ON THE COVER North Coast Journal Weekly
Nov. 4, 2004


Blown off course: Prospective Balloon Track developer speaks. City Hall listens.]

On the cover: 1997 file photo of Eureka, courtesy of U.S. Fish and Wildlife.


story & photos by HANK SIMS

[Aerial view of Balloon Track]IT WAS EXPECTED TO BE A ROUTINE BIT OF BUSINESS FOR THE EUREKA CITY COUNCIL. At the council's meeting on Oct. 5, city staff were prepared to hire a consultant to help them develop a master plan for the most valuable piece of vacant land in the city limits -- the so-called "Balloon Track," a 34-acre plot on the western edge of Old Town, with frontage on Broadway and Waterfront Drive. The parcel, an old rail yard owned by Union Pacific, became the focus of intense controversy five years ago when Wal-Mart proposed to build a store on it.

The money for the master plan -- which was intended as a public effort to determine the future of the property -- was already in place. In November 2003, the county board that oversees the Headwaters Fund awarded the city a $45,000 grant to help fund it. The city was prepared to match that amount with $55,000 from its Redevelopment Agency. The feeling was that it would be money well spent. Even Eureka resident Aldo Bongio, a strident critic of government spending who spoke at the Oct. 5 meeting, said that it "isn't really a big amount."

But suddenly, Councilmember Jeff Leonard [photo below left] didn't agree. Despite the fact that the plan had been standing city policy for almost a year, re-confirmed by unanimous vote as recently as the previous meeting on Sept. 21, and despite the hundreds of hours of staff time spent writing grant applications and interviewing prospective consulting firms, Leonard had experienced a change of heart.

"With all apologies to council and staff, I'm not willing to go any farther forward down this particular road," he said. "A hundred thousand dollars is actually, in my mind, a lot to pay for a study."

Leonard said that unlike in other cases when the city had partnered with private interests, Union Pacific showed no interest in working on the master plan.

"Until I see someone out in the community who really thinks this study needs to be done to help them get this piece of property developed, I personally don't think we should go forward," he said.

[Photo of Jeff Leonard]With these concerns in mind, Leonard made a motion to put off hiring the consultant city staff had picked to lead the work on the plan. Councilmember Mike Jones quickly seconded Leonard's motion, and a vote was taken. With Councilmember Virginia Bass-Jackson's support, the contract with the consultant was delayed, for the time being.

Debate on whether to kill the study completely was scheduled for the next meeting on Oct. 19. In the meantime, Union Pacific had written the city to say that the company was in negotiations to sell the parcel to a developer, and the developer had made it known that he didn't want the city to do a master plan. He would prefer to do the plan on his own. If the city were to go forward, the letter implied, it could derail the deal. With the letter in hand, the council voted 4-1, with only Councilmember Chris Kerrigan dissenting, to send the Headwaters grant back and abandon the project.

A week after the vote was taken, Kerrigan was still reeling from the inexplicable reversal of the council's long-held position on the plan. "It was probably one of the most shocking incidents I've seen in my time on the City Council," he said. "It was, in my opinion, really, really unfortunate."

Deal in the works

The Balloon Track master plan had died, but one question remained: Why had Leonard, along with two of his fellow council members, changed his mind before the Oct. 5 meeting, before the city had received the letter from Union Pacific? What had changed?

In an interview last week, Leonard explained. Sometime in September, he said, he became aware that the property was close to changing hands. And he became aware the buyer would be Rob Arkley [photo below right] , the multimillionaire owner of Eureka's Security National Servicing Corp. who has, in recent years, taken a great interest in development in the city. And Leonard knew that Arkley wanted the Balloon Track master plan killed.

[photo of Rob Arkley Jr.]Reached at his office Monday, Arkley confirmed this. He spoke of the duplicity of local government spending $100,000 on a study at the same time it was asking voters to pass Measure L, a 1 percent sales tax increase. He reaffirmed his ideological commitment to private property rights, putting his position in the bluntest possible terms.

"If you're me, do you really care what the city thinks?" he said. "I don't want to have an alternate plan out there because it might not be what I want."

History of conflict

City Manager Dave Tyson [photo below left] said he took the change in stride. City staff members are there to carry out the will of the council, he said. If the council abandons one policy in favor of another, the staff switches gears along with it.

Regardless of council strategy, Tyson said, it is hard to overstate the importance of the parcel when considering the future of Eureka.

