The Herald: "Land sale to lawmaker raises ire"
SNOHOMISH - The City Council may change some of its ways after selling [Democrat] Rep. Hans Dunshee a sliver of park land so he can build a home overlooking Blackmans Lake.Posted by Stefan Sharkansky at February 12, 2007 03:15 PM | Email ThisMayor Randy Hamlin said reforms are likely after neighbors vented their anger because there was no notification of the sale of land in Hill Park before the council approved it Jan. 16.
A deal in the desert for Sen. Reid?
A bill he wrote could have affected the friend who sold the land.
By Chuck Neubauer and Tom Hamburger
Times Staff Writers
January 28, 2007
BULLHEAD CITY, ARIZ. -- It's hard to buy undeveloped land in booming northern Arizona for $166 an acre. But now-Senate Majority Leader Harry Reid effectively did just that when a longtime friend decided to sell property owned by the employee pension fund that he controlled.
In 2002, Reid (D-Nev.) paid $10,000 to a pension fund controlled by Clair Haycock, a Las Vegas lubricants distributor and his friend for 50 years. The payment gave the senator full control of a 160-acre parcel in Bullhead City that Reid and the pension fund had jointly owned. Reid's price for the equivalent of 60 acres of undeveloped desert was less than one-tenth of the value the assessor placed on it at the time.
Six months after the deal closed, Reid introduced legislation to address the plight of lubricants dealers who had their supplies disrupted by the decisions of big oil companies. It was an issue the Haycock family had brought to Reid's attention in 1994, according to a source familiar with the events.
If Reid were to sell the property for any of the various estimates of its value, his gain on the $10,000 investment could range from $50,000 to $290,000.
It is a potential violation of congressional ethics standards for a member to accept anything of value -- including a real estate discount -- from a person with interests before Congress.
In a statement, Reid's spokesman Jon Summers said that the transaction was not a gift and that the price was due to the property's history and the fact that only a partial interest was sold. Reid's action on the lubricants issue was unrelated to the sale and reflected the senator's interest in fairness for small businesses, Summers said.
Reid "has never taken any official action to provide personal financial benefit to me, and I would never have asked him to," Clair Haycock has told The Times. Haycock's son, John, who runs the petroleum-products distribution company with him, said in a recent e-mail that it was "absolutely wrong" to connect the land sale and Reid's lubricants legislation, which did not pass.
Legislative efforts
Records and interviews show that beginning in the mid-1990s, Reid tried several times to push legislation that would have protected lubricants distributors from abrupt cancellations by their suppliers. Though unsuccessful, the legislation sent a clear message to the oil firms that there was congressional interest in the matter, according to Sarah Dodge, then-legislative director for an industry group that worked on the bill.
By the time of the land sale, the Haycocks say, they had lost interest in the issue and were not aware that the legislation had been introduced.
Because an employee pension fund had owned the land Reid purchased, labor law experts contacted by The Times said, a below-market sale would raise additional questions. Pension fund trustees like Clair Haycock have a duty in most cases to sell assets for their market value, the experts said.
"I think this would have been considered a potentially serious issue" at the time, said Ian D. Lanoff, who led the Labor Department's pension division during the Carter administration and was provided basic details of the case -- though not the identity of the lawmaker -- by The Times.
"Theoretically it's a serious issue for the trustee who sold the property, though practically it may not be" because the pension plan is now closed and its obligations were met, Lanoff said.
John Haycock said his workers received all promised benefits from the Haycock Distributing Co. pension plan and were therefore unaffected by the land transaction. Federal records confirm this.
Reid's interest in the barren parcel dates back to the period of 1979 through 1982, when he and Clair Haycock bought the 160 acres. Haycock bought a three-eighths interest, equivalent to 60 acres, for $90,000 -- $1,500 an acre. Reid, then a Nevada lawyer and political figure, bought the other five-eighths, the equivalent of 100 acres. They did not divide the parcel.
The property has sweeping mountain and mesa views and now abuts a housing development, which could make it attractive to developers. But there are some limitations. The land has a steep wash, or desert streambed, and the adjacent land has a gravel pit.
In early 1987, Haycock turned over his interest in the land to the pension fund, for which he acts as trustee. The fund provided retirement benefits for about 80 employees, and under law, employers must contribute to such funds each year.
In the early 1990s, California investors bought the entire 160 acres from Reid and Haycock for a little over $1.34 million -- around $8,400 an acre. The new owners obtained approval to develop a mobile home and recreational vehicle park. But a few years later they defaulted, and Reid and the pension fund were once again the land's joint owners.
Development slowed in the late 1990s, and Reid and the Haycocks say the property became a cash drain. In 1999, according to Reid's office, the senator began working without success with developer Craig Johnson on a plan for the property. At some point, Reid's office said, he offered to give the land to Johnson, who declined. Johnson has confirmed that offer. In a statement Reid's office provided, Johnson described the listless market and the property's challenges.
