Conservation via capitalism: Two men's novel idea could forever alter land protection
By Craig Welch
Seattle Times staff reporter
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SNOQUALMIE — One is a money man, an optimist and investment banker who had a brainstorm while toiling in bond markets.
The other is a forestry wonk, a worrier and behind-the-scenes operator who refereed loggers and environmentalists through the Northwest timber wars.
For a half-decade, this idiosyncratic duo spent money they didn't have to feed an ambition: revamp the way sprawl-weary communities save land.
Now, Joe Euphrat and Tom Tuchmann are on the verge of completing the most provocative land deal in Northwest history. They hope to save 104,000 East King County acres from subdivisions by cutting down most of the trees.
The transaction could change the way property is preserved across the country.
And it could help make these pioneers wealthy.
It has been only two months since negotiators announced that a nonprofit would buy Weyerhaeuser's Snoqualmie Tree Farm for $185 million, forever halting development battles on an area of the Cascade foothills one-third the size of Los Angeles. The land is rich with rivers, trails and wildlife and acts as a scenic buffer for Eastside homeowners who year by year have inched closer to the great outdoors.
Since January, community leaders from New England to the southeast, Montana to California have contacted Tuchmann and Euphrat, seeking to replicate their plan. The Nature Conservancy is contemplating a similar strategy for land along the Skagit River, and the former governor of Kansas hopes it could work for wheat farms.
Why all the interest? Money for preservation is tight. Previously logged land that serves as a buffer between homes and true wilderness is expensive. Development pressures continue to mount. Zoning regulations change with political winds.
So even in a region where activists once jammed porcelain spikes into trees and camped in Douglas firs, environmentalists — and a few monkey-wrenchers — now embrace logging as an antidote to shopping malls.
"Hell, the Snoqualmie Tree Farm's been logged for 100 years," said Mitch Friedman, director of the Bellingham-based Northwest Ecosystem Alliance and an ex-Earth First!er. He spends much of his time raising money to buy more pristine wilderness areas.
"Would I like to see it return to old growth in 300 years? Sure. And maybe that can still happen. But this is a heck of an improvement over parking lots."
The land
Spreading northeast from Fall City to the Alpine Lakes Wilderness, fir, hemlock and cedar jam this East King County valley like wall-to-wall shag.
Trees drop down to lakes and rise back up to table-topped mountains. Elk traverse river corridors still home to salmon. Bobcats trek hillsides where hunters take down deer.
Trees here have been cut, grown, cut and regrown for decades, since Frederick Weyerhaeuser bought 900,000 acres from the Northern Pacific Railway a century ago. But now much of the timber is less valuable than the earth it covers. Land near roads or on bluffs can be worth more as upscale villages with golf courses.
King County has lost roughly 50 percent of its forests since 1973, but this transformation is not unique.
From upscale ranches in Wyoming to Colorado's timbered ski towns, "we've already proven no place is too far away to live if you're affluent and it's beautiful," said Russ Shea, with the Land Trust Alliance in Washington, D.C.
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Urban-flighters demand houses in beautiful settings, and stockholders pressure companies who own the land to build them. Governments and citizen groups write land-use plans, while environmentalists with lawsuits try to stop sprawl. But growth marches on.
The Weyerhaeuser transaction tries to solve all that.
Capitalism and conservation
A newly created nonprofit, Evergreen Forest Trust, will use tax-exempt revenue bonds to buy the land and then will cut a portion of the trees each year for a half century to pay off the bonds. Roughly 20 percent of the land would be permanently protected; the rest would be logged under environmental practices more stringent than law.
Just like that, much of suburban Seattle's eastward stampede could screech to a halt. "It's a beautiful concept," said the Nature Conservancy's Elliott Marks. "If you protect large tracts, and wildlife corridors and water quality, leave some of it untouched, and do good forestry on the rest, you take care of the economic bottom line and the social bottom line at the same time."
Large-scale conservation is usually driven by land swaps, government cash, donations and altruism. But in this deal, almost everyone involved gets paid.
Weyerhaeuser sells the land at a profit. Negotiators Tuchmann and Euphrat get a cut from that sale. A timber-management company logs for money.
All that money, bargaining and cutting of trees still makes a few environmentalists nervous.
"(They) parade something as though it's a conservation measure, and it's really just one more method of extracting resources," said Janine Blaeloch, director of the Western Land Exchange. "Ultimately, what I fear is this is what environmentalism will be about — making deals, making compromises, and never putting our foot down."
Yet to most, the Weyerhaeuser deal is a pragmatic way to stave off sprawl.
"My response is, if we don't protect it now and it converts to malls or whatever, the chance to do anything later is gone," said Dale Bonar, director of the Trust for Public Land's Northwest program.
The deal makers
An avid backpacker fond of the California Sierras, Joe Euphrat grew up in a family that ran a retail lumber yard. In the mid-1990s, he had been peripherally aware of Northwest timber battles and had been reading about a development fight on an Alaskan island.
