Marin looking to repossess troubled San Geronimo land

08/14/2014

A seven-acre San Geronimo property that has seen the rise and fall of a marijuana kingpin through plans for a luxury home to an environmental lawsuit to bankruptcy hearings while its owner was in federal prison is now being eyed by the county for repossession after seven years in default and more than $100,000 in unpaid property taxes.

The tract of land at 6451 Sir Francis Drake, which is mostly undeveloped but for a 968-sqare foot deck, fronts the roadway a short distance from Lagunitas Elementary School, according to the county assessor’s records. Owned by Joshua L. Hedlund, the real estate is worth only $150,000 in the county’s valuation. But, deeply in arrears, Mr. Hedlund could rack up close to $116,000 in debt when taxes are collected, and there is at least one lien against the property, Supervisor Steve Kinsey told the Light last week.

The board of supervisors was briefed about the property and the acquisition process in a closed session at last week’s meeting. While many properties in Marin are at risk of tax default, Mr. Kinsey said he requested the board stay informed about this one in particular due to its significance as the subject of an environmental suit by the Salmon Protection and Watershed Network that effectively ended development at the site and changed how county planners’ review new homes and additions.

That’s where the irony of the near-empty lot—cut through by the dribbling San Geronimo Creek—begins. The county defended Mr. Hedlund’s development plans against environmentalists through years of appeals and litigation but has now applied for ownership of the land “to preserve and restore fish habitat” in a “natural state.”

In June 2002, Mr. Hedlund submitted plans to build four-bedroom house of 3,650 square feet, with just a 20-foot setback from the creek for his five-car garage and parking area. The project survived appeals to the planning commission and a hearing before supervisors, with minor concessions to prevent erosion of the creek bank and harm to coho salmon and steelhead trout. In a 4-0 vote—Supervisor Susan Adams abstained—supervisors denied an appeal, saying Mr. Hedlund’s case fell into a loophole they had since passed an ordinance to fix as one of 160 undeveloped lots in sensitive areas that had not been zoned for environmental review. 

“We are dealing with an extraordinary situation due to the timing of this project,” Mr. Kinsey said after the vote. “This was really the last project of its kind to get through.”

SPAWN filed suit against Mr. Hedlund and the county the following month, arguing the project’s location in a sensitive riparian area should be subject to review under the California Environmental Quality Act, in opposition to the county’s longstanding precedent of exempting construction of single-family homes. 

“It’s weird to be at odds with people that I usually see eye-to-eye with on these issues,” Mr. Hedlund told the Light in April 2003, referring to his credentials as an environmental studies major at U.C. Santa Cruz, his ownership of an organic cotton and recycled fiber clothing company and his biodiesel truck. “I hope to work with SPAWN on improving and preserving this area and that there are no hard feelings when this is all over.” To planning commissioners, he added that his critics “don’t understand the project, and they don’t know me.”

SPAWN’s arguments persuaded the trial court that the county had “erred procedurally and substantively,” and three judges in the higher court unanimously denied an appeal by Mr. Hedlund in 2005, agreeing that even if the project would have had a negative impact declaration, an environmental review was still necessary in such a fragile habitat. 

(The county dropped out of fighting the suit after the court’s ruling, not “interested in spending more public money on this,” county counsel David Zaltsman said. “The facts are so muddled, and this worked to SPAWN’s advantage.”) 

It appears no further construction was ever added to what the assessor says is a lone patio but is more likely the foundation laid during the brief months between the judge denying SPAWN’s initial request for injunction and the court’s ruling. 

At the same time the county was first considering his building permits, in the late spring and early summer of 2003, Mr. Hedlund began leasing out space in a Berkeley warehouse that was used for indoor marijuana grows—at least 2,700 plants and as many as 5,800—to pay down that location’s mortgage and purchase additional property across Humboldt, Marin, Mendocino and Trinity Counties, mostly from failing timber companies.

Berkeley police caught onto the operation in early 2006, sparking a two-year investigation by the Drug Enforcement Administration and the Internal Revenue Service. Local police said it was the biggest bust in recent years and resulted in searches across the East Bay. 

In court documents, Mr. Hedlund argued that he had no knowledge of the indoor pot farm and would have evicted the tenants had he known of it, but he later pled guilty to marijuana cultivation and money laundering. He forfeited $1 million and 7,000 acres of land, gave authorities access for warrantless searches on 5,000 other acres and spent nearly three years in a prison in Minnesota. (Mr. Hedlund would have been out of prison early but he lost good time credit when guards found him intoxicated.)

Without the green flowing in, Mr. Hedlund could not keep up payments on all the land he had acquired. As deals unraveled and court cases were filed, a “bewilderingly complicated web of interrelated entities” emerged, along with “numerous allegations of wrongdoing by Joshua, suggesting he has built a personal empire of limited liability companies and trusts that have dealt with each other in questionable transactions,” one Humboldt County judge wrote in a decision. 

“The facts are complicated and not easily understood,” because they “are sophisticated real estate developers,” Mr. Hedlund’s brother tried to explain before the judge. Mr. Hedlund’s mortgage broker, however, testified that that he avoided foreclosures by borrowing against other property technically owned by another L.L.C., though all controlled by him. His former girlfriend and the mother of his child wrote in a declaration that she had been “duped into providing [Joshua] a ‘false color of propriety’ for his alter ego real estate holding companies.” He had long since stopped paying child support, she added.

“From his jail cell, [Joshua] has continued to dominate entities and trusts he created and treat their assets as his own,” a former associate wrote, warning he may have “concealed funds available to him” after his release.

Mr. Hedlund has not paid any property taxes on the streamside lot for years, defaulting on July 1, 2007, said Sandra Kacharos, the finance department’s property tax division chief. After five years, a defaulted property, in order to repay taxes to the state, can be placed on the public auction block, sold to a government agency or nonprofit or used by contiguous owners in the case of substandard land, she said. 

For the first time in several years, the board of supervisors has directed the county’s public works department to initiate the process of repaying taxes owed to the state and obtaining the land to aid endangered fish, said Eric Lueder, the department’s chief real property agent—the same trout and salmon the county had argued would not be harmed by a house on the lot almost a decade before.

Mr. Hedlund, presumably out of prison and possibly living in San Francisco, will be notified before any acquisition by the county: banks or others who have loans reliant on the property’s equity or Mr. Hedlund himself may still fork over the cash and keep ownership of the land up to the day the sale is finalized, Mr. Lueder said. A transfer would likely not occur until April 2015, he added.

“I recently had a baby boy and had hoped to move into my home this summer to raise my family,” Mr. Hedlund said in June 2004, after losing the initial trial to SPAWN. Twenty-seven years old, the son of a Humboldt County supervisor and the grandson of a Tehama County district attorney, for all appearances, Mr. Hedlund was an ambitious real estate developer on the rise. “It saddens me to think how much money has been wasted litigating when it could be spent on restoration projects. I am trying to build a green home and have been caught in the middle, with both groups using me for their political gain.

“I plan on having my home in the valley,” he said.