In 2001, Haycock Distributing Co. decided to convert its existing pension fund into a 401(k) retirement program. In liquidating its assets, the firm decided that the plan must quickly sell its share of the property.
Lawyers advised the Haycocks that the family could not buy it from the pension fund, so Clair Haycock approached Reid. At first, Reid said "he and his wife were not interested due to the property's past history," Haycock wrote in a letter to The Times.
"Eventually, he gave me $10,000 for my share," Clair Haycock wrote. "I was just happy to have been able to liquidate the property from my pension plan." Reid's office said the senator and his wife purchased it reluctantly. "Because it had minimal value to them, they were willing to pay only a minimal price," a Reid staffer wrote in response to questions.
How good a deal?
How good a deal did Reid get? Paying $166 an acre for Mohave County land is "a super deal," said the county assessor, Ron Nicholson. But the precise answer in this case, Nicholson said, is complicated by the fact that only a minority portion of a partnership was for sale; minority shares can be difficult to sell. Other experts who reviewed the transaction for The Times acknowledged the complexity of the deal but said the senator appeared to have acquired valuable property for a fraction of its value.
"The price strikes me as low," said professor Crocker H. Liu, McCord chair of real estate at Arizona State University's W.P. Carey School of Business. "But I don't know what other considerations -- valuable or otherwise -- were part of this transaction. Usually when a purchase price is that low, there is other juice in the deal."
Calculating the precise amount of Reid's discount is difficult because of varying values assigned to the property around that time, including some by the senator himself. In his 2001 Senate financial disclosure, Reid valued his Bullhead City acreage at $5,000 to $10,000 an acre. When questioned about the filing several months ago, Reid's office said he might have overstated the value. A Reid spokesman said the senator was in the process of amending his ethics statements to more accurately describe the terms of the deal.
At least twice, Reid appealed to the Mohave County assessor to lower the land valuation and decrease his taxes, in 2002 presenting a 2001 appraisal that valued the land at $1,000 an acre. The assessor's office made a downward adjustment for 2003 but still places the value at about $1,748 an acre.
On a recent property tour, the assessor acknowledged that Reid's land had problems.
"There are topographical issues on this property," Nicholson said as he drove a county-owned four-wheel-drive vehicle through the tract. He pointed out the property's steep wash and another streambed.
An adjacent parcel with similar topography sold in April 2004 for $4,260 an acre.
Reid's spokesman said the senator had paid a fair price for the pension fund's minority interest.
"When a willing buyer pays a willing seller to buy an asset, that is a sale, not a gift," Summers said.
Real estate experts say that minority interests in partnerships are often sold at a discount, sometimes of 20% or more. But they say that such discounts do not necessarily apply in a case like Reid's where he is the majority owner and gains 100% control by the purchase.
"We were happy to get out of the deal as we did," John Haycock said, adding: "Would we have liked to make more money on the Bullhead City land? Of course."
Reid's office produced statements from three Haycock retirees who attested that they believed they had been well-served by the pension plan.
Since taking full control of the parcel in 2002, Reid has pushed for federal funding for a new bridge over the Colorado River a few miles from his property, a spending request The Times disclosed last November.
Reid said he secured funding for the bridge, which would connect fast-growing Bullhead City with the gambling town of Laughlin, Nev., because local residents wanted it. He said the bridge would not affect his property's value.
Losing business
Reid has long been known as a champion of Nevada interests, particularly gambling and mining. But he seemed an unlikely choice to advocate for the beleaguered lubricants industry when he took up the issue in 1994. He did not sit on the Energy Committee.
At that time, the Haycocks went to Reid for help, according to a former employee of the lubricants industry trade group, Petroleum Marketers Assn. of America, who was involved in the events. The employee asked that his name be withheld because his current job involves congressional contacts.
The Haycocks had lost business in 1994 when Mobil Oil Co. canceled the family's distributorship, costing the firm a lucrative contract with the Las Vegas-area General Motors dealers, which had to use Mobil products.
The family was "incensed that this had happened and there was nothing they could do about it," said the former trade group employee.
Reid mentions constituent
The Haycocks -- who were considered industry leaders -- say they do not recall discussing the matter with Reid. But the former trade group employee said the Haycocks convinced Reid to take action.
Reid "did it because John or Clair asked him to do it," said the former employee.
With the legislative session coming to a close, Reid brought the issue to the Senate floor on Oct. 5, 1994. He described a Nevada constituent whose "franchise agreement to sell lubricating oils to car dealers in Las Vegas was arbitrarily canceled with 30 days' notice," adding: "This seems grossly unfair."
A Washington lawyer who represented the Haycocks in their dispute with Mobil recalls that dealers turned to Reid after other avenues of redress had been exhausted.
"The Haycocks provided access to Sen. Reid," said Al Alfano, the attorney, who still represents distributor interests. However, Alfano said, Reid's efforts brought no relief to the Haycocks. Although the issue remains a concern for many distributors, he said, the Haycocks lost interest after the mid-1990s.
