More than 30,000 acres of almond orchards have been planted in eastern Stanislaus County the past decade, most of them on what had been dry rangeland.
Thanks mostly to groundwater pumping, millions of leafy green trees now cover those rolling hills.
Rather than revelry over that agricultural accomplishment, however, concerns about the drought and falling groundwater levels have tainted the transformation.
Criticism abounds, and there are calls for a moratorium on groundwater drilling.
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Many landowners control those newly planted orchards, most of them longtime local farming families.
But one particular grower, a Silicon Valley-based investment group called Trinitas Partners, has garnered the bulk of the attention – much of it surprisingly negative.
There are reasons for that:
• Trinitas is big, controlling about 7,200 acres of orchards east of Oakdale, north and south of the Stanislaus River.
• It’s run bythree San Mateo County guys
who had no farming experience in 2008 when they launched their company and started buying up raw Stanislaus land.
• It purchased about 57 large parcels in private deals directly with landowners, avoiding real estate agents and using a legal filing maneuver to essentially keep secret how much it paid for all that land.
• It won’t reveal the names of investors who bankroll its projects, which has led to wild speculation about Oprah Winfrey, Condoleezza Rice, John Madden and other celebrity involvement.
• It’s been sued a couple of times by local landowners claiming Trinitas wronged them in property deals, and the company paid$4 million to settle
one of those lawsuits.
• It has drilled dozens of large groundwater wells to nurture its 800,000 almond trees, but it won’t say exactly how many wells it pumps.
• And it persuaded theOakdale Irrigation District to expand its borders
so virtually all its orchards soon will start receiving highly coveted surface water from Sierra snowmelt. That’s costing Trinitas about $31 million in OID annexation fees and irrigation infrastructure expenses.
Trinitas’ principal owners say their company’s local reputation has been unjustly tarnished, and they want to correct the public’s misperceptions. They recently visited with The Modesto Bee’s editorial board and allowed a reporter and photographer to tour their orchards, watch their harvest and interview their workers.
“We’ve been unfairly characterized as the poster child for groundwater abuse,” lamented Ryon Paton, one of the three controlling partners. “Pictures of our ranches were always on the front page (accompanying stories about well drilling).”
The perception that Trinitas is run by outsiders simply motivated by profit is wrong, Paton said. “We are good stewards of the land. We’re very environmentally sensitive and have a sustainability conscience,” assured Paton, 59, whose background is in commercial real estate. “We’re not abusing natural resources.”
While he resides in Hillsborough, one of the nation’s wealthiest communities, Paton said he visits Trinitas’ Stanislaus operations a couple of times a week.
“These are long-term investments for us,” Paton said. “We’re not short-termers. … We’re not flippers. Nothing we have is for sale.”
Big payments to OID
The millions of dollars Trinitas has spent establishing itself is not obvious in the old Quonset hut office it leases near downtown Oakdale. Its money has gone instead into converting dry, rocky land into lush, irrigated orchards.
“Clearly, everyone knew these lands were out here and didn’t want anything to do with them,” Paton said. After buying its first 824 acres in 2008 near Rodden Lake – north of Oakdale and west of Knights Ferry – Trinitas began purchasing adjacent properties.
“We didn’t expect to scale up as fast as we did,” Paton said. “We got a lot of door knocks by neighbors” wanting to sell Trinitas their acreage.
A couple of its land deals ended up with civil lawsuits alleging contract breaches. Trinitas lost one of those legal battles last December, after jurors sided with a guy who had sold the partners 1,269 acres. Trinitas eventually agreed to pay $4 million to settle that case.
While Trinitas may not have had much experience with agricultural land deals when it launched, it soon focused its strategy.
Paton said Trinitas started buying non-irrigated land near OID canals, based on an “unguaranteed hope” that it could get those properties annexed into the water-rich irrigation district.
Doing so isn’t cheap.
Paton said Trinitas will end up paying OID about $20 million for the annexation, and it’s spending an additional $11 million for the pumping and filtration infrastructure needed to distribute water from OID canals to its 7,000 acres of rolling hills.
Trinitas also has agreed to pay significantly more than other OID customers for every drop of water it gets, and that surface irrigation will be provided only if the district has enough water to meet the rest of its needs.
OID currently charges its farmers about $20 per acre for water, no matter how much of it they use. But Trinitas will pay that per-acre fee, plus an additional $55 per acre-foot for any water it receives.
According to Trinitas, its trees need only 36 to 42 inches of irrigation water per year to thrive. By contrast, OID calculates its current almond growers use nearly 52 inches of water on average per year.
Trinitas said it designed its orchards to be particularly water-efficient.
“The cost of growing almonds is going to go up because of the price of water,” said Paton, who acknowledges the validity of public concerns about groundwater sustainability and the drought. “The world just changed.”
Trinitas doesn’t plan to pump groundwater for much longer.
“Next year, we’re going to irrigate over 50 percent of our orchards with OID water, and by 2016, we’ll be 95 to 97 percent dependent on it,” said Paton, who is confident OID will have enough surplus water to sell them.
