It's touted as a model private-public solution for conservation: allow nonprofit groups to tap tax-exempt revenue bonds to buy working forests and keep them out of developers' hands. For nearly a decade, that proposal has gone nowhere in Congress, but lawmakers are trying again.

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WASHINGTON — It’s touted as a model private-public solution for conservation: allow nonprofit groups to tap tax-exempt revenue bonds to buy working forests and keep them out of developers’ hands.

For nearly a decade, that proposal has gone nowhere in Congress.

For the fifth time since 2003, Sen. Patty Murray has rolled out legislation to authorize conservationists to borrow money via municipal bonds to acquire timberlands and to keep logging a portion of the forest to repay the debt. A companion bill again is pending in the House, too, this time with Rep. Dave Reichert, R-Auburn, as the lead sponsor.

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The Community Forestry Conservation Act of 2011 has wide backing from conservation groups and timberland owners. They include Federal Way-based Weyerhaeuser and Seattle’s Plum Creek, the nation’s largest private landowner.

Yet the legislation’s prospect for passage in this Congress appears just as dim as ever.

The Republican-controlled House has been working to roll back environmental-protection regulations, including a bill that would weaken the 1972 Clean Water Act. And the current antipathy on Capitol Hill against spending and targeted tax breaks may not bode well for taxpayer-subsidized land purchases.

“It feels like free money, but it is in fact a government subsidy,” said Ed Kleinbard, former chief of staff of the Joint Committee on Taxation, a nonpartisan committee that advises Congress on tax issues.

Matt McAlvanah, Murray’s spokesman, conceded she may be resigned to yet another defeat.

“The plain truth is that given the makeup of the Republican-controlled House, passage of this bill will be very difficult this year,” he said, adding that Murray continues to believe that the bonds could be a valuable means to protecting open spaces.

Sen. Maria Cantwell and Rep. Jim McDermott, D-Seattle, are among the bill’s co-sponsors this year.

Supporters see conservation bonds as a vital alternative to dwindling public grants and private donations as a way to draw on private capital to finance timberland purchases. Tax-exempt municipal bonds carry interest rates that are 1 percentage point or more lower than conventional Treasury rates. In exchange, bondholders skip paying federal and some state taxes on their interest income.

Perhaps just as importantly, the nonprofits may be able to stretch the tax-exempt bonds over 30 or more years, instead of repaying the money in 10 years or less.

Tom Tuchmann, president of US Forest Capital, a Portland firm that advises on conservation deals, noted that ownership of the vast majority of commercial timberlands around the nation have turned over in the past two decades. Many of them are now held by real-estate investment trusts and other owners with keen interest in extracting maximum value from the forests.

“Is there another way to finance (conservation acquisitions) instead of asking state or local governments for appropriations?” Tuchmann asked.

Dan Stonington, conservation-policy director for Cascade Land Conservancy, said the environmental movement in recent decades has gradually shifted away from a strict focus on wilderness designations or wildlife protection to outright land buys.

Washington has about 10 million acres of private forestland. In Western Washington, almost 1 million acres could face conversion to other uses, according to a 2009 study by the University of Washington.

Stonington would not identify any of Cascade’s potential acquisition targets. But he said the central Cascades, the Olympics and Southwest Washington are promising areas for conservation.

“If we don’t conserve our lands now, they will be overtaken by sprawl, and our natural landscapes, farms and working forests will disappear,” Stonington said.

Already, conservation groups are cobbling financing to pull off massive deals, including the 2008 agreement by The Nature Conservancy to pay Plum Creek $510 million for 312,000 acres of forestlands in western Montana.

That transaction was paid, in part, by a forest-bonds tax-credit provision inserted into the 2008 farm bill by Montana Democratic Sen. Max Baucus. Critics said the provision was so tailored for the Nature Conservancy-Plum Creek deal that it amounted to a $250 million earmark.

Stonington said that timberlands purchased with forest-conservation bonds by necessity would have to be continued to be logged to pay off the debt. But the logging is intended to be more limited and sustainable, while also protecting critical habitat and recreational features.

That, Stonington said, reflects a growing acceptance by conservationists that commercial forests’ economic benefits can coexist with clean water or sanctuaries for wildlife.

“If we lose working lands, we lose a whole range of benefits,” Stonington said.

The Murray-Reichert bills would authorize $3 billion in municipal bonds by assuring that revenue from sustainable logging could be used to pay down the debt without running afoul of Internal Revenue Service (IRS) restrictions on private business use.

That tax prohibition was an issue in 2002, when Weyerhaeuser agreed to sell 104,000 acres on the western slope of the Cascades to a nonprofit conservation trust. The forest, which was to be called Evergreen Forest at Snoqualmie, was to be financed through tax-exempt bonds and needed clearance from either Congress or the IRS.

The House of Representatives got around to approving it some 14 months later. By then, Weyerhaeuser had already sold the land to a Boston timber-management company.

The turnabout spurred King County to step in to buy the conservation easement on the land. That allowed the Boston buyer to own the underlying timberland while the county controls development rights.

The cost: $22 million from public coffers.

Kyung Song: 202-662-7455 or

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