Economic growth for Humboldt County based on evidence, not nostalgia.

Building on our rural creative class economy a better bet

By Dave Spreen of TransportationPriorities.org.

The newspaper headline read “Port seen as key to economy” and went on to report that after a roundtable discussion about ways to improve the local economy, the group of College of the Redwoods Administrators and area business owners came to a consensus that “developing Eureka’s port to increase commercial shipping traffic” was the answer.

Unfortunately, that headline was from February 1988 — over 27 years ago. We have spent hundreds of millions pursuing that goal, yet we are basically no closer. It’s not too late to change course, but if Caltrans’ Richardson Grove Highway 101 and the Del Norte Highway 199/197 road “widening” Surface Transportation Assistance Act (STAA) oversize truck access projects are not cancelled, the international freight “port with rail” dreamers will continue to be a drain on public resources that could be better utilized elsewhere.

Opponents have suggested a smaller scale model. For example, Port Townsend, Washington, where 30 years ago folks there calculated that the train was not likely coming back in their generation, if ever, so they chose to accept that and build on local strengths. The Wooden Boat Foundation was created to attract craftspeople to the Port Townsend area and over time, rebuilt their community. By 2008 the Foundation was serving 150,000 people annually in its educational programs, events, and services at which time the Northwest Maritime Center was built on property previously owned by an oil company. Local and regional maritime enthusiasts, marine trades, local organizations, visitors and thousands of visiting schoolchildren from around the region use the center. The maritime center serves as an economic anchor for the port and community.

Locally, the Humboldt Bay Harbor, Recreation and Conservation District’s list of state and federal legislative priorities for 2015 includes “funding to develop a National Marine Research and Innovation Park,” which, along with the district’s short-sea-shipping initiative represent feasible projects to stimulate desirable economic growth and doable international shipping solutions without massive taxpayer subsidies.

Supporters of an international port with rail and oversize STAA trucking have for too long followed a locally unsuitable economic model that holds that industrial port development must be the primary economic driver for creating jobs and generating income for recreation and conservation improvements. The empirical evidence certainly does not support that model.

As reported in Dennis Mullins’ “Business Sense” column, “… the county continues to add jobs, has lower unemployment than about 40 of California’s 58 counties and is growing entrepreneurs at a faster rate in comparison to other rural counties.” (“Humboldt’s unemployment rate continues downward,” Times-Standard, July 19, Page D1.)

How could this be? Well, consider the newly released study by Department of Agriculture economist Timothy Wojan, which looks at the role of the “creative class” and natural amenities in rural counties’ performances during and after the Great Recession.

From the study overview: “The creative class thesis — that towns need to attract engineers, architects, artists, and people in other creative occupations to compete in today’s economy — may be particularly relevant to rural communities, which tend to lose much of their talent when young adults leave.”

In an article for CityLab.com, Richard Florida writes: “Two kinds of rural counties are experiencing growth, according to Wojan’s analysis. The first are nonmetro creative class counties close to major metros. The second are rural creative class counties that are home to colleges and universities, which are themselves knowledge economy hubs. This proximity effect is likely to become more important, as larger metros and knowledge economy hubs play an increasingly important role in driving economic growth across the nation.” (“The Fall and (Partial) Rise of the Rural Creative Class,” Nov. 11, 2014.)

Instead of turning the Humboldt/Del Norte Highway 101 corridor into I-5 Coastal, we should be renaming it “Redwood Coast Highway” and restricting it to California legal trucks only. Can you imagine anywhere on the coast south of us even suggesting STAA oversize truck access on Coast Highway (State Route 1) would be key to their economic development?

The Times-Standard reported that Humboldt was ranked second best county in the U.S. by the “natural amenities index.” (“Second best county in US,” Aug. 19, Page A3.) When two paths diverge in the woods, you can’t take both. Let’s direct transportation resources to enhance development of our rural creative class economy, not through-route access for oversize trucks in a futile pursuit of unsustainable goals.

Dave Spreen, a Kneeland resident, is spokesman for the Coalition for Responsible Transportation Priorities. For more information, visit www.TransportationPriorities.org.

please add your comments online here.

