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Mendocino County Forest $19 Million Preservation Price Tag Raises Questions

Mendocino County Forest

  First Posted: 09/26/11 02:14 PM ET Updated: 11/26/11 05:12 AM ET

This article comes to us courtesy of California Watch.

By Susanne Rust

In a unanimous vote this month, the Wildlife Conservation Board agreed to pay $19 million to a large Virginia-based land trust to purchase a conservation easement on about 14,000 acres of timber land in Mendocino County. It was touted as another victory for preserving California's wildlands from development.

But critics of the deal say the price is not adequately supported, may be too high and has even been questioned by the state's own independent reviewer. Because the conservation board does not disclose appraisals to the public until after a purchase is complete, there is no way to tell how the state came up with its valuation or why the reviewer found fault with it.

"They are not providing full disclosure," said Michael Evans, an American Society of Appraisers-certified appraiser and owner of Evans Appraisal Service in Chico, who was not involved in this recent transaction. "This is public money. When the appraisal is done, stick it out there. Let the public decide."

Since 2009, when the Wildlife Conservation Board received $180 million from Proposition 84, a 2006 voter-approved $5.38 billion bond measure, more than $50 million has been spent to preserve forestland. The board also oversees hundred of millions of dollars in other conservation bond funds, most of which is handed over to nonprofit conservation groups to purchase and manage these lands.

The Conservation Fund is purchasing the easement on the Gualala River Forest, a timber property 10 miles from the coast and four hours north of San Francisco. Studded with redwoods, sugar pine and Douglas fir, the forest provides stunning views of the Pacific Ocean and access to the salmon-laden Gualala River.

The easement will prevent the property from being converted into residential or agricultural property and will keep it as a working timber forest. In addition to the state bond money, The Conservation Fund is providing $1 million and the land owner is donating the remainder to complete the $22 million purchase.

The land is being purchased from Richard Padula, owner of Coastal Forestlands Ltd., a timber operator in Mendocino County.

Officials with the Wildlife Conservation Board said they are confident the assessment on the property is valid, and they point to overall support from the independent reviewer - despite significant complaints about how the assessment was made - as well as the Department of General Services, which oversees all major state contracts.

"Protection of these types of working forestlands is essential, not only for the species and habitats found there, but also for the future economic vitality of the North Coast," said John Donnelly, executive director of the Wildlife Conservation Board.

The allocation of state funds for the easement also was supported by several conservation groups, state agencies and politicians, including the Sierra Club, the state Department of Forestry and Fire Protection, and Assemblyman Wesley Chesbro, D-Eureka, whose district includes a wide swath of coastal Northern California.

But a look at a state-contracted review of the property's appraisal suggests the assessment had serious inadequacies and the methodology used to determine the land's worth was questionable.

The grant to purchase the easement originally was scheduled for a board vote in February, but was taken off the agenda after the Department of General Services raised questions about whether an earlier appraisal was too high. The board promised to contract a new appraisal and make the assessment process more transparent by agreeing to hire an independent reviewer to audit the assessment.

That review by Richard Murphy, a Redding-based appraiser, supported the state's new appraisal that showed the property was worth $30 million, with a conservation easement of $22 million. However, Murphy found significant problems with the assessment.

Murphy could not be reached for comment.

In a checklist attached to his review, which includes 113 questions used to assess the adequacy of the appraisal, Murphy wrote "NO" next to the question: "Was the land value considered well supported and reasonable?"

Under a box asking if it was acceptable, he also wrote "NO."

In another question, which focuses on the methodology used to value the land, the question asks, "If another method of estimating land value (was used), was it adequately documented and reasonable?"

Again, Murphy checked the "NO" box and said it was unacceptable.

In a list of concerns about the appraisal, Murphy said he was not satisfied that there was enough evidence to suggest the land could be converted into vineyards, which would push the price of the land higher. Murphy noted the assessment seems to contradict itself, claiming the land has value for vineyards but then later notes the "soils are said to be rocky."

"It is typical for agriculture and timber land and large acreage parcels in general to have soil types summarized, along with terrain features, and locations of utilities and services described ..." he wrote. "This report lacks the typical summarization of each of the items above."

Murphy's criticism of the assessment has raised alarms in the Capitol.

"I think at a time when California's families have to think twice before they spend their discretionary dollars, we should expect the state and the Wildlife Conservation Board to do no less," said Douglas Haaland, chief policy consultant to the Assembly Republican Office of Policy.

The transaction also was criticized by the chairman of the Mendocino Redwood Co., Sandy Dean, who questioned how the land was valued and pointed to the board's lack of transparency regarding the valuation. He cited the complicated nature of assessing timber value and the appraiser's presumption that the highest and best use for the land was residential housing.

"The appraisal review ... is silent as to whether the appraiser considered the infrastructure needs, marketing cost and time value of money necessary to develop homesites in a remote part of Mendocino County," he wrote in a letter to Donnelly, the board's executive director, in June.

In another letter to Donnelly, dated Sept. 7, Dean expressed his concern about Murphy's overt contradictions.

"The appraisal review cites various shortcomings of the appraisal, and then concludes that the areas were at least minimally addressed," Dean wrote. "Is minimally addressed the right standard for appraisals justifying the expenditure of $20 million of state funds?"

"Given the challenging valuation issues associated with conservation easements for North Coast forests ... take a step back," Dean wrote. "Allow for adequate public review ... before the money is spent."

Karen Finn, program budget manager for the state Department of Finance's environment unit, said she was shocked and concerned about the appraisal when she saw the reviewer's concerns.

"But I had never seen an appraisal review before," she said. She was quickly assured by Wildlife Conservation Board staff that the appraisal was OK, despite the reviewer's claims of inadequacy, and that, in the end, the review supported the appraisal's values.

"Appraisals are an art," she said, "so you do have some kind of judgment and subjectivity in them."

The Wildlife Conservation Board has claimed for months that it will unveil a new way of assessing property before it spends millions of dollars on conservation easements. It already has a policy that requires independent review of all purchases costing more than $25 million. The board is expected to unveil a new process sometime this year.

Donnelly, the Wildlife Conservation Board director, said that while Murphy "indicated a few deficiencies of the appraisal," the appraisal complied with the Uniform Standards of Professional Appraisal Practice "and his review process supported the appraiser's opinions of value."

Chris Kelly, California program director for The Conservation Fund, would not comment on the appraisal or the review. The Conservation Fund already owns 40,000 acres of conservation land in Mendocino County.

However, he said, "the Gualala River Project has been through several years of review. ... The project is an excellent and cost-effective expenditure of the funds approved by California voters to conserve productive, managed forestlands."

State Sen. Fran Pavley, D-Santa Monica, who sits on the legislative council to the board, said she believed the board acted with due diligence, and she remains "committed to cooperating with the WCB to ensure that any and all appropriate improvements to the appraisal process are implemented."

"I think the bottom line here is you have two options: Either the appraisal is bad, or the review is bad," said Evans, the appraiser who was not involved in the transaction. "Disclose the appraisal and let the public decide."

Susanne Rust is an investigative reporter for California Watch, a project of the non-profit Center for Investigative Reporting. Find more California Watch stories here.

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