Heat is on: AG says Biscuit Run deal under scrutiny
Recently disclosed details of the Biscuit Run state park deal have prompted more than public outrage–- they may have prompted an investigation into the transaction that some allege was a government bailout of wealthy investors at taxpayers' expense.
"I can tell you and therefore reassure the public that the Biscuit Run matter is being reviewed by appropriate parties," writes Brian Gottstein, spokesperson for Attorney General Ken Cuccinelli, in an email. "I cannot say any more than that without potentially compromising an investigation."
As reported in the Hook's January 6 cover story, "Bad Men? New numbers show spiraling costs of Biscuit Run," the owners sold the 1,200-acre property to the state for $9.8 million in December 2009. Several months later, the Virginia Department of Taxation issued $11.7 million in tax credits, more than doubling the price. The former owners–- who include developer Hunter Craig and music mogul Coran Capshaw–- have appealed to the state to issue millions more.
Meanwhile, the new governor–- a Republican who initially endorsed the deal–- now appears to be distancing himself from something arranged by his predecessor, Tim Kaine, who heads the Democratic National Committee.
"The acquisition of this land occurred during the Kaine Administration, not this one," writes Bob McDonnell's spokesperson, Stacey Johnson. "This Administration was not involved in that process."
The process, according to documents anonymously mailed to the Hook around Christmas, includes a questionable appraisal that might trigger millions more for the speculators. And yet, if not for the documents, the taxpayers who'll end up footing the bill would not have known that an Orange County appraiser asserted that the land was worth nearly $88 million–- nearly double what the speculators paid during the height of the real estate bubble.
"This type of secrecy is the worst," says Jim Moore, a government transparency advocate who's worked in real estate development. "I guess their excuse would be that it's socially acceptable to keep large private gifts private–- that making them public might discourage the wealthy from providing these gifts. But as we can now see, how can we tell that they're gifts?"
Moore says he hopes that the state will open the Biscuit Run files, change the laws that shrouded it, and punish any wrongdoers. However, Delegate David Toscano says he doesn't believe an investigation is actually taking place.
"I do know that [Department of] Taxation would look at this thing first, but there may be other places where it would be reviewed as a matter of course," says Toscano, who says use of the word investigation "implies something I don't think is happening here."
Toscano notes that he doesn't consider an investigation appropriate.
"Any time you have a transaction of this size, you're going to have a lot of differences of opinion about value," says Toscano. "If they can't agree, then there is some kind of court remedy to determine what that value is."
According to legal analyst David Heilberg, the AG's office may have authority to investigate even though it handled the real estate closing. And he notes that if the state allows the massive $88 million appraisal or even its own $39 million appraisal, another potential stumbling block for the investors hoping to recoup losses might come if they attempt to use their charitable donation for a federal tax deduction, opening up an opportunity for the IRS to investigate the land's actual value.
One person who won't be getting any tax credits or deductions from the Biscuit Run deal is DMB fiddler Boyd Tinsley. Although he was presented as a Forest Lodge investor at a January 8, 2010, event announcing the sale, and granted interviews about the "gift," a source close to the deal says that, in fact, Tinsley–- who spoke about his close personal friendship with Governor Kaine and said he'd learned about the transaction only weeks before the event–- never had any money invested in Biscuit Run.This story is a part of the The Biscuit Run cash grab special.