Timber company selling town

January 01, 2007 11:00 pm

SCOTIA (AP) – Along with the scent of freshly cut redwood, an air of uncertainty hangs over this idyllic Northern California logging town.

Mel Berti feels it from behind the butcher counter at Hoby's Market, where he has greeted lumber mill workers and their families by name for three decades.

Nodding toward the tidy streets and rows of whitewashed bungalows outside, he wonders what the Scotia he knows will look like in another 10 years – now that its days as a company town, one of the last in America, are numbered.

"It's not getting any better than it is now, I'll tell you that," said Berti, 67. "There's not a town around that looks this nice while being maintained as a regular town."

After 141 years as Scotia's only employer, landlord and property manager, Pacific Lumber Co. is getting out of the real estate business. Citing declining timber prices and a need to raise cash, its Houston-based parent company, Maxxam Inc., plans to sell Scotia's 270 homes, stores, pair of churches, hotel, museum, movie theater and recreation center in 2007.

PalCo, as the company is known, hopes the rest of its holdings 137 miles south of the Oregon-California border – from the fire department and street lights to the power plant and sewer system – will be annexed and governed by the adjoining town of Rio Dell – a community as scruffy as Scotia is spic-and-span.

For generations, employees of PalCo and the town's auxiliary businesses have been Scotia's only residents, and the company is pitching its divestment as an economic opportunity for them.

They will be offered first dibs on buying the homes they now rent at subsidized rates ranging from $500 to $700 a month.

PalCo spends about $1 million a year landscaping yards, sponsoring community events and performing other tasks that protect Scotia's pristine, 19th century ambiance.

Further fueling the apprehension are doubts about long-term prospects for timber.

PalCo is the state's largest private owner of old-growth redwood forest. But environmental regulations have made fewer of its 210,000 acres available for logging.

In the past five years, the company has closed two mills, repeatedly threatened bankruptcy and laid off hundreds of employees. Some worry whether selling Scotia signals that PalCo is preparing to leave town altogether, making buying a house there a risky investment.

"It's at the point here where the people don't know if they will have a job next week or not," said Berti, who like many old-timers speaks nostalgically of the days before the family that owned PalCo sold it to Maxxam in 1987.

It's too soon to say what the two- and three-bedroom houses will sell for, but Wood said he expects it to be less than Humboldt County's median price of $300,000.

The Rio Dell City Council has hired a company to study the financial impact of annexing Scotia. A decision on the deal is expected by midyear. Some residents worry their property taxes would be raised to pay for the additional municipal services and improvements annexation would require.

"If they could come out and say this is not going to cost the people in Rio Dell a penny, then I would be for it," said Mike Burns, who runs a car repair shop. "But they are not showing us it's not going to cost us a penny."

Wood pointed to the high-tech saw mill Pacific Lumber built in 2004 as evidence that it sees a future in the redwoods it would still own after unloading Scotia. The company is also renovating the site of one of its old mills into a light industrial park it hopes would attract other businesses, such as a brewery.

Still, his sunny prediction came the same day the company quietly laid off 90 more workers. Berti, a veteran city councilman in nearby Fortuna, heard about it from workers who came into Hoby's Market.

"It's sad to see such a beautiful community go out the window," he said. "But time moves on. You have to go along."