IMAGE: COASTAL AREA
Reed Saxon  /  AP
A rusting barbed wire fence marks the line between the Pacific Shores subdivision, foreground, and public land and the Pacific Ocean at the Lake Earl Wildlife Area near Crescent City, Calif.
updated 1/25/2008 8:22:42 AM ET 2008-01-25T13:22:42

Her home is just a camper parked atop a dune, but to Lois Holzworth it's paradise on the remote North Coast where great blue herons strut in the lagoon outside her door and the ocean crashes on a beach nearby — all for $50 a month.

It's not without shortcomings, though: The 79-year-old goes without electricity and running water, and for three months of the year rising waters threaten to swamp the portable toilet and rusted Oldsmobile that sit in a gully below.

"At night when it's all flooded and the water gets in here real deep, it just reminds me of a monster from the deep — it's a dull kind of spooky roar," Holzworth said.

A flood, however, is not what is likely to drive Holzworth to drier land. The narrow sandy spit she occupies is the subject of a battle that has gone on for decades between bureaucrats hundreds of miles away and unwitting landowners who thought they had bought prime real estate in the 1960s.

In the eyes of the state, Holzworth is a squatter living in the middle of one of California's most important coastal wetlands — a 12,000-acre area called the Tolowa Dunes State Park and Lake Earl Wildlife Area. To some landowners, she is staking her turf as a tenant on land that was legally subdivided, developed and sold.

Pacific Shores, as it was dubbed by a developer who sold lots on the cheap to far away dreamers, is a limbo land where the state has been able to prevent development but unable to get lot owners to give up their quest.

Owners have been squaring off with the agency that oversees coastal development almost since the Coastal Act of 1976 was created, partly in response to Pacific Shores and similar undevelopable subdivisions.

About a half dozen times a year, commissioners grapple with some new legal entanglement thrown up by owners so bent on building they've spent upwards of $2 million on lawyers and environmental studies.

"People have this need to feel they own this piece of ground so they will jump on it no matter how unrealistic it is, even if they'll never really be able to build on it," said Peter Douglas, the California Coastal Commission's executive director. "I think they were swindled, I really do."

If the commission and other public agencies have their way, a subdivision that never developed much beyond a network of paved streets could be on the road to officially being reclaimed by nature.

From dream to nightmare
In the 1960s, the Tamco Development Company purchased more than 760 acres of land that sat between the ocean and joint Lakes Earl and Tolowa. The ranching family who owned the property would periodically breach Lake Earl and let it drain it into the ocean to keep the grazing land dry year round.

The two lakes are joined at a narrow bend and form a lagoon. The water rises and falls with the rains and tide, spilling over sandbars and into the ocean several months of the year.

The mix of fresh and salt water provides habitat for at least 15 threatened species such as the western snowy plover, the Oregon silverspot butterfly and tidewater goby. As many as 100,000 birds use the wetlands during seasonal migration.

When the waters were low, developers paved 27 miles of roads and put up street signs. With county approval, they began selling the half acre lots in the newly named Pacific Shores subdivision for as much as $10,000 to buyers mostly from Southern California and Hawaii.

Less than a decade later the Coastal Act was passed. Ever since, lot owners have been unable to get a water and sewer system installed in such a sensitive area of seasonal wetlands, sand dunes and endangered species.

Maxine Curtis, a property owner in Oregon who feels scammed, said that "if you go out there and walk around you'll realize there's no way you're ever going to build out there. We went out and looked at one property and it was flooded in the driveway — you couldn't drive up into it."

The roads are now cracked and lead toward rusted mailboxes waiting for letters that will never come. Some lots have been turned into a squatters' paradise of abandoned buses, boats and trash. A half-submerged "for sale" sign marks one parcel.

Many owners remained defiant.

IMAGE: ABANDONED BUS
Reed Saxon  /  AP
A burned-out school bus and other debris left by squatters litter a lot in the Pacific Shores subdivision.
In 1988, they created a water district that collected fees used to pursue the right to build. That same year Fish and Game and the county stopped breaching the lake to let it drain into the ocean, instead allowing it to flood.

