Biscuit and gravy: Lawmakers dodge calls to unshroud millions

The loudest voices on both the political left and right have voiced outrage, but future Hunter Craigs can continue to secretly extract millions from taxpayers. That's because the Charlottesville-area delegation of state lawmakers demonstrates little interest in forcing disclosures of the tax credit system that quietly rewards Virginia landowners and stands as the heart of Craig's Biscuit Run controversy.

"We run the risk of intruding on our individual tax benefits if we force others to disclose the tax benefits they receive," says Charlottesville-based Delegate David Toscano, soon to be House minority leader, in a letter specially prepared for the Hook and cc'd to Bath-based Senator Creigh Deeds. "It's like the camel's nose under the tent," agrees Deeds.

The two Democratic lawmakers, the latter the architect of the controversial system that pays $107 million annually to some of Virginia's most well-heeled investors, assert that disclosing who gets the money could destroy the hallowed concept of taxpayer privacy. Republicans Rob Bell and Bryce Reeves similarly appear to be taking a wait-and-see approach rather than actually initiating reform.

 

Although designed to protect family farms from development, Virginia's conservation tax credits, as Biscuit Run amply demonstrated when its former owners snagged $11.7 million of them, can also throw an eight-figure lifeline to speculators. That's a concept called "privatized gain and socialized risk," and it's just one aspect of Biscuit Run that has brought opprobrium from such disparate groups as Occupy Charlottesville and the Tea Party.

"It's corporate welfare," says liberal activist David Swanson, who has lent his support to the Occupy Charlottesville movement and hopes that Biscuit Run won't continue to drain state coffers.

On another side of the political spectrum, the head of the Jefferson Area Tea Party recently issued a press release calling for reform of the tax credit system.

"We want more accountability and transparency," says Tea Party head Carol Thorpe, denouncing the special secrecy law that was approved three years ago, over the objections of the Virginia Coalition for Open Government, by the General Assembly.

The law was penned by Delegate Lyn Lewis of Accomac. Downplaying the fact that he graduated with Hunter Craig in 1984 from tiny Hampden-Sydney College, Lewis notes that the 2008 secrecy law passed both houses unanimously and that it was merely an effort to avoid a "chilling effect" on easements, a request that came from the Department of Conservation and Recreation. He says it's a coincidence that he and Craig, with whom he had just a "nodding" acquaintance, were in the same college class.

In the case of Biscuit Run, Craig appears to be trying to trim his losses after he and other speculators attempted a real estate flip that flopped in an unwilling economy and then craftily packaged the supposed housing development for sale to Virginia as a state park. Nearly two years ago, an outgoing governor told the public they were buying the approximately 1,200-acre tract for $9.8 million. However, leaked documents (and later a lawsuit) gave abundant evidence that the speculators actually reaped another $11.7 million in the form of tax credits, which can be as good as cash. In mid-October of this year, Craig sued for another $19.5 million in credits.

Attorney General Ken Cuccinelli is fighting back by demanding the suit's dismissal. Alternatively, he's asked the Albemarle Circuit Court to charge Craig an upfront payment starting at $78,000 on the theory that Craig cheated taxpayers by underpaying the recordation taxes. If Cuccinelli's playing tough, some say he hasn't fought as hard as he has in other high-profile cases.

After all, the Republican Cuccinelli has brandished a tough anti-fraud law– which the state designed to punish misuse of taxpayer funds– as he attempts to inspect thousands of emails from the years when controversial climate scientist Michael Mann was on the faculty at the University of Virginia. Meanwhile, Cuccinelli has been suing the federal government over the health care reform passed by Congress in 2010. While both cases have hit legal barriers, Cuccinelli continues to pursue them.

"He was overzealous in those cases," says retired Albemarle teacher Mark Crockett. "But he hasn't been overzealous in Biscuit Run."

In Biscuit Run, lead investor Craig submitted appraisals claiming that the property, which cost $46 million,  rose in value to nearly $88 million. He hired three state-licensed appraisers willing to assert the questionable claim that while the rest of America suffered a real-estate blow-out of historic proportions, the empty tract in Albemarle was practically doubling.

