Planting it Forward – Hawaiian Legacy Hardwoods, an EZ Success Story

Posted on May 23, 2017 in DBEDT, Enterprise Zones, EZ, Hawaiian Legacy Hardwoods, HLH, Koa Forests, Koa Wood, News, Success Stories, Sustainability

Hawaii Legacy Forest LogoHawaiian Legacy Hardwoods (HLH) specializes in the preservation of Koa wood and is one of the largest replanting projects of its kind. Developing a new kind of renewable forestry, HLH is just one of the businesses currently enjoying the benefits of a partnership with Enterprise Zones (EZ).

Under the Department of Business, Economic Development and Tourism, the EZ partnership is a State and County government effort to assist certain types of businesses in specific areas by creating jobs where they are most needed. To be eligible, at least half of the business’ annual gross needs to be from activities such as, but not limited to, agriculture, manufacturing, medical research, wind energy production, and biotechnology. The State benefits from this program include a 100 percent exemption from General Excise Tax and an 80 percent State non-refundable income tax credit in the first year.

“It couldn’t have happened without this (EZ). If we had to pay all those taxes, our growth would have been much slower,” HLH CEO Jeff Dunster said. “Consequently, we would be paying more taxes back into the system than we ever would have had we not had the opportunity to join EZ.”

Dunster and his team are revolutionizing the timber industry, while creating a new way of sustainable reforestation. Planting it forward one tree at a time, HLH is creating green-jobs for the local community in some of the most underemployed places in Hawaii.

Tropical rainforests have been disappearing at alarming rates due to deforestation over the past century. The Hawaiian Islands once flourished with Koa forests, but now this nitrogen fixing tree has become one of rarest, most expensive woods in the world. With our current deforestation rates and no replanting, a global shortage of Koa and other tropical hardwoods was imminent. Dunster and his longtime business partner, Darrell Fox, set out to make a difference by creating a business model that would reinforce the value of the forest, rather than cutting it down and selling it as lumber.

With its sustainable timber model, HLH brought in investors who were planting trees strictly for harvest. This model allocates 25 percent of what the company plants strictly for harvest as an economic driver. The remaining 75 percent is intended for permanent reforestation and further serves in HLH’s legacy model. This attracted investors and provided all the capital HLH needed for its 1,200-acre property on Big Island.

On top of putting this $12 million forest in place, HLH has no debt, a self-sustaining revenue stream, and has supported over 350 charities along the way. HLH’s legacy model allows people to sponsor a tree for $60, with a third of that going to a charity of their choice. Due to strong demand from sponsors wanting to come see their trees, HLH’s own Eco-tours started in 2013 and has since been rated best Eco-tour in the state by the Hawaii Ecotourism Association.

With nearly 360,000 trees planted to date and over 160,000 tons of carbon output, HLH signed up for a 50-year carbon project. After surviving the long and drawn-out carbon accreditation process, HLH is now the only certified Gold Standard in the state and the only forestry carbon project in North America. In addition, the annual revenue generated from the sale of carbon is enough to maintain the company three times over. In other words, this 50-year project will sustain HLH for the next 150 years. Along with carbon sales, the proceeds of the lumber collected from any dead trees after year 25 is enough to sustain this forest indefinitely.

In addition to offering permanent jobs for the local community, HLH also provides its workers with housing, clothing, insurance, and extensive training. “EZ is helping us effect lives by creating livelihoods for people who don’t have that opportunity,” Dunster said. “We’re just a couple of guys, and we can do just so much and then our backs will give out, but passing this on to the next generation is where you see the real impact.”

Since joining EZ in 2011, HLH has grown from two to 20 full-time employees. These workers, who are all lifers, have developed a strong sense of ownership with the forest. Ownership that will be passed down for generations as each worker is allowed to select and train his or her replacement.

In accordance with the B-Corp Declaration of Interdependence, HLH acts with the understanding that we are each dependent upon one another and thus responsible for each other and future generations. Dunster, who is the father of five children, revisits an old proverb, which he includes on his business card and in the company’s monthly newsletter, “We don’t inherit the land from our ancestors, we borrow it from our children,” reminding us that there is far more value in giving than receiving.

Contributed by Sheehan Chase, Hogan Entrepreneur