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A deal in the desert for Senator Reid?

A bill he wrote could have affected the friend who sold him the land.

January 28, 2007|Chuck Neubauer and Tom Hamburger | Times Staff Writers

BULLHEAD CITY, ARIZ. — It's hard to buy undeveloped land in booming northern Arizona for $166 an acre. But now-Senate Majority Leader Harry Reid effectively did just that when a longtime friend decided to sell property owned by the employee pension fund that he controlled.

In 2002, Reid (D-Nev.) paid $10,000 to a pension fund controlled by Clair Haycock, a Las Vegas lubricants distributor and his friend for 50 years. The payment gave the senator full control of a 160-acre parcel in Bullhead City that Reid and the pension fund had jointly owned. Reid's price for the equivalent of 60 acres of undeveloped desert was less than one-tenth of the value the assessor placed on it at the time.

Six months after the deal closed, Reid introduced legislation to address the plight of lubricants dealers who had their supplies disrupted by the decisions of big oil companies. It was an issue the Haycock family had brought to Reid's attention in 1994, according to a source familiar with the events.

If Reid were to sell the property for any of the various estimates of its value, his gain on the $10,000 investment could range from $50,000 to $290,000.

It is a potential violation of congressional ethics standards for a member to accept anything of value -- including a real estate discount -- from a person with interests before Congress.

In a statement, Reid's spokesman Jon Summers said that the transaction was not a gift and that the price was due to the property's history and the fact that only a partial interest was sold. Reid's action on the lubricants issue was unrelated to the sale and reflected the senator's interest in fairness for small businesses, Summers said.

Reid "has never taken any official action to provide personal financial benefit to me, and I would never have asked him to," Clair Haycock has told The Times. Haycock's son, John, who runs the petroleum-products distribution company with him, said in a recent e-mail that it was "absolutely wrong" to connect the land sale and Reid's lubricants legislation, which did not pass.

Legislative efforts

Records and interviews show that beginning in the mid-1990s, Reid tried several times to push legislation that would have protected lubricants distributors from abrupt cancellations by their suppliers. Though unsuccessful, the legislation sent a clear message to the oil firms that there was congressional interest in the matter, according to Sarah Dodge, then-legislative director for an industry group that worked on the bill.

By the time of the land sale, the Haycocks say, they had lost interest in the issue and were not aware that the legislation had been introduced.

Because an employee pension fund had owned the land Reid purchased, labor law experts contacted by The Times said, a below-market sale would raise additional questions. Pension fund trustees like Clair Haycock have a duty in most cases to sell assets for their market value, the experts said.

"I think this would have been considered a potentially serious issue" at the time, said Ian D. Lanoff, who led the Labor Department's pension division during the Carter administration and was provided basic details of the case -- though not the identity of the lawmaker -- by The Times.

"Theoretically it's a serious issue for the trustee who sold the property, though practically it may not be" because the pension plan is now closed and its obligations were met, Lanoff said.

John Haycock said his workers received all promised benefits from the Haycock Distributing Co. pension plan and were therefore unaffected by the land transaction. Federal records confirm this.

Reid's interest in the barren parcel dates back to the period of 1979 through 1982, when he and Clair Haycock bought the 160 acres. Haycock bought a three-eighths interest, equivalent to 60 acres, for $90,000 -- $1,500 an acre. Reid, then a Nevada lawyer and political figure, bought the other five-eighths, the equivalent of 100 acres. They did not divide the parcel.

The property has sweeping mountain and mesa views and now abuts a housing development, which could make it attractive to developers. But there are some limitations. The land has a steep wash, or desert streambed, and the adjacent land has a gravel pit.

In early 1987, Haycock turned over his interest in the land to the pension fund, for which he acts as trustee. The fund provided retirement benefits for about 80 employees, and under law, employers must contribute to such funds each year.

In the early 1990s, California investors bought the entire 160 acres from Reid and Haycock for a little over $1.34 million -- around $8,400 an acre. The new owners obtained approval to develop a mobile home and recreational vehicle park. But a few years later they defaulted, and Reid and the pension fund were once again the land's joint owners.

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