Welcome to Kohrdt County

Danny Kohrdt has big plans for Butte County. He is going to pull the chronically depressed community out of its economic doldrums, protect the environment and provide some “intelligent growth” for a change.

All local governments have to do to realize Kohrdt’s largess is to cooperate with his efforts to build at least 20,000 new homes here.

His Loafer Creek LLC, an “environmental, technology and real estate company,” recently became the second-largest landowner in Butte County, says Kohrdt, tallying up with 25,000 acres, behind only timber giant Sierra Pacific Industries.

In the last few years Kohrdt and his unnamed investors have quietly sunk more than $30 million into Butte County real estate, buying the 4,000-acre Musty Buck Preserve between Chico and Cohasset and properties from just north of Bidwell Ranch to the Tehama County line.

As a result, Loafer Creek investors now enjoy some serious leverage over how and where this county is going to grow. Their holdings include great tracts of land in the foothills, including many of the recharge areas that feed the huge aquifers that run beneath Butte County and supply most of the water used here.

The company’s idea is to offer this land as a “mitigation bank” that would sell mitigation “credits” to developers who want to build on environmentally sensitive land elsewhere. (See sidebar, page 17.)

Loafer Creek already operates Dove Ridge, the largest mitigation bank in California. In its two-year history, Dove Ridge has made its owners a profit through the sale of a portion of its 466 development credits at $70,000 a pop to builders in Butte and eastern Tehama counties.

Most recently Loafer Creek beat out Chico State University, which also hopes to get into the mitigation-banking business, for a huge chunk of property in northern Butte County owned by the family of longtime cattle rancher Noel Owens. The university’s bid for property by state law must be conducted publicly, a school employee said.

“We have to offer fair-market value. [Loafer Creek] caught wind of what we were doing and rushed in at the last minute and stole it away” by offering a slightly higher bid.

Who are these investors, who now have about three-quarters control of Loafer Creek and, by extension, thousands of acres of land in Butte County?

“None of your fuckin’ business,” Kohrdt answers in his typically blunt style.

But in the same breath he assures that these are “good-hearted people” who care about this community. Never mind that a lot of them live back east and have probably never seen Butte County.

In January he told the News & Review that Loafer Creek had “multi-investors.”

“We’ve got people over in Colusa County, got people back east. We’ve got a lot of people invested in Butte County, and not for the wrong things.”

The company’s ambitious plan hinges on convincing the city of Chico and Butte County to buy into Loafer Creek’s mitigation banking scheme.

By Kohrdt’s reckoning, if the city and county facilitate the development of 5,000 acres of his property, each would get 1,500 mitigation credits in return, and that could mean as much as $45 million for each government. County schools would get a $63 million shot in the arm in property tax increases, and 10,000 more houses would be built in the city and another 10,000 in the county, relieving the current housing shortage.

And there would still be enough available acreage to build another 38,184 houses in the future.

What’s in it for him?

“We’ll make money on a certain amount of lots we develop, right?” he explained. “Well, not that we develop. We’ll bring in a major developer. Somebody who can do it right and everybody will agree to. A national distinguished developer.

“What’s in it for me? Hey, maybe I have so many lots that I’m going to make my money off of, you get so many lots you make your money off of. I protect 20,000 acres. I live in this community. I got a daughter. I got a grandchild. You know what I mean?

“What’s so hard to believe that somebody just doesn’t need it all?”

It might look good on paper, but believing in Dan Kohrdt and his ambitious plan for a bright Butte County future takes a mighty leap of faith and a willingness to ignore a past defined by a rejection of authority and a stubborn refusal to follow rules and regulations.

Kohrdt has typically come into a community, made promises of a better life for the locals and spent millions of dollars only to be skewered by government restriction and regulation. He then points to the local authorities as the enemy and in the process becomes a folk hero.

Kohrdt’s history stretches from the tiny Colusa County town of Maxwell to Louisiana to Michigan and Illinois and back to Oroville. He’s made and lost great sums of money along the way.

