Hearst Ranch Sale Talks Still On

Hearst Corp. officials said they will continue negotiations to possibly sell the firm’s world-renowned seaside ranch, despite legislation signed by Gov. Gray Davis aimed at reducing the price taxpayers might have to pay to preserve it.

At the same time, environmentalists said they intend to campaign for more changes in California land-use law to stop developers from using loopholes to obtain windfalls of tens of millions of dollars.

“Hearst is committed to the ongoing negotiations with conservation organizations to secure a permanent program for the Hearst Ranch,” said Hearst attorney Roger Lyon. “We have made it clear that developing a long-term solution is our primary goal and we will continue to work toward that end.”

Lyon declined to say if the corporation would go to court to challenge the new law, signed by Davis over the weekend. The measure aims to close a loophole that has allowed property owners to shuffle parcels around like puzzle pieces to inflate the value of their land.

The goal was to hold down the amount the state--and conservation groups--will have to pay to preserve environmentally sensitive properties such as the famed 83,000-acre Hearst Ranch near San Simeon, one of the last remaining large swaths of untouched coastal property left in California.

Hearst has been negotiating for several months with two environmental organizations to permanently preserve the land. “Negotiations are coming along,” said Liz Reilly of the Nature Conservancy. “I would certainly think” the new legislation will keep the price down, she said.

“People are fairly optimistic there’s a good opportunity here,” she said. “But there are bound to be ups and downs as we go along.”

Speculation about the price of buying out Hearst’s right to develop the property has ranged up to $300 million. But one activist, Kat McConnell, said she was told by a Hearst representative that the company was thinking of “Headwaters-style money,” referring to the half-billion-dollar price tag of preserving the 7,500-acre Headwaters forest.

Appraisal experts said it is too early to know exactly how the new legislation will affect the Hearst negotiations. But the central question when appraising any piece of property, said Elden Fillion, a supervisor in the state’s Department of General Services, is determining what it could be used for if it were to be developed.

“What we’re trying to come up with in the real world is, what could you do with that property?” said Fillion, whose job is to make sure the state is not overpaying when it buys land. Last year, he and his colleagues reviewed 215 appraisals worth $1.5 billion.

Hearst Ranch has long been used primarily for cattle grazing, but the company recently applied for “certificates of compliance” recognizing the existence of 279 building lots based on old deeds, some going back to Spanish land grants. Most certificates have already been approved by San Luis Obispo County, an act that alone will likely increase the value of the land. Hearst can now argue that each certificate grants a right to build a million-dollar ranchette on the parcel.

The other tactic that has been used to increase the price of sensitive land was to adjust lot lines on the parcels. In some cases, lots were moved from undevelopable mountain slopes to the seashore. Stopping that practice was the purpose of the bill signed by Davis.

“It seems like the development potential that was there won’t be there now,” said Gordon Hensley, an analyst for the Environmental Defense Center.

The appraiser chosen to evaluate the land will be crucial. Fillion said the appraiser could be hired by Hearst or by the state. “I prefer to see the agencies hire the appraisers,” he said. Regardless, when the appraisal comes in, “this one will land on top of the pile” and get extremely close scrutiny from his office.

“Obviously, this property will have a lot of political sensitivity,” Fillion said.

The appraiser will be required to justify whatever figures he arrives at or it will be rejected. “I’m not going to give in to the political winds,” Fillion said.

Hearst officials have said they never intended to file for lot-line adjustments anyway, but land preservationists say the company wouldn’t have had to do that. Merely holding the right to file has been enough. In one land purchase, McConnell said, the owner had the county write a letter saying the owner was eligible to ask for certificates and lot-line adjustments to increase the value of the land.

Whatever happens next with Hearst, environmentalists were savoring their political victory this week. “They said it couldn’t be done,” said Susan Jordan of the League for Coastal Protection. “But they were wrong.”