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COVER STORY | SPECIAL REPORT | IN THE GARDEN | CALENDAR
Sept. 19, 2002
New bank in the works: Former exec says banks 'no longer local' by JUDY HODGSON  FORMER PRESIDENT OF HUMBOLDT BANK last week that he and a group of investors are launching an as-yet-unnamed bank based in Eureka that will likely open next year. The move is certain to spark a debate on just what constitutes a local bank.
"We want to re-establish community banking in Humboldt County," said John Dalby, former branch manager in Fortuna and Eureka and bank president from 1999-2001. [photo ar right] The two existing North Coast banks claiming to be community-based in advertising campaigns are today regional banks with administration headquarters out of the county, according to Dalby. There was a significant shift in Humboldt Bank ownership toward nonlocal shareholders after the corporation was listed on the NASDAQ in March 2000, Dalby said. Local ownership was further diluted when Humboldt merged with Tehama Bank in 2001. "When ownership is outside this community, you are answering to investment bankers and investment analysts. Goals and objectives are set for you by analysts who say, `If I'm going to recommend your stock, you need to do this,'" Dalby said. "It's been my experience that the economy of a community takes a back seat to what is perceived as shareholders' needs." Dalby said he resigned as bank president last year but remained on staff in another capacity, head of commercial lending. However, he said his frustration continued to grow earlier this year when Humboldt Bancorp, the parent corporation, combined the independent charters of its three banks -- Humboldt, Tehama and Capitol Valley -- into one regional bank and moved its top administrators from Eureka to Roseville, Calif. Paul Ziegler, who replaced Dalby as president last year, agreed that listing on the NASDAQ "certainly brought on institutional investors" and the ownership "broadened" when Humboldt purchased Tehama Bank. "We have certainly grown outside our original service borders in Humboldt County. I don't think that means that Humboldt is less important or isn't going to get the resources it needs." Ziegler estimates that the bank has about $550 million in deposits from this county "and roughly $400 million in loans." The bank is the leading lender in the region for commercial, Small Business Administration loans and residential real estate. Competition is always good, he said, but Humboldt Bank is not particularly worried with the proposed start-up. "We have a very loyal and diverse customer base. We will continue to have a high profile, active voice in the community regardless of the percentage of local ownership or where our executive offices are located," Ziegler said. Ironically, Humboldt Bank and Six Rivers Bank were both launched as local banks in Eureka in 1989, one year after locally owned Bank of Loleta was sold to one of the major banking chains. What followed was a decade of rapid consolidation in the banking industry across the nation -- independents selling or merging into regional chains, and regional chains being bought up by major banks. "Bank of Loleta sold, Six Rivers Bank sold [to North Valley Bank in 2001], Humboldt Bank didn't sell, but it merged itself and moved," Dalby said. The key difference between major bank chains and independent banks is reinvestment in the community, he added. "There are only so many dollars [in deposits]. In Eureka about 40 percent of all deposits are with major banks," Dalby said. "Outside of standard consumer loans, those major banks do very little reinvesting in their community. When's the last time you saw a construction loan sign with Wells Fargo or Bank of America on it? It doesn't happen. "Banks have the ability to take deposits here and deploy them in the form of loans elsewhere," Dalby continued. "When things get tough in Humboldt County, all [major and regional banks] have to do is turn down the credit screws and stop making loans. It exacerbates the problem at a time the local community needs a shot in the arm." So how can a new bank maintain independence when others have failed? "I cannot tell you our bank will remain a community bank forever -- I can't promise [because of fiduciary responsibility to shareholders]. But what we can do is learn from history and not repeat those errors," Dalby said. "With Six Rivers, it was performance. They had problems with loans and they had significant regulatory problems [in the mid and late 1990s]. Whether it was bad loans or poor management, frankly their return to shareholder wasn't sufficient to keep them from having to find a suitor. "Unfortunately, Humboldt Bank forced their hand by being so aggressive," Dalby said. [In 1994, 1997 and 1999 Humboldt Bank failed in three hostile takeover attempts of Six Rivers Bank.] Dalby said he has no ill feelings about his former bank and maintains many friendships. He just doesn't agree with where the bank is headed. "Humboldt made some decisions -- not today, but years ago -- that sent them in a direction. They are absolutely doing what's right based on current circumstances. But those circumstances were really created when they began to cater to investment bankers and analysts," Dalby said. "Technically the only locally owned financial institution is Coast Central. It's one of the largest credit unions in the country. It's extremely well run, but they have limitations. Their niche is the individual. If you were sitting in my office