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