More info on successful economic development strategies for rural communities:

www2.epa.gov/smartgrowth/smart-growth-small-towns-and-rural-communities

http://ilsr.org/wp-content/uploads/files/thenewcitystates.pdf

www.nado.org/vibrant-rural-communities-case-study-series/

www.sitka.net/Downloads/Small_Towns.pdf


Notes on development of Humboldt Bay as a cargo shipping port:

While an active shipping port would have once been a source of numerous living wage jobs, modern automated ports create few jobs. Meanwhile frequent cargo ship traffic could seriously hinder commercial fishing, an industry that defies automation and instead still requires skilled workers. Large ships traffic will also impeding sport fishing, a proven source of local revenue (not to mention a cherisher activity for many us Humboldt residents!).

Here’s a few footnoted quotes:

…Automation began to significantly decrease longshore jobs in the early 1960, …the number of employed longshoremen declined from over 50,000 in 1953 to 23,000 in 1967. Since then the number has dropped to under 16,000. The cuts on the West Coast have been equally dramatic. There are now fewer than 10,000 regular longshoremen in all thirty-two ports of the West Coast. …The loading and discharge of ships now involves ever-fewer humans… …Longshore work will increasingly decasuaIize and more resemble warehouse or factory work: source


…“If the port doesn’t automate, it will not be competitive,”

… equipment that moves containers from ships to shore cranes and trucks with minimal human labor. .. The technology at TraPac’s terminal at the Port of Los Angeles is likely to reduce the number of workers needed per crane by about 53 percent, and at transtainers — the hoisting devices for loading and unloading cargo from rail cars or trucks — by 85 percent, according to the Los Angeles Harbor Department report… source

However discouraging the job outlook for many persons “automated” out of work now or in the near future, some students of the problem insist that the long-range employment prospect is not as gloomy as it is often pictured. Assuming that automation will lead eventually to a general reduction in working hours, they point out that the resulting increase in leisure time will probably create new occupations and thus accentuate the established trend toward expansion of the service industries… It has been suggested also that additional leisure time may bring about “an increase in the demand for artists of every kind and for others catering to cultural requirements source

HELP is of no help to Humboldt

My Word by Richard Salzman
Eureka Times Standard

In response to Kay Backer’s My Word of March 22, Getting Humboldt leaders 
to lead: Kay Backer is a paid professional spin doctor from Sacramento. 
Hired by local developers, she is paid to badger county government and 
bamboozle the public. She feigns concern for our families by shedding
 crocodile tears about so-called affordable housing here in Humboldt
County.

It’s ridiculous that Kay Backer is even treated as a legitimate voice in 
our local affairs just because Rob Arkley and HELP summon her to town for 
a meeting, or to send off an e-mail full of accusations and threats to the 
media. She represents nothing other than a handful of developers. Are
 there even five people who will admit to being a member of HELP?

It’s absurd that those who pay her (they call themselves HELP but really 
should be called HELP-Yourself) are implying that the reason they want to 
build more houses is because they want to see home values drop. When has 
any developer ever wanted to see any housing prices drop? Do you want to 
see the value of your home decline?

In the Sacramento area, where Ms. Backer lives, homes are being built at
 an astounding rate. Strangely enough, housing prices there are still 
shooting up and now routinely cost about half a million dollars. Is that
 what Ms. Backer’s backers have in mind as affordable” housing?

Now Rob Arkley is threatening to use his money to sue the county unless
planning officials buy into HELP’s fabricated projections of housing
 needs. Isn’t that called blackmail?

I have no objection to developers making money off constructing houses. 
But it’s an outrage to be told that the reason they want permission to 
build more — and forever change the essentially rural character of 
Humboldt County — has anything to do with stopping people from moving out
 of town, lowering home prices or anything other than their search for
higher profits.

Where will Kay Backer’s concern for our community be the day after her 
paychecks stop coming in? Will she still be shouting HELP or just go on to 
her next lucrative public relations campaign?

The big box vs. local entrepreneurs

My Word by Richard Salzman
Eureka Times Standard

I want to thank my friend Cletus Isbell for furthering the discussion on big-box stores in his My Word of Dec. 23. I do, however, want to respectfully disagree with three points he makes.

First, I disagree that those consumers now comfortably buying items off the Internet (and getting them home-delivered) will switch to the big boxes. Instead, the big box’s customers will mainly be those of us who now frequent locally owned and operated brick-and-mortar stores.