"It's a fairly significant piece of property for our community," he said. "It's largely a gateway for the Old Town/downtown area, and for our harbor."

Currently home to nothing more than weeds, rusted railroad cars and toxic waste, the Balloon Track was once a vital part of the city's infrastructure. It was the main yard for the Northwestern Pacific, the rail line that linked Humboldt County with the San Francisco Bay Area. Petroleum companies used the site to cache their automobile and diesel fuel until it could be sold to customers. But with the slow, steady demise of the railroad, along with serious problems with groundwater contamination, the property became less and less useful over the years. Eventually, it was almost completely abandoned.

[Photo of Dave Tyson]The parcel sprang back into the forefront of public consciousness when Union Pacific proposed to sell it to agents representing Wal-Mart. In meetings with members of the City Council at the time, the company made it known that it wished to put one of its mega-stores on the site. According to Tyson, the majority of council members were tepid.

Instead of going through normal channels, where the company was looking at a potential defeat on the City Council level, Wal-Mart and its proponents decided to put the issue directly to the city's voters. They sponsored a ballot initiative -- Measure J -- that would have given the retailer the right to build on the site through a rezoning. A bitter campaign ensued, with the company backing an expensive, heavy-handed campaign to promote the initiative. Some residents, concerned about the company's negative effect of the local economy and claiming that Wal-Mart would be a poor use of a prime piece of real estate, formed an opposition group. When the issue came to a head at a special election in August 1999, Wal-Mart was defeated by a wide margin, 61 to 39 percent.

As Tyson noted, lifelong friendships were severed over the issue. The public was bitterly divided, each side suspicious of the other's motives. It was at that point, Tyson said, that the city decided it should be more forward-looking when it came to future development on the site.

"The master plan has been on our list of things to do probably since the Wal-Mart issue, the Measure J issue, back in the late `90s," he said. "Since that time, it's been the feeling of the city and many people in the city, residents here, that we ought to look at master-planning that site. In that process, we would look at what types of uses would the community want to see on that site. Would we want manufacturing, would we want more service/commercial -- retail. Do we want light industrial? Do we want parks? What do we want?"

The master plan was supposed to find the answers. City government holds what Tyson called the "trump card" over future development on the Balloon Track, as it does on all property in its jurisdiction, through its ability to zone properties for different types of development. The Balloon Track is currently zoned for "public" use, meaning that only public facilities such as schools and other types of government buildings can be placed there.

[old train cars on Balloon Track property]The master plan -- which would have functioned as a miniature version of the city's General Plan -- would have studied physical impediments to development, such as water and soil toxicity and protected wetlands, as well as impacts on the area's traffic. But it also would have listed what specific types of development the community wanted to see on the site. The zoning will have to be changed from its current "public" status if any new, private development is to occur at the site -- the master plan would have recommended what to change it to, after an extensive public outreach effort gathered enough community input on the recommendation.

The way Tyson understood it, that would have protected the community, but it would have protected the developer, too. If the public were to endorse a vision for the site, it would make it difficult for that same public to oppose a project that conformed to the recommendations.

"That's largely why we were thinking it was a good idea," he said. "We were looking at it as a defense mechanism, so we wouldn't have to go through this public process that was very divisive. Had there been this process in place, then we probably wouldn't have had the type of Wal-Mart fight in the community."

Waste of money?

Last week, Leonard recounted how he had come to change his mind about the wisdom of continuing with the Balloon Track master plan. A few months ago, when the county's various political factions were embroiled in the fight over the county's general plan update, a controversial article appeared in the Times-Standard. It told of a new study by the Workforce Investment Board that called the idea that young people were leaving the county in mass numbers -- a central tenet of those who sought to accelerate development -- a "myth."

By Leonard's account, the article had so upset Arkley and his colleagues that they called a meeting of some of the county's movers and shakers at Security National's headquarters on Fifth Street. Leonard was among the invitees.

"We ended up just talking about jobs and economic development -- the whole nine yards," he recalled. "During that meeting, I think, Rob said, `Well I'm going to be buying the Balloon Track soon. We've almost finished the deal,' or something along those lines. I think that's the first time I actually heard it from him, that in fact he was going to buy it.

[view of drainage area with pampas grass, on Balloon Track property]"At some other point, the comment [from Arkley] came out, `What's the city doing with this Balloon Track master plan? It's a private piece of property! It's going to get privately developed. What are you guys doing spending a bunch of money on it? It's wasted money.' And then that launched into, `Here's what the Headwaters Fund ought to do...'