He was first in the news in Butte County six years ago when he promised people in depressed Oroville a new residential development with houses, stores, a bank and even a sheriff’s substation.

Frustrated in his efforts by state and local development laws concerning grading permits and a sewer connection, he tore down the nearly completed substation, packed its pieces into 300 cardboard boxes and then transported them and a group of supporters in a bus to the Butte County supervisors’ meeting. The stunt brought Kohrdt a lot of press and some admiration. Over the next few months, whenever he appeared before the board, he had an enthusiastic following that clapped and cheered his every word.

He was a crazed fool to some but a bigger-than-life folk hero to many more.

No matter what you think of him—fanciful dreamer or financial savior—one thing is for certain: Danny Kohrdt will play his hand, good or bad, in determining Butte County’s future.

That is in no small part because, just as he has set himself up in this new business of environmental protection through mitigation banking, the federal government is pushing for its widespread establishment. As you read this, Kohrdt and his company representatives are in Charlotte, North Carolina, attending the eighth-annual National Mitigation and Conservation Banking Conference. Loafer Creek is a major sponsor, and Kohrdt, as he is quick to point out, sits on the national steering committee.

So far the city and the county have welcomed Kohrdt’s latest plans with something less than open arms. At the April 5 Chico City Council meeting, the project, which hinges on adding the Bidwell Ranch property to Loafer Creek’s existing mitigation bank, was unveiled publicly for the first time. It had already been discussed by city staff in at least three meetings.

In return for the environmental protection provided by the mitigation bank, the city would facilitate the building of some 10,000 houses on Kohrdt property that stretches from just north of the Chico Municipal Airport all the way to the Tehama County line.

The plan calls for the development to be annexed into the city—an idea the city doesn’t like for any number of reasons, including lack of access to the city sewer plant, proximity to the airport’s northern fly zone and the physical distance from the current city limits.

At the meeting the City Council moved to rezone the Bidwell Ranch land as open space, which, if carried out, would thwart Loafer Creek’s involvement because, once so zoned, it can’t be designated as a mitigation bank.

Chico Senior Planner Clif Sellers said he, Community Development Director Tony Baptiste and Planning Director Kim Seidler had met with Loafer Creek representatives in their office weeks earlier and that City Manager Tom Lando held at least one phone conversation with them.

“I remember [Kohrdt] sat at his desk over in the corner and during the meeting would look up and interject comments every once in a while,” Sellers said.

“We told them it was just so far north and that it could interfere with north clearance of the [airport] runway. It’s just not realistic, between the conflicts with airport operations, the sewer service, police and fire.”

Sellers said he had known of Kohrdt only from reading of his dealings six years earlier with the county. But he was impressed with Loafer Creek’s headquarters.

“Oh yeah, it’s big time,” he said. “But all the information we have about him is either vague or else it comes from him.”

A week after going to the city, Loafer Creek offered its plan to the Butte County Board of Supervisors, where it met with mixed reaction.

County Counsel Bruce Alpert and county Chief Administrative Officer Paul McIntosh’s responses could be best described as confused, concerned and a bit nervous. The supervisors, on the other hand, seemed split between interest and skepticism.

Supervisors Curt Josiassen and Kim Yamaguchi appeared to support the idea, which basically calls for updating the county’s General Plan—a process that is now underway and would have to be seriously redirected to build it around Loafer Creek’s land holdings.

Kohrdt has financially supported both supervisors in past elections. Marshall Thompson, owner of the Adworks, a video production company that made political ads for TV, recalled recently how Kohrdt came into his office one recent election season, plunked $10,000 in cash down on his desk and said he wanted to buy some air time for a candidate.

“That was pretty stunning,” Thompson said. “I wasn’t used to anything like that.”

Kohrdt-controlled companies contributed $46,250 to Josiassen’s election efforts in 2003. Kohrdt also made a $1,000 personal donation in 2004.

