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TEX-CAL: Reliance on soaring land values digs FmHA into deep holeContinued from A1two dozen ranches in a belt nearly 60 miles long.A comprehensive appraisal would take 60 to 90 days, two appraisers said. A third estimated it would take two months just to prepare the reports.Appraiser Michael Asher asked FmHA for one month to do the job. FmHA gave him 13 days. He missed the deadline, and FmHA fired him in early April 1979.On May 5, FmHA appraised Tex-Cal’s two cold-storage sheds and land at $32.5 million, or $5,416 per acre.In early 1980 Tex-Cal needed another loan. But FmHA’s appraisal did not show enough equity to cover both theexisting debt and the proposed $9.75 million loan.FmHA did not order a new appraisal. Instead it simply raised the book value of land and cold-storage sheds to $45.1 million. The only evidence in the FmHA file for this 39 percent increase was a two-page, hand-scrawled, unsigned note. Citing a couple of recent sales, the note suggested that the land - valued a year earlier at between $4,012 and $5,409 an acre - was now worth $7,500 per acre.This new estimate was used to justify nearly $20 million in additional loans during 1980 and 1981. In 1982 Tex-Cal came back for more money, and this time FmHA ordered a new appraisal.Doug Colucci, later the FmHA countysupervisor, revalued the land and sheds at $53 million. He used five recent sales as references. Only three of them were vineyards. The other two were parcels of bare land controlled indirectly by Bud Steele.“They valued 6,900 acres based on three vine sales?” asked Doug Warren, the only private farm appraiser willing to talk publicly about FmHA. “That would be a pretty tough one to substantiate. ... That’s a little suspect.”FmHA loaned Tex-Cal $5 million based on that appraisal. During 1983 the ' agency loaned another $15 million. FmHA called these loans “protective advances.” They were justified on the grounds that FmHA’s collateral, thecrops, trees and vines, would be damaged or lost if Tex-Cal ran out of money to farm.Ultimately, even that additional investment proved to be of little value because of neglect of the property and falling land values. As early as November 1985, federal attorneys acknowledged in court documents that private lenders, whose mortgages predate FmHA’s, probably would get all the land in foreclosure.In August 1986, Steele’s attorneys proposed a bankruptcy plan to gradually repay old debts. As for the federal government, they wrote, “the FmHA shall receive nothing.”
Newspaper Details
Bakersfield Californian
Bakersfield, California, US
Mon, May 25, 1987
Page 2
Full Page
Clipped by
Kimberly S.
USA 05 Jun 2025
Other Publications Near Bakersfield, California
The Berkshire County Eagle
Southern Californian and Kern Weekly Courier
The Weekly Californian
Kern County Californian
Daily Californian
