Feb. 5, 2004
DEVELOPMENT IN PALCO SUIT: District
Attorney Paul Gallegos' lawsuit against Pacific Lumber received
a shot in the arm late Tuesday when Richard Wilson, the head
of the California Department of Forestry during the Headwaters
negotiations, revealed that he would not have approved the deal
if he had been given correct information on land sliding rates
by the company. Wilson's 10-page legal declaration, the subject
of a press conference held at the District Attorney's office
Wednesday, lends weight to Gallegos' claim that the company used
deception to gain access to as many as 100,000 redwoods located
on landslide prone slopes.
TO ABOVE NEWS ITEM, AS OF FEB. 12: The Eureka Police Department has not assigned five
of its detectives to investigate the slaughter of 10 ducks in
Sequoia Park last month. Nonetheless, spokesperson Suzie Owsley
says the department is aggressively pursuing the case. Anyone
with information should call 441-4060.
by HANK SIMS
The Eureka Inn stood shuttered Tuesday morning, staffed with a skeleton crew under orders not to speak to the press. "Temporarily closed for refurbishments," said a sign posted on the door -- a euphemistic notice, given that the inn stands to be closed for a good long while and that Ray Park, its new owner, has made clear that he doesn't intend to invest anything in the hotel.
The closure of the inn was the final act in the slow collapse of former owner John Biord's financial empire, which in recent months saw criminal charges against the entrepreneur, tax battles and buyout talks and, in the end, the foreclosure of the property by an old creditor. Park, chairman of the Cleveland-based Park Corp., bought the inn at public auction Monday and said he planned to resell it as soon as possible.
Park financed John and Deborah Biord's takeover of the inn in 1995, and was a family friend of Deborah Biord's father, Joe Carter. Park came to Monday's auction with Deborah Biord's brother, Mark Carter of the Carter House Inn.
About 40 people attended the sale, which took place at Fidelity Title on H Street in downtown Eureka. John Porter, who managed the inn for Helen Barnum for 15 years and is now a co-owner of the Benbow Inn, was there, as was Barnum's grandson, Bill Barnum, a Eureka attorney. Bill Carson, general manager of the Santa Rosa-based Fountaingrove Inn LLP, came with one of his company's owners.
Four parties came to bid, including Fountaingrove and Trueman Vroman of Vroman Engineering & Construction of Eureka, but the sale was over almost as soon as it began. Fidelity Title's Pam Poore announced the opening bid -- $690,833.69 -- shortly after 10 a.m. Vroman offered $700,000. Park quickly said "Two million," silencing the entire room. "Going once, going twice," Poore said, and the inn was Park's.
Vroman later said that once Park entered a bid, he knew his plan for the inn -- he wanted to keep it open while at the same time conducting repairs -- had no chance.
As holder of a second mortgage on the inn, the Park Corp. is believed to have a $4 million stake in the property. The foreclosure action brought on the first mortgage was a threat to that investment; if another interested party bought the inn at auction, Park would receive only whatever was left over after the first was paid off.
The second mortgage gave the Park Corp. leverage that other competitors could not match. After paying off the first mortgage of $700,000, the remainder of Park's $2 million bid would be returned to the second mortgage-holder: himself.
Park told a media scrum that formed around him after the auction ended that the inn would be closed until a buyer for it could be found.
"We're just in the finance business," he said.
Employing a dry sense of humor, Park told reporters that he drove all night from Cleveland just to get here in time for the sale, and that now he'd perhaps consider turning the inn into a homeless shelter. Finally, a reporter from another news organization said, "So, it's all about the money for you?"
"Isn't that what life's all about?" Park wondered.
The reporter retorted that it was not what life was all about for her and her colleagues who made only $8 per hour, and Park soon declared an end to the impromptu press conference.
Such gaiety was not in evidence among the inn employees who had attended the auction and who now found themselves out of work. Mark Campbell, chef of the Rib Room, said he was thankful that he had been working two jobs before the inn's closure.
"I'm not like most of the employees, who don't know what they're going to do," Campbell said. Other employees discussed the possibility of openings at the Blue Lake Casino.
Fountaingrove's Carson was philosophic. He said that he and others in his company had determined long ago how much they could invest to purchase the inn, as they had been in talks with Park and Biord late last year. Park's $2 million bid priced them out of competition.
"That's more than we were willing to go," he said. "It only makes sense that [Park] would seek to protect his interest."
After the chit-chatting crowds cleared out of Fidelity Title's parking lot, Park and his attorney, along with Carter and Humboldt County Tax Collector Steve Strawn, walked off together in the direction of the county courthouse.
