Conflicts of interest afflict MALT

10/28/2020

The Marin Agricultural Land Trust is facing increasing public scrutiny for purchasing conservation easements from board members. 

The allegation that MALT has violated multiple conflict-of-interest laws and overvalued easements for the benefit of board members was brought before three legal bodies in September by whistleblower Kenneth Slayen. Subsequently, a North Bay Bohemian/Pacific Sun investigation found that over its 40-year history in West Marin, MALT has spent millions in private and public funds to purchase easements from board members and their families. 

MALT leadership has publicly denied wrongdoing, asserting in several recent statements that the organization adhered to an adequate conflict-of-interest policy and emphasizing that independent, third-party appraisers set the value of easements. The organization’s lawyers have filed letters with all three legal entities, defending its practices.  

Yet MALT also changed its policies last year, after Mr. Slayen expressed his concerns privately to the organization. Under new rules, the organization can no longer purchase easements from board members or their immediate families. Earlier this year, both an employee who oversaw easement acquisitions and the executive director resigned. 

In August, MALT filed a lawsuit against the county seeking to block its release of further documents to Mr. Slayen, a Ross resident who started amassing information after MALT rejected his application to collaborate to purchase a Hicks Valley ranch in 2015. MALT instead chose to work with the family of a sitting board member, Sam Dolcini. The easement sold to the Dolcini family is one of seven sold between 2014 and 2019 that Mr. Slayen argues violated the California False Claims Act.

Marin County’s counsel and District Attorney have yet to respond to the allegations. The third entity Mr. Slayen petitioned, the California Fair Political Practices Commission, shut down his concerns in an October letter. The F.P.P.C. only had jurisdiction over one aspect of Mr. Slayen’s argument—that MALT has violated conflict-of-interest laws that govern public agencies. In a brief letter, the F.P.P.C. wrote that MALT is a private organization and therefore not subject to those laws.

Due to the nature of his claims, Mr. Slayen had to give these bodies a chance to pursue civil proceedings first. Should they all decline, he will file his own lawsuit, and request that the Marin County Civil Grand Jury investigate the Measure A Farmland Preservation Program.

“The county contributes 50 percent of the purchase price of most MALT easements since the passage of Measure A,” Mr. Slayen said this week. “Accordingly, taxpayers have paid hundreds of thousands or millions of dollars more for conservation easements than they should have.” 

County counsel Brian Washington said his office would have a response within two weeks. 

The F.P.P.C. administers and enforces the Political Reform Act, which ensures that public officials perform their duties free from bias caused by financial interests. 

Mr. Slayen’s attorney, Thomas Brown, argued that although MALT is a nonprofit, it qualifies for regulation under the Political Reform Act, meeting the act’s four criteria: First, the county was involved in MALT’s formation; second, MALT receives significant county funds every year; third, MALT serves a public purpose; and four, other laws, including the California Public Records Act and the Brown Act, treat MALT as a public entity.

But the F.P.P.C. disagreed. “After review of the complaint and evidence provided, the enforcement division found that the Marin Agricultural Land Trust does not appear to be a government agency under the Political Reform Act, therefore, we will not pursue an enforcement action in this matter,” wrote Galena West, the commission’s division chief.

Conflict-of-interest laws are different for nonprofits. Under the Internal Revenue Code, for example, an organization can lose its tax-exempt status if it uses its assets for the private benefit of insiders. IRS Form 990 asks organizations to affirm adoption and enforcement of a conflict-of-interest policy, though it does not require it. 

Mr. Brown cited the provision of the Political Reform Act that requires public officials to disclose financial interests that may affect their official actions and recuse themselves from “making, participating in making, or in any way attempting to use their official positions to influence a governmental decision in which they know or have reason to know they have a financial interest.”

Mr. Slayen had asked the F.P.P.C. to initiate civil proceedings for Political Reform Act violations against all board members who served during the last four years, and the two employees who resigned earlier this year, former conservation director Jeff Stump and executive director Jamison Watts. He calls out five board members in particular who he says financially benefited from easement acquisitions.  

An investigation by the North Bay Bohemian/Pacific Sun published on Sept. 30 used records that Mr. Slayen received from the county. “An independent investigation by the Bohemian/Pacific Sun found that since 1980 more than 30 MALT board members have benefited from 38 easement sales totaling more than $49 million. Fifty-five percent of $90 million in easements bought over 40 years has benefited board members. A handful of families with multi-generational board members, including the Dolcinis, have received $37 million,” journalist Peter Byrne wrote.