"At that point, I certainly knew -- OK, he's looking at buying it. He's not going to want to participate with this stage of the process. He has said on many occasions, `I don't use redevelopment money, I don't use economic development money.' OK -- he doesn't have to. So, again, it just seemed to me like, `How come we're taking Headwaters money and redevelopment money to put together a study that the person who has the property isn't going to use? It doesn't do us any good.'

Leonard said that he always felt that the primary purpose of the master plan would be to get developers interested in the site. If the community could put forward uses of the property that it would find acceptable, potential developers would have some assurance that they could build at the site without inspiring a Wal-Mart-style battle in the community. But if Arkley was close to closing escrow on the property, Leonard said, perhaps the city could find better uses for its money than pre-determining what Arkley could build.

"I'm not going to say that that master plan wouldn't have helped in that decision -- it might have helped," he said. "Would it have been $100,000 worth of help? No. I don't think so. I don't know if it's worth $100,000, given the way the situation has developed in the meantime."

The next 'big fight'?

Minus the master plan, the Balloon Track project will go forward like any other. Assuming Arkley's deal with Union Pacific goes through, he will put forth a proposal to the city's Planning Commission and then to the City Council. (Because the property lies near the bay, it will also have to be approved by the California Coastal Commission.) At every point the public will have the opportunity to offer comment and critique, as Leonard takes pains to emphasize. At the city level, council members will give their thumbs-up or thumbs-down to the project.

[oil barrels, refuse, pampas grass on Balloon Track property]What won't happen is a preemptive community dialogue aimed at reaching consensus before it goes before the decision-makers. Mayor Peter La Vallee -- who, like everyone on the council, said that he is eager to see the property developed -- sees the "potential for another public explosion," along the lines of the Wal-Mart debate, which made national headlines for its rancor and bitterness.

"Rob has been interested in that property, and I think that's wonderful," he said. "But the issue is, are we going to have a public, forward-thinking debate on this, or are we going to have a big fight like last time?"

If such a fight were to break out, Arkley would certainly have the advantage going in. In recent years, he has demonstrated a willingness to go to the mat for his ideas. He spent over half a million dollars this election season in an effort to unseat North Dakota Senator Tom Daschle, the leader of the Congress's Democratic minority. He and his family have given over $100,000 to the Republican National Committee and George Bush's campaign. Locally, he put his weight behind DA Paul Gallegos and started his own newspaper, the Eureka Reporter, because he disapproved of the Times-Standard's coverage. (On Monday, he disclaimed any knowledge of the mysterious "Eureka Coalition for Jobs," which flooded the airwaves and local mailboxes with anti-Kerrigan ads over the weekend.) He is not an ordinary developer.

For his part, Arkley declined to specify what sort of plans he had for the site, except to say that it would be something that would benefit the area's economic development and would assist in the effort to provide local opportunities for the area's high-school graduates. He said that these were the same motivations that prompted him, in 2000, to offer to donate up to $3 million to the city in order to finance a public buyout of the property. (The city turned down the offer, citing the unknown costs of toxic clean-up at the site.)

In the event that anyone has any plans to bring the Balloon Track master plan back, Arkley wished to disabuse them of that folly.

"I'm not willing to sit at the table with anybody until I decide what to do with the land," he said. "If they think that taxpayer money is well spent doing that, they should think again."


MAY 27, 1999: COVER STORY: Does Wal-Mart have a plan B?

JULY 1, 1999: IN THE NEWS: Wal-Mart debate heats up

SEPT. 2, 1999: IN THE NEWS: Wal-Mart no longer interested

OCT. 28, 1999: IN THE NEWS: Balloon tract may be park

JULY 27, 2000: IN THE NEWS: Council reverses reversal

MAY 17, 2001: IN THE NEWS: Balloon tract to be cleaned

OCT. 1, 2001: COVER STORY: Finding beauty in the blight: A fresh look at the Balloon Track Tract

MAY 29, 2003: COVER STORY: Going nowhere: Has the Northwestern Pacific Railroad reached the end of the line?

NOV. 27, 2003: IN THE NEWS: Doling it out: Six names for $300,000 in Headwaters money




Comments? Write a letter!

North Coast Journal banner

© Copyright 2004, North Coast Journal, Inc.