Dreyfus Estate deal in limbo | TahoeDailyTribune.com

Dreyfus Estate deal in limbo

Andy Bourelle

There is a 46-acre parcel of land in Zephyr Cove containing 3,000 feet of sandy beach, a wetland, meadow, creek and several types of animals and sensitive plants. Also on the land is a caretaker’s cottage and a 10,000-square-foot building known as the Dreyfus mansion.

The Dreyfus Estate was the subject of the most expensive land exchange in U.S. Forest Service history, and now a federal investigation of the transaction has stalled negotiations regarding the future use of the property. There is no indication when the investigation might end, and the estate’s future is uncertain.

The biggest victim in the unfortunate situation, officials say, is the public.

“Members of the public don’t have access to a $38 million piece of public property,” said Don Miner, Douglas County commissioner.

In a land exchange valued at $38 million, the federal government two years ago gave an Arizona-based land-brokerage company, the Olympic Group, public land around Las Vegas in exchange for the Dreyfus Estate. The Forest Service was to manage the land but reportedly had no interest in the mansion or other improvements on the property, and the agency allowed the Olympic Group to sell them.

Several parties were interested in purchasing the improvements, including Douglas County. Park Cattle Co. ultimately made the purchase with the understanding that a special land-use permit would be issued for the company to operate the buildings as a business, possibly including a bed-and-breakfast and conference center.

Douglas County officials were happy, because not only would Park Cattle Co.’s ownership lead to more public access, it would mean more tax dollars for the county. 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.

Last summer, however, the management of the estate ran into an obstacle and hasn’t moved since. As part of an audit of the Forest Service’s Pacific Southwest Region’s land adjustment program, the U.S. Department of Agriculture Office of the Inspector General began a criminal investigation into how the transaction was made. Since then, Lake Tahoe Basin Management Unit officials have not been allowed to discuss the transaction with members of the media.

While David Dickson, the special agent in charge of the investigation, said the Office of the Inspector General is giving the issue top priority, he could not estimate how long it would be until some kind of resolution was reached.

He said he could not provide many details about the investigation.

“I can tell you it’s based on a concern that came out of an audit regarding land exchanges and the particulars of (the Dreyfus) land exchange,” Dickson said. “Basically, we’re looking at the whole issue of the land exchange and whether accurate information was provided to the government regarding the exchange – and whether or not everything was above board.”

The audit that facilitated the investigation states: “The Forest Service is in jeopardy of losing management control over the Zephyr Cove lands. … Our evaluation found that this was due in part to questionable actions by the proponent (Olympic Group) relating to the alleged sale and transfer of publicly owned improvements to a private party (Park Cattle Co.).”

The audit goes on to indicate that the ability to “sever” the land from its improvements – such as the buildings, driveways and fences – is not pursuant to federal law.

“The proponent (Olympic Group) apparently misrepresented information to LTBMU personnel and a private party (Park Cattle Co.) as to the proponent’s rights and interests in the improvements …. The proponent (Olympic Group) did not have ownership to the Zephyr Cove improvements, and it also did not have the right to choose the options pertaining to the disposition of the improvements,” the audit states.

The auditors claim that the property without the improvements should have had an appraised value of up to $10 million less, which means: “Leaving the appraisal unchanged would result in the public paying more than fair market value for the property.”

That isn’t how Douglas County officials view it.

“(The federal government is) covering its own butt and distorting the truth,” Miner said.

Douglas County officials believe the Forest Service reneged on its promise to issue a special-use permit. While about 800 special land-use permits issued by the Lake Tahoe Basin Management Unit already exist at Tahoe, the audit indicates the federal government now says local and regional Forest Service offices are not allowed to make these types of decisions, Miner said.

“If that’s the case, there are 800 (permit holders) in the basin who are going to be very unhappy,” he said.

How does the Park Cattle Co. feel about situation?

“In a word: frustration. We made a good-faith effort to open this for the public, and now the Forest Service won’t even talk to us about it,” said Gary Midkiff, consultant for Park Cattle Co. “Instead, they come up with a mixture of rumor and innuendo not at all based on the facts as they’ve been submitted. They won’t even sit down and deal with the facts.”

At a meeting last week, the Douglas County Board of Commissioners came up with a “shopping list” of what federal land it would like to acquire. The Dreyfus Estate topped the list, and Douglas County officials will begin petitioning the federal government, asking Nevada Congressional representatives to help make that happen, Miner said.

“The Forest Service has demonstrated an inability to provide the necessary access (to the land),” Miner said. “Douglas County would see that it is opened up to full public use.”

Miner said he didn’t expect any type of resolution soon.

“I think we still have several months of hide-and-seek to go through,” he said. “But it’s on our front burner. We’re not going to let this thing pass unless there is an appropriate resolution.”

Park Cattle Co. officials hope that happens as soon as possible.

“We would just like to see this resolved,” Midkiff said. “Let us get on with this and make it available to the public.”

The Dreyfus Estate land swap is separate from another Lake Tahoe Basin exchange involving property formerly owned by New York mutual fund manager Jack Dreyfus. That exchange involves 140 acres south of Sand Harbor containing a medieval-style French chateau known as the Whittell mansion. If that deal goes through, the Forest Service would administer the Washoe County property while the University of Nevada, Reno would obtain the mansion and use another 6 acres to build a research facility.

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