and wanting a car loan, I would tell you the best deal you can get is at the credit union. "We are going to cater to individuals, too --and moderate income up to doctors and lawyers, but primarily small business people. Our primary focus will be commercial lending, to help fund small business." The new bank will be full service and will tie into a national ATM service. Dalby estimates he will need to raise $8.5 million to $10 million to open the doors. He said he is not ready to reveal the names of his financial partners until the name of the bank is chosen and they have regulatory approval to began raising capital. He did confirm that he has the backing of one key person in the local financial world, Eureka businessman Rob Arkley. Arkley told the Journal he agrees that there is a strong need for a local bank. He said he was investigating starting one himself this past year but ran into potential conflict-of-interest problems. (The bank will be located in Eureka's redevelopment zone. Arkley's wife, Cherie Arkley, sits on the Eureka City Council and is running for mayor.) Arkley said he has agreed to purchase a block of shares (less than 10 percent) in the new bank and will give the stock to the 125 employees of his Security National Servicing Corp., headquartered in Eureka. "We will be not be participating in any ownership or management in any way. The Arkley family will have no financial ties or interest," Rob Arkley said. The Arkleys have made a number of philanthropic gifts to the community in recent years. Some have been highly visible -- like the $2 million check to the city of Eureka to speed up completion of the Boardwalk project. Not-so-well known is a similar-sized donation made this year to the zoological society to revamp the city zoo. Other gifts include significant funding for restoration of the Carnegie Building (now the Morris Graves Museum of Art), the Eureka Theater, Vance Hotel, Redwood Concert Ballet building, Christ Episcopal Church, Eureka High School pool and stadium, and the Willow Creek downtown improvement project. The Arkleys gave nearly $200,000 to St. Bernard Schools when it was threatened with closure two years ago. Dalby said he appreciates Rob Arkley's support for the new bank and his financial guidance. "I began to do due diligence to see whether there was a need [for a new bank]. Later I began hearing rumblings that Rob Arkley was going to the same thing so I went to see him," Dalby said. "The last thing I wanted to do is compete with him in putting together a financial institution. I told him about my plan and he said, `Good. Now I don't have to.'" Dalby said he does not think the new bank will have a financial impact on Humboldt Bank. Even if it is "wildly successful" in its first year and grows assets to $100 million, "We'd still be a pimple on the butt of Humboldt Bank," Dalby said. Humboldt Bancorp current assets are $982 million.
McKinleyville strip mall burns story & photos by BOB DORAN
Chief Dave White of the Arcata Fire Department OSCAR GUERRERO STARED INTO THE BURNT-OUT SHELL of Don Juan's Mexican Restaurant, the family business where he used to work, shook his head and said, "I don't know what we'll do now, maybe rebuild, maybe find another place."  Officials believe the fire that burned Don Juan's and several other businesses in a McKinleyville strip mall on Monday may have originated in the kitchen of the restaurant that morning. It raged out of control until the afternoon, filling the sky above town with thick black smoke and ultimately destroying five businesses: Live From New York Pizza Restaurant, HealthSPORT Annex, Added Touch Family Styling Salon and Figueiredo's Video Movies, which housed 12,000 videos. H & R Block Financial Advisors was the only business in the mall -- a single building -- that survived.
Surveying the gutted structure the following day, owner Dave Figueiredo estimated the damage at "over $1 million." [photo below right] "It's up to the insurance people at this point" to sort things out, he said. He added that he felt "numb" after spending a sleepless night Monday. According to Chief Dave White of the Arcata Fire Department, "the fire was well involved in the attic (above Don Juan's) by the time we got to it." At one point the firemen thought they had suppressed the blaze at least enough to save Figueiredo's, the business at the other end of the mall from Don Juan's. But the fire proved difficult to stop because the attic stretched the length of the building. With flames shooting through the roof, White conceded the blaze was out of control and pulled firefighters out of the doomed structure. The damage might not have been so extensive had more water been available to fight the fire. Truck 3, Arcata's brand new ladder truck, a rig capable of pumping 2,000 gallons of water per minute, was called into play to douse the flames from above. [see photo above left] Unfortunately, with the fire hydrant closest to the fire already in use, the nearest available hydrant was at Thomas' Building Supply, a block away. According to Capt. Tad Sundquist of the Eureka Fire Department, whose ladder truck crew was called in to help put out the fire, the distance reduced the hose's capacity by half: to about 1,000 gallons per minute.  Still, Sundquist said that by the time a ladder truck is put into use, it's usually too late. "When the ladder goes up, the building is coming down," he said. Chief White concurred, explaining that ladder trucks are "not really effective until the fire burns through the roof."
