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Subdividing Humboldt

How Bob McKee remade SoHum and bought himself a decade-long lawsuit

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Bob McKee doesn't visit his Tooby Ranch property very often, but the last time he drove out there, the ranch's grasslands — interspersed with black oaks, white oaks and poppies — were remarkably green for late May. Deer skittered across the dirt and the occasional vulture floated overhead. From a high point on what was once a 13,000-acre ranch, he gazed over the jumbled King Range and a narrow, navy strip of the Pacific Ocean barely visible beyond. Below, to the south, the eastern branch of the Eel River's south fork snaked by.

When McKee drove his dusty red Dodge Ram up the hill that day, he was awaiting a ruling in a long trial over accusations that he illegally divided the land after purchasing it in 2000. His 1,000-acre parcel is one of more than 40 he carved out of the sprawling hillside ranch that sits along Alderpoint Road east of Redway and Garberville.

With that ruling now issued — but not yet finalized — the lawsuit that has occupied McKee's thoughts, shelves and filing cabinets for more than a decade appears to be nearly over.

It's hard to overstate the influence McKee has had on Southern Humboldt County. He's been actively shaping the landscape and communities around Petrolia, Whitethorn, Redway and other rural areas for more than 50 years through land purchases and sales. He's bought more than 100 properties in that time and subdivided almost all of them, selling approximately 800 parcels.

For many people in the county, he's an embattled hero who cares about community and land, and who gave fleeing city dwellers a chance to live their pastoral dreams. To others, he's a serial subdivider out for personal gain who helped create a culture of isolated, resource-gobbling property owners — many of them marijuana growers — whose first thoughts are rarely about the environment.

Humboldt County's decade-long lawsuit against McKee highlighted that divide, as well as the county's fight for one of its few protections for resource lands.

 

McKee's an affable, bearded man who's remarkably spry — though his knees are giving him troubles. At 84 years old, he lives with his wife Valery near Whitethorn, on land inherited from his father, who inherited it from his father before that.

McKee's grandfather mined gold in Mexico after the Civil War, then came to Humboldt County and bought 640 acres in Whitethorn in 1878. When he died in a wagon accident, the property was split up among his five children. McKee's father would later buy an adjacent piece of land, too.

When McKee was just 1 ½, his mother died in childbirth, and his father died of spinal meningitis a few years later. McKee, his sister and half-sister moved in with his grandmother in Eureka, where McKee attended grade school. He often visited southern Humboldt on summer break.

After a stint in the Navy, he took advantage of his GI Bill benefits and attended Humboldt State College, where he met his future wife Valery — the daughter of one of his favorite professors.

Despite a rocky academic start (he loved school; didn't care so much for grades), McKee graduated 6 ½ years later, after studying English literature, art and business administration. While in college he worked nights at Humboldt Land Title Company, printing and sorting the negatives of any land-related documents photographed that day at the county courthouse. Poring over these documents was his first lesson on patent parcels, subdivisions and land transfers, he said.

In 1957, Bob and Valery moved to the 160-acre homestead in Whitethorn that he inherited from his dad. There, he started a carpentry business and then taught for six years in Whitethorn and Ettersburg before returning to carpentry. In 1963 bought two properties — five or six acres in Whale Gulch and 20 acres in Bear Creek. Land was cheap then, and McKee said he invested only the small savings he'd put aside while teaching, although he couldn't remember exactly how much he put down for either property. He sold both for a profit within a few years, after building houses on them.

Several years later, in 1966 or 1967, McKee purchased his first large piece of land — 500 acres in Whitethorn. The asking price? $50,000. The land had title defects, McKee recalled, and he bought it from a Noyo Harbor man who asked just $250 down and collected no interest in the three years it took McKee to subdivide and sell it.