A most profitable year
If not, Trinitas could continue to pump its wells. The company won’t say how many it’s drilled since 2008, but Stanislaus County records show it obtained at least 30 well-drilling permits between mid-2010 and the end of 2013.
“We’re not digging any more wells,” Paton promised. He said the ones Trinitas already drilled are 350 to 550 feet deep and cost $200,000 to $300,000 each to install – not counting the cost of bringing in the electrical power lines needed to run them.
It paid big bucks to install precise drip irrigation systems to water every tree, and it had to build miles of private roads to access its remote orchards. Then there was the cost of deep-ripping the land, conditioning the soil, preserving ecologically sensitive areas and planting those 800,000 trees.
Investor funds – mostly from outside Stanislaus – paid for all that.
“When we started, we had no funds to invest,” said Kirk Hoiberg, another of Trinitas’ principal partners whose background is in commercial real estate.
Hoiberg said the company’s founders in 2008 raised money from friends and family members, and they took out personal loans to buy that first piece of Oakdale rangeland.
“We didn’t really know much about the almond industry when we started,” said Hoiberg, who lives in Menlo Park. “But we liked the fact there’s a growing worldwide demand for almonds … and even when prices are at normal levels, you can make a decent return.”
The principal partners, including real estate investor William Hooper, didn’t take a salary for three years.
That’s changed. Trinitas had 3,000 acres of trees old enough to harvest this season, and almond prices are at record highs.
“The prices are clearly between $3.25 and slightly north of $4 a pound,” Paton said. When Trinitas planted its trees, he said, it calculated there would be a positive return on investment if the nuts sold for $1.25 to $2 per pound. “This is the most profitable year since our company started.”
Lots of investors eventually will get a taste of Trinitas proceeds.
Hoiberg described Paton, Hooper and himself as “sponsors of investment opportunities.” He said growing almonds has become popular with investors because “it’s a very tangible hands-on business.”
There are 60 to 70 investors, including investment groups, that have partial ownership in one or more Trinitas orchards, according to Hoiberg.
“The investors are a real mix. There are some local people and a lot of non-local people,” Hoiberg said. When asked whether it’s true that Winfrey, Rice and Madden are among them, he said, “If they are, I don’t know it.”
Paton insisted “no one famous” owns part of Trinitas.
Trinitas actually has lots of parts. Its different orchards are owned by more than a dozen limited liability companies, all of which start with the word “Trinitas.”
Many of those LLCs include names of roads near the orchards – like Warnerville, Crabtree, Olive, Tim Bell, Rodden and Fields. Others include the names of former landowners, like Ardis, Grohl and Thomson. And some are distinguished simply by numbers, like 321 or 611.
Investor defends company
One of Trinitas’ local investors is Dave Germano of Hughson. He also is the company’s senior farm adviser and a well-seasoned almond grower.
“This is my life. This is my passion,” said Germano, who grew up in an Escalon farming family. He’s heard some of the less-than-kind gossip about Trinitas, and he disputes it. “Maybe I’m prejudiced, but I don’t see anything bad in us.”
Germano defended the planting of trees on Stanislaus’ formerly uncultivated ground.
“The world population in my lifetime has doubled, and people are hungry,” explained 63-year-old Germano. He noted how almonds are high in protein, fiber and good fat.
Trinitas also has boosted Stanislaus’ economy, Germano said, because “we try to utilize as many local companies as we can.”
That includes buying tractors, trucks, tires and hardware from Oakdale-area shops and trees from Stanislaus nurseries. It hires Roche Brothers of Escalon for harvesting services, and Wilkey Industries of Turlock for hulling and processing.
Trinitas employs 70 full-time workers, and it hired about 100 seasonal employees this year.
“We like to pay above what the going wage is,” Germano said. And he stressed how it’s company policy to promote from within whenever possible.
Farmworker Armando Flores of Waterford can attest to that.
“I was a guy with a shovel digging up the weeds when I started here,” recalled Flores, 23. That was in 2010. Now he is the company’s equipment supervisor, overseeing about 30 people. “I worked my way up to where I am right now.”
Flores emigrated from Mexico about a decade ago and began working on a farm with his father when he was 15. He attended Hughson High, but he admitted he “didn’t concentrate too much in school.”
“When I started here, I didn’t speak English,” said Flores, who credited his Trinitas supervisors and co-workers with teaching him the language. He said they also helped him attain permanent legal working status, which enabled him to get a driver’s license.
Now he drives the company’s big trucks, backhoes and other machinery.
“You can say it was my dream working here,” Flores said when the bosses weren’t around. “I’m happy. I love my job.”
Ranch supervisor Alex Rodriguez, who is only 26, also praised how Trinitas treats its employees.
“They have quarterly barbecues and do things like dental days when they take all the employees to a dentist,” said Rodriguez, who grew up in Escalon, graduated from Ripon High and now lives in Riverbank. “We help each other. We’re a team here.”
Rodriguez said he, too, has heard the unflattering talk about Trinitas: “They say it’s a large corporation that’s here just to burn everyone. But that’s just not the case.”