The second and third reasons have to do with the intertwined subjects of jobs and taxes, and can perhaps be best illustrated with the example of Home Depot, a timely subject coming before the Eureka City Council in the form of a zoning change request for the Balloon Track. A Home Depot would have a devastating effect on everyone who sells everything from appliances to flooring, hardware to cabinets, lumber to home heating. The list goes on and on (and a Best Buy — another possibility — would include everyone in music and home electronics). Since Home Depot now also does installation, work would be snatched from all sorts of contractors and tradespeople, too.

Yes, some driven out of business will be able to get jobs at the Home Depot, but the ripple effect on our community will be devastating. The key difference is that Home Depot spends most of its money with out-of-the-area suppliers — and sends all of its profits back to corporate headquarters.

Whatever short-term gains there may be in the tax base would pale in comparison to the money drained from our local community. Because whenever a dollar is spent at a locally owned company, it recirculates several times through the local economy. The county has already acknowledged this economic fact of life in a comprehensive study called “Prosperity — The North Coast Strategy” (available at www.northcoastprosperity.com), which the city of Eureka signed onto.
I urge readers to just do a Google search on “big box impact” and read any of the myriad studies detailing the disastrous effect these stores can have on the economy of areas with a limited population like ours. Our locally owned and operated small businesses are the lifeblood of what has proved to be a vibrant and resilient local economy, but there are limits to how much more impact we can sustain.

The loss of extraction-industry jobs already has been hard on us, and small businesses are the best hope for living-wage jobs. Yet even those businesses which might survive the initial impact and aren’t forced to close down will have to cut back: Cut back on their workforce and downsize their American dream. There is simply not enough business in such a small community to support both the big box and the local entrepreneur.

I don’t know that the government could or should stop a big box from coming to town, but business owners, tradespeople and all their customers and neighbors alike ought to tell their elected officials, starting with the Eureka City Council, not to facilitate the process through zoning changes or the rejection of study grants.

Richard W. Salzman, an artists’ representative for illustrators working in advertising and publishing, has long been active in local Democratic politics. He lives in Trinidad.

The opinions expressed in this My Word piece do not necessarily reflect the editorial viewpoint of the Times-Standard.

Finally: The Truth about PL/Maxxam’s Lies

May 5, 2005

Responding to Pacific Lumber Company’s claims of financial crisis, the State Water Resources Control Board has released what is quite likely the most thorough and authoritative analysis of the PL’s finances ever made public, finding that the company’s dire predicatment “is the result of the risky business model that (parent company)MAXXAM has chosen to follow.

This study was commissioned by the State Water Board to determine whether increased regulation by the North Coast Regional Water Quality Control Board (NCRWQCB) may be responsible for PL’s proclaimed economic crisis. The study specifically responds to various claims made by Pacific Lumber in a March 15, 2005 Economic White Paper, and analyzes Securities and Exchange Commission (SEC) filings by Pacific Lumber, Scotia Pacific, and MAXXAM going back to 1993.
The report concludes that “MAXXAM has taken money out of PALCO in subtle and complex ways and has directed PALCO to harvest trees at rates that greatly exceeds sustainable forest practices. MAXXAM has put PALCO at risk by borrowing large sums of money, not paying down its long-term debt, and thereby keeping PALCO a highly leveraged company.

Perhaps the most startling finding is that “..even if they cut every tree they own, it may not be enough to pay back its current debts. PALCO’s financial difficulties are the result of deliberate business decisions, and not the result of any regulatory decisions.

PL’s financial crisis exists despite a massive increase in the company’s harvest rates. The study notes “MAXXAM PALCO has tripled the old harvest rates to unsustainable levels, nearly doubled the operating income, and still lost an average of $20 million a year since the takeover… None of the profit from accelerated harvesting has been used to pay off this company debt. Instead, MAXXAM has removed at least $724 million in PALCO funds for its own use.”
In analyzing that rate of harvest, the report finds that in the 10 years from 1987 to 1997, PALCO harvested over half of their entire timber inventory. This rate of harvest is equivalent to a 20-year harvest cycle.” The study also notes that the 178 million bf/yr harvest rate allowed by the 1998 Headwaters deal “would deplete the 3.2 billion bf inventory in less than 18 years.

The report finds that the company is so highly leveraged that “…a Debt to Equity ratio cannot even be calculated for the new PALCO.” “MAXXAM has refinanced and taken so much money out that PALCO has a negative equity position (nearly twice as much debt as assets). This is highly unusual for any company operating as an ongoing concern.

