Save the Redwoods League

San Francisco
Round
Fall-Winter 2020
Project Type
Full team
Project Focus
Finance,
Market Analysis
Organization Type
Environment

Organization

Since 1918, Save the Redwoods League (the League) has protected and restored California redwood forests and connected people with their peace and beauty so these wonders of the natural world flourish. The League purchases redwood forestland for permanent protection of critical natural and recreational resources; regenerates logged forests so they become spectacular havens for future generations; studies how to protect and restore these global treasures; and introduces people to these magical places.

Situation

As Save the Redwoods League moves forward to implement its Centennial Vision, the organization needs to be increasingly creative and innovative in the approaches used to accomplish its work. The traditional tools of public funding for their programmatic work will continue to benefit the League, but given the expansion of its land protection work to a larger landscape scale, along with the growth of its work with new audiences, the organization needs to think beyond traditional project funding, financing tools, and partners. This need is particularly pressing in the context of the recent economic downturn and associated market uncertainties. The League needs to be ready to seize upon emergent opportunities through ready access to funding sources that will enable it to be competitive and nimble in negotiating land conservation opportunities and implementing critical restoration work.

Project Objectives

The League’s centennial vision demands land acquisitions that are much larger than what the organization has done in the past. Additionally, the public agencies that the League historically relies upon to offtake the properties have recently lacked the funding to do so. For both acquisition and offtake of these larger properties, the League requested ACT to identify new partners, financing mechanisms, and deal structures.

Project Overview

The project consisted of two phases: Research & Preliminary findings, followed by Analysis & Final recommendations.

Given the broad scope of ACT’s mandate, the first phase of the project involved:

  • Reviewing over 25 source materials recommended by League staff: websites, books, and articles on the current variety of approaches to financing, including: debt, carbon offsets, institutional investment, partnership acquisitions, sustainable forestry, and other revenue sources;
  • Interviewing over seven League staff members and twelve Work Group members;
  • Additional research and brainstorming

After the presentation of the first phase results, the League asked ACT to focus its analysis and final recommendations on strategies to attract market-rate investors to its land acquisition and conservation opportunities. Accordingly, ACT’s work in the second half of the project included:

  • Conducting a market landscape survey of conservation finance tools and investors;
  • Further interviews with conservation-driven market-rate investors
  • Synthesizing findings and formulating recommendations

Key Recommendations

The ACT Team recommended that Save the Redwoods League:

  • Pursue revenue-generating activities on its properties (sustainable forestry, carbon credit sales, recreational leases, among others) to attract market-rate investors;
  • Utilize its traditional concessionary sources of funding as first-loss capital to improve the risk-return profile for market-rate investors in its land acquisition deals;
  • Explore the use of debt in its acquisition deals where appropriate;
  • Incorporate risk-mitigation tools into its acquisition deals, such as subordinated debt, loan guarantees, letters of credit, reserve accounts among others;
  • Develop alternative exit partners for their properties, including land trusts, municipalities, and tribes

Key Conclusions

The League will need to pursue new activities to attract the market-rate investors needed for its larger land acquisition deals. These activities include sustainable forestry, selling carbon credits, holding and operating properties for extended periods, and incorporating debt into their deals.

Final Report Outline

  • Project Plan and Approach
  • Potential Decision Matrix
  • Partners and Benchmarking
  • Recommended Funding Structure
  • Holding Considerations
  • Cultural Context
  • Q&A / Discussion