The East Bay Conservation Corps is an Oakland, California-based nonprofit that works to "promote youth development through environmental stewardship and community service and to further education reform and social change." EBCC builds literacy, civic responsibility, and employable skills while teaching environmental awareness.
Among their various programs is a "micro-enterprise" called the Urban Tree Mill. The notion underlying the Mill is simple: every year, thousands of tons of urban trees -- usually those which have fallen, or were cut down due to disease -- are dumped into landfills; many of these trees can be recycled into usable wood, thereby simultaneously reducing the use of landfills and reducing the demand for wood from forest-grown trees. The Mill processes about 2,000 tons of urban wood each year -- not a huge amount, but a respectable effort.
The EBCC isn't the only group looking at recycling urban trees. This page at the USDA Forest Service site lists several different organizations recycling downed trees and even old telephone poles into wood suitable for construction, furniture, and art. This article at Interiors and Sources Design magazine, entitled "Sustainable Woods for the New Millennium," tells designers how they can use more sustainable wood sources for their projects. And "The Elements of Sustainability in Urban Forestry" (PDF), from 1993, looks at the ways in which communities and cities can move to more sustainable urban tree management.
(Thanks, CTP)