McKee, in his steady, gravelly voice, said other land speculators at the time just bought property and held it, but didn't "improve" it by building or subdividing. "I thought, 'Jesus — you oughta at least do something to it.'" McKee said bank financing was difficult to come by for rural Southern Humboldt, which meant lots of deals with seller financing. Demand for rural homesteads was high enough, McKee said, that he often sold parcels before or soon after he divided them. He couldn't estimate the most land he'd held at any one point.

Others followed suit. Among those who emulated the McKee model, sometimes including the controversial reliance on old federal parcel lines, was Ken Bareilles, a Eureka attorney and friend of McKee's, who began subdividing properties in the early 1970s. "Bob, to my knowledge, was the first person who knew we could sell land grant patents," said Bareilles, who was using the practice by the early 1980s.

Bareilles has had his own problems with the county. He pleaded guilty to illegally subdividing a ranch on Titlow Hill in the 1980s. In that case, Bareilles violated the state's Subdivision Map Act, but did not use patent parcels to divide the land.

McKee specialized in idiosyncratic land needs. If someone needed an easement or wanted to extend the borders of existing property, he would try to put together a deal. "Everything I bought seemed to have some little story to it," he recalled, and he'd ask himself every time, "'How in the world am I going to pull this off?'"

Michael Evenson, who helped McKee subdivide the Fearrin Ranch in Briceland in exchange for a parcel, said it was always a "shoestring operation" with McKee — though he excelled in working with people. "It's part libertarian, I guess, and part trust in people. That's really key to Bob's character."

 

By the mid-60s, Southern Humboldt was beginning to change, in large part thanks to McKee's subdivisions. The back-to-the-land movement was gaining momentum, and McKee, despite his rural roots, wasn't clinging to a good ol' boy vision.

"He was not redneck-y," said Judy Evenson, who moved to the county with her then-husband Michael in 1969. "We, being newbies, were warmly welcomed into their family circle." To most of the locals back then, she said, "we were 'them darn hippies.'

"It was a big cultural shift not only for ourselves, who came up here very idealistically and raised families and raised farms, but it was also a big cultural shift for the people who were already here."

Because of his success and enthusiasm for splitting large pieces of land into affordable homesteads, McKee became the person to see if you were interested in buying land.

"He was very much aware of how to build an economy from the ground up," said Michael Evenson, who now runs a ranch in Petrolia. "If they wanted to buy land but didn't have any money, he'd say, 'That's OK; you can work it off.'"

McKee said he sold land to affluent professors from Harvard and Berkeley. He also sold land, for $25 down and $25 a month, to welfare recipients.

"The whole range — people who were very well off and people who had nothing," McKee said. "They became neighbors and friends."

Gary Graham Hughes, the executive director of the Environmental Protection Information Center (EPIC), grew up in Southern Humboldt after his dad moved there in the early 1970s.

"In many ways, Bob McKee was seen as the Gandalf of the back-to-the-land movement, in terms of people getting a piece of land," Hughes said. And through the 1980s, Hughes said, that was often a good thing. "There's no question that a lot of these back-to-the-landers began to inhabit very seriously degraded lands."

Poor timber and cattle practices during the previous century had left unstable, eroded hillsides and damaged watersheds, Hughes said, and many new landowners harbored a genuine sense of stewardship and conservation.

The now-powerful marijuana industry was born out of that back-to-the-land movement, as was the Mateel Community Center, KMUD and other community groups. Today, Southern Humboldt is inundated with growers — an industry that by many estimates yields hundreds of millions of dollars a year. In mid-May, as McKee steered his truck up the winding Alderpoint Road east toward Tooby Ranch, the road was heavily trafficked with trucks hauling water tanks (three at a time, in one case), earth movers and other equipment. "Wow — hell of a piping project going on there," McKee remarked at one passing pickup loaded with PVC tubes.

EPIC's Hughes said the "recent exponential explosion" in marijuana growing is threatening the earlier wave of restoration.

