By David Kirkpatrick and Jim Rutenberg
Mr. McCain has been willing, though, to help sponsor bills authorizing federal land exchanges that Mr. Diamond sought. Former Representative Jim Kolbe, another Arizona Republican close to Mr. Diamond, said Mr. Diamond often proposed such deals and impressed lawmakers with his frankness about the potential sensitivities, Mr. Kolbe said.
“He would tell you, ‘I don’t think you should get on this one, this one is too close to where you live, let another member of the delegation work on this one,’ ” Mr. Kolbe said. “He never tried to flim-flam you.”
Such exchanges can serve a public interest by expanding parks or wilderness areas. But many environmentalists and other analysts have also concluded that such trades almost invariably give private developers a profitable bargain at public expense. Although federal rules stipulate that public land can be traded for private land only of “equal value,” appraisals of unusual property or in fast-growing areas are highly variable and developers often apply political pressure to get favorable terms.
A study in 2000 by the nonpartisan Government Accountability Office cited “inherent difficulties” and “fundamental inefficiencies” in such exchanges and urged Congress to discontinue them.
The first two swaps involving Mr. Diamond that Mr. McCain helped sponsor were initially supported by local governments and conservationists, and Mr. Diamond argues the land would be worth far more today. But many Arizona conservationists later protested that the federal deals gave away too much.
“Don Diamond has done very well through these land exchanges,” said Sandy Bahr, director of the Arizona chapter of the Sierra Club. “It is the public that got shortchanged.”
The McCain campaign noted that the bills left the terms of any acquisitions to the Interior Department, but environmentalists argued that the legislation set the parameters.
“It’s not like there is some market mechanism at work,” Ms. Bahr said.
The laws expanded what is now the Saguaro National Park just outside Tucson to insulate it from proposed Diamond projects, including one to build 10,000 houses and four resorts on the 4,400-acre Rocking K Ranch nearby. Mr. Diamond had bought the ranch for less than $10 million in 1979.
In the first deal, Mr. McCain was the sole Senate sponsor of a 1991 law authorizing the Department of the Interior to acquire about 2,000 acres of the ranch, which local environmentalists valued at about $5 million but Mr. Diamond and parks appraisers put at around $30 million.
Over the next five years, the government paid him more than $23 million for the land and traded him two parcels of about 50 acres in upscale Scottsdale, Ariz. And the expanded Saguaro also added to the value of the remaining Rocking K land, where Mr. Diamond is still planning to build 3,000 houses along with resorts and golf courses.
When The Arizona Republic linked Mr. McCain’s support for the bill to Mr. Diamond’s fund-raising, Mr. McCain called the implication “outrageous and disgusting.”
In 1994, Mr. McCain sponsored, along with a Senate colleague at the time, Dennis DeConcini, Democrat of Arizona, another law expanding the park by again acquiring land from Mr. Diamond. To carry out the expansion, the Interior Department has so far taken over about 630 acres from Mr. Diamond in exchange for about 4,300 acres near Phoenix.
Last year, Mr. McCain co-sponsored another bill with Senator Jon Kyl, Republican of Arizona, that would grant Mr. Diamond about 1,250 acres south of Tucson in exchange for requiring him to contribute about 2,500 acres to other conservation areas-- a scaled-back version of a 2003 proposal that collapsed under protests that it was too generous to Mr. Diamond. A Senate committee passed it to the floor this month.
A Deal and a Lawsuit
In the mid-1990s, Mr. Diamond set his sights on Monterey County, Calif., where the Army was closing Fort Ord. It was a dream property -- hundreds of undeveloped acres and two golf courses in the ocean-misted hills overlooking Monterey Bay, one of California’s great tourist destinations.
Tipped off by a fellow Tucson developer, Mr. Diamond had snapped up a housing complex there that had been built on land leased from the Army, giving him the inside track to buying the land when the base shut down.