In analyzing the possibility of bankruptcy, the report sees two likely scenarios: “The companies could be put into bankruptcy with MAXXAM continuing to operate the companies,” or “a second possibility is that the Timber Note holders might successfully gain control of Scotia in the bankruptcy process and come to own the property.” “In either case, timber harvest and milling should continue and workers would keep working. The local economy would experience some slowdown during this period of uncertainly, but most of the economic harm would be borne by the Timber Note holders and possibly MAXXAM.”
The report responds strongly to Pacific Lumber Company’s repeated assertions that the company sold the Headwaters Forest for less than market value. The study concludes “PALCO got an equivalent of $95,000 PER ACRE for its Headwaters transfer.” It goes on to note that in the 1998 Scotia Timber Note sale, “205,000 acres were mortgaged to the bond holders at a rate of only $4300 an acre. MAXXAM was able to get over twenty times this amount per acre from the government for its prime old growth Headwaters.

The report also notes “Charles Hurwitz received $9 million from MAXXAM for his role in securing the Headwaters Agreement.

A Titan of Logging Threatens to Topple [L.A. Times]

By Tim Reiterman
Times Staff Writer
February 21, 2005
REDCREST, Calif.

Whenever Pacific Lumber Co. planned to dispatch helicopters to log its nearby redwood groves, the company would phone Christine Rising at her vine-draped bungalow above the Eel River.

After finding someone to care for her horses, dogs, cats and pot-bellied pig, Rising, 51, would pack her clothes and head down the dirt road toward a Eureka hotel about an hour’s drive away. Then for days or weeks, she could escape the beat of helicopter blades that she says wreak havoc with her surgically repaired left ear, causing nausea, dizziness and even blackouts.

For Pacific Lumber, paying Rising’s hotel bills for a few years was a cost of doing business — a relatively inexpensive goodwill gesture by a company that could ill afford more enemies or more obstacles to harvesting its valuable Humboldt County timberlands.

But early last year, Rising says, she had to start fending for herself. Although Pacific Lumber says it will help her out with her medical expenses, it has stopped paying to relocate her.

For Rising, who lives on an $850-a-month government disability payment, the development was a heartless move by one of California’s most powerful natural resource companies. But it also was one more sign that a company that has been a pillar of California’s north coast economy for nearly a century and a half is in trouble.

A series of layoffs and mill closures culminated earlier this year with Pacific Lumber warning that it was on the brink of bankruptcy.
Company executives began negotiating with a state agency last week over 11 logging permits that they say are crucial to the firm’s survival.
Catherine Kuhlman, executive director of the North Coast Regional Water Quality Control Board, said the final decision on the permits wouldn’t be issued until later this week, after the public has had a chance to comment.

The demise of Pacific Lumber — with its own town and the world’s largest privately owned groves of ancient redwoods — would strike Humboldt County like a 300-foot redwood toppling to the forest floor.

Pacific Lumber remains the biggest taxpayer and private employer, with friends and former employees in key places in county government and the state Capitol. The company supports charities and community affairs — and offers college scholarships to employees’ children.
Since the early 1990s, Pacific Lumber has been at the center of one of the country’s longest and most volatile environmental battles over the fate of some of the world’s tallest trees and the wildlife they support.

To end the strife, six years ago, the state and federal governments made a $480-million deal for 7,500 acres of Pacific Lumber’s oldest, grandest trees, creating the new Headwaters Preserve. The deal also required the firm to limit logging on its remaining 200,000 acres. But now the company contends that the terms are a huge financial burden and that it can’t get enough logging permits to turn a profit.
“We’re 140 years old … and we’re about to go bankrupt because of overlapping and duplicative regulation,” company President Robert Manne said in a recent interview.

Company officials warn that if they have to declare bankruptcy, monitoring and remedial work on its lands would be dramatically scaled back, to the detriment of wildlife and water quality. But state officials say that terms of the agreement would have to be followed no matter what.

Environmentalists and other critics argue that the company has only itself to blame for its difficulties. They point out that financier Charles Hurwitz, whose Texas-based Maxxam Corp. acquired Pacific Lumber in a contentious takeover in 1985, soon liquidated hundreds of millions of dollars in assets, including a welding division and a farming corporation.

