Pando

A Journey Through Oligarch Valley, Pt 8: Redwood City (Detour)

By Yasha Levine , written on September 9, 2015

From The Oligarch Valley Desk

Previously: Pt 7: Corcoran (Exit 334)

You can pick up the scent of Oligarch Valley overlords in the most unexpected places.

Take the massive real estate development being planned for Redwood City, California, a wealthy suburb about 20 miles south of San Francisco. The plan calls for a plug ’n play community that would swell the city’s current population of 75,000 by 30 percent, cramming schools, office buildings, shopping malls, parks, playgrounds and 12,000 homes into two square miles of marshland owned by Cargill Inc., the largest private company in America and one of the biggest, most evil agribusinesses in the world.

I lived in San Francisco for nearly two decades and I had no idea that Cargill was the biggest private landowner in Redwood City and the owner of 1,436 continuous acres of premium shoreline property. If you’ve ever visited San Francisco, you’ve probably seen the land while landing at SFO: Cargill uses it to harvest salt, and it can be seen from the air as a patchwork of deep brown and darkred tide pools.

Cargill’s development plan is fiercely opposed by locals, who want to restore the salt ponds back to wetlands, their natural state, and turn it into a nature preserve. But local opposition has been the least of Cargill’s problems. The bigger issue is water: Redwood City uses just about every drop of its annual water supply.

But Cargill’s partner, DMB, a luxury real estate developer outfit from Arizona has pulled out a trump card. They won’t be needing Redwood City’s municipal water after all; DMB had plenty of its own water.

According to documents filed with city’s planning department, DMB had acquired its water supply through a 70-year lease agreement with some rinky-dink company called the Nickel Family LLC in Bakersfield. DMB would not disclose how much it paid for the lease, but wasn’t cheap. They were leasing a massive amount of water—nearly enough to double Redwood City’s water allotment and supply a city of up to 60,000 people. The lease probably put a serious dent into DMB finances. But the cost surely pales in comparison to the killing DMB and Cargill stand to make on the project.

And it’s not like residents of Cargill Acres are going to get that water free of charge. Nope, you can bet they’ll squeeze these residents for as much as much they will bear. And they won’t complain either, as half of them will be blissfully working for Google.

But its not Cargill or DMB we’re interested in. The real question is: who or what is Nickel Family LLC? It’s clearly a farming operation of some sort, but who has that much water to lease out—especially for 70 years into the future? 

Turns out that there’s nothing rinky-dink about it. The Nickels, of Nickel Family LLC, are about as close to royalty as you can get out here in the Golden State. The Nickels are descendants of Henry Miller, the “Cattle King of California.” 

“I thought once that I would own the whole state of California,” Miller told a friend a few years before he died in 1916. He didn’t own the whole state, but Mr. Miller got close—too close.

The son of a German butcher, he ran away from home as a teenager, made his way to California by boat, adopted the name Henry Miller and scammed his way to unbelievable riches as a cattle baron, supplying beef to San Francisco during the Gold Rush. At some point, he was considered the largest landowner in the United States. The man had so much land that he liked to brag about being able to drive his cattle from Los Angeles to San Francisco without ever leaving his own property.

“Henry Miller left behind him the largest area of land under a single ownership ever assembled in America, probably the world, if private individual ownership and now the feudal domains of Kings is alone considered,” gushed the New York Times in a 1921 profile five years after his death. “Eight hundred thousand acres in California—more than 1,250 square miles—nearly as much in Oregon and half as much in Nevada, constituting the entire holdings of Miller & Lux, Inc.” 

In San Francisco, he married into elite anglo society and started leveraging his profits and connections into buying as much real estate as he possibly could, always on the lookout for land with water rights and access to rivers and streams. Miller was among the first to understand that water was the key to power and wealth in California, and was the state’s most valuable and strategically important resource. He snatched up land on both sides of major California rivers, monopolizing water supply.

The man was obsessed with growing his business operation, and supposedly took pleasure in nothing but work, not even in food. “I’d stop eating if I could,” he once wrote a friend.

The man was a miser and skinflint. “Even after he had become a multimillionaire, he always insisted on having his potatoes boiled in the jackets because the skins could be peeled thinner that way, and he would go into a rage if he were given a full cup of coffee after he had asked for only a half cup, because this meant he was going to have to drink more than he thought was good for him in order to avoid the wastefulness of throwing any coffee out,” according to a 1967 profile in the American Heritage Magazine .

The Nation’s legendary editor Carey McWilliams was in total awe of Miller’s business abilities, writing “His career is almost without parallel in the history of land monopolization in America. He must be considered as a member of the great brotherhood of buccaneers: the Goulds, the Harrimans, the Astors, the Vanderbilts.” California water historian Marc Reisnser also showed deep respect for the man’s talents, reverently describing Miller a “mythical figure in the history of California land fraud.” 

