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Sunday, September 16, 2007

In Bankruptcy, Pacific Lumber Starts Selling Off Assets

Company Town May Lose Company

By John Ritter, USA TODAY Sept. 10, 2007

SCOTIA, Calif. — Tucked among redwood hills on the scenic Eel River, next to a big timber mill, one of America's last true company towns appears to be expiring.

Financial troubles forced Pacific Lumber Co. to refocus on producing redwood and shed extraneous parts, such as the town it built and has benevolently maintained since the 1880s.

Pacific Lumber, or PALCO, wants to sell Scotia's 272 houses, give employees renting them a chance to buy them and get out of the company-town business.

Many residents, some born and raised here, don't know if they can afford their three- and four-bedroom bungalows or what will happen if they buy one and PALCO goes under. Others like the status quo of below-market rents — $650 to $800 a month — complete with company-provided trash-collection, electricity, water and repairs.

PALCO has until Sept. 18 to file a reorganization plan in federal bankruptcy court. The town's sale awaits a decision on whether Scotia, population 1,079, should merge with neighbor Rio Dell or become its own municipality, says company spokeswoman Andrea Arnot.

Either way, change is coming, and many residents say a tight-knit community that leaves its doors unlocked at night and knows everybody's business will lose its character. They worry that part of Scotia, about an hour south of Redwood National Park, will be sold to a retirement-home investor or similar development. "We have tourists drive through here all the time and ask if any of these houses are for sale," says Deb Jeffries, whose husband, Bill, a millwright, was born here.

Fading way of life

Volunteer fire chief John Broadstock says many residents are afraid of change. "They've lived in it the way it was and you can't do that anymore because of economics," he says.

Maxxam, a Houston-based corporation, bought PALCO in 1986, then fought environmentalists in the 1990s over plans to trim debt by harvesting thousands of acres of old-growth redwoods. In 1999, PALCO signed a landmark deal that protected most of that timber.

The company remains mired in debt, despite state-of-the art retooling of its mill and downsizing from 1,200 workers here to fewer than 500. The market for its Douglas fir lumber collapsed in the recent housing slide, says PALCO Vice President Pierce Baymiller.

What's happening here in the world's premier redwood region has happened over the decades to Appalachian coal towns, California citrus towns, Hawaiian pineapple towns, Carolina chicken towns and New England mill towns.

Company towns faded as the culture changed, not least of which was workers who could afford cars to commute and not have to live next door to the boss. A lot of towns dried up in the upheaval of the Great Depression and post-World War II years. Sometimes a town's reason to exist — timber, gold, silver — played out. Towns such as Richland and Grand Coulee, Wash.; Brookings, Ore., and Potlatch, Idaho, lost their company identities but adapted and survived.

Scotia's likely fate — sold off by PALCO — has been the fate of other towns, says Linda Carlson, a Seattle consultant and author of Company Towns of the Pacific Northwest. But with some mill towns especially, companies sometimes simply picked them up and moved them on rails to new forests to harvest.

Many towns weren't built to last more than a decade or two. They had cesspools instead of sewers, no foundations under the houses, crude street infrastructures. "When environmental controls became a big issue, it was easier to shut a lot of them down," Carlson says.

She thinks a handful still operate on the traditional formula with a church or two, a school, company stores, maybe a post office and Boy Scout troop.

"Very few were incorporated," she says. "It might literally have been a stretch along a river."

Scotia was — and is — much more. It has an elementary school, an inn, a small shopping center, a museum, a theater and ball fields, all in cozy proximity to the hulking mill. This year's garden contest was the town's 87th annual.

'One big family'

"It's one big family in this town," says Leah Willis, whose husband, Jason, grew up here. "If my kids are doing something wrong up the street, I get another parent calling. When somebody's hurting, the town's there for you."

The Willises hope to buy their three-bedroom house for around $175,000. Beyond intending to sell at "fair market value," PALCO hasn't said anything about home prices. "We'll have programs to help people get in them," Arnot says. "We'll work very hard at that."

Jim Gleaton, 62, terminated last month in the latest round of layoffs after 44 years, was interested in buying his house and retiring here where he raised three children. In the old days, when PALCO workers retired they had to move. Gleaton isn't sure now if he could swing a mortgage.

"A lot of young families are desperate to know if they're going to have a job," he says. "Why would you buy a home and have no job?"

Christina McGee, 27, and her husband, Bryan, 28, a machine operator at the mill, have two small children and pay $695 a month rent. He makes about $40,000 a year, she earns $10,000 working at PALCO Pharmacy.

"We'd love to buy. We can't wait for details to be finalized," Christina McGee says. If her husband were laid off or the mill closed, "we'd probably have to move out of the area."

Bill and Deb Jeffries are in their third Scotia house in 28 years. She'd like to buy their house, but he's not sure.

"My concern if they sell the houses to just anybody, is the town still going to look like this?" Bill Jeffries says. "That's why I'd love to leave it like this, renting, because then it can stay like this."


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