The federal government has $17 million to lend to California's Tuolumne County ventures that convert wildfire fuel into wood products or energy.

The program aims to create jobs while helping to restore forest health in this part of the Sierra Nevada. Businesses and other recipients could use the money to produce building material, power plant fuel, chips for landscaping and other goods.

The loans are at 3 percent annual interest over 30 years. The program will evaluate applications received by June 12, then consider later requests if money remains.

It comes from a program at U.S. Department of Housing and Urban Development that seeks to make places resilient to disasters. Tuolumne was chosen because of the Rim Fire of 2013, which burned a quarter-million acres of forest and brush.

The new money pot is called the Biomass Utilization Fund. Two state agencies and a nonprofit are part of the effort.

>> Dealing with dense woods

Many experts say trees and brush have become unnaturally dense in the Sierra. This happened in part because of a century-plus of suppressing the gentle fires that used to keep the undergrowth in check. Early logging practices also contributed, taking mostly large pines and leaving firs and cedars that were not so fire-resistant.

The county already has sawmills in Standard and Chinese Camp, owned by Sierra Pacific Industries. They produce lumber from national forest and company lands in the central Sierra, an industry dating to about 1900.

A plant in Chinese Camp, owned by Pacific Ultrapower, has generated electricity with wood chips since 1986. Its supply includes small trees thinned from forests, waste wood from Central Valley orchards, and urban construction debris.

Two recent reports examined the potential for biomass in and near Tuolumne County. One estimated the volume of woody material from various sources. The other looked at the feasibility of small businesses that turn the material into lumber, power plant fuel, firewood and other products.

The reports were done for the California Department of Housing and Community Development, a partner in the biomass fund. It also involves the Sierra Nevada Conservancy, another state agency.

The loan fund is managed by the Rural Community Assistance Corp., a nonprofit that supports various efforts around the West.

“We’re thrilled to be working with RCAC on this program to boost the restoration economy in Tuolumne County,” said Angela Avery, the conservancy’s executive officer, in a news release.

>> Valley’s water source

Advocates of forest thinning note that it also protects recreational spots visited by people from the San Joaquin Valley and other regions.

And they say fewer trees sucking up moisture can mean more yield from mountain watersheds. River runoff from Tuolumne County is the main water supply for Stanislaus County farms and cities.

That boost from well-managed forests could be as much as 14 percent, said a recent report from the Public Policy Institute of California. The document, “The Benefits of Headwater Forest Management,” also notes the potential for job creation and capture of climate-changing carbon.

More information on the Biomass Utilization Fund is at www.rcac.org.