Nonetheless, Reid cited the same constituent example almost word-for-word in 2002, soon after the land sale, and again in 2003 when he introduced legislation, cosponsored by Sen. John Ensign (R-Nev.), to protect lubricants distributors.
John Haycock said Reid's actions provided no benefit to his company. "I am not aware of any action taken by the senator, relative to lubricants, that has had a financial benefit to our company," Haycock wrote. "At one point I believe Sen. Reid pushed for legislation ... but that legislation was never passed and therefore could not have had any impact....
"To my best recollection, I didn't even know Sen. Reid had introduced the legislation," John Haycock said, referring to the legislation in 2002 and 2003.
Reid's spokesman said: "In any event, the Haycocks are Sen. Reid's constituents, and there is absolutely nothing improper about Sen. Reid working to advance good policy on matters of concern to Nevadans and businesses in Nevada."
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chuck.neubauer@latimes.com
tom.hamburger@latimes.com
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(INFOBOX BELOW)
Reid's land in the desert
A 160-acre plot in Bullhead City, Ariz., has been variously valued at $1,000 to $10,000 per acre since Harry Reid and longtime friend Clair Haycock bought it more than 20 years ago. But Sen. Reid effectively paid far less than that in 2002, when he purchased Haycock's three-eighths interest, the equivalent of 60 acres.
Per-acre valuations of the land over the years
Price Haycock paid in 1982 for his share: $1,500
Approximate price paid in 1990 by buyers who later defaulted: $8,400
Valuation by Reid in 2001 Senate ethics statements: $5,000 to $10,000
2001 private appraisal for Reid: $1,000
Valuation by Mohave County assessor in 2002: $2,144
Price Reid paid for Haycock's three-eighths share of the land in 2002: $166
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Note: The current county valuation of the property, unchanged since 2003, averages $1,748 per acre. Reid's per-acre valuation on his latest Senate ethics statement is $3,125 to $6,250.
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Sources: Los Angeles Times estimates based on U.S. Senate disclosure forms; Mohave County Recorder's Office; Mohave County assessor; private appraisal records
Posted by: JDH on February 12, 2007 03:04 PMEven if, by some mistake, you are exposed by the press, your equally corrupt Demorat allies will surround you and praise you for your courage in fighting off those evil Republicans. They'll get you a jury of your peers and a mistrial is almost certain, if not a simple slap on the wrists.
Posted by: MJC on February 12, 2007 03:13 PMHans says that it wasn't his fault; we should blame the City.
This guy is Mr. "I hate developers" in Olympia. Except when it is his own development. He ranks right up in the hypocritical hall of shame with Dan "the man" Evans.
He should back away from this, pronto!!
Hans is of the man, "you don't own the property, you just are leasing it". I hope the guy honors wetland and lake setbacks, but I doubt it.
Posted by: swatter on February 12, 2007 04:22 PMIs he going to be subject to all the same setback rules etc. that everyone else has to abide by??
Posted by: Michele on February 12, 2007 04:49 PMCorruption and Nepotism are only a problem if one is a Republican. Republicans caught in corruption must resign and suffer their names dragged through the mud be the media. And then conservatives all applaud and are glad that there is one less bad apple.
For Democrats caught in corruption, they do the late night talk show circuit, allow the obligatory lame jokes to be cracked, say their apologies, enter treatment, and then get back to robbing the people blind, whilst preaching under a sanctimonious banner.
This is a time tested ritual. Everyone knows the score. This is just how it is done. Hans Dunshee is completely in the clear because he picked the right party.
Move along, nothing else to see here.
Posted by: Jeff B. on February 12, 2007 05:21 PMOf course this stinks but why...is it because we have shame so we would not boldly ask this of our fellow citizens realizing how it looks, because we know that we cannot do what ever we want regardless of the rules because rules are there for a reason, because we know our city would not spend thousands of dollars of city staff time writing legal descriptions, gerrymandering the RCW's and then doing the bare minimum to make it legal but of course not right, because being a good neighbor is about more than riding your bike around to get elected.
I realize he is a piker compared to Reid's deal or Obama's little land deal but no less envious. After all caring only about yourself is hardwork and he is entitled to not care about the future of this state but his house deal. As the good ship Washington sails towards the rocks of Indian gambling, nightmare healthscare and felons raping as they fill out 50 mail in ballots at Joel Conelly's Whidbey Island voting retreat Hans can always think back with pride to his first days in the neighborhood and how good it was.
BTW Mr. Mayor in quotes Hamilin I am coming over to buy that chunk of land in front of Hans's place next to the lake. I will keep it park like with many 20' tall trees and evergreen shrubs and a ton of 8 foot rhodies that block the view of the house peering in the park from the east. After all the precedent is there. Come on neighbors have fun with this one.
Posted by: Col. Hogan on February 12, 2007 09:35 PM