Crockett contends that Cuccinelli, in fighting the Craigian cash grab, should take a page from his own "Climategate" playbook.

"I mean, come on," says Crockett, "on the face of it, that appraisal is false and fraudulent. Why isn't he going after Hunter Craig and his investment cronies?"

As it turns out, the circle spins far wider than appraisers. Parties who benefit from conservation tax credits range from the Nature Conservancy, the billion-dollar nonprofit that invented the concept over a decade ago, to the landed gentry who cash in the credits, to the hometown lawyers who package the deals.

Biscuit Run and its nearly $88 million valuation was packaged by a man who is now a member of the Albemarle Planning Commission, Duane Zobrist, and he stands by his legal work. Then there are brokers who sell the tax credits to wealthy Virginians to reduce their tax bills. In Charlottesville, it's former Kluge Estate moneyman Todd Hochrein who sold the first $11.7 million in tax credits. Hochrein declined to return a reporter's calls.

Cuccinelli's spokesperson won't explain why the state, which already closed its file on one appraiser with an "insufficient evidence" finding, hasn't announced any criminal charges.

"He wants the voters to perceive him as diligent," says Crockett of Cuccinelli, who has expressed interest in running for the governorship, "but he doesn't want the big donors to run away scared."

Speaking of big donors, in the run-up to statewide office, Craig (who also gave thousands to the campaigns of Rob Bell and David Toscano) donated over $60,000 to support now Governor Bob McDonnell, who later rewarded Craig with a seat on the prestigious University of Virginia Board of Visitors. McDonnell is remaining tight-lipped about the situation created by his gubernatorial predecessor, asserting through a spokesperson that the litigation precludes comment.

Sources indicate that McDonnell, Cuccinelli, and Craig were all present inside the president's box at last Saturday's UVA-Virginia Tech football game. If the trio talked, Crockett bets that all of them– but particularly the higher-office-inclined Attorney General– wish that Biscuit Run would fade away.

"Politically, it's not a win for Cuccinelli," says Crockett. "He wants to be governor, and the big donors will be put off if he goes after these rich guys."

This story is a part of the The Biscuit Run cash grab special.
Read more on: biscuit run

21 comments

They need to change the law about disclosure, They need to account to the taxpayers how much they spent aquiring the property in total. We do not to see which of the cronies got the most of the loot. But we are entitled to know how much of our tax money went for the place.

An alternative would be for the state to have a non partisan board to evaluate the deals in advance to see if they make sense. This debacle shows that the people paid to do the evaluations are not competent. They could have bought 12000 acres instead of 1200 with the money. (that is not an exxageration.. there is a lot of land for sale at 3k an acre in Va. today)

Hawes - first, thank you very much for continuing to follow this story. This presents the background very nicely and it is clear that nobody really wants to uncover this. I just have three not terribly relevant questions:

- were you also not a classmate of Hunter's at Hampden-Sydney then? I'm not sure what bearing this would have on the reporting or the story.

- why is a retired schoolteacher an informed source for the background? Again: Mr. Crockett's logic seems to speak for itself, so I'm not sure his background is relevant.

It's not really a question, but I have to observe that the irony of Carole Thorpe and her band of useful idiots going after their own masters (the plutocracy) is delicious.

@Bill Marshall - why don't we need to see which cronies benefited? I think that makes perfect sense - let's get a good look at who the beneficiaries are.

I agree with you and Mr. Crockett that these are farcical appraisals on their face; I do not agree that it's incompetence. The whole point of having independent professional appraisals is to get things out of the hands of partisans or state employees who might be influenced by political officeholders. Clearly those appraisals can be 'bought' as well.

I attended H-SC in 83-84 and 84-85. Ran into some academic trouble and got ousted.--hawes

Please have Toscano be specific regarding his statement, "We run the risk of intruding on our individual tax benefits if we force others to disclose the tax benefits they receive," He represents ALL of the taxpayers and not just from those that from whom he has accepted contributions . When a property is assessed for taxes it is public record. When that same property is reassessed and the value is deemed less and the taxes are credited that also is public record. Why is this any different?

