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April 22, 2004

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Pleading their case
Outside agencies want cuts erased, but Supes noncommittal

Secrecy flap
Portions of Palco document proposing
easing of logging restructions redacted

T H E  W E E K L Y  W R A P

BUYER IN THE OFFING: The Eureka Inn's months in limbo may soon be coming to an end. A source close to financier Ray Park, who bought the Inn at a foreclosure auction in February, told the Journal that Park has found a buyer and the historic hotel is currently in escrow. Reached at his Las Vegas home, the semi-retired Park said that employees of the Cleveland-based Park Corp. were handling the deal, and that he wasn't sure if the two sides had yet come to terms. However, he sounded optimistic that the Inn would soon reopen its doors under new ownership. "It looks favorable that someone will be operating it," Park said. No one is revealing the name of the buyer, except to say that it is not the Santa Rosa-based Fountaingrove Inn LLP, the owners of which have long expressed an interest in the property.

DIKEMAN'S JOB IN JEOPARDY?: District Attorney Paul Gallegos said this week that the mandatory budget cuts imposed on his office by the county's budget crisis could result in the layoff of one or more of his office's senior prosecutors. Gallegos said that he has to trim about $500,000 from the DA's budget, and since the great bulk of that budget goes to salary, layoffs will almost certainly be unavoidable. However, he said that he and his staff are still working on a final plan, and nothing was yet set in stone. "We have many options and many sub-options," he said. "We have to look at everything." Likely targets are the longest serving and presumably best paid deputy prosecutors: Worth Dikeman, Rob Wade and Max Cardoza. Dikeman ran as a replacement candidate in the recent, unsuccessful attempt to recall Gallegos. Both Gallegos and Assistant DA Tim Stoen have taken pay cuts.

KMART SUIT THROWN OUT: A federal bankruptcy court judge dismissed on Monday a lawsuit that Kmart, the discount retail chain, filed against Humboldt County and hundreds of other local governments, the Wall Street Journal reported. Judge Jack B. Schmetterer said in court that Kmart didn't establish why the bankruptcy court would have jurisdiction in the suits. Kmart had claimed in its action that it was overcharged on property taxes. County Tax Collector Stephen Strawn, while saying, "We won," cautioned that Kmart has the option to refile the litigation.

HUSBAND OF EDUCATOR ARRESTED: A Salyer man who is married to the principal of Burnt Ranch School in Trinity County has been charged with four felony counts of child molestation arising from two separate cases, one involving an 8-year-old girl from the Willow Creek area and the other involving a 4-year-old girl from Trinity County, according to Trinity County Deputy District Attorney Michael Mock. Eddie Monroe Van Houten, 57, was arrested Feb. 25 and booked into the Trinity County Jail, where he was released on $100,000 bail. He has pleaded not guilty. Van Houten's wife, Terry, is the principal and kindergarten/first-grade teacher at Burnt Ranch School. A preliminary hearing is scheduled for May 12 in Trinity County Court.

WHO WANTS MONEY? Bucking the trend in these tight-budget times, one county agency announced last week that it is looking for more people to give money to. The Humboldt County Children and Families Commission said that it was seeking more applicants for its mini-grant program, which awards up to $2,500 for projects designed to promote health in pregnant women and children up to 5 years of age. "We are not getting as many applications as we hoped we would get," said Andrea Sousa, the commission's executive secretary. "The same agencies seem to be applying every year, and we want to reach out more to the community." Sousa added that in the last fiscal year, the agency was only able to award around two-thirds of the $30,000 available for local mini-grants each year. The grants are funded by 1998's state Proposition 10, which imposed a 50-cent-per-pack tax on cigarettes sold in the state. Interested parties can contact the commission -- which will soon be changing its name to First Five Humboldt -- at 445-7389, or on the Web at www.humkids.org. Applications are due on the first business day of each month.

ACTIVIST FREE: Naomi Wagner, an Earth First! activist who spent 24 days in jail on a charge of resisting arrest during protests in Freshwater last year, was released from Humboldt County Jail last week. (Her 40-day sentence was shortened because of good behavior.) Citing the Jewish tradition of fasting to call attention to a pending disaster, Wagner, 58, of Petrolia, said she was on a hunger strike in jail because she wanted to call attention to the logging practices of Maxxam/Pacific Lumber Co. "There hasn't been enough emphasis on the depletion that's going on," she said. "That's what we call extraction logging. This is not forest management; this is money management. It spells doom to the industry, to the forest and to our public values." The company has repeatedly said they practice sustainable forestry.

TRINIDAD TAX INCREASE: City government in the cash-strapped town of Trinidad narrowly won a vote of confidence last week, after a slight majority of residents voted for a special sales tax increase of 1 percent. The final vote was 88-75. The increase could take effect as soon as October, depending on how quickly the city can get its paperwork into the State Board of Equalization. "It's one important step to help us rebuild our cash reserves," said Mayor Dean Heyenga on Tuesday. "Another is going to be settling these litigation issues." Heyenga was referring to the long-running dispute between the city and resident John Frame, which also flared up again last week. Frame threatened to file yet another lawsuit against the city unless it gives him permission to fence off and vegetate a section of the Wagner Street Trail, which runs near his home.