Strawn said that the attorney came with him to his office and immediately paid off the back property taxes owed on the inn -- a total of $163,157.49.
However, the large federal tax liens placed on all of the Biords' properties in 2002 -- they total nearly $750,000 -- will still be their responsibility. Biord recently told the Journal that he and the IRS were negotiating a settlement to the liens.
The closure of the inn threw local service groups and other upcoming events into chaos. Nancy Kay, president of the local chapter of the League of Women Voters, said that her organization would have to scramble to find a new venue for its "State of the Community Luncheon," normally held in one of the hotel's convention rooms each spring.
"It's an annual community event, and we wanted to maintain it at the inn," she said. "We're still uncertain what to do now."
Last week, John Biord pleaded guilty to failing to pay bed taxes collected from guests to the city of Eureka. He will spend 10 days in jail, most likely to be served with the Sheriff's Work Alternative Program, and must perform 200 hours of community service.
by BOB DORAN
When Paul and Jessica Spencer signed a lease last November to rent the Arcata Theater, they were ready to live out a dream.
The couple, who share a passion for teaching gymnastics, had big plans. The old theater was to become AIRcata Physical Arts -- an acrobatics training facility with trampolines and a climbing wall. They figured with the Olympics coming up this summer, gymnastics would be even more popular than ever.
But they did not foresee the stumbling blocks that lay ahead: resistance from the city of Arcata, a seemingly intractable landlord, and, most distressing, paying $3,000 a month in rent for a building they couldn't use. Now, after just three months, they have given up on the Arcata and are searching for a new facility.
Originally the Spencers had thought about buying the theater, but realized they "weren't in a financial position" to do so, as Jessica Spencer put it. Months later, Realtor Debbie Bindel, representing owner Robert White, offered the Spencers a two-year lease with a right to match any offer that came up. They accepted and began laying their plans in earnest.
"We met with the city and everything looked good," said Spencer. The planning department let them know they would need building permits and a historical analysis report, nothing more. No problem, at least so they thought.
After signing a two-year lease on Nov. 4, they started work, first dismantling the theater seats. Less than two weeks later they got their first major shock. Local engineer Terry Clark, who was catching a snack at the pizza place next door to the Arcata, saw Jessica out front and asked her, "What are you going to do about the asbestos problem?" Clark, who works for Winzler and Kelly, had examined the building for someone else who was interested in buying the theater.
The Spencers were aware that there was asbestos in the soundproofing material sprayed on the ceiling; Bindel, who was with Clark when the inspection was made in July, had told them about it. What they didn't know was what Clark told Jessica that day: That the asbestos was "friable" (easily crumbled) and uncontained, and thus a potential hazard to customers.
Not long afterward came more bad news: a letter from Arcata planning department head Tom Conlon ordering a halt to work on the building. Conlon said the city was concerned about the historic significance of the theater seats and about the theater's damaged marquee. He said work could not resume until permits had been issued, and he prohibited occupancy until the marquee was repaired.
The problem with the marquee was deeper than the surface damage caused to the overhang by a wayward truck driver last May. According the Conlon, the city had asked for an engineering analysis two months before the accident. "There was visual evidence of a [structural] problem. It appeared to be sagging and water was leaking through the marquee," Conlon said.
Bindle informed the Spencers that repair plans had been delayed due to negotiations with an insurance company regarding damages to the overhang.
As for the asbestos, it was soon determined that it should be removed, along with lead paint on the walls. The cost? Around $30,000. White asked the Spencers to pay for it, saying that the amount would be deducted from the purchase price if they bought the building. The Spencers refused.
In December they laid down an ultimatum to White: Either fix the various problems -- "the asbestos, the lead paint, the leaking roof, the plumbing problems, the facade" -- by Feb. 1 and skip the rent for December and January, or release them from their lease and return all of their money. If neither were acceptable, they would seek mediation.
"We were responding to all their requests but they wanted everything done yesterday," said White, who offered to skip one month's rent, but not two. After the Spencers retained a lawyer, White agreed to end the lease and to refund an $11,800 deposit the Spencers had put down as part of the lease arrangement.
Nonetheless, the Spencers lost a fair amount of money -- about $6,000, according to Paul Spencer. He said the money was spent on a variety of things, including advertising, the purchase of a computer and legal fees. Jessica Spencer talked about another cost: "Good faith with the community is lost," she said.
Nonetheless, the Spencers are looking for another facility in Arcata and may temporarily rent space in the city's D Street Neighborhood Center to teach gymnastics classes. At the same time, Paul Spencer said he's begun looking for work outside the area. "This really threw our lives into a tailspin," he said.
© Copyright 2004, North Coast Journal, Inc.