"The idea is to return it to as near natural as possible," said Tim Williamson the Fish and Game area manager, who oversees the Lake Earl Wildlife Area. "Even without bringing the water down, it's 70 percent wetlands."

Over time, the subdivision's neatly trimmed lots and roads fell into disrepair, confounding property owners who were occasionally found wandering around searching for their lots.

Locals, meanwhile, found other uses for the vacant subdivision.

"Ninety percent of the residents here either learned how to drive here or were conceived here," Williamson said.

Faced with so many hurdles, many lot owners gave up and sold to the state or to unsuspecting buyers from as far away as Israel.

A 2006 landauction.com ad invited prospective bidders to: "Listen to the sound of the splashing waves and breathe the crisp ocean air Pacific Shores is known for! If you've been dreaming of a coastal home now is the chance of a lifetime."

For those who have clung on to their property, it's not hard to see why.

Dwayne B. Smith, a lot owner in Seal Beach, bought his first Pacific Shores property in 1964. At the time, he was a 29-year-old rookie with the Los Angeles Fire Department living with his wife in rented house. He responded to an ad in the local paper and a sales representative came over, dazzling them with a slide show.

The young firefighter paid $20 a month out of his then $400 a month paycheck until he finally paid off the $5,000 price tag for the property.

"The vast majority of us were young couples with this dream of one day moving up to this beautiful part of California," he said.

Now 73 and living in a retirement community called Leisure World, Smith has yet to lay a single brick. As the years have passed, Smith has built all manner of homes in his mind, from a Kennedy-style complex for family vacations to a one-story ranch style home for retirement.

Had he been able to develop, Smith might have watched pelicans lumbering over crashing waves from his front porch and fished the lake a few steps from his back door.

Time has taken a toll on those who have remained. Smith and other graying members of the homeowners association still hold monthly meetings at a Los Angeles hotel to strategize. Many believe state and federal agencies are working together to allow Pacific Shores to flood to snap up lots on the cheap.

"It's like being between Malibu and Palos Verdes and being told your lot is worth $4,000," said Tom Resch, who heads the property owner's association.

Smith has filled a thick manila file with photocopied newspaper articles, maps and letters he's scribbled on. He tapes interviews and answers most questions about his development battles with a lengthy history about the subdivision. His frustration is palpable.

"It's like owning Florida swampland," he said. "You pay your taxes but the government won't allow you to do anything with it."

At times efforts to turn the situation around have gotten them into trouble.

After the Army Corps of Engineers stopped draining the lake, Smith and Resch were caught doing just that in 1995 and were fined $5,000 and put on 18 months probation. That year Smith fired off a series of letters pleading their case to the assistant secretary of the U.S. Interior Department and the secretary of defense.

"This letter is to inform you of an especially egregious and sinister situation," he wrote. "Federal agencies are conspiring with the United States military to sabotage the development of a 1,534 lot subdivision of homesites in Northern California."

Water district closed down in December
Holzworth and her handful of neighbors are now living on borrowed time.

After a decades-long standoff, state officials appear to be finally closing in, ousting squatters and buying back half of the lots. Local officials moved to dissolve the dues-collecting water district in December on the grounds that it never provided any water or septic services.

Many have sold their lots for about $5,000 a parcel to the Smith River Alliance, a nonprofit working with the state. The land will eventually be added to the nature preserve.

Defiant property owners remain among the only obstacles to completing the wildlife area. Dwayne Smith believes lot owners are being cheated, but when asked if he'd sell for a fair price and walk away after such a long ordeal, he hesitates.

Like tens of thousands of others still holding onto undevelopable parcels around the country, he isn't ready to let go of the dream.

"I have hopes of turning this around," he said. "What happened is we waited too long."

Last fall, Holzworth was visited by a state Fish and Game officer who told her the day is coming when she'll have to move. By law the only thing lot owners can do is pitch a tent for two weeks out of the year.

"There's always people hassling you," Holzworth said. "You get hassled a lot here."

She told the officer she had a legal lease — and has for a decade.

She tried to hold her ground but wobbled a bit in her hip replacement brace, her bare feet unsteady on the shifting sands.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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