MALT disputes the findings, arguing that although there may have been board members who shared last names with the beneficiaries of easements, they did not always have financial ties. Over the past 40 years, the instances in which a conservation easement has financially benefited a sitting board member fall in the single digits, MALT alleges. The Light did not conduct its own investigation.

The organization’s lawyer, Ellison Folk, argued in a letter to the F.P.P.C. on Sept. 25 that MALT should not be considered a public agency under the Political Reform Act. Regardless, she argues the board members under Mr. Slayen’s scrutiny complied with the spirit of that law, saying they informed the organization of their financial interest and recused themselves from any board discussion or decisions on their easements. 

Ms. Folk said MALT has been a nonprofit since biologist Phyllis Faber and rancher Ellen Straus founded it in 1980, and that its governance, funding and purpose continue to be independent. She described the extent of the county’s involvement: the Marin County Board of Supervisors encouraged MALT’s formation and has continued to appoint two people to the board, one of whom had to be the District Four supervisor until that policy changed in 1996.

Now, the MALT board appoints the supervisor, who the organization says serves in a personal capacity; the county appoints two other board members. 

The Public Records Act and the Brown Act, the other transparency laws that Mr. Slayen claims should treat MALT like a public agency, would have kicked in if Marin supervisors appointed one of their own to the MALT board. MALT made this same argument in its lawsuit against the county. 

Ms. Folk addressed the two remaining criteria: funding and purpose. She argued that the Political Reform Act defines a public agency as one that receives at least half of its funding from a local agency. Since 2012, the nonprofit has received more than $13 million from Measure A’s Farmland Preservation Fund, which is fed by a quarter-cent sales tax. Since 2014, Measure A funds have accounted for only 25 percent of MALT’s annual $9 million budget, she said. An additional 5 percent comes from other governmental sources.

Addressing whether MALT’s principal purpose is one that public agencies perform, Ms. Folk wrote, “Unlike government land use policies, which simply restrict the use of land (including the Point Reyes National Seashore designation and the Marin County General Plan), the tool MALT now uses requires land owners to actively farm their land. For this reason, MALT’s activities do not fall within the traditional land use functions of public agencies.”

MALT added the provision to easements that requires landowners remain in active agriculture in 2011. The nonprofit said it made the change out of a concern that people were buying agricultural lands for estates and would keep just a token amount of agriculture. In three cases, the change applied retroactively.

In a 2014 interview with the Light, then-executive director Jamison Watts said, “In 1980 the threat was high-density development. Now there is a threat of estate development, where individuals come in and purchase farms and ranches and take the agriculture off. In a smaller county like Marin you have to maintain a critical mass of farms and ranches and supporting industries. They rely on each other.”

The F.P.P.C. did not weigh in on another matter that Mr. Slayen asked it to investigate: violations of government code 1090, another conflict-of-interest law that pertains to public agencies.

Mr. Brown describes that under this law, public officials cannot escape a conflict simply by abstaining from voting or participating in discussions or negotiations. “Mere membership on the board or council establishes the presumption that the officer participated in the forbidden transaction or influenced other members of the council,” Mr. Brown cited from an appeals court ruling on the act.  

Ms. Folk pointed to the organization’s new policies. In the past, MALT sought to avoid conflicts with a policy mandating that trustees wishing to sell an easement to the organization recuse themselves from any discussion or vote on the matter. But in July 2019, MALT strengthened those terms, disallowing easement acquisition from board members and their immediate families—defined as spouses, domestic partners, children, parents or siblings.

Neil Rudolph, the board chair, explained why MALT ever did deals with board members, highlighting the fact that the group’s bylaws require half of the roughly 20-member board to be agriculturalists.

“If you look at MALT’s governance structure, with 50 percent of the board ranchers and farmers, and the 40-year timeframe of MALT, and the fact that a board member can only sit for up to nine years before they roll off, by definition sooner or later someone is going to be on the board when their cousin, brother, mother, stepson, get in the pipeline,” he said. 

Regarding MALT’s strengthened policies, Mr. Rudolph added, “Our position is that we’ve always done things correctly, and now we’ve gone even further. We’re always trying to reach high, ensuring the organization achieves its mission.”

County counsel and the District Attorney are considering a broader set of claims than the F.P.P.C., including that MALT inflated seven easements in violation of California False Claims Act, which prevents fraud on the public treasury. MALT’s lawyers submitted response letters to those entities but declined to share them with the Light.

