Gold Mine in the Desert
Sands
Beginning in 1994, and culminating in 2000, a supposedly
altruistic legislative process turned desert sand into gold. This magical
miracle was credited mainly to California’s U. S. Senator Dianne Feinstein; and
the corporation that owned the sand was Catellus Development, in which
Feinstein’s husband, Richard C. Blum, held a serious interest.
Catellus was then the second-largest private landholder in the
western United States, with 817,000 acres in California alone. The company
developed commercial real estate, shopping centers, and housing. It also
acquired a number of properties on some defunct military bases during the
Clinton administration’s base closure program. Catellus had also been active in
a number of land swaps, exchanging profitless rural properties with the Federal
Bureau of Land Management for prime development sites within urban areas, or
directly adjacent to planned freeways.
Catellus was one of the most politically-wired development
companies in the state, with significant ties to Feinstein, former San
Francisco Mayor Willie Brown (first a Catellus attorney, then a limited partner
in the firm), former California State Senate President Pro Tem John Burton
(another ex-Catellus attorney), and John Foran, who lobbied for Catellus in
favor of the Mission Bay legislation carried by Burton in 1997.
In a 1997 article published in Forbes Magazine, writer Mary Beth
Grover put it this way: “With real estate, politics matters a lot, almost as
much as location. In California real estate, politics is the most important
thing [and] aside from sheer corruption there are a number of ways to appease these
little gods. Catellus knows the game well.”
Catellus Corporation and its officers, including former CEO Nelson
Rising, were significant contributors to the political war chests of both
Willie Brown and Dianne Feinstein. The campaign contributions proved to be a
sound investment for Catellus, especially in regard to Senator Feinstein’s
sponsorship of the Desert Wildlands Protection Act of 1994. The act was funded
with additional legislation sponsored by Senator Feinstein, with $30 million in
federal funds provided for the project in the 2000, 2001 and 2002 federal
budgets. The Senator is very proud of this project, and lists it as one of her
prime accomplishments on her official Congressional website.
This bill involved the transfer of over 400,000 acres in the
Mojave Desert from Catellus to the Bureau of Land Management. The area became a
nature preserve for endangered species, especially the desert tortoise.
On her Senate website under the heading “Accomplishments”, Senator
Feinstein outlined this act as follows: “The California Desert Protection Act
protected more than 7 million acres of pristine California desert. It was the
largest such designation in the history of the continental United States – and
established the Death Valley and Joshua Tree National Parks and the East Mojave
Natural Preserve.
“The California Desert is home to remarkable archaeology, beauty
and wildlife – some of the last remaining dinosaur tracks, Native American
petroglyphs, abundant spring wildflowers, and threatened species including the
bighorn sheep and the desert tortoise, an animal known to live for as many as
100 years. The California Desert Protection Act ensured that these lands would
be preserved for years to come.”
Then Senator Feinstein listed the specifics of her legislation.
“Specifically, the Act:
• Designated nearly 3.5 million acres of desert administered by
the Bureau of Land Management (BLM) as wilderness.
• Added 1.2 million acres of land to Death Valley National
Monument and re-designated the monument a national park.
• Added 234,000 acres of land to Joshua Tree National Monument and
re-designated the area a national park.
• Established a new 1.6 million acre Mojave National Preserve.
• Transferred 20,500 acres of BLM land to the state of California
to expand the Red Rock Canyon State Park.
“Since 2000 the wilderness area has been expanded even further
with the purchase of nearly 600,000 acres of land primarily in and around the
Mojave National Preserve. The transaction, the largest conservation acquisition
of private lands in U.S. history, combined federal Land and Water Conservation
Fund appropriations with funding from the Wildlands Conservancy to buy
discounted land owned by the Catellus Development Corporation.”
In a press release put out by Senator Feinstein’s office,
Catellus’ CEO Nelson Rising gave a major shout-out to Feinstein for the deal:
“The successful completion of these transactions would not have been possible
without the significant efforts of Senator Dianne Feinstein.” Rising then went
on to credit David Myers and the Wildlands Conservancy for raising “…the
private funds necessary to complete these sales.”
Not everyone is as thrilled with Feinstein’s land-swap acumen as
Nelson Rising.
Jeff Baird works as a computer programmer for the County of San
Bernardino. He’s married with two daughters and lives in the high-desert
community of Apple Valley, where the land exchanges occurred.
Baird told me what he thought about Catellus. “I believe that a
number of these non-profit groups like The Wildlands Conservancy are
masquerading under the cloak of “environmentalism. I believe that these
environmental groups are being used as vehicles to initiate a series of land
purchases and swaps that will ultimately benefit Catellus Corporation and their
friends—all at the expense of John Q. Public.”
“These were all public lands; at least those that weren’t
privately owned, “ Baird told me. “The private lands were these small ranching
operations. The public lands were where people used to go out shooting or ride
horses or drive their ATV’s. Then, suddenly, the public lands became private
holdings, and they’re going to create this massive new park. Then they start
throwing the ranchers off their lands. The whole thing stunk as far as I was
concerned. And this was for an “endangered” species, the desert tortoise? Come
on, there’s thousands of desert tortoises all over the place out there. They’re
not that endangered.
