Ecotrust PRI: A Fitting Loan for a Growing PRI Program

1

• Ecotrust PRI A Fitting Loan for a Growing PRI
  Program
• By Ann Lininger
• Program Officer

2
Scope of Presentation

• A brief description of the Meyer Trust
• The Meyer Trusts current PRI program
• The Trusts 2004 loan to Ecotrust, which
  supported creation of a forest land investment
  fund
• Why it was a good fit for the Trusts evolving
  PRI program.
• Deal aspects relevant to other foundations
  interested in launching PRI programs

3
Background Re the Meyer Trust and Its PRI
Program

• The Meyer Trust is a private, independent
  foundation located in Portland, Oregon. It was
  founded in 1982.
• It is a general purpose foundation that funds
  projects in Oregon and Southwest Washington.
• The Meyer Trust has a corpus of 570 million.
  Pay-out will be approximately 28 million this
  year.
• To date, the trustees have approved 17 PRIs
  totaling 7.5 million. The Trust has roughly 4.1
  million in PRIs outstanding.
• The Trust awarded PRIs as early as 1984, but over
  70 have been awarded since 2003.

4
Sample Conservation PRIs

• Funding of a program to acquire surface water
  rights from irrigation users for return to
  permanent in-stream use
• Funding of a program to acquire and protect
  natural areas in the Columbia Gorge
• Funding for rehabilitation of vacant inner-city
  buildings, supporting in-fill development and
  greenfield preservation
• Funding for development of an entity that would
  acquire forest lands in low-income census tracts
  for sustainable logging

5
PRI to Ecotrust - the Context

• In 2003-2004, Oregons economy was bad.
  Unemployment was over 10 in many rural
  communities.
• The trustees wanted to help displaced rural
  resource workers.
• They wanted to safeguard Oregons natural
  environment.
• Faced with a high level of need, they wanted to
  stretch the Trusts limited dollars as far as
  possible.
• The Trust had an established relationship with
  Ecotrust.

6
The PRI to Ecotrust

• Strategy Ecotrust sought to create a fund to
  raise capital to acquire forest land for
  sustainable timber harvesting. The goal was to
  protect ecosystems while creating jobs in rural
  communities.
• Loan on January 14, 2004, the Meyer Trust issued
  a loan of 235,000 to Ecotrust to support costs
  associated with creating the fund (e.g., creation
  of the entity, preparation of offering documents,
  and associated Ecotrust staff time).
• Terms
• No interest
• Unsecured
• To be repaid in one lump sum on January 15, 2009,
  with 100,000 convertible to a grant if, by the
  maturity date, Ecotrust raised 50 million in
  capital for the fund

7
Why This PRI Made Sense for a Young PRI Program

• The borrower had a successful track record with
  the Trust.
• The PRI was structured for administrative ease -
  repayment would be in one installment with no
  interest, and the loan was unsecured.
• The project was consistent with Trusts operating
  style (then relatively responsive).
• Ecotrust incorporated the Trusts input re deal
  structure.
• The PRI enabled the Trust to stretch its limited
  resources.
• The PRI leveraged significant outside funds (50
  million to date).
• The PRI contained a built in performance
  incentive (The Trust would forgive 100,000 if
  Ecotrust raised 50 million by 2009).
• The project accomplished important, innovative
  work!

8
Conclusion

• The Meyer Trust has recent experience formalizing
  and growing its PRI program.
• This experience gives us insight into issues
  relevant to foundations launching PRI programs
• Loan documentation
• Loan underwriting
• The mechanics of loan securitization
• Loan servicing
• Useful resources /outsourcing
• If youre considering launching a PRI program and
  have questions about ours, please come see me.