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Land exchanges are riddled with abuses, GAO says

Report urges BLM to put end to land exchange program

SHARE Land exchanges are riddled with abuses, GAO says

Other stories in this series:

May 14, 2000: Are Utah land deals ripping off the U.S.?

May 20, 2000: Trouble over land trades

May 21, 2000: Investigators find problems in 8 Utah land deals

July 9, 2000: A sweet deal on land?

Writers share opinions:

May 21, 2000: Fairness, professionalism marked Utah-U.S. land exchange

May 21, 2000: Too much land-deal secrecy

Federal whistle-blower Jack MacDonald was labeled little more than a disgruntled employee when he protested that Utah land trades were ripping off American taxpayers to the tune of millions of dollars.

But a report by the federal Government Accounting Office, the investigative arm of Congress, has validated at least some of MacDonald's claims, and the agency has now called for sweeping changes in how agencies acquire lands in trades with the federal government.

The report recommends the Bureau of Land Management "immediately discontinue selling and buying land under its land exchange program — a practice that is not authorized under current law — and conduct an audit of financial records associated with these sales."

Rep. George Miller, D-Calif., who requested the investigation, also called for a moratorium on land exchanges.

The GAO report addresses land exchanges conducted by both the BLM and the U.S. Forest Service, which are responsible for most land exchanges involving the federal government. Thirteen different exchanges, including one in Utah, were highlighted as examples of a land exchange program riddled with abuses.

Targeted in the report was a 1999 land exchange in southwestern Utah with DeMar Limited, owned by the family of Washington County Commissioner Alan Gardner. According to investigators, Gardner's private appraisers estimated the value of the 239 acres at $7,000 per acre, whereas an appraiser hired by the BLM estimated the land was worth $1,000 an acre.

DeMar Limited was subsequently paid $7,440 per acre.

"The bureau's chief appraiser believed that the bargained amount exceeded a value that could be reasonably supported. We also question the basis for the final value," the report stated.

But Gardner said the price was a fair deal for taxpayers. He sold it for far less that what he could have to developers in the rapidly growing St. George area where land sells at a premium.

"We'd take that ground back at that price in a minute" if not for the endangered Desert tortoises, Gardner said. "We could get twice that amount for it today." (The presence of the protected tortoise has stymied development in several areas adjacent to St. George.)

Gardner said the reason he was

paid $400 an acre more than the appraisal called for was that almost two years had elapsed since the first appraisal, and negotiators agreed that land values had increased during that time.

At the heart of the dispute over land values is a litany of bureaucratic red tape, contradictory federal laws and the Endangered Species Act.

MacDonald, the former chief appraiser for the BLM in Utah, maintains the law is specific: The appraisal must take into consideration the presence of endangered species, like tortoises, that make the land unusable for housing and commercial developments.

In other words, lands in the St. George area worth $10,000 to $20,000 an acre to a developer were worth maybe a few hundred dollars an acre as scenic open space.

But Rep. Jim Hansen, R-Utah, passed federal legislation that specified the Washington County landowners would be compensated for their land as if there were no endangered tortoises.

"The congressman has always been concerned that folks get the true fair market value for their lands, and he believed the way to do that was to evaluate those lands without consideration of the desert tortoise," said Allen Freemyer, staff director for Hansen's Subcommittee on National Parks and Public Lands.

That provision, attached as a rider to an unrelated omnibus parks bill, stands in direct contrast to other federal laws and policies that say lands must be appraised in "as is" condition, meaning the presence of endangered species must be considered in establishes fair market value.

GAO investigators also addressed the requirements in federal law that land exchanges must involve roughly equal values, and the transition must be in the public's best interest. Throughout the report, investigators questioned whether the private lands acquired by the federal government were grossly over-valued in comparison with the federal lands traded for the private lands.

MacDonald made similar assertions involving scores of Utah land trades, many involving trades of state school trust lands within national parks, monuments and proposed wilderness areas.

MacDonald's accusations prompted two federal investigations, one by the GAO and the other by the Inspector General's Office of the Department of Interior. The Inspector General's report has not yet been released.

The questionable land trades, reported in a series of Deseret News investigative reports, have also come under increasing scrutiny by national news media. NBC highlighted the DeMar Limited exchange Thursday in its "Fleecing of America" series.

Ironically, the DeMar Limited land exchange occurred a year after the BLM pledged to increase its oversight of land exchange programs. In fact, both agencies established teams of specialists to review proposed exchanges that were controversial and of high value. The GAO report says those changes did not go far enough.

"The agencies' efforts do not ensure that lands to be exchanged are valued appropriately or that exchanges well serve the public interest," the report states. "Furthermore, the bureau's efforts do not address or prohibit the unauthorized selling and buying of land in land exchanges."

Janine Blaeloch, director of the Western Land Exchange Project, a Seattle-based watchdog group that has been critical of Utah land exchanges, said the GAO report is right on target, and she wants more aggressive reforms on all land exchanges.

"The GAO and other watchdog agencies have found in one case after another that the public is regularly cheated in appraisals because of the incompetence of agency staff and the undue influence exerted by private parties," she said.

Blaeloch called on Congress to halt all current land trades, that audits be conducted to determine if the land exchange programs can be fixed, and that Congress reform the land exchange process.

Gardner said the current hullabaloo over land trades doesn't take into consideration real people with private property rights that have been trampled by federal law.

"It was the Endangered Species Act that caused the devaluation of the property," Gardner said. "If the government requires that we have an Endangered Species Act, the government should pay for it, not a few property owners in Washington County."

E-MAIL: spang@desnews.com ; donna@desnews.com