By most accounts, the marijuana industry grew relatively steadily until the late 1980s, then leveled off through the '90s. Many of the early idealists who came to save the ancient redwoods were replaced by people gobbling up land from timber companies and developers to establish illicit cannabis farms.

"Their reasons for coming here were more financial than philosophical," Hughes said. "It's a very corrosive influence."

For his part, McKee doesn't deny that people buy land in Southern Humboldt to grow marijuana. "I'm not contributing to that more than any of the real estate people in town that are selling land. That is part of what's happening."

He says he doesn't condone marijuana growing, but tolerates it — it's just part of the community, he says. "This is where I live."

 

Several factions have been struggling over the future of the county's resource lands. Homestead owners, many operating marijuana farms, defend their desire to live off the land, pointing out positive elements of the community they've helped build in southern Humboldt.

Some long-established ranchers and farmers, though, say their livelihoods are threatened by splitting up large properties, ones big enough to make legitimate agricultural production cost effective.

Environmentalists say large parcels make stewardship easier and more reliable, and can curtail some of the threats of the modern marijuana industry, the mammal poisonings, water diversions, diesel spills and erosion-inducing earth moving.

"In a way we're running an experiment with no controls," said Friends of the Eel River Executive Director Scott Greacen. When he first took a job at Friends of the Eel River, he called McKee to ask for his perspective on homesteaders. "He told me straight off — with no apparent intent to deceive — that he was convinced people he sold land treated it better than the people they bought it from. He made a very compelling case that this was true. And there's no question that can be true, and clearly it is true in some cases. The problem is, when you look at the numbers, they tell a different picture."

Scott Downie, a senior environmental scientist supervisor for the California Department of Fish and Wildlife, said it's simple math: More subdivision means more people; more people means more roads, water diversion, construction and pollution, particularly from marijuana growers, who often grade land to install greenhouses.

A 2004 Fish and Wildlife report on salmon habitat pointed out these harmful effects of subdivision, and said that tax breaks for larger agricultural parcels can be a tool to "preserve a rural landscape for more effective recovery for coho salmon."

Surprisingly, given timber companies' less than environment-friendly history, large tracts of timber-company lands are better for coho salmon than watersheds that have been divided, Greacen said.

"It's hard going for a long-time, hard-core timber fighter like me to say the timber companies are doing a good job," Greacen said. But modern practices, enforceable regulations and simply fewer owners to keep track of makes the county's oversight much simpler.

 

The Tooby Ranch lawsuit shows how fiercely the county wished to defend one of its protections for resource lands — the Williamson Act.

In 1965, the state Legislature passed Assemblyman John Williamson's California Land Conservation Act (known since then as the Williamson Act). The law was enacted as an incentive to preserve rural farmland, which was being gobbled up by urban and suburban development. Populations were blooming in areas with prime ag land, and the state hoped to slow subdivisions, sales and non-agricultural development there.

The Williamson Act — administered by counties — made it possible for landowners to get hefty tax breaks for maintaining land in at least 50 percent agricultural production. A county reviews the property owned by Williamson Act applicants and identifies eligible land. The county and the owner then enter a contract that renews every year unless agricultural production is inadequate or either side opts not to renew. In the case of a nonrenewal, the property taxes on the land gradually return to normal over 10 years, but all of the restrictions — including the required agricultural production, the minimum parcel transfer size and the terms of the contract — remain in place until the 10 years is up.

In 1972, the state began replacing money that counties were losing as a result of the tax breaks. Between 1972 and 2010, when this subvention funding ended, the state paid $876 million to local governments, an average of $23 million a year, to help ease the tax sting. Fifty-three of California's 58 counties had adopted a Williamson Act program by 2009.

Proponents say the Williamson Act is a boon for counties and farmers: Ag land is preserved and agriculture producers get a boost.

But pressure from the state department of conservation, followed by the Tooby Ranch lawsuit and the loss of state income, have forced the county to look closely over the last decade at how it administers the Williamson Act.