Sundquist said the shared attic -- a common feature of strip malls -- made it "a tough fire to fight. These strip malls are notorious." Sundquist said there are shopping complexes with the same problem all over the county, including "quite a few in Eureka" and the Valley West and Uniontown shopping centers in Arcata. Live From New York's owner, Paul Amato, was philosophical as he watched a fire crew douse the rubble of his pizza place. The former New Yorker said he saw the fire as a sign. "I've been working too much lately, now I guess I get a vacation. I'll go back to New York, maybe even Italy." Figueiredo expressed concern for the Guerrero family. "That was their whole life," he said, gesturing toward the charred remains of the restaurant. Figueiredo, who owns another video store in Arcata and one in Fort Bragg, said he was not too concerned about his own future and promised to rebuild. "We'll be up and running as soon as we can. At least it will be a brand new building when we return."
Youthful spirit  Most people retire at age 65. Not Muriel Hayes. In 1978 she began a new career that lasted 22 years and ended with cake and punch at a reception earlier this month. Hayes, with her husky voice and New York accent, was the official greeter at the Arcata Chamber of Commerce and the California Welcome Center. "She had an incredible amount of patience, answering the same questions over and over again with the same enthusiasm to share all the wonderful things to see and do on the North Coast," said Jody Hansen, former executive director of the Arcata Chamber. "People visiting from New York and the East Coast loved hearing that familiar voice. We loved hearing her stories about Manhattan during World War II." (Her late husband served in Eisenhower's headquarters in Europe while Hayes worked in the financial district.) Hansen, who now is director of the Chamber of Commerce in Cupertino, said Hayes often fooled people about her age with her youthful spirit and "the best octogenarian skin around."
Fishing ban imposed Facing the collapse of an entire fishery, federal regulators have banned bottom fishing next year on most of the Continental Shelf stretching from Mexico to Canada. Meeting in Portland, Ore., last week, the Pacific Fisheries Management Council slashed quotas for several species of rockfish -- often called red snapper -- by as much as 80 percent. The council -- long criticized for favoring the fishing industry -- also designated for the first time no-fishing zones in the ocean depths where rockfish tend to concentrate. "It's no longer sufficient to regulate the kind of fish people can land. We have to regulate where they actually put their lines in the water," L.B. Boydstun, a council member and a California Department of Fish and Game official, told the press after the vote. While applauding the council, environmentalists complained that the ban has loopholes. For example, while fishermen will not be able trawl in the heart of the depth zones where bocaccio -- perhaps the most imperiled rockfish species -- lives, they will be able to fish around the edges. And restricted shrimp, prawn and flatfish trawling will be allowed to take place in the protected depth zones. "The council is talking about closures, but it's more like Swiss cheese," complained Mark Powell of the Ocean Conservancy, an environmental group. The new restrictions are likely to hit Humboldt Bay's struggling fishing industry hard. Pete Leipzig, executive director of the Eureka-based Fisherman's Marketing Association, said small fishermen could be put out of business. (The Journal wrote about the rockfish crisis in a July 18, 2002 cover story, Deep Trouble).
BSS building to be redesigned
In a major compromise, new Humboldt State University President Rollin Richmond has agreed to redesign -- at a cost of $1 million -- the controversial Behavioral and Social Sciences building. The planned building, designed previously for a cost of $1.1 million, has been a sore point between the university and the city, with residents contending that its height and size would make it an eyesore as well as a traffic problem. The city of Arcata even filed a lawsuit over it (the suit was recently dropped). The proposal is a clear indication that Richmond is giving top priority to improving the university's relations with the communities that surround it. The building's basic location, on top of the hill at 15th and Union streets, is not going to change. What will be different is the building itself. Instead of soaring five stories upward it will be more horizontal and will possibly spread further downhill -- perhaps even deeper underground -- than originally planned. The redesign will be tricky -- if the university changes the design too much it will have to undertake another expensive review of potential impacts. It's also not a done deal. Voters must approve a state education bond in November or there won't be any money to do the job.