Yamaguchi received a $4,000 campaign contribution in 2000 from Korhdt’s then-wife Deleta.

Supervisors Jane Dolan and Mary Anne Houx questioned Loafer Creek’s plan when it came before them. Houx asked hard questions about Kohrdt and his company at the April 12 meeting, but Dolan was silent. She has spoken to the press in the past, however, about Kohrdt’s flamboyant reputation and flair for the dramatic and repeatedly referred to his sheriff’s substation as a “garden shed.”

It is not clear where Supervisor Bill Connelly stands, though he seems interested in the project’s possibilities.

There’s been some speculation that Kohrdt will spend his money in upcoming elections to try to unseat Houx or Dolan in 2006. One scenario has him backing City Councilman Steve Bertagna, who ran a close race against Houx in 2002, Bertagna said that was news to him when asked recently asked about his political future.

Kohrdt is less than pleased with the responses his offer has received.

“We’re serious people here,” he said last week. “There is a rude awakening coming. But they are not going to wipe out this development. I done made my statement.”

Two weeks before his representatives outlined his plans to the city and the county, Kohrdt agreed to an interview on his turf. Seated at his desk on the second floor of the cavernous silver corrugated-metal warehouse nestled deep inside the almond orchard that is part of the 2,400-acre Dove Ridge mitigation bank, the 53-year-old Kohrdt welcomed the reporter but seldom smiled during the hour-long interview.

Dove Ridge was established two years ago a few miles south of the Highway 149 turnoff from Highway 99 just north of Oroville. The property has vernal pools, which contain endangered fairy shrimp, as well as the protected plant called Butte County meadowfoam, both of which have stopped development in its tracks here in Butte County.

Kohrdt’s weathered face, silver hair and goatee add 10 years to his age. He has cold blue-steel eyes and a voice that rattles like gravel in a tin can.

“I been rode hard and put up wet,” he explains. “I been on my own since I was 12.”

Kohrdt is a difficult interview. He answers questions with more questions and poses his own questions that he then answers with questions. He talks in circles and repeats certain phrases like, “We need to lead with the environment.”

But he insists he’s no environmentalist.

“Just ‘cause I want clean water for my granddaughter to drink, does that make me an environmentalist?” he asks.

His office is an odd mixture of big-city board room and appliance store kitchen showcase. A long conference table leads to two enormous computer screens hanging on one wall and connected to “Goliath,” four 8-foot-tall Dell computer towers making up what Kohrdt says is one of the most powerful computers in the state. There is millions of dollars’ worth of mapping, monitoring and other computer equipment in the building.

In the garage section of the warehouse sits Kohrdt’s high-riding four-wheel-drive Ford pickup, complete with orange flames fanning out across the hood and front fenders.

The company also has a Bell 407 helicopter equipped with high-tech optical and laser scanning equipment. It is kept in Redding for insurance reasons but has been used to map and track all of Butte County. It is reported to have technology capable of marking land elevations down to the inch. Whatever the copter is monitoring can be transmitted live to the big computer screens.

The employees who operate the high-tech gear are not exactly what you’d expect. Angi Orlandella is a former tanning salon operator who is now Loafer Creek’s technology and land coordinator. Lorri Davis, the company’s education outreach officer, was jailed on methamphetamine-related charges in 2000.

In fact, just before Christmas last year, six Loafer Creek employees, including Orlandella, Davis and Kohrdt’s daughter Cindy, the company’s human resources manager, surprised Butte County Drug Court and Judge Darrell Stevens by marching into his courtroom and interrupting procedures with an $18,000 donation—a combination of employee bonuses and the company’s matching funds. Davis is a graduate of the court program.

Both the Chico Enterprise-Record and the Sacramento Bee reported the story, which was just the kind of press that can buy some good will for a company about to spring a major proposal on the community.