“They have taken so much money out of the company and their debt is so high that without the logs … they are hurting,” said Richard Wilson, who was former Gov. Pete Wilson’s forestry chief when negotiations for the Headwaters deal were underway.

Under Hurwitz, Pacific doubled logging volumes, spawning years of costly protests by activists who blocked logging roads and perched in trees to prevent them from being cut. There have been hundreds of arrests, numerous injuries and one death.

Since the mid-1990s, a number of Pacific Lumber’s neighbors have contended that excessive logging along steep slopes has triggered landslides, filled streams with sediment and flooded their property.

Before the 1999 Headwaters deal, the California Department of Forestry suspended the company’s license for repeated forest rules violations.
“When Maxxam took over, they waved a red flag at the bull, and said we would do it our way,” said opponent Woody Murphy, whose family had owned Pacific Lumber for decades before the takeover.

The company “is a mess, and whether it’s the endgame, I would not be surprised,” said lawyer Bill Bertain, who tried to block the Maxxam takeover and has sued Pacific Lumber over damage to residents’ homes, orchards and water supplies. “But it’s a sad thing. A lot of my buddies are on edge, worried about working.”

In recent years, Pacific Lumber has closed three mills and cut its workforce of 1,700 almost in half. Company officials said they now want to sell employees and retirees the 275 homes Pacific Lumber owns in the tidy mill town of Scotia.

Last year, in a blow to its reputation, the company poured more than $200,000 into a losing effort to recall the county district attorney. The prosecutor had filed a $250-million civil fraud suit against the company over the Headwaters deal, alleging it had submitted false data on landslide dangers in logging areas. The company denies the allegation, and the case is pending.

In addition to saving some of the most majestic trees, the Headwaters deal sought to protect salmon that spawn in the forest’s streams, northern spotted owls that nest in its trees and 15 other species.

Despite misgivings by some company officials, Pacific Lumber hoped the pact would finally bring peace — and steady profits. But executives now say the company has been losing $28 million to $98 million a year since 1999 — largely because of the cost of complying with the Headwaters deal, difficulties in obtaining logging permits and millions of dollars in legal expenses.

Pacific Lumber said it has spent about $65 million complying with the habitat conservation plan and has expanded its staff of scientists from eight to 52.
Much of the company’s environmental protection effort has been devoted to two adjoining watersheds outside Eureka — Freshwater Creek and Elk River — where residents say that sediment has washed off heavily logged slopes, choking streams and causing frequent flooding.
Jerry Gess, a retired mechanic, lives behind what some people jokingly call “The Great Wall of Freshwater.” He built the 6-foot high cinderblock structure around his house in 2003 after the creek came within inches of his front door. The house was built on high ground by his grandparents, but since Pacific Lumber increased upstream logging, he said, the creek filled with silt, not the gravel that spawning salmon need. Swimming holes, he said, became just a memory.

“I’m not totally against Pacific Lumber,” said Gess, who joined a lawsuit against the company. “But Charles Hurwitz has one thing on his mind: to make money at any cost. We’re all caught in this thing.”

The company maintains that most downstream sediment is from “legacy logging” several years ago or longer. And its scientists say silting has declined since the Headwaters agreement, despite continuing resident complaints and numerous forest rules violations.
On a recent tour, Jeff Barrett, head of Pacific Lumber’s science division, pointed out road repairs and new logging practices that the company says have helped prevent erosion and preserve wildlife. “There is a beautiful clear-cut with slash,” he said, pointing to a stand of logged trees. “The birds have perches.”

Pacific Lumber wants to do more logging in the area and says it has spent $2 million to winterize dirt roads to minimize washouts. But the North Coast Regional Water Quality Control Board has been holding up the permits, because officials feared the company’s logging could dump more sediment in waterways.
Last week, the company and the board held marathon negotiations over 11 proposed logging areas that the company says hold 38% of its projected harvest for the first half of this year.

“I think we can make a deal that will keep Pacific in business and protect the residents,” Kuhlman, the board’s director, said Friday. “But the devil’s in the details.”

Chuck Center, Pacific Lumber’s legislative director, said there was a potential agreement for some of the permits, but that it was not clear where that would leave the company’s finances.

The permit holdup, coming on top of Pacific Lumber’s warnings of insolvency, has not helped the company’s already low financial ratings or its ability to make payments on bonds used to refinance Maxxam’s $900-million purchase. It still owes $750 million.

