Special Reports

Possible conflict haunts conservancy program

In 2001, North Carolina was in desperate need of environmental restoration to allow work to start on a backlog of state road projects.

The solution that got the bulldozers moving again was controversial: The state could buy tens of thousands of acres of relatively undisturbed lands to match up to the environmental impact of construction for a two-year period, as long as the state followed up with matching stream and wetland restorations in subsequent years.

It worried environmentalists, because it meant pristine property that might not be developed anyway would be used to offset the loss of streams and wetlands. Left by itself, this would result in a net loss of existing streams and wetlands, violating a basic tenet of restoration.

But it was a boon to conservation groups that had thousands of acres to sell for mitigation, including The Nature Conservancy of North Carolina. And what no one knew during negotiations was the federal official who was pushing the conservation-heavy plan had his own land deal going with the nonprofit.

In December 2002, David Franklin, a U.S. Army Corps of Engineers district engineer, paid the conservancy $109,000 for 287.5 acres of riverfront property in Pender County. It was a slice of a 38,320-acre purchase the conservancy had made from International Paper nine months before.

Seven months after Franklin bought the land, state and federal officials agreed on the plan to solve the state Department of Transportation's problems, ending more than a year of talks. It launched the state Ecosystem Enhancement Program in 2003, which ultimately spent $70 million with several conservation groups to buy land for preservation.

"The spearhead was David Franklin, no doubt about that," said Bill Gilmore, who represented DOT in the negotiations.

Today, some of those involved in the agreement say Franklin should have disclosed the land deal because it looks like a conflict of interest.

"It's definitely an appearance of a conflict of interest and that kind of stuff needs to be revealed so that people can set to rest whether it's a real conflict," said John Dorney, a supervisor with the Division of Water Quality responsible for watching over state stream and wetland restorations.

Franklin paid $379 per acre, well below the $626-per-acre price the conservancy paid.

Even the Nature Conservancy chapter's executive director, Katherine Skinner, said that today the deal would not be approved by the nonprofit's board until a special committee had reviewed it to make sure Franklin was not getting a break based on his public position. The group changed its ways after a series in The Washington Post reported the conservancy had sold land at a lower price to people with ties to the nonprofit and then accepted donations that made up the difference.

Who knew what is murky

But Skinner said she did not think anything was improper with the land purchase. Along with the price Franklin paid, he gave the conservancy a $92,000 donation, which when added with the purchase price closely reflects what conservancy officials say Franklin was willing to offer: $700 an acre.

That set-up, however, gives Franklin a tax break he wouldn't have received had he paid the $700-per-acre price at the outset. He gained a charitable tax write-off.

Franklin could not be reached by phone at his Carolina Beach home, or by registered mail. He retired from the Corps in 2005. Property tax records show he still owns the land.

Gilmore, who is a friend of Franklin's and has visited the property, said Franklin hunts and fishes there.

Skinner also said there was no conflict, because Franklin bought the land before the ecosystem program was in place, and no one at the conservancy, including her, realized Franklin worked for the corps.

At the time Franklin bought the land, he would have been required to report real estate dealings to his supervisors on a disclosure statement. Corps lawyer Brooke Lamson said disclosure forms were not public records and would not say whether Franklin reported the purchase.

The conservancy received $6 million of the $70 million the ecosystem program spent. But the ecosystem program did not buy the International Paper site. The conservancy later received a $7.9 million grant from the state Clean Water Management Trust Fund that covered 14,103.5 acres of the International Paper purchase.

During the negotiations about starting the program, Lamson raised concerns about using preservation to offset the destruction of streams and wetlands.

"Corps guidance is that preservation is the least favored of mitigation options, and will be used rarely," she wrote in a March 4, 2003, e-mail. "Given that language, it is very possible that preservation property would not be acceptable as mitigation, come permit time."

Four months later, the corps, along with two state Cabinet secretaries, signed the agreement.

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