Blended Capital for Conservation in the Mountain West
Across Colorado and the Mountain West, pressure is growing to develop farmland, and/or separate water rights from land rights and realize financial benefit from the value of the water. The work of land trusts is crucial to protecting both agricultural lands and important water rights associated with those properties.
QV is working with Colorado West Land Trust to structure an innovative financing model to accelerate land acquisition and protection in the Mountain West. This replicable buy-protect-sell approach aims to enable land trusts to secure and protect land more quickly and efficiently.
QV’s work to date has helped foster the buy-in from CWLT’s board for pursuing blended financing for project acquisitions and has supported investor interest in the CWLT deal. This buy-protect-sell financial model and strategy can be deployed repeatedly by the organization and other land trusts in future transactions.
Problem
Land trusts typically rely on philanthropy and grants to support their work, either buying properties outright, or placing conservation easements on them. As the need for conservation grows, the available dollars to support these activities have stayed relatively constant. At the same time, across Colorado, pressure is growing to develop farmland, and/or separate water rights from land rights and realize financial benefit from the value of the water. The work of land trusts is crucial to protecting both agricultural lands and important water rights associated with those properties. How quickly a land trust can move to secure funding impacts the ability to protect critical lands and water for agriculture, water values, habitat, and more. Increasingly, land trusts are competing with developers, private equity, and investors, whose ability to swiftly purchase large scale properties is contributing to rising land prices, displacement of agriculture, and increasing speculation on water rights. This is particularly true in the Grand Valley of western Colorado, where Colorado West Land Trust (CWLT) works.
Approach
Finding innovative new approaches to securing necessary funding will help land trusts meet the moment. The “buy-protect-sell” model is not new to land trusts, but as a tool it is less common in Colorado, where leveraging debt to secure land hasn’t been a focal strategy to-date given limited availability of low-interest dollars, and limited experience pursuing blended financing for conservation. QV is supporting CWLT to develop buy-protect-sell (BPS) capabilities, expanding the organization’s ability to leverage dollars, and secure land more quickly and effectively.
We are also helping to structure land acquisition deals, developing financial models that forecast property values, easement values, required financing, cash available for debt service, and other key metrics that can inform CWLT’s decisions on how to finance property acquisition. QV will support outreach to investors and translating this BPS strategy in support of securing necessary funds to close.
Impact
QV’s work to date has helped foster the buy-in from CWLT’s board for pursuing blended financing for project acquisitions and has supported investor interest in the CWLT deal.
As we continue working with CWLT, we hope to support their successful closing on several thousand acres in the Grand Valley and build both a replicable financial model and strategy for the organization - and other land trusts - to use in future transactions.