|Nevada BLM officials are trying to explain to federal investigators why they diverted millions of dollars of potential land-sale profits away from U.S. taxpayers and into the pockets of two big-time Las Vegas land-exchange operators.|
| One of the organizations
reaping major profits on the transactions was the
American Land Conservancy, a wealthy and well-connected
San Francisco-based environmentalist land-trading
"non-profit" very active in recent years in
both northern and southern Nevada.
Nevada senators Harry Reid and Richard Bryan have both introduced federal legislation to smooth the path for several ALC-arranged land exchanges. Secretary of the Interior Bruce Babbitt is a founding board member of the organization.
Hancock, who retired from the BLM in late 1989 but continued to monitor what he saw as deteriorating land-exchange practices, in late 1994 wrote the Inspector General for the U.S. Department of Interior.
That letter, detailed and eight pages long, set off a year-long audit investigation of bureau land acquisition practices in Nevada, beginning in early 1995, when Acting Inspector General Joyce Fleischman launched a review of the exchanges cited by Hancock.
Those exchanges included some managed by the American Land Conservancy and others managed by Olympic of Nevada, Inc., a Flagstaff, Ariz. firm.
The draft report of the IG audit is now circulating through BLM offices in this state and Washington for officials' review and comment.
Pocketing the difference between those prices and the actual market value of the properties, he points out, are real estate operators like the American Land Conservancy, Olympic of Nevada, and the private parties that they represent in the transactions. Losing out, he says, are the taxpayers and the public.
As an example, Hancock cites the $27 million exchange of private lands near Reno for federally owned subdivision lands in Las Vegas in 1994 -- an exchange brokered by the ALC.
He notes that "the appraisal report did not include a market approach to value, historically the most dependable."
Instead, the Bureau of Land Management let appraisers hired by the Galena Ski Resort, owner of the 3,700 acres, determine value "based on a very sophisticated subdivision modeling approach and use of a discounted cash flow technique," the reliability of which varies greatly and can be, he says, self-serving.
Those assumptions included, he says, 1) that the U.S. Forest Service had issued a permit for the development of ski lifts, 2) that Washoe County had approved all permits, and 3) that the parcel included 778 acre feet of water rights.
In actuality, says Hancock, none of those assumptions were true. But Galena Resorts, which had acquired most of the lands in 1987 for about $800 per acre, was able to get an exchange value from their ALC-brokered deal with the government of about $5,400 per acre.
Based on a write-down of Galena's investment that the firm took in 1993, Hancock estimates that the resort company's total per-acre cost probably did not exceed $1,400 per acre -- leaving a per-acre profit of about $4,000, or a windfall of about $15 million.
2) The ALC arranges with the Forest Service to deed the land to the U.S. government when the BLM gives ("patents") to the ALC certain desired federal land of a value equivalent to the private parcel's jacked-up selling price, and then
3) once the valuable federal land is at hand, the ALC activates its option to buy the private parcel desired by the forest service.
Not only does this procedure rip-off the American taxpayer -- the real owner of the public lands -- says Hancock, but none of the process is really necessary if environmentally sensitive lands need to be acquired by the government. The Federal Land & Water Conservation Fund has about $9 billion available to spend on buying such land, says
Hancock, and those funds are basically
And BLM officials admit that they've been flooding the county with land exchanges. More, they say, are being processed in Clark County than anywhere else.
In the last decade, according to Mike Dwyer, district manager for Clark and southern Nye county, the BLM has privatized 17,380 acres, with another 17,000 acres available for development.
While the developers using the land swaps make a profit, he said, there is no benefit to the citizens whose taxes paid for the infrastructure that made the county land valuable in the first place.
Instead, said Christensen, it's the reverse: thousands of additional people then move to Southern Nevada, and hit the environment with more carbon monoxide emissions and other growth-related problems.
Another reason the swaps have become common, Hancock says, is that the federal land managers don't have to justify their actions by demonstrating the land they want is a high priority.
That differs from the procedure required when monies from the Federal Land and Water Fund are used, he says.
"You have to justify your priorities and a lot of these lands that the government is picking up by exchanges ... would never shake out at a high-enough priority that knowledgeable people would say, 'Hey, yeah -- we should go ahead and buy this with public funds.'"
Another is the huge profits made by the two main private land-exchange operators in Clark County, the American Land Conservancy and Olympic of Nevada, Inc.
Hancock notes that until recently the ALC owed the federal government $8 million for Las Vegas subdivision land acquired by exchange in 1994 from the BLM. To help clear this debt, the ALC offered the government land which had been valued by a reputable appraisal firm that same year at $4.7 million, on which the ALC held an option.
"The question is," he says, "how these people can dabble in real estate" and yet remain "non-profits."
"We know that they're making money when they transfer these lands to the subdividers, and you and I couldn't do that. Somebody would blow the whistle on us if we were out here brokering sales between two people and then taking a piece off the top."
"My fundamental concern," says the former BLM appraiser, is to "let the public get the return on it. Don't let the land conservancy feather their nest with it. To my knowledge, they've never donated any bird sanctuary to the public like the Nature Conservancy does all the time; Nature Conservancy's set up some beautiful refuges around the world, but this outfit, hell, they're just kind of feathering their own pay scale, I suspect."
Hancock says he has filed formal protests with the BLM on about ten of what he calls the "sweetheart deals" arranged by either the ALC or Olympic of Nevada.
"If someone is digging a tunnel under Fort Knox," says the retired appraiser, "you shouldn't have to have 'standing' to turn 'em in."
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