Thron pulls political ad
Doug Thron, Green Party candidate for State Assembly, has decided to move his political advertisement from a billboard located just north of Eureka along Highway 101. The advertisement has been an embarrassment for Thron, whose campaign is based primarily on his environmental credentials. The billboard is located on a protected wetland inside Humboldt Bay National Wildlife Refuge. The U.S. Fish and Wildlife Service has been in a battle with Viacom Outdoor Products for illegally using federal land for its billboards. Thron maintains that he told Viacom officials he didn't want his ad placed on a billboard that stood in the refuge.
Sheriff Lewis retires
After 35 years in law enforcement, Humboldt County Sheriff Dennis Lewis has retired, four months early, from the position he has held since 1994. In a ceremony before the Humboldt County Board of Supervisors Tuesday, Chief Deputy Gary Philp, who beat Lewis in the March elections, was sworn in as the new Sheriff. The supervisors honored Lewis, presenting him with a commendation for his years of dedicated service. "I wouldn't be here today without my wife," Lewis said after receiving the commendation. "The commendation should go to her." Lewis' tenure as sheriff was not without controversy. In 1997, he ordered deputies to daub pepper spray on the eyelids of timber protestors. Last year, he refused a judge's order to return confiscated medical marijuana to a patient. Lewis began his career in 1968 as a police officer for the city of Arcata. Within five years he was promoted to lieutenant. In 1975 he was hired as an investigator with the Humboldt County District Attorney's office. He worked primarily on welfare fraud and child custody cases.
Arcata relents
Less will mean more for future events on Arcata's Plaza. On Sept. 4, the City Council removed a requirement that any event serving alcohol have two on-duty Arcata police officers patrolling the festivities. The city's decision to drop the requirement could potentially save event organizers upwards of $700 in costs. That could result in additional income for many of the nonprofits that hold fund-raising events on the Plaza. Event organizers hire their own private security when there will be alcohol served. And Arcata police officers already patrol the Plaza area as a regular part of their beat. The council also plans to hold a study session to determine if there are alternatives to fencing in the Plaza when alcohol-serving events are held.
Rancheria drops suit
Blue Lake Rancheria has dropped its lawsuit against the city of Blue Lake, after the two sides reached an agreement over the city's ability to impose water and sewer mitigations against the tribe. Under terms of the agreement, the city retains the right to address issues with the tribe, while the rancheria retains the right to contest any action by the city. The suit was filed when the tribe said the city didn't have the right to stop water and sewer service as a way to force the rancheria to address issues under an existing agreement. The agreement between the rancheria and the city called for a cooperative effort on providing water and sewer services to the tribe. The city had agreed to offer water and sewer services to the rancheria in return for user fees, connection fees, reimbursement for police services, improvements on Chartin Road and environmental review services.
A new Sphinx riddle by ANDREW EDWARDS WHAT IF ALL WE KNOW ABOUT ANCIENT history is wrong? What if, for example, civilization extended back before the last Ice Age?  If that kind of question gets your juices flowing, attend a lecture this Sunday by rogue scholar and Emmy Award winner John Anthony West and have your view of Egyptology turned on its head.