So the Looney Left Charlottesville media now depends on the Tea Party to get people riled up about this issue - while still including the obligatory reference to them as extremists..

This is good stuff!

Remember folks, only republicans are interested in campaign cash..

(2008: Obama $745 million. McCain $368 million.)

In 2009 Craig was among the top 5 donors to the Toscano campaign, wonder what favors this will garner ? Perhaps a lack of interest in repealing the secrecy law ? Wonder if Craig made the top 5 this year- anyone know ?

As long as this kind of money lines politicians pockets, from single individuals, secrecy laws for the wealthy will persist.

2009

Virginia House Democratic Caucus $13,220
M.W. Arlen $10,000
Hunter E. Craig $7,000
S. Sonjia Smith $4,500
Medical Society of Virginia $4,000

Let's not confuse the original intent of the Land Preservation law and Biscuit Run. Biscuit Run is flat out corruption. The Governor could have allowed it to happen without the court case but he knew is was a political minefield. So he and the AG decided to let it go to court.

The AG's call for dismissal of the lawsuit is irrelevant. I still content that paying the $89,000 and the state accepting it can be interpreted as an agreement on the $88 million appraisal by a judge.

""We run the risk of intruding on our individual tax benefits if we force others to disclose the tax benefits they receive," says Charlottesville-based Delegate David Toscano, soon to be House minority leader, in a letter specially prepared for the Hook and cc'd to Bath-based Senator Creigh Deeds. "It's like the camel's nose under the tent," agrees Deeds."
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Regarding this statement. We know the $39 million appraisal. We know the $88 million appraisal. We also know that the Virginia Treasury (Virginia taxpayers) disbursed $11 million (on the $39 million appraisal) and is being asked for $20 million more. So tell me what has been revealed about "individual tax benefits" Mr. Toscano. I'll answer that: Nothing.

The "camel under the tent" is the taxpayers trying to figure out why the politicians are setting up a slush fund for the Governor.

My hat is off to all of you fighting this government corruption by both parties.
.

@non-resident taxpayer:

Re: "the irony of Carole Thorpe.......": This is a good introduction for you to the concept of having principles.

Where's Robert Smith when we need him?

Besides Cafe Cubano..

The law was intended to promote the donation of conservation easements - not to "protect family farms" that was just the sales pitch. The credit was made tradable (salable) because a connected out-of-state landowner couldn't use the credit himself. The question I ask is why does the tax credit pot get $100m where we can't track the deals and the farmland protection program - which is open to daylight - get only $100k?

This property was planned for development and the state ignored the local comprehensive plan to purchase this land and allow tax credits that were intended for properties not zoned for development. The state does not allow the Virginia Outdoors Foundation to accept easements that are contrary to a comprehensive plan, why should their own purchases allow it?

This is not the first of these tax credit "deals" where there has been a significant discrepancy in appraised and market value.

So who, if anybody, is going to hold Hunter Craig and his group of greedy parasites accountable for the fraud, theft and political corruption which has occurred with Biscuit Run ? These arrogant jackasses have abused, corrupted and besmirched a well-intentioned conservation program, and could well destroy the program for honest, conservation-minded landowners throughout Virginia. If the Governor and the AG don't have the courage to hold Hunter Craig accountable, then maybe its time for Hawes and The Hook to take this story directly to the IRS and the national media. Somebody somewhere has the power to confront and convict Hunter Craig, who clearly thinks he's untouchable, for what he really is -- a thieving parasite. Great job, Hawes, for continuing to follow this story and continuing to apply the pressure that comes from publicly exposing this type of corruption.

What a load of crap. Why is it that _anyone in the world_ can go online and see what my house is assessed for, but for some reason that little detail must be hidden when the state is subsidizing someone else to the tune of 8 figures?