“All of these environmentally related issues appear to be a
smokescreen to give this public land away to big private developers,” said
Baird. He too believes that, in a sweetheart deal, Catellus gave up essentially
worthless desert tracts for lucrative freeway properties. Baird thinks there is
also a connection between Catellus Development and The Wildlands Conservancy,
which constitutes a direct conflict of interest. The Wildlands Conservancy did
not come into being until September 1995, after Senator Feinstein introduced
the first desert protection bill, which initially named Catellus
specifically.
Later, Clinton’s Secretary of the Interior Bruce Babbit persuaded
her to delete the direct reference. How often is an environmental group created
to join a bandwagon driven by a U.S. senator? Talk about the cart pulling the
horse!
Baird also said he feared “…that the resulting values of
ostensibly appreciated land when they were exchanged were inconsistent with the
underlying land values of these properties as determined by the county
assessor.” Baird looked at scores of parcels related to the desert exchanges,
and saw that the assessed values of the desert land increased sharply after
being transferred to the Wildlands Conservancy; as high as 300% in some
cases.
This yielded huge potential tax benefits to private donors who
gave their properties to the Wildlands group as part of the exchanges.
This inflated value estimate also allowed the swap for more
valuable land alongside freeways to proceed, because the transfers could then
be classified as “fair market value,” specified as part of the BLM’s codes
involving land exchanges. “These guys can take a huge tax write-off, because
they would be giving up land that was artificially inflated by what I believe
was a corrupt process.”
Baird also believes that some of the deals involved public lands
that had been illegally transferred to private ownership by the BLM. Baird
showed me a series of parcels with map overlays that seemed to establish his
contention that the parcels were in fact public lands until just recently.
In a May 1997 issue of Media ByPass magazine, Karen Lee Bixman
explored an area of the land swap that made some of Baird’s concerns seem timid
by comparison. In a story titled “The Great Gold Heist: The Desert Wilderness
Protection Act,” Bixman characterized Senator Dianne Feinstein as “The Modern
Jesse James.” Exchanging worthless desert land for more viable commercial land
alongside interchanges, as Jeff Baird’s file documented, is bad public policy,
but Catellus was also swapping worthless land for rich, gold-bearing deposits.
Bixman wrote: “The real motivation for the passage of [the
Feinstein] bill lies with the special interest groups that would benefit
monetarily. Through a complex series of land exchanges, Catellus will receive
land that contains some of the richest gold deposits in the world.”
Part of the Catellus exchanges in the Mojave included a swap for a
decommissioned military base called Chocolate Mountain. Bixman wrote that
geologists told her Chocolate Mountain has deposits worth somewhere between
$40-100 billion. Catellus owns the nearby Mesquite mine in the Chocolate Rift
zone, which, Bixman wrote, “is one of the ten most profitable mines in the
United States and has some of the most profitable gold deposits of any mine in
the world.”
In the company’s annual report for the year 2000, Catellus’ CEO
Nelson Rising in his letter “To Our Shareholders” wrote: “In 2000 we closed on
two sales totaling more than 405,000 acres of desert lands. We also entered
into an option agreement with The Wildlands Conservancy to sell an additional
277,000 acres of desert land… These transactions have generated more than $320
million in sales proceeds.”
The year-end report for Catellus in 2000 credited Senator Dianne
Feinstein for the Desert Wildlands bill and said: Catellus’ fortunes were
“directly affected by cash derived from the sales of these surplus lands.” That
annual report also listed the fact that CALPERS, the California Public
Employees Retirement System, was the largest institutional investor in Catellus
Development, then owning some 28% of the 100,000,000 shares of stock. The same
report mentioned that Catellus was issuing 150,000,000 new shares of stock,
which at the end of the year 2000, when Catellus was trading for $28 a share,
were worth a total of approximately $4.4 billion.
Rising also wrote: “As a result of all of these factors, we are
very positive about our prospects for 2001 and believe we will meet or exceed
our 2001 EBDDT per share growth goal of 15%.”
In the official document on the California Desert Protection Act,
the overview of the project states in the first paragraph: “The United States
Senate Committee on Energy and Natural Resources approved, on October 5, 1993,
the California Desert Protection Act (S21) sponsored by Senator Dianne
Feinstein after the bill was blocked in committee for seven years.” The
document then states that the Feinstein bill “protects all active mines and
valid mineral claims which will protect jobs (bold letters in original) in the
region.”
With the profits derived from the new stock issuances and the
overnight increase in land valuations, Feinstein’s legislative
Rumpelstiltskin act helped Catellus turn a huge profit in 2000. The closest I
can determine, Catellus made from $11 to $15 billion during the Desert
Wildlands process. And Richard C. Blum had a very good year.
Who knew environmental protection could prove so profitable?
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