"Modern history says that the fount of ancient knowledge was the Greeks," West said in a phone interview this week from upstate New York. "But the Greeks were the first to admit that the source of wisdom in the ancient world was Egypt." To hear West tell it, it's not just the Egypt of the Pharaohs that built the pyramids, entombed mummys and deified cats. His view, known as the Symbolists Theory of Egyptology, postulates the existence of a civilization in Egypt much older than is commonly believed -- so old, in fact, that its origins extend back before the last Ice Age (about 13,000 years ago.) In ancient texts, "the Pharaohs themselves seem to say that their civilization started 36,000 years ago, and I'm inclined to agree." Humboldt State historian Louis Okin expressed skepticism, noting the absence of any other evidence for the existence of a civilization that old. He also said that the "cutting style" used to carve the Sphinx "fits nicely with the style of the Old Kingdom," which dates to 3,000 B.C. Direct study of the rocks making up the Sphinx cannot resolve the issue as radioactive dating of the material is impossible. West started out studying the work of the late R. A. Schwaller de Lubicz, the adopted son of a Lithuanian prince who developed the Symbolist theory in the early part of the 20th century. "I stumbled upon this little passage, `of course the great Sphinx has been weathered by water, not wind and sand,'" West said. "He didn't himself understand" the significance of that. But West, who has studied ancient Egypt for 35 years, understood. Knowing that there hasn't been significant rain in the area where the Sphinx is located since it became part of the Sahara desert 10,000 years ago, West reasoned that the Sphinx must have been created before then. With the work of Boston University geologist Robert Schoch backing him up, West went public and produced an Emmy-winning documentary on the subject `The Mystery of the Sphinx,' with Charleton Heston as host. It first aired in 1993. Since that success West, 70, has been working to spread the word about his revisionist view of ancient history. The lecture Sunday is a benefit for his Ancient Wisdom Foundation, which is attempting to raise money to send an expedition to Egypt to determine once and for all if the Sphinx was weathered by water. If the answer is yes, "then at least some of the [scholars in] opposition will have to say `okay, we were wrong,' and look into it." West said a determination that civilization in the Mediterranean region began much further in the past than anyone suspected would hold "immense implications." The Sept. 22 lecture is at 1:30 p.m. in the Wharfinger Building in Eureka. The price of admission is $18. Call 268-1973 for more information.
Speeders' beware
Speeding fines along the Highway 101 corridor between Eureka and Arcata will double beginning next year. The speed limit through the six-mile safety zone is 50 mph. Currently, exceeding the posted speed limit by up to 15 mph costs $86; going between 16 and 25 mph over the speed limit costs $145; and going faster than 26 mph over the speed limit costs $280. The stretch of highway between Eureka and Arcata has averaged 55 collisions per year and has had six fatalities since 1997, according to the state Department of Motor Vehicles.
Co-op workers unionize
For the first time, the 170 employees of the North Coast Co-op grocery stores have unionized. The workers voted last week to accept a contract with the United Food and Commercial Workers union, completing 10 months of negotiations begun soon after the employees voted to be represented last year. According to a press release from Co-op management, the union will provide employees with more stability through a better-paid, more experienced work force. The Co-op has stores in Arcata and Eureka.
Toilet tax
Registered voters in Ferndale will have the final word on whether the city should increase its business license fee from $48 to $90 a year to continue to have public restrooms along Main Street. City officials said the increase was necessary because they could not find funding for maintenance of the restrooms in the current city budget. The license fee is expected to generate $10,000 annually. The restrooms are used by visitors to Main Street and are an alternative to people seeking to use a business' facilities. However, in order for the proposal to take effect, it must receive the support of more than 50 percent of Ferndale's registered voters. Ballots are being mailed out and must be returned to City Hall before the Oct. 14 City Council meeting.
Labor's choices
The 10,000-member General Labor Council of Humboldt/Del Norte Counties, AFL-CIO, have thrown its support behind candidates Patty Berg for state Assembly, 1st District; Jill Geist, for the Humboldt County Board of Supervisors, 5th District, Peter LaVallee, for mayor of Eureka; and Mary Beth Wolford, for Eureka City Council, Ward 1. "These are the people who bothered to contact us and present their candidacy to us," said James A. Smith, president of the Humboldt County labor organization. The organization has also endorsed Wesley Chesbro, for state Senate, 2nd District; Congressman Mike Thompson, 1st Congressional District; and Gov. Gray Davis, who's running for a second term.
State grants awarded
Humboldt County will receive $35,000 in state planning grants for a feasibility study for an industrial park in Samoa. Another $35,000 will go toward a survey of exterior housing conditions and an evaluation of affordable housing in the region. The city of Arcata also received two $35,000 grants to help update a housing study and to look at the practicality of building an "ecolodge." The grants, to be used for planning and technical assistance on community projects, are part of the state's Community Development Block Grant Program to benefit low-income households.