HARBOR 'VISIONING:' The Humboldt Bay Harbor, Recreation and Conservation District will hold a "visioning forum" on Wednesday, April 28, between 7 and 9 p.m. at Eureka's Adorni Center. The forum comes in the wake of the contentious dispute over a proposed liquefied natural gas facility on land in Samoa. Calpine, the San Jose energy company that wanted to build the facility, pulled out last month after a special meeting of the Eureka City Council on the proposal drew around 900 citizens, most of them opposed to the plan. According to a press release, the district wishes to solicit public opinion on "the direction that the commercial/industrial use of Humboldt Bay will take in the future."

CONCRETE CONCERN: The North Coast Regional Water Quality Control Board is pressuring a Garberville outfit to change the way it handles highly alkaline cement wastewater so as to reduce the threat to the South Fork of the Eel River. Randall Sand and Gravel, of Garberville, agreed last week to line a "wash-water pit" located near the river after water quality staff raised alarm bells.

EYEING $4 MILLION: The General Accounting Office, the investigative arm of Congress, is looking into whether $4 million intended to improve conditions for imperiled salmon in the lower Klamath River in 2003 was properly spent. Rep. Mike Thompson, D-Helena, and Rep. Henry Waxman, D-Los Angeles, have raised questions about the U.S. Bureau of Reclamation's water bank project, designed to buy water from irrigators living in the upper part of the Klamath basin so that more water can flow downstream.

Pleading their case
Outside agencies want cuts erased, but Supes noncommittal

story & photos by HANK SIMS

The county's deadline to set its 2004-05 budget is rapidly approaching, and county departments are going though the painful process of deciding which programs and staff will have to be sacrificed to the ever-shrinking budget.

But county departments aren't the only ones that are feeling this pain. On Tuesday, groups representing three separate outside agencies that receive, or wish to receive, funding from the county pleaded their cases before a Board of Supervisors with very little to spare.

Representatives of the tourism industry before the Board of Supervisors on Tuesday, ask the county to continue to fund tourism promotion.

LEFT: Don Leonard, executive director of the Humboldt County Convention and Visitors' Bureau.

The relatively small amounts that the agencies were seeking didn't "sound like much when you're dealing with a $200 million budget," said Supervisor John Woolley. "But that's what we're getting down to."

The Youth Services Bureau, a program of the Redwood Community Action Agency, was looking for a return of monies earmarked for a youth shelter. Various "promotional entities" -- including the Humboldt County Convention and Visitors Bureau and local Chambers of Commerce -- sought continued funding from the county's hotel bed tax receipts. The board had cut both programs in March.

Representatives of the county's 21 fire districts were seeking a commitment from the county to share income from a state fund for public safety. The plan they had devised, which would have taken effect only in the 2005-06 budget year, would have channeled part of any increase in future revenues from that fund to the fire districts.

In the end, the board agreed to help each agency to identify areas where the lost revenues might be made up through grants from state or federal governments, or through cost savings, but appeared to hold fast to the tight budget line.

Before each group presented its case, County Administrative Officer Loretta Nickolaus gave them, as well as the supervisors and the public at large, some idea of what the county was up against.

Nickolaus said it appeared, from Gov. Schwarzenegger's budget proposals, that the county would end up having to cut $8 million from its discretionary general fund budget -- about 28 percent of the total amount the county can spend as it chooses. In addition to grants to outside agencies, the discretionary budget pays for most county law enforcement, the planning department, the agricultural commissioner and many other front-line services.

The coming budget losses would be the culmination of three years of county belt-tightening, Nickolaus said.

"As of today's date, we've lost 290 county jobs," she said. "The worst is yet to come. This next year is going to be extremely tough."

John Porter, co-owner of the Benbow Inn

But Lloyd Throne, executive director of the Redwood Community Action Agency, told the board that the proposed cut of $91,000 in county funding to his agency's shelter facility for homeless and at-risk youth would end up making the county's budget crisis even tougher.

He said that the shelters had a proven track record in turning children with problems into happy, productive citizens. If that work were discontinued because of budget cuts, the Sheriff's Office and the juvenile justice system would end up handling these children, with a much less happy outcome.

"Should RCAA be forced to close its facilities, someone would be dealing with these high-risk issues," he said. "They will end up costing the county far more than the $91,000 in question."

John Porter, co-owner of the Benbow Inn, was one of the many residents who spoke out passionately against the county's decision not to "re-invest" the county's transient occupancy tax into promotion of tourism.

He said that over the years, as the county gradually increased the bed tax from 4 to 10 percent, the industry did not raise any serious objections because it knew that the county was actively promoting tourism in the region.

Raymond Hillman of Pride Enterprises Tours.

"There was never an effort on behalf of the industry to oppose those increases," he said. "The reason is because we had a partnership with the county." Porter hinted that with the county's decision not to fund agencies like the Garberville-Redway Chamber of Commerce, the county had effectively broken off that partnership.