Danny Kohrdt is part used-car salesman, part carnival barker, part raconteur and part preacher. He goes off on verbal tears, asking questions but allowing little time for answers. He gets frustrated when his listener doesn’t seem to follow his line of reasoning. At other times he’ll give a little wink, as if he’s letting his audience in on a secret only he and few of his cohorts know.

“Chico needs to develop, right?” he begins. “And they need to know how could we make it better. Our job is to make it better; lead with the environment, make the environment have its own economic engine that helps the community. But lead with the environment. How can you do that? We say you can.”

He says people are just beginning to realize that mitigation is the way to grow—that it is not as costly as folks think. The problem, he says, is that nobody wants to do it correctly.

“Let’s say I owe 25,000 acres. Let’s say, yeah, I own some development property. Let’s say I have a lot of environmental property. What could we do? Could I take the Bidwell Ranch? Put in a preservation? Not a mitigation, a preservation. That’s what they want, to protect it forever, but they have a problem. You keep preserving all this land with no money, and it’s still goin’ nowhere.

“It’s like Bidwell Park. It’s a great place, but to make it a public-use area you have endowments. You have to do multi-things that you need to make that work.

“So working with everybody, listening to everybody’s concerns, you say, ‘OK, how can this thing work out for Butte County?’

“I live here. Butte County is a community. It is not Chico against Butte County; it’s a community; we’re all here together. We need an economic engine in Butte County real bad. How can we do it, protecting environmental lands? Right now you have Bidwell Park, 3,500 acres, what do we have next to it, contiguous we have 7,000 more acres, we own all this property here, we own…”

And on he goes, barely taking a breath, pointing at the computer screens over his desk, asking questions—sometimes expecting an answer, sometimes not.

Kohrdt’s office smells of stale cigarette and cigar smoke. On the day of the interview there was a pack of Winston Ultra-Lights on his desk next to a three-quarters-full ashtray. Two computer screens displayed the spreadsheet that details in dollars his ambitious plans for the county.

The initials “DK” are tattooed on his left forearm—most likely in honor of his second wife, Deleta.

Kohrdt lived in Maxwell for 35 years before moving to Oroville in the late 1990s. He owned a salvage operation there, an occupation he had learned as a young boy.

Interviewed six years ago, Kohrdt told the News & Review that he began making money at age 12 by salvaging automobiles for parts. He said he never graduated high school.

While he may not have a formal education, Danny Kohrdt is nobody’s fool.

Divorce court records tell a lot about the guy’s past.

Butte County records show he and Deleta married Aug. 1, 1993, and separated July 1, 2001. Included in their assets were two houses in Oroville, four unimproved properties, two Mercedes, a Chevy Tahoe, a Ford pickup, a Honda, four race cars, a houseboat, a Cobalt ski-boat, bank accounts and interests in businesses including Environmental Management and Abatement, Inc., Table Mountain Farms and Ridgeway Development. There was also a collection of Thomas Kinkade paintings that, by court order, the couple split.

Liabilities included an IRS audit adjustment, as well as a couple of lawsuits out of Illinois and filed against Environmental Management and Abatement. One was a wrongful-death complaint, the other litigation by the Environmental Protection Agency settled last year with a $50,000 fine.

In the wrongful-death case, Kohrdt said, one of his workers “got blown up” in an explosion.

Kohrdt has not always had the financial clout he now seems to enjoy.

Colusa County court records from his first divorce in 1990 indicate the fluctuating income of a young man finding his niche. His company then was called Triangle Machinery Sales & Service, which he established in the early to mid 1980s.

Years later Kevin Carmody, a reporter for Chicago’s Daily Southtown newspaper, wrote an investigative series on Kohrdt stemming from a huge project involving a defunct Army ammunitions plant and Kohrdt’s controversial plans to build Illinois’ largest landfill.

In the series, Carmody revealed that in the 1980s, when Kohrdt built a salvage and storage yard next to his Maxwell home, he failed to obtain proper zoning from the county. “He always figured he didn’t have to follow the rules,” Colusa County Supervisor Bill Waite told Carmody.