By then, he had already spent 13 years working bond markets for firms such as Lehman Brothers and Prudential, often financing hospitals with tax-exempt money. Then it dawned on him: Why not use tax-exempt bonds to preserve land? He could make money saving something he loves.
Under law, tax-exempt financing must be used for a public asset. "If you build a public hospital, you can't take the top three floors and sell them to a for-profit entity," Tuchmann said.
In Euphrat's idea, the land — not the trees — would be the asset, so cutting the trees for money would be the same as using revenue from patients to pay off a new emergency room.
Euphrat knew he was on to something, but he didn't know how to make it work. There were legal and logistical questions to be answered, and he needed a like-minded pro who knew trees.
He found his way to Tuchmann, who had organized the Clinton administration's 1993 Northwest Forest Conference in Portland, a historic collision of spotted owls, old-growth logging and politics. Tuchmann later was instrumental in implementing the Northwest Forest Plan, which drastically curtailed federal-land timber harvests.
Tuchmann and Euphrat created a company, U.S. Forest Capital. They each worked contacts in their specialized fields, talking to landowners and politicians and timber executives, environmentalists and bankers and securities experts.
They made some money on consulting, and sometimes lived on savings. But the real payoff would come from negotiating deals in the future.
'I love this idea'
Even though the King County deal requires congressional or IRS approval to use tax-exempt financing, participants won't say how much Euphrat and Tuchmann stand to make, saying only that their fee will be "substantial."
"Is it a big money-making area? I don't know," Euphrat said. "It's a viable niche for Tom and I to have made our investment. In terms of scale? Your guess is as good as mine."
Tuchmann testified before Congress, and the two hired lobbyists. In four years, they racked up $300,000 in lobbying bills alone, some of which they haven't yet paid.
"I knew they were pretty much out of money, but I love these guys and I love this idea," said Jim Beall, with the D.C. lobbying firm Ball Janik.
Said Euphrat: "There are a lot of parties that are extending themselves because they believe it can happen. I don't think we would have been able to be where we are without that cooperation because, frankly, there wasn't the cash to do it."
They found their pilot project in King County — a big hunk of land that would make a public-relations splash.
"(Snoqualmie) was on our wish list," Tuchmann said. "It's a large industrial green space people want to see maintained, and for that reason it's also expensive for a forest-management company to run."
In early 2000, after years of talking with Tuchmann and Euphrat, a Seattle-area group of politicians, conservation experts, environmentalists and timber experts created the Evergreen Forest Trust. The purpose: To buy and conserve area land. They immediately turned their attention to Snoqualmie.
The sellers and the county
For the past 10 years or more, Weyerhaeuser has been contemplating whether to sell or subdivide parts of the tree farm. For nearly as long, King County has been contemplating how to stop the company.
"What we found is that once land gets broken up and in a wider range of ownership, it's very difficult to continue it as a forest," said Lori Grant, with the county's regional-planning office.
While the county can't keep private land from being sold, governments can decide how land gets developed. So officials attacked any future Weyerhaeuser development plan with the only regulatory tool they had — zoning.
In 2000, when King County was updating its comprehensive plan, officials were determined to tighten land-use regulations, which already restrict homes to one every 80 acres of forest land. The Metropolitan County Council aimed to ban homes on lots created in the future.
"The purpose was to provide a de-motivation for larger property owners to subdivide at all," Grant said. "Weyerhaeuser was very opposed to it. They came to the staff and said, 'We don't like this idea.' They went to council members and said, 'Please don't adopt (the development ban).' "
With its money, land holdings and jobs, Weyerhaeuser has long been a political influence in Washington. But it was making no progress convincing King County to delay restrictive zoning.
Finally, Weyerhaeuser officials met with County Executive Ron Sims. They told him the company was negotiating the conservation sale. They explained the deal but swore Sims to secrecy. Word of the transaction could affect Weyerhaeuser's stock price.
"They said, essentially, 'We can't afford to have our land values fluctuating during the middle of this,' " Sims said. A major zoning change could dramatically lower the land's value, which meant Weyerhaeuser wouldn't get as much money in the sale.
Despite having the votes to drastically curtail development rights on the tree farm, Sims agreed to wait, most likely saving Weyerhaeuser millions.
If he had moved ahead, Sims feared Weyerhaeuser would have backed out of the conservation sale and lobbied future county councils to allow development.
"There's an old saying about zoning, that it can be changed any Wednesday night," Marks said. "Over time, what we see is politicians change regulations when the pressure builds."
In the Wyoming resort town of Jackson Hole, for example, county officials worked for three years to draft a land-use plan designed, in part, to conserve open space. Shortly after its completion, voters elected new county commissioners, and much of the plan was scrapped.
"Ten years ago, if we were having this conversation, I'd probably be saying, 'Just change the zoning,' " said Friedman, the environmentalist. "But when the bulldozer's at the door, you make the deal."