Mr. Slayen makes several allegations concerning the Dolcini-Beltrametti Ranch easement, including that an appraiser overvalued it. His attorney wrote to county counsel and the D.A. that “MALT paid $5,112 per acre for the easement, substantially more per acre (with one exception) than it has paid for any other conservation easement over land zoned for 60-acre-minimum lots.”

Mr. Slayen claims that the high value of the easement influenced the values of five others, among other False Claims Act violations he alleges in all seven instances. On the Ielmorini Ranch, for example, MALT board members who owned adjacent property allowed for new access easements, creating a development risk and compelling the need for an easement.

On the Millerton Ranch, which MALT owned between 2014 and 2018, Mr. Brown says, “Instead of selling Millerton Ranch subject to a conservation easement, MALT sold the entire ranch and, in the same escrow, bought back a conservation easement at the 2018 appraised value. Thus, MALT bought the conservation easement at the higher 2018 appraised value, instead of the lower 2014 appraised value.”

Four of the seven easements in question involved board members.

In 2015, Mr. Slayen proposed that MALT purchase a conservation easement for a 326-acre Hicks Valley ranch that he hoped to buy. Mr. Slayen, a retiree, proposed donating the majority of the land to MALT and living there while someone else farmed the land. MALT did not pursue his offer, saying he lacked sufficient funds, among other reasons.

In 2016, members of the Dolcini family purchased the ranch—now called the Dolcini-Beltrametti Ranch—while Sam Dolcini, who has a financial tie to the property, sat on the MALT board. He has been a member of MALT’s board almost every year since 1998.

Over the past 40 years, branches of the Dolcini family—which has ranched in Marin and Sonoma Counties for seven generations—have sold five easements to MALT for a total of $7 million. 

Mr. Dolcini has a 2.5 percent stake in the Dolcini-Beltrametti Ranch as one of eight children who are the beneficiaries of their parents’ trust, which has 20 percent ownership. The five children of the late Calvin Dolcini—Sam’s father’s first cousin—own the Dolcini Jersey Dairy, which operates on the ranch and owns the other 80 percent.

In her letter to the F.P.P.C., Ms. Folk shows how Mr. Dolcini followed MALT’s conflict-of-interest policy at the time, meaning he disclosed his financial conflict and did not participate in the board vote on the easement purchase.

Yet in a recent press release, MALT acknowledged that Mr. Dolcini personally negotiated the sale of the easement for the family. “It is correct that Sam Dolcini negotiated the specifics of the easement for Dolcini-Beltrametti Ranch with MALT staff,” it stated. “While board members are the decision-makers in easement transactions, MALT staff determine easement terms and ensure they are accurately captured in the appraised easement value.”

Mr. Slayen has brought to light several other instances of apparent wrongdoing related to the same easement.  

Records from 2016 raise the question of whether the easement value MALT included in its county application for Measure A funds for the Dolcini-Beltrametti Ranch matched the value that a third-party appraiser set two months later.

Furthermore, that appraisal was one of two MALT commissioned, and the group only sent the higher one to the parks department; it disclosed the lower appraisal three years later. The first appraisal was valued at $1,135,000; the second appraisal, which ultimately determined the amount of Measure A funds MALT received, was $1,666,500. 

The issue of MALT obtaining two appraisals, and hiding the lower one, has been public for some time now. Mr. Slayen says he first confronted the group in February 2017 and sent a demand letter in 2019. This May, after an internal review, MALT alerted the county of the first appraisal. MALT then returned the funds, which amounted to $833,250 and came from private donations, not from the Dolcinis.

“While MALT followed the letter of the county’s requirements for Measure A applications in this transaction, the recent follow-up with the county was to ensure that all parties agreed MALT also adhered to the spirit of those requirements,” Mr. Watts said in a statement at the time. “While many staff and the board of directors are involved in every transaction, as MALT’s executive director, I take full responsibility for this Measure A application.”

In response, Marin County Parks director Max Korten said the guidelines would be revised to require the disclosure of all appraisals made within two years prior to the application date. 

Mr. Watts resigned in June for what he said were personal reasons, leaving Ray Fort, who has worked as the organization’s director of operations for three years, at the helm. It was the second resignation in 2020, following that of Mr. Stump, who worked for MALT for 13 years and oversaw the easement acquisition program. 

MALT’s October press release included a statement from Mr. Fort defending MALT on all accounts. “MALT stands by its decision to purchase this easement and believes the purchase price was appropriate, based on the analysis of an independent appraiser and comparable sales of easement-encumbered properties,” he stated. “The county’s decision to ask for the return of Measure A funds used to purchase this easement was based on a process issue, not on the question of whether the easement was properly valued.”