U.S., State Offer ‘Basket’ of Assets for Redwoods

Showing their hand in the high-stakes negotiations over the Headwaters Forest, the Clinton administration and the state Thursday offered to swap assets including prime oil and gas leases in Kern County and 10,000 acres of national forest in the Sierra for 3,500 acres of ancient coastal redwoods.

The federal offer for the North Coast forest includes other national forest land in California and 30 acres of real estate in Laguna Niguel adjacent to the Chet Holifield Federal Office Building. The state’s companion list of offerings includes the 9,000-acre LaTour State Forest in Shasta County, San Francisco’s Transbay Bus Terminal, an Inglewood office building and property around the state.

The state and federal offers represent the first step in carrying out a controversial agreement to pay Texas financier Charles Hurwitz the equivalent of $300 million in return for a portion of the last significant expanse of virgin redwood still in private hands.

Deputy Interior Secretary John Garamendi said that the offers represent “a market basket” from which Hurwitz could choose what is most appealing. In all, about 7,500 acres of the Headwaters Forest, including some less valuable second-growth timber, would become part of a public preserve as a result of the deal.

“We have come up with a definitive list of assets that we expect will satisfy him [Hurwitz],” said Garamendi. But in the course of a press conference, Garamendi also said he anticipated “considerable debate” over the federal assets being offered. Some properties might be added or subtracted from the list, he said.

Douglas P. Wheeler, California’s secretary for resources, said the properties offered by the state were worth at least $200 million and were on a list of surplus assets that “no longer serve a public purpose” and would have been available for sale. He said he had not discussed any of the properties with Hurwitz.

Even if Hurwitz agrees to the offers, both Congress and the Legislature will have to sign off on the deal.

“The people will have to decide,” Wheeler said when asked whether a slice of the Headwaters is worth giving up so much property.

The deal has little support among the environmental groups that are behind the decade-long struggle to save the Headwaters. They argue that the public should be getting a larger piece of the forest, in particular 3,000 additional acres of ancient redwoods. Moreover, they contend that Hurwitz ought to be forced to give up the entire forest in order to settle two lawsuits pending against him over the $1.6-billion failure of a Texas thrift in 1988.

Hurwitz’s company, Houston-based Maxxam Inc., responded to the federal offer Thursday with a terse statement saying Garamendi’s property list had been received and would be reviewed. The statement suggested displeasure that the list contained no appraised values.

“We’re not in a position to respond until we get a more complete package that includes appraisals,” said Maxxam spokesman Robert W. Irelan.

The offer includes federal property with producing oil and gas wells in Kern County, the county responsible for about 55% of the state’s onshore oil production. Garamendi estimated the value of the property at about $200 million.

In addition, Garamendi said the federal government is offering Hurwitz 2,967 acres of second-growth forest land in Humboldt, Mendocino and Trinity counties in Northern California.

As part of the complex deal, Hurwitz would get another 1,755 acres of privately owned Humboldt County forest land next to the Headwaters. The federal government would compensate the owner of that land with 10,000 acres scattered across the Sierra in four national forests: Plumas, Tahoe, Stanislaus and El Dorado.

Garamendi said the acreage did not contain old-growth timber or federally protected habitat of the California spotted owl.

“We are not creating one environmental problem in order to solve another,” he said.

The Headwaters became an environmental cause celebre in 1986 when Hurwitz, with the help of junk bond impresario Michael Milken, engineered a hostile takeover of Pacific Lumber Co., the firm that owned the forest for more than a century.

To pay off the bonds issued to gain control of the company, Hurwitz announced that all of the ancient redwoods would be logged by 2007.

Among the oldest and tallest trees in the world, the Headwaters’ redwoods are clustered in a half-dozen groves in a fog-shrouded forest near Eureka. The prospect of their destruction inspired a passionate campaign of protest and civil disobedience that culminated in the current effort to preserve a portion of the forest.

The state’s list of possible assets to be swapped ranges from vacated conservation camps in Contra Costa and Sonoma counties to a dog training facility in South Lake Tahoe and an empty California State University dormitory in Stanislaus County.

According to Wheeler, the most valuable parcels are 110 acres of waterfront land in Eureka and 1,100 acres of undeveloped land near Chino. But the list also includes office buildings in Oakland, Long Beach and San Diego and property in El Segundo, Glendora, South Los Angeles, Anaheim, Costa Mesa, Barstow, Napa, Walnut Creek, Redding and several other communities.

Starting with $17,000 in the mid-1960s, Hurwitz began his career as a stockbroker and eventually built an international conglomerate based on natural resources and real estate. By the early 1990s, he controlled companies worth a reported $3.2 billion.

Known variously as a colorless executive and a relentless adversary, he captured the spirit of the corporate takeover era of the 1980s when he gave his version of the Golden Rule to employees of Pacific Lumber.

“He who has the gold rules,” Hurwitz said, though he later insisted that the remark was a joke. But environmentalists seized on it. For them, it said it all about the Texas wheeler-dealer who became the man the green community loved to hate the most.