 

When McKee bought the 13,000-acre Tooby Ranch in 2000, he had at least six purchasers lined up. He had hoped to divide the property into more than 40 parcels.

Though McKee said it was the first land he'd ever bought that was under a Williamson Act contract, he was aware of the ag production requirements. He also knew that Tooby Ranch was under a Williamson Act contract dating from 1977, which, at that time, limited the minimum parcel transfer size to 160 acres.

He asked the former owners to remove their cattle operation — he said — so that he could improve the roads and water troughs for future grazing.

McKee's removal of cattle on the Tooby Ranch, along with suspicions that the property was being divided for residential use, raised a red flag for the county, according to court documents. In response to county questions, McKee wrote in 2001 that the ranch would lie fallow until the new owners decided what to do with the land. By 2002 McKee had sold the parcels, and court documents show one of the 30-plus purchasers began running cattle again on a smaller, 360-acre piece of the formerly sprawling ranch.

The county sued McKee on Dec. 31, 2002, saying he violated the Williamson Act by removing cattle and taking the land out of production. Later the county added to its suit that McKee had further violated the act by dividing the ranch into parcels too small by Williamson Act standards. That would become the most contentious portion of the lawsuit.

In 2008, a state appellate court ruled that McKee had indeed sold undersized parcels. Though he abided by the 160-acre minimum governing transfers at the time of Tooby's original Williamson Act contract in 1977, the county had later raised the minimum to 600 acres. If a county changes how it administers the program, the court ruled, a Williamson Act contract holder can accept the changes or get out of the program. McKee never asked for a non-renewal.

But the appellate court decision didn't end the case. After a brief attempt at settlement, it was handed back to the Humboldt County court to decide if and how McKee's violations would be resolved.

The county called for nullification of the deeds, asking Humboldt County Superior Court Judge Dale Reinholtsen to force McKee to purchase back the 44 properties he had sold. The defense said that was extreme. By now, the defense lawyers argued, there were homesteads, ranches, vineyards and other infrastructure that purchasers had invested in and relied upon. "We've got people out there that have been entitled to this property for a dozen years," McKee said.

Reinholtsen issued a ruling in June calling for McKee to pay nearly $200,000 in fines for violating the Williamson Act. In his ruling, Reinholtsen wrote that "both sides acted reasonably but imperfectly" and said McKee could be credited for believing he was following the law when he divided the land.

Transferring the parcels carried the stiffest penalty under Judge Reinholtsen's ruling: $149,000 in fines both under Humboldt County code and the state Unfair Competition Law. Reinholtsen issued another $50,000 in fines for McKee's ceasing of grazing on the property.

In his ruling, Judge Reinholtsen rejected accusations from both the county and McKee's attorneys. "The evidence did not support the notion that he is a victim of local government run amok," Reinholtsen wrote. "At the same time, he cannot be reduced to the caricature of a greedy land developer who flouts the law in the careless pursuit of profits."

No deed nullifications, no buying back of parcels, no razing of homes. So, despite the county winning its lawsuit, McKee's attorneys were pleased with the penalty, saying it amounted to far less than the county had asked for.

Over the phone last week, McKee gave a sort-of dejected chuckle before saying, "Well, I'm basically OK with it. I don't know what could make me really happy about the end of this lawsuit that never should have even started. I'm glad that we can see the end of it though. I can't say I'm thrilled about it."

Both county attorneys and McKee's attorneys filed objections to the tentative ruling, and a final judgment is expected soon.

McKee's attorney objected to the portion of the ruling that found McKee violated the Williamson Act by ceasing cattle grazing between 2000 and 2002.

The county called for increased penalties for the transfer of properties, and asked Judge Reinholtsen to award the county its costs in pursuing the lawsuit. The county also called for McKee and the property owners to pay back the nearly $650,000 reduction in taxes that they had enjoyed under the Williamson Act.

