Lawmakers on the House and Senate tax-writing committees have introduced separate but identical bills that would authorize up to $3 billion of tax-exempt qualified forest conservation bonds that could be used to finance projects to conserve forests throughout the nation.
The QFCBs would be private-activity exempt facility bonds but would not be subject to the private-activity bond volume cap, according to the text of the bills, which were introduced late last month.
Under the program, state and local governments could issue the bonds and then loan the proceeds to charitable organizations to finance forest conservation projects, including arrangements with private timber companies to harvest trees on a sustainable basis.
The legislation would divide the bond authority across the country, with 35% going to the Pacific Northwest region, 30% to the Western region, 17.5% to the Southeast region, and the remaining 17.5% to the Northeast region. Those regions are defined by the U.S. Forest Service.
The bond authority would be awarded on a chronological, first-come, first-served basis, and proceeds would have to be used to finance the cost of acquiring forest land, interest payments on the bonds, and credit-enhancement fees.
Although similar "timber bond" programs have been proposed by federal lawmakers in the past and failed to move through Congress, the sponsor of the Community Forestry Conservation Act of 2009, Rep. Mike Thompson, D-Calif., insisted that conservation groups now more than ever could use help from the tax code to facilitate much-needed projects to save deteriorating and disappearing forests.
"The current tax code makes it hard for conservation organizations to manage and restore our forests," Thompson said when he introduced the bill. "This bill is important for the health of our forests and forest jobs."
Thompson sits on the House Ways and Means Committee, and his bill is co-sponsored by two other committee members: Reps. Dave Reichert, R-Wash., and Jim McDermott, D-Wash.
The bill in the Senate was introduced by Sen. Patty Murray, D-Wash., a member of the Senate Appropriations and Rules Committees. She has been joined by three members of the Senate Finance Committee serving as co-sponsors - Sens. Maria Cantwell, D-Wash., Mike Crapo, R-Idaho, and Ron Wyden, D-Ore.
Both bills are pending before the relevant tax-writing committees.
However, the qualified forest conservation bond program would differ from a similarly named program that was authorized by Congress last year. That program, which was sponsored by Senate Finance Committee Chairman Max Baucus, D-Mont., also was for tax-credit bonds but in reality was a disguised $250 million earmark for a single conservation project in Baucus' home state.
That $500 million tax-credit bond program contained such stringent and specific project requirements that it appeared to benefit just one conservation project, a massive land acquisition in Montana by two conservation groups from the Plum Creek Timber Co., dubbed the Montana Legacy Project.
Projects qualifying for that program required at least 40,000 acres of land that partially bordered National Park land and that was subject to a native fish habitat conservation plan. Those qualifications mirrored the status of the Montana project.
Furthermore, the statute outlining the program contained a unique provision that allowed any organization that received an allocation to, alternatively, receive a "tax refund check" from the Treasury Department that equaled 50% of their bond allocation. Even charitable groups that did not have significant tax liabilities would be eligible to receive this "tax refund."
The $250 million that could be obtained via this refund check was the exact amount of public financing the Montana Legacy Project anticipated it would need to purchase 111,740 acres of Montana forest from Plum Creek. That project received the program's full allocation, and used the refund check it received from the federal government to acquire the land in February.