Meet the chief
Every fourth Thursday of the month, Arcata Police Chief Chris Gallagher will hold office hours at Denny's, 3525 Janes Rd., to allow northside Arcata residents a chance to meet with him one-on-one . Southside residents will also get a chance to meet with Gallagher every second Thursday at Coffee Break, 700 Bayside Road. The meetings will begin at 7 a.m. and last one hour. Discussion will not be limited to police business, Gallagher said. The first meeting is Thursday, Sept. 26.
Woolley named to rail board
If you want a job done right, you've got to do it yourself. In that spirit, the Humboldt County Board of Supervisors last week elected 3rd District Supervisor John Woolley to the North Coast Railroad Authority. Woolley replaces Dan Opalach of Simpson Timber Co., who left due to time constraints. The authority has been struggling for years to get the rail line between Eureka and Healdsburg operational, but heretofore the supervisors had only played an advisory role. Woolley said that his addition takes their interest to the next level.
Election forums
KEET, the North Coast's public television station, will broadcast 12 call-in candidate forums for the November election. Each of the forums will be broadcast live at 7 p.m. on Channel 13. A phone number to call in and ask candidates questions will be provided during the forums. The first of 12 forums will air Sept. 26 and will feature Ben Shepherd and Jill Geist, candidates for the 5th District seat on the Humboldt County Board of Supervisors. The remaining election forum schedule is as follows: Del Norte County sheriff, Friday, Sept. 27 Eureka City Council, Ward 3, Thursday, Oct. 3 Del Norte County District Attorney, Friday, Oct. 4 Eureka City Council, Wards 1 and 5, Tuesday, Oct. 8 Eureka mayor, Thursday, Oct. 10 Crescent City Harbor District, Friday, Oct. 11 State Assembly, 1st District, Monday, Oct. 14 State Senate, 2nd District, Thursday, Oct. 17 Arcata City Council, Friday, Oct. 18 U.S. Representative, 1st District, Monday, Oct. 21 Eureka Utility Tax Measure, Tuesday, Oct. 22
Clean it up
Volunteers are needed to help remove trash and debris from Humboldt County beaches as part of the annual California Coastal Clean-Up. The event will be held Saturday from 9 a.m. to noon. The cleanup effort, which is statewide, has been dubbed the largest trash collection effort on the planet by the Guinness Book of Records. In 17 years, approximately 500,000 Californians have removed more than 7.5 million pounds of debris from the state's shoreline. About 40,000 people volunteer annually to clean up more than 400 sites statewide. Humboldt County's event is organized by the Northcoast Environmental Center. The center held its first all-volunteer clean-up day in 1985. Volunteers will be given plastic trash and recycling bags and gloves as they scour Humboldt County's shoreline to remove cigarette butts, beer bottles, fishing lines, tires and other debris. Participants will receive a commemorative mug for their efforts. For further information or to volunteer, call 822-6918.
Bank deal stalled
Humboldt Bancorp announced last Friday that the $34 million deal to sell its merchant bankcard division to iPayment Holdings Inc., in Tennessee, is not going as smoothly as expected. iPayment has refused to sign an amendment to the deal that would extend escrow past the Aug. 30 deadline. "We did not meet our original date to close the deal," said Humboldt Bancorp president Paul Ziegler. Ziegler did not elaborate on the reason for the hitch. Ziegler said he was anxious for the deal to go through as soon as possible as he wants the company to focus on its core banking operations without having to worry about the merchant bank card division.
Animal abuse trial
The operators of the Band of Mercy animal shelter will have their day in court. On Monday, Humboldt County Superior Court Judge Timothy Cissna declared that the case against Linda Sue Martin and Larry Decker Lawson was sufficient to justify a trial. Martin and Lawson are charged with felony animal abuse for mismanaging the Band of Mercy Animal Rescue. In July, it was discovered that nearly 100 animals -- mostly dogs and cats -- were being kept in filthy conditions. The decision came after testimony from Shannon Miranda of Miranda Rescue in Fortuna, and Deputy Doug Pool of the Humboldt County Sheriff's office, both of whom assisted in clearing out the Eureka house that Band of Mercy operated in. The next hearing is scheduled for Sept. 25. Meanwhile Martin and Lawson remain free on their own recognizance.
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