According to County Assessor Mari Wilson, that figure represents the savings for all the Tooby Ranch parcels between 2001 and 2011.

McKee has been responsible for paying taxes for all of the Tooby Ranch properties that he sold between 2000 and 2002 because the county assessor's office hasn't recognized the transfers. For the first few years, McKee says he paid them. "I just finally quit and told them I'm not going to do this anymore. You need to assess the record owner," McKee said.

Since then, many of the Tooby Ranch properties have been delinquent on taxes. Some of the purchasers, wanting to remain in compliance, have paid taxes on their properties. But sorting out back payments and refunds is not going to be simple. When the county recognizes the parcels, said County Auditor/Controller Joe Mellett, the assessor's office will establish the values of those properties and tax them accordingly.

"This is going to be a horrible mess to straighten out," McKee said.

Other issues remain. While the county's issues with McKee appear nearly over, he was only the first and most prominent of the 30-plus defendants in the lawsuit. Some ceased agricultural production or further divided parcels in violation of the Williamson Act, said county attorney Josh Cohen. Others built homes or other structures on their properties, which the county maintains violates the Williamson Act.

 

It's unclear exactly how much has been spent on either side of the lawsuit, but one thing's for certain: It was a lot. McKee said he's spent more than $6 million fighting the suit. He said he's had to put up his property — about 1,000 acres he owns on the Tooby Ranch and 400 acres in Whitethorn, where he lives — as backing to finance his attorney fees.

McKee had taken out a $3 million bank loan to purchase the Tooby Ranch — only the second time, he said, that he'd gotten a bank loan to pay for land. He bought the ranch for $6.7 million and sold it to its multiple new owners for more than $10 million — a profit of more than $3 million, according to court documents.

McKee is mostly cool-tempered when he's talking about the lawsuit that's dominated the last decade of his life, although he grumbles about the county "pissing its money away" on the lawsuit. And he declines to talk about his own finances. Despite a successful career as a developer, he insists he never bought land with much money of his own.

He says the Tooby ranch would have been "very profitable," but those profits all went into his attorney's fees. Walking around the mill at Whitethorn Construction, he lamented the costs and time spent on the lawsuit that he would have put into that business. He blames the county but admits his own stubbornness, too, contributed to the lengthy lawsuit. "I didn't want to cave in, no, no."

Asked to estimate his current worth, he sounds bitter.

"Are they trying to say I made out like a bandit on this piece of real estate?" he said. "I think it's none of their goddamn business if you ask me."

It's hard to tell if he's declining to discuss his own wealth or any possible financial troubles, although he insists he's not a wealthy man.

For its part, the county has spent at least $3 million on outside attorneys, according to public records that were released following a separate lawsuit filed by the developer-friendly Humboldt Coalition for Property Rights. That doesn't include the amount of time that staff spent on the lawsuit over 10 years, which the county does not keep detailed records of.

 

During the time of the lawsuit, political tides were changing in the county. Spurred by the Tooby Ranch and other county land use lawsuits, the Humboldt Coalition for Property Rights was born (see "HumCPR Rising," March 28). The group and its allies formed the most cohesive bloc of development-friendly landowners that the county had seen. And it was powerful. Four of five county supervisors and two planning commissioners have ties to the group. Last year, supervisors gutted planning director Kirk Girard's department after years of pushing the Tooby Ranch lawsuit and battling with property rights advocates. He resigned shortly after, taking a job with Santa Clara County.

Environmental consultant Sungnome Madrone is no stranger to conflicts with developers — he's been at odds with former HumCPR treasurer and current Planning Commissioner Bob Morris over a development in Trinidad for years. Madrone's not happy with the ascendance of developer-friendly politics in the county but said at least politicians' intentions are getting more apparent. "This board is getting radical. I love it — they're exposing themselves."

Could that developer-friendly political shift threaten the Williamson Act's effectiveness in Humboldt County?

