WASHINGTON — To keep private forests from becoming subdivisions, senior U.S. senators this week introduced an amped-up version of an Oregon law that provides a unique way to conserve timberlands.
Oregon’s 2005 law lets nonprofit organizations partner with local governments to sell bonds to buy private forestland. Then the nonprofit can use sustainable timber sales from the forest to pay off the bonds over several decades. It’s a financing mechanism the Deschutes Land Trust has been counting on to preserve the 30,000-acre Skyline Forest, northwest of Bend.
But the federal bill would make it easier for the land trust to buy that land, said Land Trust Executive Director Brad Chalfant.
That’s because the bill would let nonprofits sell tax-free bonds, which would allow the trust to borrow money more cheaply. Chalfant said the parcel’s cost will depend on the value of timber, but it figures to be millions. And when you’re borrowing millions, even slightly lower interest rates make a big difference.
“On a large enough project, that could have significant implications in terms of the cost,” Chalfant said.
Skyline, also known as the Bull Springs Tree Farm, extends from a few miles west of Bend northwest to a few miles south of Sisters.
To Bend residents, the forest is the expanse of greenery lying beneath the Three Sisters peaks. It was previously part of Crown Pacific’s timber holdings, and in terms of acreage, it’s 50 percent larger than the city of Bend.
Preserving the bulk of the forest as a nonprofit, while managing it for timber, resources and environmental purposes, has been discussed for years.
Fidelity National Timber reached a deal with environmentalists this spring to build as many as 282 dwellings in the northern part of the forest, in exchange for selling the forest to the land trust.
To max out its development rights, Fidelity would have to not only sell 30,000 acres of Skyline Forest, it also would have to sell another 35,000 acres to a land trust or a public agency such as the Oregon Department of Forestry. That land is located in southern Deschutes County and northern Klamath County.
Not far from the additional lands that are considered under the bill, the Forestry Department is looking at another parcel owned by Fidelity near Gilchrist for acquisition as a new state forest.
Neither U.S. Sens. Jeff Merkley, D-Ore., nor Ron Wyden, D-Ore., has weighed in on the bill. Sen. Patty Murray, D-Wash., sponsored the Senate bill, along with Sens. Maria Cantwell, D-Wash., and Mike Crapo, R-Idaho. A similar bill has been introduced in the U.S. House, also with bipartisan support.
The senators projected the bill would help preserve 2.2 million acres across the country.
“It provides a federal financial incentive to bring stakeholders together to manage and sustain working forests into the future for the good of the surrounding communities,” Crapo said. “In these tough economic times, it’s important for Congress to use all the tools available to help sustain communities as well as the environment.”
Tax-exempt bonds would probably cut interest costs by 1 percentage point to 2 percentage points a year, said Tom Tuchmann, a consultant and former top forestry official under President Bill Clinton. Cheaper financing means the trust wouldn’t have to raise as much money or cut as many trees to pay for the purchase.
“The real value, to groups like (the land trust), is getting this tax-exempt treatment of this debt,” said Tuchmann, who helped develop the bond authority bill. “You can basically pay market value and cut less if you have tax-exempt bonds.”
In exchange for cheaper borrowing costs, the nonprofit would have to sign an easement agreeing to keep the land as a working forest.
Fidelity National Timber Chief Operating Officer Gregory Lane said his company wants to sell Skyline and the other parcel as soon as possible but not before the housing market rebounds. Fidelity has five years to begin the development process and sell the forest, under the Oregon law that formalized Fidelity’s agreement with the land trust.
“What’s really going to drive it is the economy, of course,” Lane said. “We want to have it basically teed up and ready to go, once we’re comfortable there’s a real estate market that can absorb the project.”
Keith Chu can be reached at 202-662-7456 or at email@example.com.