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Land-swap deal: Government learns from previous mistakes

While the $38 million land swap involving the Dreyfus estate has amounted only to confusion and controversy, another deal a few miles north involving an even larger mansion – also once belonging to tycoon Jack Dreyfus – is nearing completion.

When it does, the Dreyfus estate’s designation as the most expensive land swap in Forest Service history will disappear. The Whittell estate exchange, valued at more than $50 million, will hold that title.

In fact, mistakes made in the controversial Dreyfus transaction helped officials better handle the swap involving the Whittell estate near Incline Village, according to officials.



“As a result of what occurred in the other exchange, the (Inspector General) intended to ensure our exchange was done appropriately,” said Scott Higginson, vice president of government affairs for Del Webb Corp., which currently owns the estate. “The Forest Service responded to all of the IG’s concerns, and we have complied with all of these things. This is going forward with none of the problems there are with the other one.”

The “down-lake exchange” as Higginson describes it involved 46 acres in Zephyr Cove. Its a big mess, with the fate of the 10,000-square-foot Dreyfus mansion and a caretaker’s cottage in question.



The Park Cattle Co., which has extensive holdings in Douglas County, owns the mansion and wants to use it for conferences, but the Forest Service won’t issue a permit for Park to use it. Forest Service officials won’t talk about what is happening, but Park officials have publicly claimed the federal agency wants to raze the 15-year-old mansion. Negotiations are under way, with no estimate of when a conclusion will be made.

Higginson said the Whittell exchange, a completely separate deal, likely will close within weeks.

The late George Whittell, an eccentric multi-millionaire from San Francisco, once owned more than 45,000 acres of Lake Tahoe property, including 29 miles of shoreline. Between 1938 and 1941, he built the medieval-style Thunderbird Lodge overlooking Lake Tahoe south of Sand Harbor.

Dreyfus purchased Whittell’s Washoe County estate in the early 1970s and added to the three-story home. Today, the 16,000 square feet Thunderbird Lodge is eligible for listing on the National Register of Historic Places and considered the most historic building on Tahoe’s east shore.

The 140-acre property also includes three stone guest chalets, a cavernous boathouse connected to the main lodge by a 500-foot tunnel, a lighthouse extending from the main lodge and nearly a mile of shoreline.

Del Webb acquired the property from Dreyfus, and in 1997 started the process to turn the land over to the Forest Service, swapping it with land near Las Vegas. The University of Nevada, Reno, was to take possession of the buildings, and, while that plan has changed, UNR still intends to conduct research at the mansion and allow public access.

Everyone thought the swap would be completed by now, but officials say there is nothing wrong.

“This has been such a complex transaction, but we really do see light at the end of the tunnel,” said Ron Zurek, director of economic development for UNR. “I’m certain all the people involved are looking forward (to completing the transaction). It’s going to be a place where we can conduct research at the lake and provide public access.”

In 1998, an audit of the Forest Service’s Pacific Southwest Region’s land adjustment program was conducted, taking a look into all the land swaps the Forest Service was conducting.

The audit fueled an investigation into the Dreyfus swap.

Auditors had some concerns with the Whittell exchange, too. An April 1999 auditor’s report, given to the Tahoe Daily Tribune by U.S. Sen. Richard Bryan, stated UNR no longer wanted to use the Thunderbird Lodge but intended to build a new research facility on the land. Auditors feared the Forest Service would maintain ownership of the buildings, something the federal agency tries to avoid. Ongoing maintenance of the buildings could cost hundreds of thousands of dollars a year.

Auditors urged the Forest Service not to go forward with the transaction unless certain actions were taken. But officials say those recommendations were followed exactly.

“In our view, the Thunderbird exchange is in great shape. As it moves forward, we don’t see any problems. We expect it to close this summer,” said Matt Mathes, press officer for the Forest Service’s Pacific Southwest Region. “We have met all the (Office of Inspector General’s) concerns. They are happy with the way things sit right now.”

What has happened to alleviate concerns is a non-profit organization has been created which will own the buildings, Del Webb’s Higginson said.

“The Thunderbird Lodge Preservation Society, a non-profit charity organization, is being formed to manage the Thunderbird Lodge and preserve its historic nature, and to support research opportunities at Lake Tahoe through the University of Nevada system,” Higginson said.

UNR still can use the Thunderbird Lodge for research, and the option is there for the university to construct a new building later. Any money raised by the Thunderbird Lodge Preservation Society, from tours of the estate or other recreational activities, will be used for maintenance of the buildings.

Higginson said this contrasts significantly with the Dreyfus deal, where a private company currently owns the buildings on the Zephyr Cove property.

“There will be no individual making one thin dime from (the Thunderbird Lodge),” he said.

“We believe this is the benefit and purpose of the federal land exchange program,” he added, “to ensure there’s public access to the land.”

After the deal is finished, Higginson said it likely would take some time for the Forest Service and the newly created society to come up with management plans for the property. However, he said the public would have access to the off-limits estate eventually.

Because of the problem-ridden Dreyfus estate deal, Douglas County commissioners last week said if the Zephyr Cove mansion was razed, they would fight to keep any swap involving the federal government from happening inside the county again.

Two counties to the north, however, is the even-more-complex Whittell deal officials are considering a success.

“I think it is a good example of a land exchange, especially considering the scale and complexity of this one,” Mathes said. “We view this as a real success story.”


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