In 1985 Kohrdt’s income, according to court records, was $15,294; a year later it climbed to $41,614, only to drop the following year to $30,467.

By 1988 things started to fall together, and he grossed more than a quarter-million dollars.

And in 1989 he pulled in $2.5 million.

“The substantial income in those years resulted from my opportunity to dismantle and take the salvage from a Kaiser Aluminum plant in the state of Louisiana,” the records say. “In conjunction with that dismantling and salvage operation, I removed a substantial amount of asbestos and was paid tremendous sums for that endeavor.”

But the job ended and he came back to Northern California. Using the money he’d received from the Louisiana job, he built and opened the Maxwell Saloon in May 1990. Locals say it was an upscale place that stood out in a tiny town whose only commercial enterprises up to then were a gas station and a grocery store.

Rushing to open the place before the Maxwell Rodeo, Kohrdt bulldozed the grocery store that stood on the site before the county had issued him the proper permits. He also failed to provide the required number of parking spaces.

The saloon may have been top-notch, but there was not enough patronage to keep it alive. Kohrdt told the court he lost more than $135,000 in the saloon’s first year of operation. The following year it would reportedly lose another $210,540.

Then, in August, 1992, an arson fire damaged the place. Kohrdt laughs off any suggestions—including those made by state Arson Investigator Phil Porta—that he had anything to do with the fire.

“Man, the insurance company had gone broke,” he explained, saying there simply was no motivation for him to commit such an act. As for Porta, Kohrdt said the two men never cared for each other, and he dismissed the accusation as something personal between them. Plus, he added, the press hated him.

Kohrdt moved his operations from Maxwell north to Anderson, where he was cited by the Shasta County Development Department for moving into his new building prior to obtaining an occupancy permit.

At one point in the 1990s, according to a Daily Southtown story and based on court documents from a case in which Kohrdt successfully sued Bank of America for $1 million after it froze his account, Kohrdt’s banker where he had his business account wouldn’t issue him a MasterCard or VISA because his finances were in such disarray.

By 1997 Kohrdt had formed a company called Transport Development Group and purchased the 1,826-acre Army bomb-making arsenal near Joliet, Illinois. Carmody’s investigation showed the sale was approved by the state-appointed Joint Arsenal Development Authority board in October, 1997, before the Army had even deeded the land to the town.

Carmody reported that the company was actually incorporated the same day it purchased the arsenal.

Kohrdt said his company would build a major railroad hub transfer and storage center, bringing much needed revenue and jobs to the community that sits about 40 miles south of Chicago.

One month later, according to Carmody, Kohrdt made the stunning announcement that he also planned to build the state’s largest landfill and a quarry on the property. Local officials said they had no knowledge of the landfill when they agreed to the sale.

In December, 200 residents attended a meeting in the village of Elwood, the actual site of the arsenal, after Kohrdt offered the town $75 million and two local school districts $25 million each if they would support the 100-million-ton landfill, which was expected to generate $4 billion during its 20-year lifetime.

There was great concern about the landfill because it would sit next to a national prairie preserve and a veterans’ cemetery. Carmody’s investigation suggested the board members did know of the plan to build the landfill before approving the sale. Kohrdt then asked for government assistance to help build the rail hub because he was relying on income from the landfill to finance the rail project.

In July, 1998, Transport Development Group agreed to sell the land to another interest.

According to court documents, in December, 2003, the state of Illinois fined Kohrdt and his company Environmental Management and Abatement $50,000 for “allowing open dumping and failing to file required reports and information related to the on site disposal of waste at the Joliet Army Ammunition Plant.”

Kohrdt says today that even though his plans in Illinois never reached full fruition, he did bring 17,000 permanent jobs to a town of 600 people.

“I got the city everything I intended,” he said.

It was through this same project that Kohrdt apparently hooked up with Steve Mardigian, who now serves as Loafer Creek’s managing partner.

