http://newsok.com/article/3136806/1191150781

Sun September 30, 2007

How a $441G grant helped Stipe

By Tony Thornton
Staff Writer

SCIPIO — It was heralded as a boon for tourism, the kind that would bring jobs and other economic benefits to Pittsburg County.

Three years later, the federal government has little to show for its nearly half-million-dollar investment in rugged land purchased from former state Sen. Gene Stipe.

Debate continues as to whether Stipe's political clout played a role in a federal grant used to buy his land for a 1,720-acre, off-road trail project near the Scipio community.

The $441,600 Stipe received was the largest grant ever approved for Oklahoma's federally funded Recreational Trails Program.

State officials involved in approving the grant said they scrutinized the matter intensely after learning of Stipe's involvement.

"It went through the normal process,” said David Franklin, chairman of the Oklahoma Trails Advisory Board, which recommended approval of the grant to the state Tourism and Recreation Commission.

However, Franklin said he didn't learn Stipe owned the land until after the grant was approved.


‘A fair price'

Stipe tried selling the Scipio land for years but found no one willing to meet his price of $300 an acre, said Pittsburg County Assessor Jim Kelley, who tried to broker a deal to buy the land in the mid-1980s.
"In 1984, that was way too much. Now, it's a fair price,” Kelley said.

The land, part of roughly 5,000 acres Stipe once owned in the Scipio area, is filled with rocks and scrub oaks.

In 2004, when state and federal officials approved the grant for his Scipio land, Stipe was needing cash. A federal judge and the Federal Election Commission had just fined him more than $1 million for his role in the Walt Roberts campaign fraud case. Stipe also incurred massive attorney bills in that case.

He ended up selling 1,430 acres in November 2004 to a nonprofit group called Oklahoma Trail Riders for $441,600 that the group secured through a federal grant. Stipe donated an additional 290 acres appraised at $93,607 to fulfill a requirement of the grant. Two months later, Stipe sold a right-of-way easement to the motorcycle club for $20,100. The easement provides road access to the trails.

Each state gets Recreational Trails Program grant money based on a percentage of fuel taxes. In fiscal year 2005, Oklahoma got $1,058,213. The program funds motorized and nonmotorized trail projects for towns and entities like the Oklahoma Trail Riders.

The grant program requires recipients to come up with 20 percent of the total funding. The value of the land Stipe donated was considered matching funds. Factoring in the donated land, Stipe got $256 per acre. He also got a tax write-off for his donation.

"At that price, he didn't hurt nobody,” Kelley said.

Eight months before his sale to the motorcycle club, Stipe sold 3,324 adjoining acres of similar land to a Tahlequah man for $600,000, or $180 an acre. The buyer recently resold the land to a Texas man for $1.4 million, or $428 an acre, Pittsburg County property records show. That increase illustrates how property values in southeastern Oklahoma have skyrocketed recently, largely because of hunters seeking lease property.

"It's gone crazy,” said Rick Fender, an assistant assessor in Pittsburg County. "The stuff you used to get for $200 an acre, you can hardly get it for $1,000 now,” Fender said.


Stipe associate found land

Steve Travis, president of the Oklahoma Trail Riders, said approval of the group's grant application took more than three years.

"My opinion is, because of the landowner being who it was, it took longer than it would have otherwise. I think it caused more scrutiny,” Travis said.

He said the group approached a Tahlequah real estate agent around 2001 and asked her to find enough rugged land for motocross trails to be funded through a federal grant.

"She calls us back and says, ‘I think I've got some land for you,'” Travis said.

Records obtained by The Oklahoman show that the purchase went through Crosslin Real Estate in Tahlequah. Louise Crosslin, who operates the company, has business associations with Stipe dating back nearly 40 years.

Coincidentally, Crosslin served on the federal grand jury that indicted Stipe in a 1968 income tax evasion case. She joined him in a business venture a year after his acquittal in that case.

Crosslin Real Estate collected a $28,743 commission from the Scipio land sale, records show.

Travis noted that two independent appraisers determined the land's value. A third appraiser, Stephen Greer of Edmond, then reviewed the work of the other two and recommended a fair price to the Tourism Department. Greer's recommendation of $321 per acre was used to establish the amount Stipe would receive.


Proponents became grand jury witnesses

Those who wrote letters supporting the motocross track have familiar names to the FBI and federal prosecutors. Many of them also helped Stipe obtain state and local tax money for land he sold for a McAlester dog food plant in 2002.
A federal grand jury in Muskogee has spent much of the last year investigating the financing of National Pet Products and whether Stipe also was a part-owner.

Randy Green, who was then McAlester's city manager, said the Scipio trails project would have a "tremendous economic impact” that would create new jobs.

Then-McAlester Mayor Dale Covington predicted the trails project would create 15 to 25 jobs through a 3 percent increase in local hotel/motel taxes.

Both wrote their letters to the Federal Highway Administration on Oct. 8, 2003, long before it was disclosed who owned the property for the proposed trails.

A year earlier, Green urged his city council to spend $250,000 in local tax money as startup funding for the dog food plant, failing to mention Stipe's involvement.

Others who wrote letters supporting the Scipio trails project were Chester Dennis, executive director of the Kiamichi Economic Development District of Oklahoma; and Jason Smith, who then was director of the McAlester Economic Development Service.

Both testified before the grand jury concerning their involvement in the dog food plant deal, as did Green and Covington.


Trails' location is remote

Don't bother trying to find the Scipio Recreational Trails Project without a detailed map of Pittsburg County. The trails are 18 miles northwest of the Oklahoma State Penitentiary, far from any road you'll find on a state map.
Getting there requires traversing winding blacktop county roads to Scipio, then taking a gravel road the final three miles. No signs offer directions.

10-foot sign greets all-terrain vehicle and motocross riders at the trails' entrance. The sign thanks the state and federal government and acknowledges the land donation from "State Senator Gene Stipe,” even though Stipe left office 18 months before the land deal was done.

The Oklahoma Trail Riders' plan, which helped secure the federal money, said the trails would open within two years and thereafter would be open 24 hours a day, seven days a week.

However, the group missed its projected opening by nearly a year. And on a weekday visit last week, the entrance was closed.

The McAlester Chamber of Commerce told federal officials in 2004 that the trails would bring sales tax revenue and jobs to the area.

However, the chamber's executive director, who began working there in 2005, said last week she'd never heard of the project and is unaware of any benefits it has created.

In July 2006, the Tourism and Recreation Commission approved another grant for the Scipio trails. The $51,600 grant was to develop a trailhead, build rest rooms and a payment kiosk, and add more trails.