It was Christmas Eve 2017 and most people were finishing their shopping before heading home to be with their families and friends. Janis received a call from Gary and Kukui Maunakea-Forth about an exciting opportunity to purchase 21 acres of land at Palikea in an effort to expand MA‘O’s program reach, land base, and operations. They arranged a meeting that afternoon in the office of their attorney along with Steve Rafferty and staff members from the Trust for Public Land (TPL). The owners of the 21 acres were motivated to sell and time was of the essence. The team had to move quickly.
Gary and Kukui are the founders of MA‘O Organic Farms - MAʻO. MAʻO is the acronym for māla ʻai ʻōpio, which means “the youth food garden,” a movement to develop a comprehensive and living local food system–educating youth, fighting hunger, improving health and nutrition, and growing the organic agriculture industry–to empower the community to move towards self-determination and self-sufficiency. A partner in Hope for Kids ‘Elua grant making initiative, Hau‘oli Mau Loa Foundation (the Foundation) has partnered with MA‘O since 2016 in support of their Youth Leadership Training (YLT) program.
About the opportunity – Palikea, Lualualei Valley, O‘ahu
MA‘O set a goal to purchase 21 acres of land at Palikea in Lualualei Valley as a first phase of the Mā‘ona Capital Campaign. Big picture, the ambitious campaign goals were to acquire two parcels of land (21 acres and 236 acres respectively in Lualualei) in an effort to expand MA‘O’s YLT program by a factor of four, increase food production by a factor of 10 and create 75 new jobs. As we mentioned, the challenge in December 2017 was that the owners of the 21 acres were motivated to sell and the asking price was $1,100,000. With assistance from TPL, MAʻO secured committed funding from Freeman Foundation and the State of Hawai‘i DLNR Legacy Land Conservation Program however, there were funding provisions that could not be immediately met, hence the need for cash up front. MA‘O needed to secure $1,100,000 in early 2018 in order to acquire the land. The team worked to come up with a plan which involved asking Hau‘oli Mau Loa Foundation for a returnable grant which would be used to purchase the 21 acres. A returnable grant (also known as recoverable grant) is an agreement under which a grantee commits to repay a grant under certain circumstances. The Foundation would be paid back following MAʻO’s receipt of funds from Freeman Foundation and the State of Hawai‘i’s Legacy Lands Program. MA‘O was ready for any project related questions we needed answered because they had done so much preparation for the other funders. Following a due diligence process, Janis presented “the plan” to the Foundation Board of Directors and received approval to provide MA‘O with a $1,100,000 returnable grant. In terms of risk, the Foundation looked at the risk of the committed funding from other sources not coming through. The Foundation and MA‘O agreed to the following safeguard: if the committed funding did not come through and the grant could not be returned, the returnable grant would convert to a loan that would qualify (under IRS provisions) as a Program Related Investment (PRI).
Although there were a few delays, the plan was executed! The land was purchased, all funding was received, and Hau‘oli Mau Loa Foundation was repaid by MA‘O. It should be noted that TPL not only played a critical role in planning, but also in serving as the interim fee owner of the land until the State Legacy Land Conservation Program funds could be released. The Hawai‘i Land Trust also assisted by agreeing to hold a conservation easement over the land, a requirement of select funders.
Although we’ve only executed a few returnable grants, we’ve learned that they can be a powerful tool in support of our Partners under the right conditions. The Christmas Eve meeting was an auspicious one and we’re proud to have contributed to MA‘O’s expansion through a great team effort.
MAHALO NUI LOA!
MA‘O Organic Farms
Trust for Public Land
State of Hawai‘i DLNR Legacy Land Conservation Program