In Hearst Land Fight, Old Papers Are New Weapon

TIMES STAFF WRITERS

Rolling across a golden pastureland in a shiny new Suburban, Stephen T. Hearst talks about preserving the memory of an enchanted youth: riding horseback with his father, camping deep in the canyons behind Hearst Castle, hunting for deer, wild pigs and quail.

"We want to make sure our kids can enjoy this place as much as we did," said the great-grandson of William Randolph Hearst.

But lawyers for Hearst Corp. appear to be heading toward something very different from the goal of preservation that Hearst's words suggest.

The lawyers have amassed a trove of obscure 19th century land records that could allow the corporation to chop the 83,000-acre ranch into 279 parcels and create oceanfront subdivisions.

A relatively new wrinkle in California land use law, the records known as certificates of compliance show evidence of long-forgotten property splits. Under state law, the certificates can give modern landowners carte blanche to circumvent local zoning rules and other restrictions on development.

The certificates have provided real estate speculators with powerful leverage over coastal open space. Conservationists consider their use a form of blackmail, forcing them and taxpayers to pay hugely inflated prices to protect the land from development.

Yet Stephen Hearst swears that's not his intent.

"We have no specific development plan," he said recently.

Instead, he said, the corporation simply wants to gauge the land's "potential" for development to help determine its maximum value. The key here is that property that can be turned into building lots is worth much more than grazing land.

Once he knows the value of the development rights, Hearst said, he hopes to sell them to taxpayers or private foundations, which would retire the rights and preserve the land much as it is.

As Hearst envisions the arrangement, the corporation would retain ownership of the ranch but give up rights to build on 99.5% of it. Such a plan could still leave enough room for a version of the resort hotel complex that the Hearsts have proposed in the past.

Many ranch owners have used certificates of compliance very successfully, Hearst said. "Every one of these deals was absolutely tailored to the landowners' needs."

Indeed.

In recent years, developers brandishing the certificates have unlocked thousands of acres along the coast that were thought to be exempt from subdivision. Conservation groups desperate to protect some of that land have paid huge premiums.

Tactic Gains Popularity

In 1998, two conservation groups forked over $43 million--twice the price negotiated a few years earlier--for a 7,000-acre dairy farm north of Santa Cruz. The motivating factor: Brian Sweeney, a Las Vegas land speculator armed with certificates of compliance who was threatening to carve up the farm into 139 parcels.

In another deal involving certificates and Sweeney, the Trust for Public Land recently paid about $26 million for a smaller ranch on the Big Sur coast. This time Sweeney made a $24-million profit on the sale after moving to subdivide the ranch into nine large home sites.

The run-up in prices in these cases and others was based on the discovery of old deeds and other records that indicate, sometimes in the vaguest ways, that the land was not always one parcel but a collection of many historical lots.

These underlying parcels might have been crude homesteads or mere well sites. Yet, even if nothing was built on it, evidence that the property existed has often been enough to allow modern owners to subdivide again.

Moreover, the modern owners have been able to adjust the boundaries of the old parcels so they can be moved around like pieces of a puzzle.

A 1992 California appellate court ruling gave landowners broad ability to move lot lines so long as the alterations make the lots more suitable for building and do not create any more parcels than already existed. The new location of a lot need not encompass or even touch the original one.

Conceivably, that means a landowner can take an isolated, largely worthless lot on a mountainside and move it to the beach, where it will be worth a fortune.

Conservationists Forced to Pay More

Such strategies have emerged over the last three decades to thwart ever-tightening zoning rules in California communities that have become resistant to growth. Developers in Napa, Sonoma and Mendocino counties have used certificates of compliance to create nearly as many new building sites as they have through the normal planning process.

More recently, the strategy has become a way for landowners to force conservationists to pay ever higher prices for land they want to protect as open space.

"This is a new kind of environmental terrorism," said Rep. Sam Farr (D-Carmel). Landowners and speculators, he said, have managed to hold the land hostage. "Pay the asking price or it will be developed."

Some officials worry that escalating prices will drain the accounts of government and private foundations so less land can be preserved for wildlife and recreation.

"Do an inventory of all of the land that might be subject to acquisition to preserve it for the public," said Pedro Nava, a California coastal commissioner. "With this kind of artificial inflation of prices, the numbers are going to be huge."

Douglas Wheeler, former California resources secretary, estimates that a deal for the Hearst ranch development rights could cost $300 million or more. It would almost certainly need financial contributions from the federal and state governments, he said.

Wheeler is associated with two of the half-dozen conservation groups interested in preserving as much of the ranch as possible.