Despite the bankruptcy warnings, Manne, who took over as Pacific Lumber’s president three years ago, says he believes it is strong enough to survive. “The company is well-managed, well-run and we have an experienced team,” he said. “We hope we can get it back to the level of respect it deserves.”
Last summer, Pacific Lumber opened a high-tech $30-million sawmill, which cuts small logs up to 2 feet in diameter. It was the company’s way of adjusting to the increasing scarcity of big trees in a forest logged for more than a century.

Meanwhile, officials said they were trying to raise $100 million to acquire more timberland — and are willing to sell a piece of the company.
Dennis Wood, vice president of operations, said the timber shortage was forcing the company to run two shifts per day — instead of three — at its mills. “We’re cutting faster than we can bring logs in,” he said.

Rafael Lopez, one of 38 mill workers laid off Jan. 17 and later rehired, worries about putting his three children through college and losing his company housing. “If we don’t get more logs, next time it will be a lot more than 38 of us,” he said.

Maxxam Machinations Demand Local Solutions

My Word by Michael Twombly
Times Standard – February 8, 2005

The Los Angeles Times reported last week on a closed-door meeting between Charles Hurwitz, CEO of Maxxam (parent of Pacific Lumber) and Governor Arnold Schwarzenegger. They conferred on the likelihood of Pacific Lumber’s impending bankruptcy. The meeting included Undersecretary of CAL-EPA James Branham, formerly of PL and “broker of the Headwaters deal.â€? The Times editorialized “Californians may get to see up close how well or ill the revolving door of public service/private industry serves the public’s purpose.â€?

Hurwitz, through his myriads of shell companies, took many hundreds of millions of dollars from this once proud, sustainable and responsible company by mortgaging PL’s vast timber assets. He intentionally burdened PL and its spin offs with so much debt that they cannot legally cut enough timber to pay off the approximately $100 million in annual interest on the debt while still covering operating costs, Rather than make up for this shortfall from the hundreds of millions he has taken from PL, Hurwitz has found it eminently more profitable and expedient to threaten PL’s bankruptcy and the termination of hundreds of its loyal employees.Â

His strategy is win/win; if the North Coast Water Quality Control Board holds to the protections of the Headwater’s agreement, PL goes bankrupt and Hurwitz walks away with his hundreds of millions (and probably sues the State). If the Water Quality Control Board gives in and allows the Eel and Freshwater cuts, Hurwitz takes the trees and prepares for bankruptcy a year later. Win/Win.What is clear is that CEO Hurwitz needs to keep our PL timber workers and their families anxiously advocating for Maxxam’s interests while he engineers PL’s bankruptcy and their termination.           Â
This paper chose to poke fun at â€?La La Landâ€? in a subsequent editorial, rather than ring the Pacific Lumber bankruptcy alarm bell.  But more than 50 citizens, land-owners and even former PL employees spoke before the Board of Supervisors last Tuesday, clearly and eloquently detailing Maxxam’s bankruptcy strategy. They recounted the number of companies which have been purchased by Maxxam, only to be looted into bankruptcy, their pension plans emptied, their assets mortgaged, and finally their employees terminated. They warned the Board that Hurwitz, master of junk bond piracy, had already enriched himself by borrowing on PL’s timber assets and then moving the money to Maxxam, anticipating PL’s bankruptcy.

It is heartening to see this maturing political awareness of Humboldt citizens just as so many saw through Maxxam’s failed attempt to buy the recall of District Attorney Paul Gallegos in 2004. Charles Hurwitz believes that he will be able to obfuscate, frighten, misdirect and divide our community and keep his stolen profits, leaving Pacific Lumber in financial shambles. He believes that Pacific Lumber’s past reputation, loyal workers and former positive influence in Humboldt County will cover the stink of his strategy, coupled with his assumption that no one will be able to understand and uncover his financial manipulation and the money trail leading directly to his pockets.