Miller used corrupt state courts to steal land from owners of Mexican land grants. One of his crowning achievements was when Miller and Lux litigated a Mexican-American landowning family into insolvency and then forced them to sell Buri Buri Ranch, a chunk of land stretching from the southern edge of San Francisco down to Burlingame. He did it all with the help of notoriously corrupt lawyer and future California governor, Harry Haight. Yep, the guy hippy Haight Street was named after. Stealing Buri Buri was all about securing grazing land for his massive cowherds as close to San Francisco’s hungry meat market as possible. They didn’t have ice boxes then. So once you kill it, you better eat it fast.

Eventually Miller’s dominance began to slide. Railroads and refrigerated car technology allowed the powerful Chicago Meat Trust to shoulder him out of the way and deliver their shitty high-density feedlot beef directly to San Francisco.

After his death in 1916, Henry Miller’s empire passed to his spoiled children, who squandered their inheritance for two generations, until Miller’s entrepreneurial spirit was reincarnated in his great grandson, George Nickel Jr.

In the 1960s, George Nickel joined with the Boswells, Chandlers and other Oligarch Valley’s farmeraristocrats in support of Governor Pat Brown’s plan to build the California Aqueduct, which would run right through the Nickel family’s land holdings in Oligarch Valley.

Nickel pitched in to help Governor Brown in anyway he could, even volunteering to loan the state a bunch of water for construction purposes. “After the aqueduct was done, the state repaid him with three times as much water. He banked it in an aquifer and years later sold it to Chevron and Union Oil for drilling,” reported the Sacramento Bee. Nickel pocketed $8 million in the deal, which is considered to be one of the earliest sales of farm water.

But that was just the beginning. Like other Oligarch Valley farmers, Nickel began experimenting with the lucrative business of “water banking.” Now that he was plugged into the California Aqueduct, he could divert water from a river into an underground aquifer during wet periods, where it would be stored for later use.

“My father was marketing waterways before anybody else, before it was cool,” said Jim Nickel, who has headed up the Nickel family ag and water business after his dad died in 2004.

In 2001, just before George Nickel finally kicked the bucket, the old man used his hereditary water rights to pull off one final scam that would keep his kids flush with cash for years to come. The Sacramento Bee explained it in 2002: 

"Henry Miller was one of California’s original water barons as well, and today his descendants are wheeling and dealing in water with style and gusto. Just last year they pulled off a trade that brought them millions of dollars’ worth of water on the California Aqueduct—the state’s main waterway and an ideal trading post. 

"...Last year Jim Nickel swapped some family water with the county Water Agency for $10 million and some water on the California Aqueduct. He got less water than he had, but the location was worth it. A few months later he sold every drop of the year’s allotment to the state’s environmental account for an eyepopping $460 an acre-foot, or $4.6 million.”

This swap went beyond the $4.6 million. The deal handed the Nickels 10,000 acre-feet of taxpayer-funded water a year in perpetuity—as in, forever. It also gave them license to market the water to anyone along the 700-mile span of the California Aqueduct. That’s enough water for a city of 100,000.

“We consider ourselves farmers,” Jim Nickel told the SacBee. “But we have to admit the water marketing has become a bigger part of our balance sheet than it used to be. It’s significant now.”

Best part? Regardless of how much money the Nickels make selling this water, California has to keep pumping in more every year, so they can sell it again and again and again. Oh and by the way, shipping and handling’s on the house, of course. The Nickels get the profits, Californians pay the costs. It’s an immutable law of Oligarch Valley economics.

It is this exact chunk of hereditary water rights that is being used to back Cargill’s $6.8-billion real estate development currently in the works in Redwood City. The project depends entirely on the Nickel family, which has agreed to lease it out to DMB, the developer of the project, for next 70 years.

What is interesting is how frequently the DMB-Nickel water partnership pops up in other real estate development projects connected to Oligarch Valley. DMB is also a major partner in the Tejon Ranch development, which is also being underwritten by a portion of Nickel family water rights.

Nickel’s water allotment backed another speculative real estate project involved in jacking California’s largest public employee pension fund for $1 billion. The development was planned to go up on the edge of the San Fernando Valley at the foot of the Tehapachis, but the whole thing collapsed after the real estate bubble burst, and took a lot of investors down with it—the biggest investor was CalPERS, which invested $1 billion into the development right before the whole thing crashed and burned.

Without the Nickels’ water, the real estate development would probably never have gotten off the ground, and CalPERS wouldn’t have been goaded into making such a disastrous investment.

Yep, who knew that Henry Miller’s rapacious scamming and accumulation of water rights in the Central Valley would one day be used by Wall Street hucksters to defraud California’s public pensions system.

The vicious cycle completes itself: Miller’s expansion was financed by East Coast banking interests, who are still profiting off an investment their tribe made more than 100 years ago.

To be continued...

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Editor's Note: This article also appears in NSFWCORP: A Long Fucking Story, an oral history of NSFWCORP including interviews with former writers and previously out of print long-form features.