Stephen Hearst said he is getting close to picking one of the groups to help him structure a deal. At issue is how much land would be kept as open space and how much would remain eligible for development. That balance may well depend on the negotiated price.

Bruce Babbitt, the Interior secretary under President Clinton who now represents the Hearst interests, defended the use of certificates of compliance to maximize the value of the land.

"I would advise any client who is considering alternative uses to perfect their rights," he said. "It's good, proper and correct to do that."

Paper Trail Dates Back to 1852

To perfect its bargaining position, Hearst must first persuade San Luis Obispo County planners to approve the certificates of compliance needed for the ranch to be cut into 279 parcels.

Stuffed in five large binders at the planning department, the records date back to 1852. Some are in barely legible handwriting. Each shows how title was passed from one owner to the next.

One document states that "for and in consideration of the sum of $10 in gold coin of the United States," J.H. McGovern sold 600 acres to Piedmont Land and Cattle Corp. in 1914. Piedmont Land and Cattle became a Hearst company.

The Hearst Ranch contains one of California's original Mexican land grants, called Rancho Piedras Blancas. Documents indicate that in 1852, Jose de Jesus Pico claimed the rancho, which then was more than 48,000 acres. From Pico, a chain of ownership passed the land into the Hearst family.

Hearst researchers found only 24 parcels on the rancho and 12 more down the coast. But they located 243 parcels farther east in the hills and mountains.

Those lots, mostly ranging from 40 to more than 500 acres, are on the steepest terrain. They would be the least desirable areas for construction--unless they could be moved toward the ocean via lot-line adjustments, a perfectly legal maneuver.

Under the current zoning, Hearst would be entitled to build at least two dwellings on each parcel.

County planners expect most of the Hearst Ranch certificates to be approved within the next couple of months. As long as the records are legitimate, planners say they have no right to reject them under the state's Subdivision Map Act.

But Coastal Commission officials disagree, saying that more restrictions can be placed on them. The certificates represent a direct threat to the commission's authority to regulate development under the Coastal Act, and the panel is not about to relinquish that power without a fight.

Panel Urges Tightening of Restrictions

The commission, fully cognizant of the Hearst strategy, countered this month with recommendations that San Luis Obispo County tighten zoning and impose other development restrictions on the ranch and elsewhere along the county's coastline.

The commissioners also want to push for new legislation that would constrain the use of certificates of compliance.

"These certificates really tick me off," said Sonoma County Supervisor Mike Reilly, a member of the Coastal Commission. "Why go through all of the work of setting up a general plan if someone can go around it by digging up documents that date back to the 1850s?"

In a letter to the commission, Hearst has opposed any "amendments to the [Subdivision] Map Act that would strip a property owner of the existing value of underlying legal lots. . . . These changes would have substantial negative effect on agricultural land values."

Hearst said he has a fiduciary duty to make money for the corporation and the family trust that owns it.

But for the most part, his approach has been nonconfrontational, in contrast to the combative stance of his father, George Randolph Hearst Jr., who fought unsuccessfully three years ago for the right to build an extensive resort complex on the ranch.

An affable 44-year-old who favors jeans and cowboy boots, Stephen Hearst has been meeting with local residents and giving tours of the sprawling ranch, which stretches from the Santa Lucia Range to the ocean, encompassing 18 miles of coastline.

He talks a lot about conservation and attachments to land that has been in the family for 135 years. He generally sidesteps questions about specific development plans, although he acknowledges that nothing has been ruled out, including the resort complex shot down three years ago.

"Some [people] were very emotionally opposed to this," he said. "I don't want to give them a target. I don't want to be that target."

If there is a clue to his intentions, it may be down the road at the Central Coast Ranch in Cambria.

After the owner discovered 23 underlying parcels, he negotiated a multimillion-dollar deal with the Nature Conservancy that allowed the ranch to continue to operate, while protecting a forest of Monterey pines and permitting some home building.

"It's a template," Hearst said, "that has worked for other landowners."

But Hearst cautions against drawing any conclusions about his plans for the family ranch.

He intimates that he faces challenges from within the family as well as outside it. In the past, some in the family have noisily quarreled over the future of the ranch.

His father is chairman of the Hearst Corp. board, but that doesn't mean Stephen can count on his unqualified support.

"Did you always see eye to eye with your dad?" he asked. "In any large family, you have diverse opinions."

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Jewel of the Coast

For 135 years, the Hearst family has owned the 83,000-acre ranch in San Luis Obispo County. The working cattle ranch has remained largely undeveloped and covers nearly 18 miles of unblemished coastline.

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