I believe we need to join together to defeat Maxxam’s strategy and to make Humboldt County’s forests and timber industry permanently sustainable.          Â

To do this, we may need to accept the difficult decision to slow PL’s rate of cutting and decrease its workforce to sustainable levels, despite bondholder’s demands. Humboldt County must look clearly at the long-term future of Pacific Lumber and take direct control of our collective destinies. One promising option would be to allocate Headwaters Fund money to determine if and how we and PL’s own employees could purchase PL through an Employee Stock Ownership Plan (ESOP). Another potential worker retraining solution under consideration is nurturing forest and watershed restoration industries in the County.          Â

Our community is coming to better understand what Maxxam has planned for Pacific Lumber and its workers. We are coming to see that we are all in this together against Maxxam, and that, if we are to survive Hurwitz’ PL bankruptcy strategy, we must take control of Pacific Lumber’s future today, because it is tied to our future.

If and when Hurwitz declares PL’s bankruptcy, this community must protect its workers by “piercing the corporate veilâ€? of Pacific Lumber – by going directly after Maxxam and personally after CEO Charles Hurwitz. The District Attorney’s lawsuit is one avenue which, if successful, could result in Maxxam being legally forced to assume the liability for the harms it has caused the County, the land, the water and PL workers. Other legal actions may have to be taken against Maxxam and Hurwitz if and when bondholders line up to clear-cut Humboldt County forests in payment for Hurwitz’ billion-dollar borrowing.
One thing is for sure, as evidenced by testimony before the Board of Supervisors: the people of Humboldt County are asleep no longer. Are we too late to save PL and our timber industry from Hurwitz? Will we be able come together to defend PL and Humboldt County from Maxxam’s “final solution?â€? Our future as a community and as an economy depends on us finding an alternative (and local) solution.

Michael Twombly is a founder of Local Solutions PAC (Political Action Committee) (http://www.localsolutions.or).
He lives and works in the redwood forests of Bayside.

Pacific Lumber Tries to Cut It Both Ways [LTE]

Letters to the Editor – L.A. Times
Pacific Lumber Tries to Cut It Both Ways
January 29, 2005

Re “Bankruptcy Threat With an Edge,” Jan. 25: Perhaps Pacific Lumber Co. is “running out of logs” because timber companies such as Pacific Lumber have already deforested the vast majority of virgin forest in the United States.

Permits to cut protected stands should not be issued. Do we want to silt more streams, create more flooding and lose the last of our first-generation forests? To halt financial losses, Pacific Lumber should implement more sustainable business practices (i.e. don’t clear-cut everything in sight).
Bjorn Fredrickson
Seattle
*

The story about Pacific Lumber gets more bizarre every year. Thanks to the junk bond king, Michael Milken, and corporate raider Charles Hurwitz, Pacific Lumber Co. is now threatening people’s livelihoods and the state’s hard-won purchase of old-growth timber in the Headwaters Forest.

Citing restrictive regulations, Pacific Lumber claims it must file for bankruptcy if we don’t allow it to further foul rivers and cause more damage to private homes. Pacific Lumber agreed to these restrictions in exchange for $480 million. Now, if we don’t give in to its demand, it will keep the money and take back the Headwaters Forest through bankruptcy court.

For 140 years Pacific Lumber Co. was a responsible steward of the California forest, providing jobs and lumber in sustainable fashion. Since the invention of junk bonds, the unrestricted greed of a few has taken that legacy and consumed the forest at a rate that will lead to collapse of the forestry economy in Humboldt County. Even more pristine forests will be destroyed and the private property of small landowners will be damaged.

The cruel irony is that for many, the culprit will be the very same environmentalists who warned of this disaster from the beginning. In reality, a bankruptcy would allow wealthy corporate raiders to avoid their responsibilities. But maybe that was part of the plan all along.
Paul Mudge
La Jolla
*

The logging controversy in which Pacific Lumber claims it is running out of trees to log has me baffled. For 50 years, I’ve been hearing logging company claims that dozens of trees are planted for each tree cut down. We should have more trees than we know what to do with. Something smells here.
Stan Brothers
Glendale

Palco’s bad deal is everyone’s bad deal [Times-Standard]

Sunday, February 13, 2005 –The Times-Standard

The Pacific Lumber Co. has on many occasions warned courts, critics and boards that it rests on the verge of bankruptcy if things don’t go its way. In this latest round, it offers what seems to be its most desperate cry.

Everyone is taking the company seriously this time. Employees are worried. Businesses are worried. Contractors are worried. Bondholders are worried. Standard and Poors is worried enough to put Palco’s $750 million worth of timber notes on watch for another decline in rating.

