log, shield it from development

By Tim Reiterman, L.A. Times Staff Writer

With 100% financing from the Bank of America, a nonprofit conservation group has purchased 50,000 acres of redwood forest along the Mendocino County coast north of Fort Bragg for $65 million and plans to use it for commercial timber harvesting while shielding the land from development. "We know that this property without protection would have been subdivided into smaller parcels," Art Harwood, a sawmill operator and president of the Redwood Forest Foundation, told reporters Thursday in the redwood grove outside the Transamerica Pyramid in San Francisco. "Every year in the U.S., millions of acres of forest are bought and sold, and the pressure is particularly high in Northern California."

Bank and foundation officials said the deal is the first of its kind that relies entirely on private financing. However, much of the debt is to be paid through the sale of a conservation easement to another nonprofit group that plans to seek state funding.

Harwood said the land, acquired from Hawthorne Timber Co., was heavily logged in the 1980s and '90s and now consists primarily of second-growth redwood and Douglas fir. "There are a few old-growth trees scattered out there, but we will not be cutting them," he said.

Foundation officials said they plan to do very little logging at first, and never on more than 3% of the property a year to ensure a long-term supply of jobs and timber. The Redwood Forest Foundation, which is dedicated to restoring working forests, plans to use logging revenue to help pay off the 20-year loan. The foundation, based in the southern Mendocino County town of Gualala, intends to sell the conservation easement to the Conservation Fund, which plans to use state money approved by voters last year in Proposition 84, the clean water, parks and coastal bond measure.

"We haven't negotiated the cost of the easement and the terms," said Chris Kelly, who manages California operations for the fund. "But our intention is to have an agreement allowing no subdivision, development or conversion to non-forest uses, and possibly there will be a cap on harvesting." The land is north of Fort Bragg and about 50 miles north of two other parcels purchased recently by the Conservation Fund.


Bank of America CEO Kenneth Lewis appeared in a redwood grove in downtown San Francisco today - the urban redwoods are planted next to the Transamerica Pyramid - to announce a first-of-its kind deal: the bank is providing 100 percent financing to the non-profit Redwood Forest Foundation to acquire 50,635 acres of redwood timberlands on Northern California's Lost Coast. The acquisition is part of BofA's (BAC) $20 billion green lending initiative. What makes the $65 million deal unique is that the foundation will continue to log the Usal Redwood Forest in Mendocino County, albeit on a much reduced scale and in conjunction with the restoration of the forest ecosystem. The foundation, which is buying the land from the Hawthorne Timber Company, will sell a conservation easement to ensure the forest remains intact in perpetuity and to pay down the debt it owes BofA.


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Bank of America and Redwood Forest Foundation Announce Nation's First Private Capital Forest Acquisition by Nonprofit Transaction Helps Protect California's Usal Redwood Forest

SAN FRANCISCO, CA — Bank of America and the Redwood Forest Foundation (RFFI) today announced the country's first forest acquisition by a nonprofit using 100 percent private capital to close the deal. The transaction preserves more than 50,000 acres of critical working timberland in the Usal Redwood Forest, just north of Fort Bragg in Northern California's Mendocino County. This transaction will stop the forest's fragmentation while also allowing the property's coastal redwood trees to grow and be managed as a working sustainable forest. The foundation will purchase the acreage from Hawthorne Timber Company using $65 million in flexible long-term financing from Bank of America.

This unique structure provides a national model for nonprofit ownership of a forest, and enables local environmentalists and timber companies to implement sustainable timber practices that sustain jobs and tax base while protecting critical ecological areas. The transaction also provides a return on investment for Bank of America.

"This is the beginning of a new era for our local community," said Art Harwood, President of RFFI. "We are banding together to protect and manage our forests. We are pulling together private capital, and the hopes and aspirations of people from all walks of life to create a bright beacon for our future. We are doing this by ending the 30 years of fighting, and focusing on what unites us."

"Some of the trees we are protecting were saplings before Bank of America was founded in San Francisco in 1904," said Kenneth D. Lewis, Bank of America chairman and CEO. "This is one of the most significant transactions of our recently announced $20 billion environmental initiative. We are honored to protect a California legacy and one of the environment's most precious resources." Don Kemp, RFFI's Executive Director added, "We anticipate that this project will be the first of many in which the global capital markets will be tapped to finance projects more traditionally considered the domain of the public sector. We look forward to working with the entire community to manage our Redwood forests so that jobs and environmental benefits will be maintained for decades to come." RFFI's oversight of the forest will preserve open space, restore the quality of the Redwood forest, purify waterways, enhance wildlife habitat and maintain family wage jobs for those who depend on forests for their livelihoods. Upon fulfilling its financial obligations, RFFI will continue to sustainably harvest timber and reinvest in the community as determined by RFFI.