If Kohrdt is Loafer Creek’s calloused and ruffled everyman, Mardigian is its smooth, well-pressed and dapper public persona. He delivered the company’s plan to the Chico City Council in front of a packed chamber, and he was at the county supervisors’ meeting when the project was introduced there. With salt-and-pepper hair, smooth complexion and trim build, Mardigian, 59, looks years younger than his partner Kohrdt.

In the late 1990s, Mardigian was president of The Best Group, Inc., a demolition contractor out of Detroit.

Carmody reported that Mardigian’s family companies had been in the demolition industry for several decades and contracted to demolish the old Detroit auto factories for America’s big-three auto manufacturers, Ford, General Motors and Chrysler.

It also demolished the old Arlington Stadium in Texas when then-Texas Rangers head George W. Bush got the team a new ballpark, 70 percent of which was financed with a half-cent sales tax increase.

Mardigian graduated in 1967 from the University of Michigan, which includes on its campus the Mardigian Library.

Efforts to ask Mardigian, 59, about his connection to the library’s name, or anything else for that matter, were frustrated by his reluctance to talk when reached by phone last week. He said all matters relating to Loafer Creek were to be addressed to Kohrdt and quickly transferred the call.

According to Carmody’s stories, Mardigian’s father Henry agreed in 1990 to purchase 10 acres from the city of Detroit to run a recycling operation for demolition debris. The company formed to operate the business, Recycling Corp. of America, included son Steve.

Truckloads of debris began arriving at the site before operating or even building permits had been issued. And, according to Carmody’s articles, the company never paid the city for the land. Cease-and-desist orders were issued and ignored, and the company was sued in 1993. It agreed to remove 93,000 cubic yards of waste within a year.

The Michigan attorney general called the company’s operators “unscrupulous charlatans,” according to the Daily Southtown. The cleanup agreement, however, fell apart when Henry Mardigian filed for bankruptcy in 1994, leaving debris, including asbestos and other hazardous materials, piled 30 feet high next to a school and homes, state officials said.

The old man became ill, blaming it on stress, and son Steve severed all ties with the company.

Henry Mardigian’s reputation had taken a hit in the 1970s when his name came up in the prosecution of Detroit’s Tocco-Zerilli crime family, whose membership included Anthony “Tony Jack” Giacalone, the man famously scheduled to meet with Jimmy Hoffa for lunch on July 30, 1975, the day the Teamsters boss disappeared forever.

A federal grand jury was later told that Henry Mardigian had received a $20,000 loan from Giacalone and his brother Vito. The Giacalones were subsequently prosecuted for tax evasion, fraud and extortion but never convicted.

With their father’s reputation damaged by the connections to Detroit’s crime families, Steve and his sister Michelle formed the Best Wrecking Company, which eventually linked up with Kohrdt in Illinois. The Mardigian children were never publicly linked to the Giacalones or any other crime families.

The company and its affiliate, the Best Group, however, were cited by the Occupational, State and Health Administration 10 times for 30 workplace violations in four states during the 1990s, according to OSHA records. The violations included workers exposed to asbestos and lead vapors as well as the explosion of a 3,000-gallon tank of liquid oxygen.

(On a side note, when the News & Review called the Daily Southtown last week to try to talk with reporter Carmody, we learned he had left the paper in 1999 for a job in Austin, Texas. And we learned that the 46-year-old George Polk journalism award winner and father of one apparently committed suicide in Austin on March 7.)

In the end, the story comes back to Kohrdt. He’s just a simple guy, he says, an everyman who wants only to help the good people of Butte County, the salt of the earth.

“So all I’m saying is don’t criticize me until you know me. We’ve done a lot for this community that people don’t know. I work with the police department, the fire department, in a pretty heavy-duty manner of fashion. But no offense to you guys, I don’t want any publicity. I just want to help my community. I don’t need to have somebody shake my hand because I’ve done something great.”