The Nature Conservancy is PRIVATE. Just because it is a not for profit organization does NOT mean nobody profits, quite the contrary. The Washington Post has done dozens of articles exposing them.

Dig into the Virginia Chapter and you may be alarmed at the influence peddling. Like the Community Water Plan, State Water Control Board, Department of Environmental Quality, Governor’s Office, and Legislature on and on.

The Nature Conservancy controls more land than the National Park Services. Their budget shows $6 Billion. And while the Virginia Outdoor Foundation cannot accept land outside of the Comprehensive Plan, you better believe The Nature Conservancy can and will. They are private and beyond that regulation and others.

It appears that Hawes Spencer's reporting is accurate and Cuccinelli does indeed plan to run for the governorship.

The Richmond Times-Dispatch reports this morning (Thursday, 12-1) that the Cooch is planning a run, saying:

"Cuccinelli perhaps has never been more well recognized than he is now and could command votes from the GOP’s conservative base for his stance on social issues such as abortion and gay rights, as well as his willingness to challenge the federal government with high-profile lawsuits challenging federal health-care legislation and the Environmental Protection Agency and frequent appearances on Fox News."

See: http://www2.timesdispatch.com/news/virginia-politics/2011/nov/30/5/gop-s...

As I noted in an earlier comment on Cuccinelli and Biscuit Run. the Cooch is "A religious zealot and die-hard conservative who understands neither the Gospels he claims to believe in nor the Constitution he takes and oath to support. In short, he's still very much a hypocrite." Of course, that only endears to him to his conservative brethren, who share his hypocrisy (locally, that includes Ken Boyd, and Rob Bell, who very much wants to succeed Cuccinelli as Attorney General).

Since the Lt. Governor, Bill Bolling, is also a Republican (who bypassed a run for the governor's office in 2009), the likely announcement by the Cooch sets off an intra-party fight, unless one of potential rivals backs off. And if there is a contested nomination in addition to the regular campaign, the Cooch is going to need some serious money.

Guess where he can find it.

I find it interesting that the name of "an outgoing governor" who approved this deal to save the Craig/McNeely bacon is not mentioned, so perhaps that had slipped the memory banks of Hawes Spencer. Tim Kaine is the name of "an outgoing governor". Mr. Kaine is also the former head of the Democrat National Party, and a contender for the seat of retiring Senator Jim Webb. Yes, very curious that the name of so prominent a person as former Governor Tim Kaine is absent from this article.

Under Tim Kaine, the state paid $9.8 million for Biscuit Run.

Now, either the commenter "museisluse" is new to the Biscuit Run scandal, or he's deliberately trying to shift blame and responsibility.

Hawes Spencer reported on this in an earlier Biscuit Run article. Here's the gist of the Tim Kaine-Bob McDonnell-Ken Cuccinelli involvement:

"uncontested facts laid out in the lawsuit tend to support the notion of Kaine's administration as more fiscally hard-nosed toward Biscuit Run than his Republican successor. Under Kaine, the state's appraisal pegged the value at just $12 million with Culpeper-based appraiser James S. Damer noting that rezoning the tract for 3,100 units may have actually decreased its value due to the promise of over $40 million in land and cash proffers."

Spencer's reporting continued:

"By contrast, the state-funded appraisals conducted during the term of current governor Bob McDonnell have come in at $32.2 and $39 million. McDonnell, who has received over $60,000 in campaign contributions from Craig, suggests that he has taken a hands-off approach, calling this 'a matter between the respective taxpayers and the Virginia Department of Taxation'."

See: http://www.readthehook.com/101906/flip-flopped-biscuit-run-men-want-20-m...

So it's more than clear that the onus of the scandal falls on the McDonnell administration, and on Ken Cuccinelli.
As one of those cited by Hawes Spencer in this article suggested, why hasn't Cuccinelli been more aggressive in addressing this scandal?

Don't we know why?

Why was it secrete in the first place? Shouldn't ALL tax credits (the government handing out OUR money) be public, no matter what?

Thank you Hawes, for keeping up with this story and keeping Charlottesvillians informed. Great Article!