Tasha McKee, Bob McKee's daughter and the executive director of the land trust nonprofit Sanctuary Forest, said it's an opportunity to ease the minimum acreage allowable under the Williamson Act. "If ranchlands are going to be sold — and they are — then we need to be really planning and looking at how we are going to keep those in agricultural production," Tasha said.

She says sustainable farms can be run on smaller pieces of land than when the 600-acre guideline was established in 1978. "Back then on 600 acres, a family could make a living with just cows. That's just not true today. Even on 13,000 acres you can't just run cows with California land prices so high."

But many ranchers and farmers disagree. They say that the Williamson Act's tax breaks and its minimum parcel size are crucial for ranchers and small counties.

"One hundred and sixty acres doesn't make a cattle ranch," said farmer John LaBoyteaux, chairman of an ad hoc committee the county formed last year to look into the Williamson Act. "It never did."

He pointed to Judge Reinholtsen's ruling, which said that leasing of small parcels is less economically viable than owning a large ranch property (McKee's attorneys objected to this portion of Reinholtsen's ruling, saying there is no requirement for economic viability under the Williamson Act, just the production of commodities).

LaBoyteaux said he hasn't heard much talk of lowering a minimum parcel size for Williamson Act land. "I don't think that the ag community would support a change. I don't think that my committee would support a change."

The county loses approximately $200,000 a year in tax income and spends thousands more administering the Williamson Act.

The state also takes a hit on property taxes. County Auditor Joe Mellett said 67 percent of collected property taxes go to schools, which the state would otherwise be required to fund. The state stands to miss out on at least twice what the county loses from tax breaks.

Still, the ad hoc committee has concluded that Williamson Act tax breaks are worth keeping here because they support a thriving livestock industry (grossing $36 million in 2011) and help prevent land sales to marijuana growers and speculators.

Land under a Williamson Act contract may be cheap enough for ranchers to buy it in large tracts. "If the land is sold at its ag value — and it's good grazing land — there's every chance that a cattle rancher will buy it," LaBoyteaux said. That changes, he said, when the land is split up and sold at its "marijuana value."

On top of that, the committee said in a draft report that's expected to go to supervisors in August, Williamson Act tax breaks keep down the costs for roads, fire protection and other infrastructure needed for more residential development.

McKee has not been the only property owner to violate a Williamson Act contract with Humboldt County. According to county Planner Martha Spencer, five of the 156 preserves, besides Tooby Ranch, have been found out of compliance because they dropped ag production or subdivided land. Environmental consultant Sungnome Madrone says revisiting the Williamson Act, and Timber Production Zone rules, would be an opportunity to expand the incentive side of conservation. If the county could work in stewardship as an incentive, it would be less costly than enforcement and punishment.

But Friends of the Eel River Director Scott Greacen said focusing on incentives isn't enough. He called it "philosophically problematic" for counties to have to pay landowners to keep them from wrecking the environment.

 

McKee steers comfortably along the back roads of the Tooby Ranch, some steep and dusty, others with tall grass between the wheel tracks. As he hops out to open heavy metal gates there's a glow of pride and boyish excitement about him. He points out roads he's graded and culverts he's added. He insists that all 13,000 acres of the ranch are in better shape now than when he bought it.

McKee says his subdividing days are over, though. His knee problems, combined with Humboldt County's rocky slopes, make it too hard for him to traverse the land like he used to. "Maybe I could go to a part of the United States that's all flat," he joked.

He is proud of the community that he helped create, flaws and all. Friends of the Eel River's Scott Greacen praised McKee's honesty and conviction, but was less convinced that a hands-off approach to community and environment was beneficial in the long run.

"We all tell ourselves stories — that what we want and what might be good for the world are the same thing."

With the specter of legalization looming, it's anyone's guess what will happen to the county's pot industry, the businesses and homesteads it supports, the land deals it fuels and the watersheds it threatens. One thing is certain: Bob McKee will always be a chapter in the story.

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