And lots of people are worried that Palco’s intonations that it might slip out from under the provisions of the Headwaters Forest agreement might be for real. Indeed, it already has skirted these requirements in some ways. When the Environmental Protection Information Center finally won its case against Palco’s 100-year plan to cut timber, the logging didn’t come to a grinding halt. Palco submitted plans under little-known state rules, and has been cutting in some areas without such a plan since.

Federal provisions, however, remain in place.

The key problem the company faces is its massive debt. Like any company with a finite resource to make its products from, there is a level of debt it just can’t sustain. The money Maxxam Inc.’s Charles Hurwitz made from the 1999 deal to purchase 7,400 acres of Headwaters Forest is awfully difficult to track. But it does not appear that the near half-billion went to pay down a significant portion of the debt he incurred when he bought the operation in 1985, when it was poorly protected and undervalued.

The argument Palco made to Gov. Arnold Schwarzenegger seems to have been “We need to log and we need to log now.” That’s to pay the $28 million payment due on its timber notes in July.

But should a company’s financial position dictate the regulatory process? Should the North Coast Regional Water Quality Control Board rubber stamp harvest plans because the company is about to go broke? Public agencies should be most accountable to the people, even if they should consider the interests of industry.

Jobs are at stake, maybe several hundred. So, too, are the contributions the company makes to the county and numerous charitable efforts, contributions often overshadowed by the Palco controversy.

Our county needs those jobs. But those who believe that all would be fine if environmentalists and regulators just got out of the way are ignoring the larger truth that centers on money, particularly the huge, ongoing debt the company is coping with.

A bad business deal made by Hurwitz should not lead to bad regulatory oversight. The water board is putting all its resources into solving both the needs of the people and the needs of the company, and it should consider to do so — in that order.

Headwaters Headache [San Francisco Chronicle]

ONE OF CALIFORNIA’S biggest environmental deals is near a breaking point. A giant redwood lumber company wants speeded-up timber-cutting approvals — or it may go out of business.

In 1999, the Pacific Lumber Co. sold 6,000 acres of primeval redwoods to the government in a landmark transaction that averted logging and saved cathedral-like stands of the world’s largest trees. Now the company claims that restrictions on timber cutting are putting it in jeopardy of bankruptcy.
The firm is pressing state and regional regulators for logging permits, claiming better science and logging practices allow for more cutting on its 210,000 acres along the foggy North Coast. If the firm doesn’t get its way, layoffs and possible bankruptcy are possible, its executives hint.

Coming from a company known for bare-knuckled bargaining, it’s an offer that Sacramento should resist. Pacific Lumber must learn to live with logging rules that it crafted and signed barely six years ago. The public expects careful regulation in exchange for $480 million paid by federal and state government for the Headwaters groves.

The firm argues that after a string of money-losing years, it is running out of options. If it closes down, a new owner taking over the same redwood stands may not be beholden to wildlife protections and logging limits that Pacific Lumber agreed to. Cut us some slack or face an uncertain future, Pacific Lumber representatives are warning.

The company has taken its demands to Sacramento, where executives have met with Gov. Arnold Schwarzenegger’s advisers. The governor runs state agencies that regulate logging, and he also appoints members of a local regional water board that can veto expanded logging.

The governor built a creditable record on the environment in his first year. His stance on Pacific Lumber’s demands will be his next test. Will he bend regulations to fast-track logging or make the company follow the rules?

The firm says it has spent $60 million in studies on its land, the largest redwood operation in the state. It uses helicopters to extract logs to minimize impacts and built a super-efficient $30 million mill.

What’s missing from this picture of modern-day logging is more trees. Pacific Lumber claims it needs more logs to stay open. It wants 16 tree- cutting permits within the next several months but has won only four.

These proposed cuts along small streams are where wildlife habitat, mud flows and landslides need careful study. Pacific Lumber is pressing for industry-friendly appointments to a key water board. But the governor should insist future decisions be treated objectively.

Why is this dispute so important? Because Pacific Lumber’s stewardship is anything but exemplary. In 1986, corporate raider Charles Hurwitz acquired the company and quickly boosted logging to pay off his financing costs. When he moved on the Headwaters Forest, filled with trees dating back hundreds of years, state and federal leaders devised the costly buyout.

Now his company is pushing again, demanding more logging and threatening bankruptcy.

The governor shouldn’t cave in to these tactics.