The arrangement proposed by the fire districts was the result of a nearly year-long effort by a task force composed of representatives of the districts and members of the Board of Supervisors. The task force was formed to study how monies from state Proposition 172, which provided funding for public safety agencies, were distributed in the county.

Currently, the Board of Supervisors -- which is tasked by the state to determine how the funds are spent in Humboldt County -- gives all the money to county agencies. Fire districts, which are independent of the county, believe they should be given a share.

In the end, the board voted 3-2 to deny the fire districts' request, with Supervisors Jill Geist and Jimmy Smith dissenting. Supervisor John Woolley, who put forward the motion to deny the request, said that he did not feel comfortable allocating funds from the 2005-06 budget so far in advance.

However, Woolley and the board promised the districts that they would "seriously consider" the proposal if the districts brought it to the board next year. n

Secrecy flap
Portions of Palco document proposing
easing of logging restructions redacted

by KEITH EASTHOUSE

It is now well known that the Pacific Lumber Co. is seeking sweeping revisions to its Habitat Conservation Plan -- revisions that could lead to more logging along streams and on steep slopes, and increased operations during wet weather.

What's not so well known is that financial and timber harvest volume details relating to the proposed alterations to the plan, a pillar of the 1999 Headwaters deal, are being kept secret.

A 41-page document entitled "Proposed Modifications to the Pacific Lumber Company Habitat Conservation Plan" spells out the proposed changes. The top of every single page is marked with the following: "Notice: Confidential, Private, Proprietary and Trade Information: Predecisional Review Documents: Not Subject to Disclosure or Distribution."

The Journal obtained a copy of the document this week, and despite the confidentiality notice, it has been distributed beyond the company and the state and federal agencies that are evaluating the proposals that it contains.

It is not clear whether the company originally wanted the entire document kept out of the public realm, although that is certainly what the confidentiality notice suggests. Palco spokesperson Erin Dunne did not return phone calls placed at her office, her cell phone number and her home late Tuesday afternoon.

Mark Stopher, habitat conservation program manager with the California Fish and Game Department, confirmed that the company made a confidentiality request at a Feb. 13 meeting with representatives of various state and federal agencies, including the National Marine Fisheries Service, the U.S. Department of Fish and Wildlife, Fish and Game, the California Department of Forestry and the Regional Water Quality Control Board.

Speaking by telephone from his Redding office Tuesday, Stopher said the agencies were not permitted by law to grant the request. Eventually, however, it was agreed that portions of the document pertaining to matters such as the company's finances and to specifics about timber harvest volume were excised.

"The Public Records Act does provide a few exemptions from full disclosure [when it has to do with] proprietary economic information," Stopher said, explaining that companies fear that if they open their books it could help their competitors increase their market share.

One bit of financial information that wasn't removed pertains to the alleged negative economic impact on the company of the HCP, a set of restrictions and guidelines intended to govern logging on Pacific Lumber's 211,000 acres for the next 50 years. According to a summary page at the beginning of the document, in 1996 and 1997, prior to the signing of the Headwaters Deal that put the HCP into practice, "Palco achieved both high revenues and practicable timber harvest levels.

"The period from 1998 up to the 3 rd quarter of 2003 [in contrast] was marked by a very significant decline in total revenue, net operating losses in the tens of millions of dollars and dramatically reduced timber harvest levels."

A table in the body of the document that spells out harvest and cost impacts from seasonal restrictions on logging has been blanked out, as have related portions of text. Another table, however, includes figures on operating cash flow losses: The company was $78 million in the red in 2001, $26 million in the red in 2002 and $28 million in the red for the first three quarters of 2003, according to the table.

While these losses may be greater than the company expected, everyone who was a party to the Headwaters deal, including the company, knew that revenues would go down. What the company got in exchange for giving up the Headwaters grove and associated old-growth stands, and for agreeing to tighter logging restrictions, was $480 million from the state of California and the federal government.

The redactions have outraged environmentalists and fueled suspicions that the state and federal agencies and the company have, in secret, struck an agreement over the proposed modifications.

That suspicion has been strengthened by a March 3 cover letter that accompanies the proposed modifications written by Palco CEO Robert Manne, in which he laid out a series of deadlines that he wants the state agencies to meet in coming months.

For example, Manne asked that the agencies decide by April 22 whether to approve the company's suggested changes for easing logging restrictions in landslide areas. Manne suggested other deadlines, such as a decision on reducing restrictions in "streamside buffers" (areas near streams in which logging is restricted) by May 14.

The dates "were selected to assure we have time to adjust our operations to provide the soonest possible benefit in the earliest harvest cycle," Manne explained in the letter.

Bay Area environmental attorney Sharon Duggan, who has represented the Sierra Club and the Garberville-based Environmental Protection Information Center on Pacific Lumber cases, said Manne's deadlines suggested the company was dictating the process. She also expressed deep skepticism about the impartiality of the state and federal agencies.

"Is the fix in?" she asked. "Is this the kind of thing that was negotiated with [an understanding] that there was a strong likelihood that everything was a pass?"

Stopher said the state and federal agencies will set their own time schedule and that their evaluation of Palco's proposals will take months to complete.

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