Who owns the Dreyfus Estate?
The question remains amid a tangled past of private vs. public squabbles, contradictory deeds and a key confidential land exchange agreement.
For close to four years, the estate and land surrounding it have been the flag in an ownership tug-of-war between the U.S. Forest Service and Park Cattle Co.
Since the Bureau of Land Management accepted transfer of the second phase of 11.8 acres of land in Zephyr Cove from the Olympic Group LLC, a Nevada-based land brokerage firm, the public has not had access to the property or the estate buildings.
In two federal investigations of the biggest land swap in Forest Service history, no criminal wrongdoing was found. The U.S. Department of Agriculture Office of the Inspector General discovered, among other things, that improper judgment in dealings with Olympic and the improper recording of deeds caused confusion over ownership.
According to Guy Inzalaco of the Olympic Group, the Lake Tahoe Basin Management Unit approached the land brokerage firm in 1995 to obtain the Zephyr Cove property in exchange for 1,800 acres of BLM land in Las Vegas. The inspector general’s audit claimed Olympic approached the Forest Service to trade 1,350 acres near Las Vegas for the Zephyr Cove property.
Inzalaco said Olympic had brokered successful land exchanges for the Forest Service in Tahoe before the Dreyfus Estate land swap.
Olympic purchased the property from Jack Dreyfus in 1995 for $28 million and then resurveyed the land twice, increasing the value by breaking it into five lots and then three tracts. Before then, the last time the land had been surveyed was 1972.
Phase 1 of the exchange between Olympic and BLM in October 1996 included Tracts 1 and 3, which consisted of 35.4 acres.
The exchange of Tract 2, the second phase, consisted of improvements valued at $3 million that sit on an 11.8-acre parcel wedged between the two tracts of Phase 1.
The deeds and private dealings between Olympic, the Forest Service and Park Cattle continue to be the crux of fights over ownership.
The BLM Nevada State Office accepted the transfer of the second phase, containing all the improvements, on June 17, 1997, according to the inspector general’s investigation. This transferred the title of the second phase free and clear to the government.
That same month a second deed was recorded that replaced the June 17 deed.
This deed stated the second phase of land would be transferred to the government, but Olympic would retain ownership of the 10,000-square-foot mansion, caretaker’s cottage, garage, satellite dish, fenced dog run, main entry gate and driveway.
The deed did not specify for how long Olympic would retain ownership, or for what purpose the buildings would be used.
Forest Service regulations require any group that chooses to reserve land transferred to the Forest Service must specify in the deed:
n What land and/or buildings will be reserved.
n How long the land or buildings will be used.
n Acquisition of another appraisal of the property to reflect the effect on the land’s value.
Olympic did not do this.
Essentially Olympic tried to sever the buildings from the land and retain ownership. However, a longtime land title professional and the inspector general questioned the legality of the transaction.
The Forest Service could have leased the improvements to Olympic, but the brokerage group could not retain ownership.
“(The Olympic Group) said the attempted ‘severance’ may have been an effort to say the improvements were being used but not the land,” the 1998 inspector general’s audit of the land deal stated. “(The U.S. Office of General Counsel) concluded that such an argument had no legal merit because the improvements were in place on the land and used the land.”
Although the Olympic Group’s proposed deed did not comply with government regulations for land deals, Dennis Samuelson, acting lands team leader for BLM at the time, signed every page of the deed, stating he had read and approved its form and content.
Sixteen days before the questionable deed was recorded in which Olympic reserved improvements on the second parcel, Olympic drafted a quitclaim deed. The deed sold the improvements to Park Cattle for $1, two memberships to Edgewood Tahoe Golf Course and seven weeks exclusive use of the mansion annually for 25 years, which was valued on Park Cattle records as worth $2.7 million. Park also paid $300,000 to cover the real property title tax.
The quitclaim deed references an unrecorded Land Exchange Agreement between Olympic and the LTBMU that specifies the sale terms of the improvements and the escrow instructions.
The inspector general’s audit concluded the agreement gave Olympic the right to sell just the improvements to a private party to operate as a concessionaire or to transfer them to the Forest Service.
If Olympic did not sell improvements to Park before July 1, 1997, the agreement stated the Forest Service would retain all rights to the buildings.
Juan Palma, LTBMU’s acting Forest Supervisor at the time, signed the agreement without the authority to do so, according to the inspector general.
Palma said he arrived as the supervisor in April 1997 and was unaware of the agreement. However, Inzalaco said he had several conversations with Palma pertaining to the two options.
Inzalaco said he didn’t believe Palma or other LTBMU people who worked on the Dreyfus deal tried to do anything wrong, but were treated as scapegoats by the regional and national offices.
The Olympic Group was given offers from other different buyers, including one bid for $16.5 million, according to Inzalaco. Olympic decided to sell the improvements to Park Cattle, because Inzalaco said Park had done well with Edgewood Tahoe Golf Course and was a stable company in town.
Douglas County has not assessed any property or possessor’s tax from Park Cattle, which has had a caretaker living on the premises and has padlocked the gate since 1998.
Douglas County Assessor Barbara Byington said she can’t tell who owns the land or who has access to the buildings, which has been a point of contention for many Zephyr Cove residents, according to Byington.
“It’s been a real hornets’ nest,” Byington said. “I get a lot of phone calls from people in the community who want (Park Cattle Co.) to pay their fair share of taxes and I agree. But unless I can find where they actually can use (the buildings), I can’t tax them.”
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