Forests for the Funding
by Katie Renz

They've filed numerous lawsuits challenging timber harvest plans, operated their own independent sawmill, demonstrated in the streets, and supported protesters sitting in the tallest trees. Now they're taking the next logical step: Mendocino County residents Linda Perkins and Bill Heil are fighting for the forest by buying it.

The couple, both 65, had already devoted ten years to full-time activism when, in 1997, Louisiana-Pacific Corporation decided to sell 200,000 acres of timberland in Mendocino County. "The time was ripe for a change in how the forests were owned," Perkins says. While unsustainable logging—and the subsequent destruction of forest ecosystems—generated millions of dollars for corporate headquarters in Portland and Atlanta, the couple's small community of Albion, like scores of other Northern California mill towns, suffered a boom and bust economy.

A few months prior to the sale, Mendocino County's then-Supervisor, Charles Peterson, proposed that a representative group of locals, from third-generation foresters to Earth First!ers like Perkins and Heil, come together to buy and manage timberland for public use. The vision entailed a working landscape supporting selective harvesting and recreation, with profits recycled through the community, as opposed to its likely alternatives: further logging or cutting up the land for development.

But where would the money come from? Financial services company US Forest Capital suggested seeking alternative strategies, such as tapping into tax-exempt bond markets, to fund these mega-land grabs.

Heil explains why this strategy was so compatible with Peterson's plan for a "working forest": "If you have less to pay back on the interest, you have less forest you have to cut down to pay it back. On a local level, we realized that we had to take control. As these big companies were moving out, it was the time to acquire the base of production."

The first attempt failed: The nascent Redwood Forest Foundation International (RFFI, or as Perkins fondly calls it, "Reffie") had only existed for a couple of months when they lost the bid on the LP property.

Eight years and about a hundred meetings later, the organization is involved in closing its first successful deal: with Hawthorne-Campbell, the timberland investment group that snagged Georgia-Pacific's 194,000 acres (RFFI also tried to buy the whole plot). Hawthorne-Campbell is selling RFFI 16,000 acres of overharvested—but relatively healthy—forest land along Salmon Creek and Big River for $48.5 million.

At first, Hawthorne-Campbell wasn't interested, but as Perkins describes it, "conversation continued." About a year later, RFFI teamed up with the Conservation Fund, a national nonprofit that protects land through conservation easement and then turns the management over to another party.

"We simply don't have enough public money to buy and preserve large tracts as park land," Perkins says, underlining the group's biggest hurdle. As Heil puts it, "We understand the ecology of the forest, but the funding? It was a strong learning curve for eight to ten years, and we still are in that process."

The partnership with the Conservation Fund, which has protected five million acres and counting across the country, was invaluable for RFFI, ensuring economic resources and a reputable track record. Funding also came from loans through the federal Clean Water Act and the state water board. These were monies, Perkins says, intended for projects such as sewage treatment but that often regulate buffer zones around creeks and rivers to prevent sedimentation. "So it's a little bit innovative, what we're asking for," she acknowledges.

The immediate goal—"to wrest this land away from outside corporate ownership," says Heil—is accomplished. Albion residents will now be able to walk along their natural waterways, previously inaccessible without trespassing on corporate-owned property.

The next challenge—to repair eroded hillsides, restore the native salmon population, and regenerate a hardy ecosystem—will test RFFI's mettle. As the first nonprofit to receive its charter to manage a forest, there aren't many models to follow; logging the land to pay back loans will require a keen balance between ecological stewardship and economic reality. Heil guesses that in perhaps 40 years the debt will be settled, leaving the next generation of Albionians to determine how many trees they want to cut.

These first 16,000 acres are just a foot in the door. Much of the land Hawthorne-Campbell owns is broken into outlying pieces, some with ocean views or near roads. From a real estate point of view, these pieces are perfect to subdivide and sell for profit; for Perkins and Heil, the plots are ideal to manage on a watershed level. According to Perkins, Hawhorne-Campbell just sold for development the last wildlife corridor that crosses between Albion River and Salmon Creek. They hope RFFI can step in before chainsaws and construction crews arrive.

What the forest will look like in 40 years—subdivided and just a memory or a working ecosystem controlled by locals—is still in question. But Heil, Perkins, and the "most unusual collaboration" of RFFI, are proving that while money may not grow on trees, whole forests just might be able to grow on money.

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