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McCain Pushed Land Swap That Benefits Backer

By Matthew Mosk
Washington Post Staff Writer
Friday, May 9, 2008

PRESCOTT, Ariz. -- Sen. John McCain championed legislation that will let an Arizona rancher trade remote grassland and ponderosa pine forest here for acres of valuable federally owned property that is ready for development, a land swap that now stands to directly benefit one of his top presidential campaign fundraisers].

Initially reluctant to support the swap, the Arizona Republican became a key figure in pushing the deal through Congress after the rancher and his partners hired lobbyists that included McCain's 1992 Senate campaign manager, two of his former Senate staff members (one of whom has returned as his chief of staff), and an Arizona insider who was a major McCain donor and is now bundling campaign checks.

When McCain's legislation passed in November 2005, the ranch owner gave the job of building as many as 12,000 homes to SunCor Development, a firm in Tempe, Ariz., run by Steven A. Betts, a longtime McCain supporter who has raised more than $100,000 for the presumptive Republican nominee. Betts said he and McCain never discussed the deal.

The Audubon Society described the exchange as the largest in Arizona history. The swap involved more than 55,000 acres of land in all, including rare expanses of desert woodland and pronghorn antelope habitat. The deal had support from many local officials and the Arizona Republic newspaper for its expansion of the Prescott National Forest. But it brought an outcry from some Arizona environmentalists when it was proposed in 2002, partly because it went through Congress rather than a process that allowed more citizen input.

Although the bill called for the two parcels to be of equal value, a federal forestry official told a congressional committee that he was concerned that "the public would not receive fair value" for its land. A formal appraisal has not yet begun. A town official opposed to the swap said other Yavapai Ranch land sold nine years ago for about $2,000 per acre, while some of the prime commercial land near a parcel that the developers will get has brought as much as $120,000 per acre.

In an interview, Betts said there is "absolutely no" connection between his contributions to McCain's presidential bids and the deal involving rancher Fred Ruskin and the Yavapai Ranch Limited Partnership. While his company's possible involvement was discussed casually before the bill's passage, Betts said SunCor did not sign on to the project until afterward. "At no time during the consideration of this legislation was there any involvement by officials of SunCor," McCain spokesman Brian Rogers said in a written response to questions [read the campaign's full answers].

Betts is among a string of donors who have benefited from McCain-engineered land swaps. In 1994, the senator helped a lobbyist for land developer Del Webb Corp. pursue an exchange in the Las Vegas area, according to the Center for Public Integrity. McCain sponsored two bills, in 1991 and 1994, sought by donor Donald R. Diamond that yielded the developer thousands of acres in trade for national parkland.

In the late 1990s, McCain promoted a deal in Arizona's Tonto National Forest involving property part-owned by Great American Life Insurance, a company run by billionaire Carl H. Lindner Jr., a prolific contributor to national political parties and presidential candidates.

With the federal government owning vast stretches of Arizona land, and with pressure to meet increasing housing demands, McCain now views land swaps as beneficial, Rogers said. "He certainly recognizes that there have been well-documented abuses of legislative land exchanges, but every land exchange bill introduced by Senator McCain has been written with the highest regard for the public interest."

As McCain positions himself as a champion of environmental causes, observers of the Yavapai Ranch swap say it shows a paradox in the senator's positions. At times, he has fought to protect the delicate desert ecosystem. But when wildlife concerns have thwarted development, his loyalties have shifted.

"When the public trust intersects with private interests, basically, he has favored land development . . . in every case," said Rob Smith, director of the Sierra Club's Arizona affiliate.

McCain also has been critical of government's "revolving door," which allows former government officials to position themselves as influential lobbyists. Rogers said that McCain does not recall being lobbied by his former staff members on the land swap and that "no lobbyist influenced Senator McCain on this issue."

The Yavapai exchange idea surfaced a decade ago as area land values soared. Ruskin and his siblings for years have used the inherited property as a cattle operation.

Development was complicated, because the land was intertwined with federally owned forest, creating what land management officials call "the checkerboard." Ruskin's ranch and the federal property comprise alternating square-mile plots across swaths of northern Arizona.

For the U.S. Forest Service, the tangle of public and private property posed a management headache. For Ruskin and his family, it became an opportunity.

Ruskin said he spent months researching federal land exchanges, and decided the regular process used by the Forest Service would be too complicated to ever get done. The trade he wanted would involve three cities, three national forests, two counties and 15 land parcels. He persuaded then-Rep. J.D. Hayworth (R-Ariz.) to draft a bill proposing the exchange of 35,000 acres of ranch property for 21,000 acres of federally owned Arizona land.

Ruskin set his sights on prime development property astride a major interstate, land adjacent to the Flagstaff airport and a contiguous stretch of the ranch that would allow housing development. He estimated that the ranch land, if subdivided and developed, would easily sell for more than $250 million -- and that had to be calculated into any swap.

At first, the trade appeared to have broad support, but opposition soon developed. Clarkdale Mayor Doug Von Gausig, whose house overlooks the Verde River, said he feared that development would overtax an already fragile water source.

Other critics included a national taxpayer group that questioned the land values. "It was just a bad deal -- a rip-off to the public," said Janine Blaeloch, who heads the Western Lands Project, another opponent of the legislation.

McCain initially withheld support for Hayworth's bill, which failed in 2002. Ruskin saw McCain's restraint as an obstacle. He said Senate staff members warned him that the senator was wary of a swap because "he spent some political capital and got some bricks thrown at him" over the Tonto National Forest deal.

Ruskin, who is a pediatrician by training, said he realized he needed to hire lobbyists "to open communications with McCain's office."

He turned to some of McCain's closest former advisers. In 2002, he sought out Mark Buse, McCain's former staff director at the Senate commerce committee, which the senator chaired.

"I had gone to him to see if he had any advice as to how to deal with McCain," Ruskin said. "We had a couple of meetings and I paid him a little bit." Buse's federal lobbying records do not list the ranch as a client.

That year, lobbying records show, Ruskin also paid $60,000 to Michael Jimenez, another former McCain aide. Wes Gullett, who had worked in McCain's Senate office, managed his 1992 reelection bid, and served as deputy campaign manager for his 2000 presidential run, also lobbied on the bill, documents show. The watchdog group Public Citizen lists Gullett and his wife, Deborah, as bundlers who have raised more than $100,000 for McCain's White House bid. Ruskin also hired Gullett's partner, Kurt R. Davis, another McCain bundler and member of the senator's Arizona leadership team, to work with local officials and "to help with McCain if we needed help." Buse, Jimenez and Gullett did not return calls seeking comment.

Davis said that he and Gullett were not hired just to win over McCain. "Each member has issues that are more important to them. You have to be able to address their individual concerns. We had familiarity with the issues important to McCain." In this case, Davis said, "Senator McCain was very, very engaged and concerned about water issues."

In April 2003, McCain introduced his version of a land-swap bill. But he remained reluctant about the exchange, speaking to opponents and organizing meetings in towns that would be most affected.

Flagstaff Mayor Joseph C. Donaldson, a supporter of the swap, said McCain's hesitation stemmed from his "insistence that the environment be protected." But opponents were baffled by the senator's seemingly contradictory positions. Said Blaeloch: "The bizarre thing to me regarding McCain is, we spent a lot of time with his staff, and we all seemed to be on the same page about the problems with this swap. But somehow, John McCain kept pushing it forward."

Ruskin said a "crucial meeting" occurred on Aug. 4, 2004, when McCain added a provision aimed at appeasing many opponents. It created a management group that would monitor water reserves and document any danger to the Verde River.

The legislation also was revised to mandate that the parcels in the exchange be of "equal value." Forest Service officials say they can adjust the amount of property given to Ruskin to ensure that each side gets an equal share of land. Blaeloch and some other opponents remained concerned that appraisals could still be manipulated. The language helped win Senate passage on July 16, 2005.

Ruskin said he first engaged in confidential discussions with SunCor in 2003. Betts said the company was not "really interested in spending a lot of time on it until we knew if the legislation would pass."

Ruskin said SunCor officials formally expressed interest in October 2005, a month before President Bush signed the bill into law.

In Arizona, SunCor is a subsidiary of Pinnacle West, the state's largest power company. Betts, as Ruskin described him, "politically is a very powerful guy in the state."

Officials from the company and its subsidiaries have accounted for $100,000 in contributions to McCain's political campaigns over the years, records show.

SunCor is now working directly with the Forest Service to complete the swap, which has been delayed by administrative glitches.

As for McCain, some in the Verde Valley say they counted on him to broker a deal that would protect their precious river. Von Gausig now heads the water management commission that McCain added to the bill to gain community support. The Congressional Budget Office estimated it would cost $8 million over five years to fund water studies. But to date, none of that money has been budgeted.

Research editor Alice Crites contributed to this report.

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