Charles E. Hancock

According to the Nevada BLM's former chief appraiser, Charles E. Hancock, of Reno, whose detailed 1994 letter to the I.G. triggered the probe, the heart of the problem is a system of incentives that essentially reward BLM officials for knowingly endorsing grossly inadequate land appraisals at both ends of the state and on both ends of the land exchange process. These skewed appraisals, says Hancock, greatly raise the price when the government is buying, then greatly reduce the price when the government is selling.Pocketing the difference between those prices

and the actual market value of the properties, he points out, are favored real estate operators.Losing out, he says, are the taxpayers and the public. In a February 20 letter to Hancock, Michael F. Dwyer, manager of the BLM's Las Vegas District office, indicated the agency was essentially throwing out its November 4, 1996 decision to go ahead with the Del Webb exchange under terms the agency had accepted at that time.
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The two letters to Hancock showed evidence of careful in-agency coordination.

"They played right into the hands of people who could set up facilitation groups," said Charles Hancock, a retired BLM appraiser who testified against the bill."It's big business."

land-exchange irregularities | Charles HancockElectric Nevada

BLM-Okayed Land Swaps Non-Profit Does Very Well, If Not Good
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Operating as a broker between private property owners in northern Nevada, the Bureau of Land Management, and a select group of Las Vegas land developers, the American Land Conservancy arranges "sweetheart deals for everyone but the taxpayers," says Charles E. Hancock, former BLM appraisal chief for the state of Nevada. Hancock, who retired from the BLM in late 1989 but continued to monitor what he saw as deteriorating land-exchange practices, in late 1994 wrote the Inspector General for the U.S. Department of Interior. That letter, detailed and eight pages long, set off a year-long audit investigation of bureau land acquisition practices in Nevada, beginning in early 1995, when Acting Inspector General Joyce Fleischman launched a review of the exchanges cited by Hancock.
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At the heart of the problem, says Hancock, are self-serving, grossly inadequate land appraisals which the BLM knowingly approves, at both ends of the state and on both ends of the land exchanges.These skewed appraisals greatly raise the price when the government is buying, then greatly reduce the price when the government is selling. Pocketing the difference between those prices and the actual market value of the properties, he points out, are real estate operators like the American Land Conservancy, Olympic of Nevada, and the private parties that they represent in the transactions.Losing out, he says, are the taxpayers and the public. As an example, Hancock cites the $27 million exchange of private lands near Reno for federally owned subdivision lands in Las Vegas in 1994 -- an exchange brokered by the ALC.Grossly InflatedTwenty million of the sum was the listed exchange value of 3,700 acres on Mount Rose.That figure, says Hancock, was "grossly inflated." He notes that "the appraisal report did not include a market approach to value, historically the most dependable." Instead, the Bureau of Land Management let appraisers hired by the Galena Ski Resort, owner of the 3,700 acres, determine value "based on a very sophisticated subdivision modeling approach and use of a discounted cash flow technique," the reliability of which varies greatly and can be, he says, self-serving.False AssumptionsAnd Hancock, in his letter to the IG, did cite several false assumptions underlying the appraisal. Those assumptions included, he says, 1) that the U.S.Forest Service had issued a permit for the development of ski lifts, 2) that Washoe County had approved all permits, and 3) that the parcel included 778 acre feet of water rights. In actuality, says Hancock, none of those assumptions were true.
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Not only does this procedure rip-off the American taxpayer -- the real owner of the public lands -- says Hancock, but none of the process is really necessary if environmentally sensitive lands need to be acquired by the government.The Federal Land & Water Conservation Fund has about $9 billion available to spend on buying such land, says Top of page

Hancock, and those funds are basically untapped. In the case of the Galena Resort land, he says, it could have been purchased outright, "at fair market prices, rather than grossly inflated exchange values."
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Another reason the swaps have become common, Hancock says, is that the federal land managers don't have to justify their actions by demonstrating the land they want is a high priority. That differs from the procedure required when monies from the Federal Land and Water Fund are used, he says. "You have to justify your priorities and a lot of these lands that the government is picking up by exchanges ... would never shake out at a high-enough priority that knowledgeable people would say, 'Hey, yeah -- we should go ahead and buy this with public funds.'" Acquiring 'Hell, No' LandsOne result of this land-exchange boom, he says, is that "the Forest Service and BLM have acquired lands which the public, if they ever looked at it very closely and if it ever came up for a vote, would say, "Hell, no. You're not going to pay that kind of price for those parcels." Another is the huge profits made by the two main private land-exchange operators in Clark County, the American Land Conservancy and Olympic of Nevada, Inc. Hancock notes that until recently the ALC owed the federal government $8 million for Las Vegas subdivision land acquired by exchange in 1994 from the BLM.To help clear this debt, the ALC offered the government land which had been valued by a reputable appraisal firm that same year at $4.7 million, on which the ALC held an option.In Hock to the ALCBut when negotiations were completed, the government had agreed to accept a new value for the land of $10.5 million.The result, says, Hancock, is that taxpayers are now in hock to the ALC for a little over $2 million. "The question is," he says, "how these people can dabble in real estate" and yet remain "non-profits." "We know that they're making money when they transfer these lands to the subdividers, and you and I couldn't do that.Somebody would blow the whistle on us if we were out here brokering sales between two people and then taking a piece off the top." "My fundamental concern," says the former BLM appraiser, is to "let the public get the return on it.Don't let the land conservancy feather their nest with it.To my knowledge, they've never donated any bird sanctuary to the public like the Nature Conservancy does all the time; Nature Conservancy's set up some beautiful refuges around the world, but this outfit, hell, they're just kind of feathering their own pay scale, I suspect." Hancock says he has filed formal protests with the BLM on about ten of what he calls the "sweetheart deals" arranged by either the ALC or Olympic of Nevada.No Legal Standing

