Biscuit Run is slated to become a state park.
McDonnell: "I'm just not aware of the project."
file photo by Hawes Spencer
Four months after leaked documents showed that a Charlottesville-based group of investors convinced top-level Virginia officials to bail out their flopped housing development with millions in state money, anger still runs high. The government, however, has done nothing to punish the potential wrongdoing that led to what may eventually become Biscuit Run State Park.
"Biscuit Run is an absolute abomination and fraud," says outraged Albemarle taxpayer Clara Belle Wheeler.
While some politicians have expressed similar outrage, the drive to punish the players or reform the system appears to have dissipated, often in a bipartisan spirit.
For instance, the conservation tax credit law that enabled most of the Biscuit Run bailout went virtually unchanged this year in the General Assembly– even though the creator of the program, Democratic State Senator Creigh Deeds had vowed to make changes.
His supposed reform bill, SB 1232, merely codifies a right the state already seemed to possess: to review potentially inflated property assessments.
"It's not as far-reaching as what a lot of people would have liked," concedes Deeds, "but it's what we could get done."
On the other side of the aisle, Republican Governor Bob McDonnell– queried recently at a Charlottesville-area event– expressed ignorance both of the financial calisthenics underlying Biscuit Run and of the fact that it was one of his top donors who most benefited from them. The deal was ushered through state government by McDonnell's Democratic predecessor, Tim Kaine.
Left unchanged in this bipartisan approval zone is the cloak of secrecy that forces Virginia taxpayers to line the pockets of the landed gentry with over $100 million each year in the name of land conservation. Although the goal is noble, the secrecy gives taxpayers no way to know whether they're getting good value or whether– as has been alleged at Biscuit Run– they're simply bailing out well-connected individuals from overzealous speculation.
"There has to be a mechanism for full disclosure," says Wheeler, noting how real estate transactions have always been open to public inspection. However, it's actually a crime for state officials to reveal the amount of the tax credits, thanks to a 2008 bill patroned by a college classmate of the lead Biscuit Run speculator.
How big was the bailout? It started with $9.8 million in state cash to buy the land. Few might argue with that amount, as it represents a 20 percent discount on the state's pre-purchase appraisal. What was unseen– at least until a plain white envelope came across the transom of a newspaper office around Christmastime– were the deal's inner workings.
When then governor Tim Kaine stepped in with a taxpayer-funded package a year earlier, he told taxpayers they were getting a bargain. What he omitted were the tax credits, but they ended up costing taxpayers more than twice the purchase price. Why are tax credits important?
Imagine that you could convince an appraiser that property purchased at the height of the real estate bubble doubled in value despite the subsequent economic collapse. And imagine that you could carry that appraisal to the state tax department where they would convert the document into millions of dollars for you and your friends.
Charlottesville businessman Hunter Craig doesn't have to imagine; he found a pair of appraisers who endorsed such fabulous numbers. According to the leaked documents, lead appraiser Patricia O'Grady-Filer of Orange along with Midlothian-based James H. Boykin claimed that the land bought in 2005 for $46 million skyrocketed to $88 million in 2009. (This was detailed in news articles including the Hook's January 6 cover story, "Bad Men? New numbers show spiraling costs of Biscuit Run.")
Taxpayer Wheeler contends that the appraisers should lose their licenses. But the Virginia Department of Professional & Occupational Regulation doesn't agree.
"The information in the articles is not sufficient to suggest a violation," according to Mary Broz-Vaughan, spokesperson for the Department, which shows no complaint against Boykin and only a closed and sealed file marked "no disciplinary action" on O'Grady-Filer.
"The case was closed," Broz writes in an email, "under the category 'insufficient evidence.'"
Insufficient evidence? Late on its loans, saddled with millions in carrying costs, obligated to pay over $20 million in cash to Albemarle County, Biscuit Run was mired in the post-bubble economy with little hope that any houses would soon appear. This doubled in value?
Broz-Vaughan explains that just because the appraisers endorsed a questionable value isn't sufficient evidence to allege fraud.
"Ultimately," says Broz-Vaughan, "something that may not pass the 'smell test' is not enough for the Department to make an accusation."
She says that someone with a copy of the appraisal would have to point out a specific violation of appraisal standards. But with the appraisal kept secret, how could anyone produce such evidence?
"I cannot unlock the conundrum," answers Broz-Vaughan. "Someone needs a copy of the appraisal report."
The Hook possesses just a single page of the report, and phone calls to O'Grady-Filer and Boykin have produced– except for the day when Boykin suggested that disclosing his handiwork constitutes a criminal violation– only hang-ups.
Speculator Craig and former governor Kaine– the latter now seeking nomination for election to the U.S. Senate– have declined repeated opportunities to comment.
As it turns out, the concept of turning appraisals into cash is nothing new. In 2005, Hook reporter Lisa Provence showed how Charlottesville developer Jim Stultz was able to claim a $5 million "charitable donation" when he sold the former Mountain Wood treatment facility to Region Ten Community Services Board. While the purchase price matched the local assessor's valuation of around $5 million, Stultz produced an appraisal claiming the property was worth $10 million.
As for Biscuit Run, the leaked documents show that the state ignored both the $88 million appraisal by O'Grady-Filer and the state's pre-purchase $12 million appraisal and settled on a valuation of $39 million for the tract. Hunter Craig and company appealed.
It was a month-ago building dedication in Earlysville when a reporter asked Governor McDonnell if he planned to challenge the deal. McDonnell expressed ignorance, even as a reporter reminded him of the role played by Craig, who parlayed $63,000 in campaign contributions to McDonnell into a seat on the board of the University of Virginia.
"This is a matter between the respective taxpayers and the Virginia Department of Taxation," says McDonnell's deputy communication director Taylor Thornley. "It is going through the process provided by law and is not something that a Governor would be directly involved in."
The Department of Taxation, with its spokesperson pointing to the law created by Craig's Hampden-Sydney College classmate, has refused to make any disclosures on the matter.
How about then state parks director, Joseph H. Maroon, and then Virginia Secretary of Natural Resources L. Preston Bryant? Documents show that both men "concurred" on the O'Grady-Filer valuation, but both have since left office to accept private consultancies, and neither returned a telephone call for comment.
This leaves the Attorney General as the only official who might still speak up. Earlier this year, after trying to "reassure the public" by noting an official review, Attorney General Ken Cuccinelli has gone silent.
"There is nothing new to report at this time," Cuccinelli's spokesperson says in an email. "We don't comment on ongoing investigations or other legal actions until they lead to court action."
Cuccinelli is the state official who has been zealously fighting the University of Virginia for documents that might show fraud in climate research. But his spokesperson, Brian Gottstein, says that all public statements on the climate inquest came only after UVA raised the topic. He asserts that silence on Biscuit Run doesn't necessarily mean approval.
"I understand the public's desire for more information as well as for a resolution," continues Gottstein, "but I'm sorry I can't give you further details at this time."
Back in Albemarle, County Supervisors have expressed shock that a 3,100-house neighborhood that was supposed to bolster the tax base and serve as a centrally located prototype for urban development had suddenly become designated as parkland in a county already rife with parks and located adjacent to a national park.
At least one taxpayer wishes all the scrutiny would vanish. In a recent letter, commercial real estate broker Lane Bonner blasts the Hook for "pissing on" what he sees as a community benefit. Taxpayer Wheeler, however, says the ethical questions demand center stage.
"It's the scam of the century," says Wheeler. "Lots of people here lost money. For Hunter Craig and his group to think the taxpayers should bail them out is unconscionable."