IMAGE: Matt Grigsby

A powerful state lawmaker is pushing a bill for the February special legislative session that would bail out a New York-leveraged buyout firm by allowing an end run around Oregon’s land-use laws.

At issue is a proposed but not yet published bill called the “Agriculture Reinvestment Act.” The measure would allow Medford-based Harry & David and another company to get 1,000 acres of prime Jackson County orchard land included in local urban growth boundaries, where it could then be sold for commercial or residential development.

Greg Holmes, the Southern Oregon representative of 1000 Friends of Oregon, says the acreage is the “best of the best farmland left in the Bear Creek Valley.”

And the bill’s sponsor isn’t one of the usual Republican suspects when it comes to undercutting state land-use limits that prevent Oregon from resembling an endless string of roadside fast-food joints and McMansions. Rather, it is Rep. Peter Buckley (D-Ashland), co-chairman of the budget-writing Joint Ways and Means Committee.

In 2007, Buckley, like other Democratic pols, worked to ensure passage of Measure 49, which restored many of the land-use restrictions that had been gutted by Measure 37.

“Measure 49 delivers and it keeps the wide-scale development, the massive subdivisions, big box stores and strip malls out of prime agricultural land,” Buckley wrote in an Oct. 27, 2007, op-ed in the Ashland Daily Tidings. In his op-ed, Buckley decried the “large financial interests who stand to gain so much if Measure 49 does not go through.”

His words then and now accurately describe Wasserstein & Co., the New York leveraged-buyout firm that bought Harry & David in June 2004 for $253 million (Highfields Capital Management of Boston also owns 34 percent, but Wasserstein is the majority partner).

Wasserstein effectively borrowed the entire purchase price to acquire the nationally known Oregon business, placing a heavy repayment burden on the previously debt-free fruit merchant.

Harry & David’s most recent quarterly report, filed in November with the Securities and Exchange Commission, showed numbers softer than a bushel of rotten pears: Sales are plummeting and losses growing. The company, which employs nearly 1,200 full-time workers and thousands of seasonal workers, is almost out of cash.

And now Buckley wants the Legislature to help by twisting the land-use rules to develop farmland Measure 49 aimed to preserve. His bill would allow the sale of 1,000 acres of Jackson County orchards. In exchange, Buckley says, Harry & David would pledge to plant a larger number of acres on less valuable real estate elsewhere. The difference in value of the two land parcels would help pay down Harry & David’s massive debt. But 1000 Friends’ Holmes says he understands there’s no requirement the orchardists replant or that they do so in the same area.

“I don’t see how the bill helps agriculture,” Holmes says.

You don’t have to look far to find critics of the proposed bailout. One of Buckley’s fellow Democrats, Rep. Brian Clem (D-Salem), is unhappy with the proposal. Clem is chairman of the House Agriculture Committee, which Buckley has asked to introduce the bill.

“Every orchard owner in the industry has struggled at one time,” says Clem, whose in-laws own an orchard. “I’m sure many of them would have loved to sell off their land, too. Instead of blackmailing the state, maybe [Harry & David] ought to negotiate with their bondholders.”

The “blackmail” to which Clem refers is the job situation in Jackson County. Buckley says Harry & David and two smaller, troubled orchardists employ 7,000 people there. That is why he’s willing to bring legislation forward, despite having worked to protect farmland under Measure 49 and despite being critical of Harry & David’s financial practices, which he calls “extremely questionable.”

“I find myself conflicted and cautious in moving forward with the bill,” Buckley says. “My responsibility is to represent my district as best I can. That means I have to take employment into account.”

That argument doesn’t impress an activist in Oregon’s other major orchard area, the Hood River Valley. Jonathan Graca of the Hood River Valley Residents Association warns that OK’ing Buckley’s proposal could open up the entire state to similar shenanigans, including on land closer to Portland.

“It seems very short-sighted to say when there’s one downturn, ‘Let’s sell,’” Graca says.

Graca worked on the Measure 49 campaign in part to keep Hood River county orchards from becoming weekend ranchettes for Portlanders.

“It sounds like they [Harry & David’s owners] want to rezone because of their own irresponsibility, and that’s not a good reason,” he adds.

Buckley acknowledges Wall Street practices have put him, Jackson County farmland and an iconic Oregon business in a tough spot.

“It is the same situation that the auto industry faced,” Buckley says. “When you are faced with two negative paths, you try to find the least negative.”

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FACT: Harry & David contributed $2,500 directly to the campaign against Measures 66 and 67, and another $2,500 to ChamberPac, which passed the money on to the “no” campaign. Harry & David has not contributed to Rep. Peter Buckley.