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Dreyfus deal probed

Douglas County Commissioners authorized a grand jury investigation Thursday into the U.S. Forest Service’s handling of a five-year-old land exchange involving the 10,000-square-foot Dreyfus mansion that sits on 46 acres of Zephyr Cove property.

The Board of Commissioners voted unanimously for the grand jury to investigate any possible wrongdoing of the Forest Service after the agency refused to issue a special-use permit to Park Cattle Co.

In a land swap valued at $38 million, the federal government gave a land-brokerage company, Olympic Group, public land around Las Vegas in exchange for the Zephyr Cove property. The Forest Service had no interest in the mansion or other improvements on the property and was planning to demolish them. Instead, the agency allowed Olympic Group to sell them to Park Cattle, which has extensive holdings in Douglas County including Edgewood Tahoe Golf Course.



Park Cattle purchased the 15-year-old mansion, caretaker’s cottage and driveway in 1997 for $300,000, two memberships to Edgewood and seven weeks exclusive use of the mansion annually for 20 years, Commissioner Steve Weissinger said, with the understanding the special-use permit would be issued.

However, the Forest Service “reneged” on the special-use permit, according to Weissinger.



“It’s time for the Forest Service to be called on the carpet,” Weissinger said. “(The agency) lied to Park Cattle company at a public hearing of the Board of Commissioners. We were told unequivocally that there wouldn’t be a problem with getting the permit.”

Weissinger said the commissioners were unsure of whether the grand jury has jurisdiction to investigate the Forest Service, but the board fully supports a review of the dealings.

“I don’t know if the grand jury has purview over a federal agency like the Forest Service,” Weissinger said. “But we as a public body don’t like being lied to by a federal agency.”

The Forest Service and Park Cattle are continuing closed-door negotiations to resolve ownership and usage of the buildings, but would not comment on possible outcomes.

“We have access but (the buildings) are not being used, just being maintained,” said Park Cattle’s attorney Gordon DePaoli. “I’m hopeful we’ll have a resolution by spring.”

That access has caused some Zephyr Cove residents to question why Park Cattle Co. has not been paying possessor’s tax on the buildings and why Forest Service property, paid for with taxpayer dollars, should have been sold to a private company that can limit public usage.

The county received a $60,000 a year property tax base from the Dreyfus Estate before the transaction, and private ownership would mean at least part of that would remain. Other taxes, such as sales and lodging taxes, may also have been provided to Douglas County depending on the use of the buildings.

“We all have to pay taxes, so why does Douglas County let the Dreyfus Estate slip buy?” resident Roy Clason said. “The property should be turned over to somebody so the public gets better usage. The public owns the property and they’re entitled to the use.”

Park Cattle Co. originally purchased the estate, which borders the Zephyr Cove Marina, to be operated as a bed and breakfast.

Douglas County Assessor Barbara Byington said Park Cattle has not been assessed taxes on the estate because she cannot conclude the company actually owns the buildings.

“It’s been a real hornet’s nest,” Byington said. “I get a lot of phone calls from people in the community who want them to pay their fair share of taxes and I agree. But unless I can find where they actually can use it, I can’t tax them.”

Forest Service spokesman Matt Mathes said the agency is trying to work out the best possible deal for the public with Park Cattle, but he would not comment on who owns the buildings or who might after the talks are finished.

“Hopefully we’ll find a resolution everyone will be happy with by spring, early summer,” Mathes said. “Beachfront access is incredibly valuable to us. Every effort we’ve made has been to give the people the best possible access to beachfront property. That continues to be our goal.”

Mathes was not available to comment on a possible grand jury investigation Monday.

The U.S. Department of Agriculture Office of the Inspector General investigated how the transaction was made two years ago but found no criminal wrongdoing. The inspector general found the regional offices of the Forest Service and Bureau of Land Management were inexperienced in dealing with land swaps such as the Dreyfus one, which was the underlying reason for the problems hampering the exchange.


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