Congressman Rick Renzi was poised to push congressional legislation involving a former business partner's land but says that he washed his hands of the deal after a lobbyist questioned their ties.
In a 45-minute telephone interview with New Times about the land proposal, Renzi sounded frequently irritated and sometimes angry. He insisted that he'd never had a conflict of interest and repeatedly questioned why the aborted deal was worth writing about.
To answer the congressman's question, this aborted land deal the details of which came to light just weeks before the general election is not the first time Renzi's dealings with James Sandlin have raised eyebrows. According to a Federal Elections Commission audit, it was the profits of a land sale Renzi made to Sandlin that partly funded Renzi's election in 2002.
You wouldn't have to be a conspiracy theorist to question whether Renzi's support of a bill to obtain Sandlin's acreage in a congressionally sanctioned land swap was an attempt to return the favor.
Renzi insists it wasn't. But either way, it's definitely news.
Renzi, who is currently running for a third term representing a district that stretches from Flagstaff to southeast Arizona, sold off a half-interest in his real estate investment business to a fellow investor, Sandlin, just before filing to run for Congress for the first time in 2002.
Sandlin paid $200,000 cash. And within months, Renzi plowed all his profits into his congressional campaign an infusion that allowed Renzi to outspend his opponents and squeak into office with 49 percent of the vote.
Once he got into office, Renzi sold his remaining interest in the company to Sandlin, earning somewhere between $1 million and $5 million, according to public disclosure forms.
And that's why it seems like more than a coincidence that, last October, Renzi publicly announced that he'd be proposing legislation that would include Sandlin's acreage in a land swap. Sandlin sold the acreage to a group of experienced swappers a week later, records show, for what appears to be considerably more than he paid for it, though he insists he could have gotten more.
Initially, Renzi's chief of staff, Brian Murray, told New Times that Renzi didn't know that the land belonged to Sandlin. Then he said that Sandlin sold the property before Renzi got involved with the swap, a claim that's contradicted by the sale date.
But when Renzi himself got on the phone, he admitted that he knew all along that the investors proposing the swap were dealing with Sandlin. While he insisted, vehemently, that he'd done nothing wrong, Renzi admitted that he recused himself from the legislation after hearing that a lobbyist had complained about Sandlin's connection.
"I did not want any appearance of impropriety," Renzi says.
After Rick Renzi's 2002 campaign, the Federal Elections Commission found enough problems to order a full audit of the new congressman's campaign coffers.
And the audit, released in 2004, found plenty of cause for concern.
For example, Renzi's campaign overstated its cash on hand by close to $64,000. Renzi also failed to list employers or occupations for 200 contributors, as the law requires.
Worst of all, the campaign used $369,000 of loans from "corporate funds." Corporate donations are illegal, and while Renzi insisted that the money came from his personal accounts, the audit concluded that the transactions were nevertheless "impermissible."
While the audit doesn't mention James Sandlin, records from the Arizona Secretary of State make it clear that he was, at minimum, peripherally involved in the corporate transactions that gave Renzi an extra cash boost.
Sandlin, a real estate investor with extensive holdings in Texas and Arizona, says he didn't meet Renzi until around 2001. At that point, Sandlin says, a family member suggested he buy into a venture that Renzi was involved with in Kingman.
A Virginia-based insurance executive, Renzi and his wife had started an Arizona real estate investment company in 1995. (While he grew up in Arizona, Renzi didn't buy a home in Flagstaff until 2001.)
At the time Sandlin met the Renzis, the Renzis had full ownership of the company. But while Renzi touted the business in his campaign biography, he now says that at the time he met Sandlin, its only holding was some undeveloped land in Kingman.
In October 2001, Sandlin gave them $200,000 cash for a half-interest in the company.
What happens next is wildly complicated. As detailed in the FEC audit, Renzi made a series of transfers and loans involving the money from the October 2001 sale, a second family-owned company, and his campaign.
The end result, though, is that Renzi put all $200,000 from the sale to Sandlin into his campaign coffers. Along with another $236,000 from his own pocket, according to the Center for Responsive Politics, Renzi was able to gain name recognition in a crowded field.
Renzi won the Republican primary. Then he narrowly beat Democrat George Cordova in November 2002.
The Federal Elections Commission said that the loans from Renzi's businesses to himself and then to his campaign were "impermissible," and that Renzi's use of the money amounted to using corporate funds. The commission, however, closed its file on the matter this year without taking action.
An FEC spokesman said he was not permitted to comment on the investigation.
Sandlin and his wife, Terry, each contributed $2,000 to Renzi's campaign. It appears to be the only time either made a political contribution to anyone. But indirectly, Sandlin's investment in Renzi's business infused the would-be congressman's campaign with a hefty $200,000 boost.
Sandlin admits that was basically the point.
"He was trying to raise money for his campaign, and at that point, it was his money," he says.