After the Army did so in 1994, Mr. Diamond asked Mr. McCain, a member of the Senate Armed Services Committee, for an introduction with an Army official who could work out a sale. Mr. McCain’s legislative aide, Ann Sauer, arranged a meeting with Paul W. Johnson, a deputy assistant secretary, a Diamond executive involved in the deal said.
When the talks stalled over price and water supply, Ms. Sauer interceded with the Army, according to Mr. Diamond’s deposition and others involved. “She showed up and got the thing resolved,” Mr. Diamond said.
Mr. McCain’s campaign aides said in a statement they did not believe Ms. Sauer’s involvement went beyond setting up the Pentagon meeting. Ms. Sauer, who no longer works for Mr. McCain, said she could not recall details of her role. A spokesman for the Army declined to comment.
Mr. Diamond finally bought the land for $250,000 in 1999. He obtained an unusual guarantee from the Army that provided a generous water allowance outside the standard allocation process -- a bonus that continues to rankle municipal officials on the dry Monterey Peninsula.
“Those guys got a sweetheart deal,” said Michael Keenan, whose family bought the housing complex from Mr. Diamond for nearly $30 million two years later. Mr. Diamond acknowledged turning a profit of $20 million.
Even before he completed his negotiations with the Army, Mr. Diamond had begun turning his attention to an even bigger prize: the two Fort Ord golf courses, which had been sold to the city of Seaside.
Mr. Diamond and his partners imagined building high-end condominiums and a luxury hotel by the links, a project they described in an internal memorandum as a “World Series, final game, out of the park, grand slam home run.”
When Seaside solicited submissions in 1998 from bidders competing to develop a world-class resort, Mr. Diamond sought to exploit his Washington connections. His package included the laudatory letters from Mr. McCain, Mr. Kyl and Mr. Kolbe.
“The folks that were there at the time were sort of, like, star struck: ‘God, these people really know some high-up people,’ ” said a former senior Seaside official, who requested anonymity to speak candidly.
Mr. Diamond acknowledged that, as court papers show, he tried more than once to enlist Mr. McCain in assisting the city on other matters as the selection process continued. “I don’t mind trying,” he said. For instance, in 2002, Mr. Diamond forwarded to Mr. McCain an article from The Monterey Herald about Seaside’s problems in a water dispute. “As per our conversation today,” he wrote, “I would appreciate it if you would follow up and drop a line to the city manager of Seaside.”
He added in a postscript, “Sorry you can’t make it to the Yankees series,”
Daniel E. Keen, the former Seaside city manager, recalled: “Diamond had a relationship with McCain. He was offering to help.”
Mr. McCain rejected that request as “inappropriate at that time” because he was poised to regain the chairmanship of the Senate Commerce Committee, Mr. Diamond said in the deposition. “John said that he would rather not get involved. He didn’t think that it was right.”
Mr. Diamond’s courtship of Seaside almost unraveled the next year when a rival developer, Danny Bakewell Sr., a civil rights activist, filed a lawsuit charging that Mr. Diamond had conspired to rig the selection process. The company running the former Army golf courses, BSL Golf, was acting as the city’s agent to pick a developer, and Mr. Bakewell’s lawyers presented documents showing that Mr. Diamond offered to give BSL a stake in the resort in exchange for helping him win the project. Mr. Diamond and BSL denied any wrongdoing and settled the suit for an undisclosed sum in 2004.
Though Mr. McCain helped with the Fort Ord deals, Mr. Diamond said, he still thinks that Mr. McCain is too worried about avoiding any appearance of a favor. “He doesn’t bring home enough for the state,” Mr. Diamond said. “It is a sore subject between us.”
Kitty Bennett and Barclay Walsh contributed research
Post to other social networks:
Stay informed with our free news services:
| All news from SPIEGEL International | Twitter | RSS |
| All news from Under the Scope section | RSS |
© SPIEGEL ONLINE 2008
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH
