LeFever Mattson and the real estate buys that have Sonoma residents alarmed

Many of their residential addresses are occupied by modest-wage employees who work for Mattson and LeFever.

“I know of two properties — one business, one apartment — where the tenants paid little or no rent for months, and seemingly there was indifference or an avoidance to collect,” David Daniel said.

Daniel helped oversee payroll, human resources and facility maintenance, and other aspects of the company as general manager at Ramekins Culinary School, the General’s Daughter wedding venue and parts of the Cornerstone commercial complex, all LeFever Mattson-owned businesses, before resigning in November 2019.

It all points to a gaping question: How do Mattson, 61, and LeFever, 62, continue to attract investment while showing little return on the money they spend in Sonoma?

To report this story and analyze the purchasing spree, The Press Democrat spoke to forensic accountants and experts in real estate, investment strategy and land-use planning. Few were willing to be identified, mostly for fear of litigation, but virtually all cited peculiarities in LeFever Mattson’s pattern of acquisitions.

Their buying and selling can be dizzying.

KS Mattson Partners, for example, bought 151 E. Napa St. for $3.8 million on June 1, 2021. Nine days later, KS Mattson sold it to a sister company, River Birch LP, for $3.95 million.

Four months after that, River Birch transferred it to LeFever Mattson. The next day, LeFever Mattson sold a partial share to Risa Meyer for $264,000.

A tree-shaded property on the outskirts of town, 1549 E. Napa St., went from KS Mattson Partners to Napa Elm LP to LeFever Mattson to RT Capitol Mall LP in the span of 2½ years.

An office building at 430 W. Napa St. was bought by Tradewinds Apartments LP, KS Mattson and Peak Napa Street Associates LLC; Peak Napa Street later sold its share to KS Mattson, which sold to Tradewinds Apartments, which sold to LeFever Mattson.

An out-of-town property, 2128 Red Rose Way in Santa Barbara, passed from Tim and Amy LeFever to Carol Jacobs, then to Kathleen Hamlin, then to Ken Mattson, then back to the LeFevers, and finally last September to the Laurel Wreath Foundation — a nonprofit organization, founded by Tim LeFever, for which The Press Democrat could find no public IRS Form 990 tax filings.

The lineup of LeFever Mattson companies is ever shifting. LLCs get converted into limited partnerships. Entities come and go. One of them, Home Tax Service of America, has been suspended and revived five times since 2000.

Most of LeFever Mattson’s Sonoma deals were financed by a company in Sacramento called Socotra Capital. Socotra offers “hard money” loans, which are secured by real estate rather than credit. The company brings in investors to finance deals that traditional lenders won’t touch, usually at unfavorable interest rates as high as 10% to 12%.

“When professionals pursuing real estate opportunities are denied financing through conventional lenders,” the company’s website states, “Socotra Capital is there to rescue endangered deals with the support that only hard money can provide.”

Why, Mattson’s critics wonder, would someone with a huge real estate portfolio need to resort to that sort of high-leverage loan?

Socotra Capital executives did not respond to multiple interview requests.

Socotra also has a few dozen associated LLCs under its umbrella. That’s a common practice.

But adding to the atmosphere of curiosity, one of them is called Sonoma Highway LLC. It was organized in January 2015, before LeFever Mattson made their first purchase in the valley. They now own at least 25 parcels along Highway 12, or, as it’s often called, Sonoma Highway.

Residents unsettled, outraged

There is little obvious rhyme or reason to LeFever Mattson’s property portfolio in Sonoma County. It includes such landmark sites as Ravenswood Winery, the Sonoma Cheese Factory and the Depot Hotel, as well as hilltop luxury estates.

But it also features modest bungalows and empty lots, and the land beneath True Gents barber shop and a pool supply business.

The company’s loftiest purchase was $18 million, for the sprawling Cornerstone complex. (The group that sold it was led by Darius Anderson, the managing partner at Sonoma Media Investments, parent of The Press Democrat.)

The most humble was $400,000, for 443 Casabonne Lane, an empty lot behind Seven Branches Inn — another KS Mattson holding.

There are clusters of parcels — between West Fourth and Fifth streets, in the Springs, near Big Bend, and in the leafy neighborhood northeast of town — but little of it is concentrated enough to allow Mattson and LeFever to create a mega-development.

Amid the deluge of acquisitions, LeFever Mattson has sold off a few Sonoma properties, too — The Press Democrat found seven. LeFever Mattson took a cumulative loss of more than $2 million on the seven resales.

The partners often buy property before it hits the market or manage to get a home removed from local real estate listings before buying, according to several Sonoma Valley real estate agents. They use an out-of-town title company for their paperwork, documents show. They ask sellers to sign nondisclosure agreements, three confirmed on condition of anonymity.

These secretive and convoluted dealings have spooked the community. Despite its proximity to San Francisco and the tourist mecca of Napa Valley, Sonoma remains a close-knit and fairly sleepy town, surrounded by unincorporated neighborhoods that are by turns exclusive and ramshackle. It also has been rocked in recent years by a wave of political churn, both on its City Council and its school board, which has made residents more attentive to local government.

Sonoma is a deeply blue political environment, too, and unease over LeFever Mattson was compounded in 2019 by the disclosure of Facebook posts by Stacy Mattson attacking gay marriage — and by Tim LeFever’s close associations with such powerful right-wing groups as the Capital Resource Institute and the Council for National Policy.

The Capitol Resource Institute is focused largely on combating sex education and critical race theory in schools. Its executive director, Karen England, last year spearheaded the campaign against California Prop 1, which enshrined reproductive rights. The intensely secretive Council for National Policy, according to records acquired by the Center for Media and Democracy, was involved in extensive plans to discredit the 2020 presidential election results and incite the riot at the U.S. Capitol on Jan. 6, 2021.

It has all made Sonoma residents wary of LeFever Mattson for several years. But the opposition didn’t coalesce until the formation of Wake Up Sonoma in late November 2022.

Mattson is the local face of the business, because he lives at least part-time in Sonoma. Neighbors were outraged at the idea of local government linking hands with him, and the response — at community meetings, and in letters to the Sonoma Index-Tribune and commentary in the Sonoma Valley Sun — was vehement.

The county let a preliminary agreement to fund community outreach expire without renewal, and dropped the idea in mid-January.

The Wake Up Sonoma members, rather than being placated, used their victory as a springboard.

Since December, they have built their membership (at last count, 467 Facebook members and an email list of about 350), uncovered LeFever Mattson properties in parallel to The Press Democrat, attracted TV coverage and hosted robust information sessions.

One of those was Feb. 23, at the Sonoma Community Center. About 90 people attended, including four Sonoma City Council members.

Wake Up Sonoma core members walked everyone through a detailed PowerPoint presentation on Mattson’s growing assets, and the crowd ate it up.

People hissed when an organizer mentioned that Jerry Falwell Sr. — like Tim LeFever — also was heavily involved in the Council for National Policy. They groaned when reminded of the diminished operation of The Depot Hotel and applauded the scrapping of the Springs Plaza partnership.

Four days later, a similar number of people showed up for a presentation by Wake Up leader Veronica Napoles at a Sonoma Valley Democrats meeting. Both events reached their capacity, right around 90, and had to turn people away.

Some Sonoma residents fear Mattson and LeFever are benefiting from public funds or tax breaks. One of the slides flashed at the Feb. 23 meeting had to do with Opportunity Zones — a program that identifies low-income communities and offers developers deferrals on capital gains taxes.

But only four LeFever Mattson properties are in Sonoma’s Opportunity Zone, a slice of the Springs that runs north-south between Highway 12 and Sonoma Creek.

Wake Up organizers also point to the many red-ink sales, with one associated LeFever Mattson company selling to another at a loss. They wonder if a lower sale price will result in lower property taxes, depriving local government of revenue.

Probably not, according to Sonoma County Assessor Deva Proto.

“The assessed value would be based on market value, not simply sales value,” Proto said.

“We would be looking at comparable properties to determine the market value, especially if something was not an open market transaction. Depending on the situation, if you were the owner of both businesses, a transfer might not be determined to be a qualifying change of ownership.”

All in all, though, there are too many question marks hovering over LeFever Mattson to tamp down the mistrust.

“At some point, they’re gonna have to tell us what they’re doing,” Wake Up Sonoma’s Mary Samson said.

Shunning the spotlight

But Ken Mattson might think otherwise.

As opposition has mounted, as the phrase “Go Home Ken” shows up stenciled on electrical boxes in downtown Sonoma and anti-Mattson stickers appear on bus stops, he continues to shun the spotlight.

Mattson and LeFever almost never speak publicly. One notable exception was a Nov. 16, 2022, meeting to present the Springs Plaza proposal, when Mattson addressed the room for slightly less than two minutes.

“I understand that there is concern,” he said that night.

“We’re doing a lot of stuff in town, but I believe that the big picture vision we have for the area is completely in-line with what has been talked about over the past 20 or 25 years.”

It wasn’t nearly enough to mollify his opposition. The prolonged reticence has created a vacuum, and into it has rushed a torrent of speculation.

“When you live in a small community, and events take place where there is limited communication, what comes from that is what I would call the evolution of rumors,” Sonoma City Council member Ron Wellander said. “And what happens is, those rumors take on a life of their own.”

Despite spiraling theories about the intentions of Mattson and LeFever, there may be no real bombshells behind what they are doing in Sonoma.

Damian Archbold, whose Napa Valley real estate group currently lists several estate properties for more than $6 million each, had not heard of Ken Mattson before speaking to The Press Democrat. But after listening to a summary of Mattson’s purchasing pattern, Archbold did not react with alarm.

To the contrary, he thinks it makes perfect sense.

“Part of what I pitch to people who are coming in here to invest is that Napa is undervalued. And I’d say the same about Sonoma,” said Archbold, who has an MBA in finance and worked as an investment banker.

“If you look at the U.S. as a whole, and then go, ‘OK, what’s happened since COVID?’ You have had a real run on real estate, driven by low interest rates. A lot of markets — Austin, Las Vegas, Scottsdale — skyrocketed. Napa and Sonoma went up, but not nearly at the same rate.”

Where many of Mattson’s Sonoma neighbors see red flags, Archbold sees sophisticated tactics.

Hard money loans? They make sense, he said, if you need to “get a deal done tomorrow.”

Overpaying for some properties? It might be worth the expense if it makes the overall real estate portfolio more attractive, and if the person acquiring the land plans to sell off property or benefit from equity down the road, Archbold said.

The same rationale could explain why LeFever Mattson’s Sonoma holdings are all over the map — both literally and in terms of value.

It’s all about building a “blended portfolio,” Archbold said. Some properties may be fully developed and producing a cash flow. Others are more of a long-term investment. Maybe the owner just puts a fence around those.

“In the short-term, you may have a lot of debt,” Archbold said.

“But if you have reserves to service the debt, the portfolio could be very attractive to larger funds looking to diversify, or that hold a significant amount of real estate as a hedge against other investments. It’s just an investment strategy. Personally, I think it’s not a bad one.”

Elements of the scenario Archbold describes are borne out by the public record.

For one thing, Mattson and LeFever likely do have significant financial streams to keep them afloat. Those come from their income properties — high-end office parks in Sacramento and Concord (bought for a combined $57 million), a trailer park in Ceres and dozens of apartment buildings up and down the state.

The business partners also bought about 40 contiguous lots in Truckee in January 2018, which they are now marketing as “move-in ready” Pinyon Creek II Homes. (The seller was Pinyon Partners LLC. The registered agent for that company is Adham Sbeih, who is CEO of Socotra Capital.)

The apartments LeFever Mattson own — in Fairfield, Carmichael, Sacramento, Modesto, Perris and elsewhere — range from duplexes to a 328-unit complex in Lompoc. LeFever Mattson Property Management handles many of them — “over 3,000 residential units,” according to the management company’s website. That’s an additional revenue source.

And Archbold’s vision of investor-backed real estate deals seems to be how LeFever Mattson acquired many of their properties. That’s evident from recorded bank liens against a number of their holdings in Northern California. Those liens include multiple co-debtors — close to 200 different names when added up.

The Press Democrat reached several of these people. They acknowledged investing in LeFever Mattson purchases, but most wouldn’t talk about it.

Susan Gorin, the Sonoma County supervisor whose 1st District includes all of Sonoma Valley, agreed that it’s a great place for investment.

“I would encourage other investors to do that,” she said.

“And I would also reflect on the fact that maybe the scale of property holdings by LeFever Mattson is large compared to the size of the valley. But it’s not unusual for a corporation or individual to hold a number of properties. You can look at Cornerstone Properties, Basin Street Properties. It’s a pendulum swinging back and forth.”

A cadre of mom-and-pop investors might not be the flashy reveal many anti-Mattson activists suspect. But even if Mattson and LeFever are simply executing a sophisticated business plan, there may still be legitimate reasons to cast a wary eye to their spreading property empire in Sonoma Valley, some residents say.

“If we just keep following this model, that’s all our community is ever going to be. Controlled by someone who could care less about whether the people that live here are making a living wage, have a place to live and have a community that’s worth living in,” said Josette Brose-Eichar, a Springs resident and Wake Up member.

“And what that will do, the people living here are going to leave eventually. And the small businesses that make a place special, they’re going to leave, too.”

Coming March 26: Lifelong friends, broken promises and chain-link fence.

You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On Twitter @Skinny_Post.