That's all fine; there doesn't appear to be any law on the books barring a politician from selling land and funding his own campaign.
But then something very odd happened something that may have been a coincidence, as Renzi insists.
That "something" was 480 acres of land in Cochise County.
James Sandlin had bought the property in 2000, about a year before he says he even met Rick Renzi. But in 2005, after Renzi was well-ensconced in Congress, the land became part of a series of intricate discussions.
Tom Collazo, director of conservation for the Nature Conservancy in Arizona, says that two different groups of investors approached him about whether Sandlin's property would be useful in a "land swap."
In swaps, private citizens typically convince the feds to give them choice pieces of federal land thereby opening it to development in exchange for their donation of an ecologically important alternative.
Sandlin's land was on the San Pedro, which has been a source of great concern for environmentalists. The last free-flowing river in Arizona, it's been increasingly tapped out by businesses, farmers, and even residences ("Doomed River," John Dougherty, August 4, 2005).
The Nature Conservancy had previously attempted to purchase the property, Collazo says, but couldn't meet Sandlin's price.
But in 2005, Collazo says, it wasn't the Nature Conservancy driving the deal. Collazo says that both investors who approached his agency told him that they were looking into the land at Renzi's suggestion. And while Renzi's district does include parts of Cochise County, Sandlin's land falls outside its borders.
Even Renzi's own chief of staff, Brian Murray, acknowledges that "it wouldn't be proper for him to be involved in legislation involving Sandlin" because of their past business dealings.
Murray, who was not on Renzi's staff during the time of the land exchange discussions, told New Times that Renzi explained to him that Sandlin was part of a group of investors, and that the congressman didn't even know his old partner had interest in the land.
Property records in Cochise County, however, show that the land was in Sandlin's name at the time in question.
And Renzi called New Times a few hours later to tell a different story. He said that he knew Sandlin had ownership of the property but that Renzi's only interest in pushing a swap was helping the San Pedro, especially since the future of Fort Huachuca rested on having enough water.
"The fact is, I didn't suggest to anybody that they get the Sandlin property," Renzi says. "The Nature Conservancy was going after this land before I became a congressman. Everybody knew that land on the San Pedro was valuable and that it would help the fort."
In the end, both deals fell through.
One group, Resolution Copper, was looking to swap land for rights to mine copper in Maricopa County's Oak Flat area. Spokesman Troy Corder confirmed the company was once interested in the property, but says it was not ultimately included in the bill proposed for Congress. (Renzi is the main Congressional sponsor of that bill.)
The second deal was stymied by, yep, the pygmy owl.
The investors were no novices. The group in this deal includes Tucson real estate investor Philip Aries, former Arizona governor Bruce Babbitt, and Guy Inzalaco, a well-connected Nevada-based land-swapper who used to live in Scottsdale.
A 1995 audit by the U.S. Department of the Interior, completed during Babbitt's tenure as Secretary, studied land swaps and determined that the government had been shortchanged by $12.2 million in four previous swaps. Ironically, two of the swaps examined in the audit had Inzalaco and his then-partners at the helm which makes Babbitt's partnership with them after leaving office surprising.
Murray, Renzi's chief of staff, says that Aries and his group were seeking land owned by the federal government in Florence. A big-time Tucson developer, Don Diamond, had made it clear he wanted to build there, and the Bureau of Land Management was ready to let go of the property.
The Sierra Vista Herald ran a story on October 1, 2005, quoting Renzi. The congressman said that he would introduce legislation in Congress that very week swapping out Sandlin's land thereby protecting the land along the San Pedro in exchange for the land in Florence.
On October 7, Sandlin sold the property to Aries and his partners for $4.5 million.
Soon after that, though, Renzi says he backed away from the legislation. The Resolution Copper swap had stalled, thanks to opposition from Native American groups; Renzi said he'd heard Resolution's lobbyist was complaining that Aries and his friends were getting preferential treatment because of the Sandlin connection.
"It got back to me that Resolution Copper's lobbyist was saying that I was going to hold up the Resolution Copper bill, and I was going to push the bill in Florence because my business partner was involved," Renzi says. "The moment I heard that, I recused myself." The lobbyist, Tom Glass, did not not return calls for comment by press time.
It was only after that, apparently, that the feds realized that the land in Florence was full of pygmy owls, Collazo says. And since pygmy owls are an endangered species, that would severely limit anyone's ability to build much of anything on that land.
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Aries didn't return calls. But it seems likely that the savvy investors suffered buyer's remorse.
They've put the land back on the market. Sandlin says they've even tried to interest him in buying it back. Naturally, he's not interested.
But Sandlin insists that Renzi couldn't have been possibly trying to help him.
"Rick Renzi is one of the most honest and ethical people I've ever met in my life," he says. "We're friends. But I guarantee you, he's not going to do anything for me or anyone else that's going to compromise his ethics."