Former BLM Chief Appraiser Charles Hancock has estimated that similar such deals over the past decade have shortchanged taxpayers by as much as $150 million in profits the government could have received by offering the Las Vegas land for competitive bidding. So far, Hancock, who was in charge of appraisals on all federal land in Nevada up until his retirement in 1989, has not been invited to testify.In fact, Hancock has been ignored and told he has "no standing" in at least a dozen protests to federal land exchanges he has filed since leaving the bureaucracy.

The audit had been triggered by a 1994 letter written the Interior I.G. by the former chief appraiser for the BLM in Nevada, Charles Hancock, of Reno.Hancock retired from the BLM in late 1989 but has continued to monitor what he saw as deteriorating land-exchange practices. And it was inquiries by Hancock this November and December that elicited bureau officials' admission they now wish to avoid public review until the federal lands in question have been patented over to the developers seeking them. About November 18, says Hancock, he learned about pending exchanges between the BLM and Del Webb Conservation Holding Corp., and between BLM and Perma-Bilt Homes and American Land Conservancy. "I went down to the state office [in Reno] and requested the official file be sent up, including the appraisals on all the offered and selected land," he told Electric Nevada. Four days later he received a fax from Sharon DiPinto, of the BLM's Las Vegas District Office. In what she called "an informal
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According to Hancock, the pages faxed to him do not apply to public review requests during the legally mandated public review and comment periods.Instead, he says, they apply to eminent domain actions, none of which the BLM has ever undertaken in Nevada.
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Three days later, on November 25, Hancock sent BLM state headquarters in Reno a Freedom of Information Act (FOIA) request for both the Del Webb and Perma-Bilt Homes / American Land Conservancy appraisal documents. "Please notify me when these documents are available

for review," he wrote."They are needed for a timely analysis prior to expiration of their comment periods, December 19 [Del Webb] and December 11 [PBH / ALC], respectively." It was not till New Years, says Hancock, that the Nevada State Office answered his Freedom of Information Act request -- with a letter from state director Morgan bearing a "Dec 24 1996" stamp -- five days after close of the comment period.
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Morgan's letter to Hancock also said

that the Del Webb appraisal documents "are being withheld because they have not been approved by BLM and disclosure of such material could confuse the public as to the official agency position on this issue and have a detrimental effect on our decisionmaking process." Wrote Hancock to the Interior department FOIA officer: "If the appraisals of the Del Webb exchange have not been approved, it is understandable why the values cannot be made public. "However, why haven't they been approved?The protest periods for these exchanges expired nearly one month ago.All appraisal reports should have been completed, approved, and available for public review at the time the Notices of Decisions were issued. "BLM's current practice of not approving appraisals until a day or two before patent is issued," wrote Hancock, "is mal-administration."[his emphasis].Toward the end of her letter to Hancock denying his FOIA request, State Director Morgan said, "The person responsible

One problem is "they don't care what the costs are," says Charles Hancock, retired chief Nevada appraiser for the BLM.

Take Steens Mountain in southeastern Oregon.

CHARLES E. HANCOCK was for 15 years Chief Appraiser for the Nevada state office of the Bureau of Land Management.Charles worked for the Bureau for 36 years before retiring in 1989.Before his stint as Chief Appraiser, he worked in Washington, D.C. and California in land classification, Land and Minerals, and as an economist in the River Basin Planning and Budgeting Division.Since leaving the Bureau, Charles has been active in local and statewide public land issues in Nevada and has been a vocal critic of current federal land exchange policy and appraisal procedures.His work has led to investigations of Nevada land trades by the Department of Interior and Department of Agriculture inspectors general.He and his wife Catherine reside in Reno.