VLS Professor Cries Foul on NewVistas
Property Transfers May Have Violated State Tax Laws
At a legislative committee hearing at the State House last week,
Vermont Law School professor John Echeverria testified that David Hall,
the Utah engineer proposing the “NewVistas” development, may be in
violation of both Vermont and Utah laws that govern nonprofit
Echeverria was one of several witnesses, including Hall, to testify before the Natural Resources, Fish, and Wildlife Committee for the Vermont House of Representatives last week. The hearing was held on the recently proposed House resolution (H.R. 20) that would, if passed, formally oppose the NewVistas development.
Hall, who testified via phone before Echeverria spoke, said he didn’t hear the professor’s testimony, and was unaware of the allegations of potentially illegal activity.
In 2015 Hall made a donation of $14,000,000 to the Utah-based nonprofit organization he started called NewVistas Foundation.
NewVistas Foundation was also registered in Vermont as a foreign nonprofit entity for several years.
“As far we can tell,” said Echeverria, “there is no evidence that the donation was conditional or otherwise restricted … the donation represents an irrevocable commitment of these assets to public charitable purposes.”
Hall told the Herald on Wednesday that he donated the money to NewVistas Foundation with the intention to use it to purchase land under the foundation’s business plan (which includes land ownership and potential for future developments), but he confirmed that no documents exist that state conditions of the donation.
Echeverria based his testimony off many legal documents, including several forms that were filed by Hall on behalf of NewVistas Foundation with the Utah, Vermont, and federal governments.
“Once the financial assets were donated to the foundation,” Echeverria’s testimony read, “they were no longer in any of Hall’s personal pockets—they became public assets dedicated to charitable purposes.”
Hall, through the NewVistas Foundation, began buying land in 2015 in the towns of Sharon, Strafford, Royalton, and Tunbridge. He purchased nearly 2,000 acres in the four towns and planned to purchase 5,000 total for his NewVistas development.
Hall also purchased many properties in his home town of Provo, Utah through the foundation.
Land Use Not Beneficial
Hall requested 501c(3) status in a filing with the IRS for the NewVistas Foundation when it was created, he said.
Echeverria explained that a 501c(3) status allows corporations to be exempt from federal taxes, but is distinct from state nonprofit status.
Hall said that the IRS denied the NewVistas Foundation’s application to receive tax exemption.
“[The IRS was] unable to see how any land owned by the foundation could be of long term benefit to the community,” said Hall.
He added that his plan for a high-concentration development that would host 20,000 residents upon completion “isn’t like anybody else’s,” and that the IRS wouldn’t grant 501c(3) status until the NewVistas Foundation “got rid of the land.”
In December of 2016 The NewVistas Foundation transferred all of its properties to two for-profit entities owned by Hall, Vermont-based Windsorange, L.L.C. and Utah based DRH Holdings, L.L.C.
In March 2017 the IRS granted NewVistas Foundation a 501c(3) status and a retroactive tax exemption going back to February 2017, two months after the land transfers took place, said Hall.
“We were a for-profit entity until that status was granted,” Hall said. “So the transfers took place between one for-profit entity (The NewVistas Foundation) and two other for-profit entities (Windsorange L.L.C. and DRH Holdings L.L.C.).”
The NewVistas Foundation now focuses on “research and education,” said Hall, “and since any development is far in the future, it doesn’t really matter that the foundation can’t own land.”
In a phone interview Wednesday, Hall referred several additional times to the IRS’ refusal to grant NewVistas “nonprofit” status (before the transfers), and stated that the NewVistas Foundation was a for-profit entity before the IRS approved their tax exemption status, but according to several lawyers who have worked with the grassroots organization Alliance for Vermont Communities (AVC), the IRS can only grant 501c(3) status, not nonprofit status.
According to Echeverria, when you create a business entity (in this case NewVistas Foundation) under state law it can be registered as a nonprofit corporation or a for-profit corporation, or L.L.C. But, under federal law, a corporation fits into other categories, such as a C corporation, S Corporation, or tax exempt corporation. Nonprofit and for-profit status cannot be designated by federal law.
Echeverria explained that with this understanding of the law the land transfers in 2016 took place between the nonprofit NewVistas Foundation and the for-profit L.L.C.s owned by Hall.
“It is wrong for a person to use his power over a nonprofit organization to benefit himself personally,” said Echeverria during his testimony. “It is against the law (in both Utah and Vermont) for a nonprofit foundation to simply give away its charitable assets to one of its board members or any other private individual.”
Letters written by lawyers in Vermont and Utah to their respective Attorneys General’s offices provide detailed explanations of how the NewVistas Foundation might be found to be in violation of state laws governing nonprofit organizations.
Neither letter has received a formal response from the attorneys general, said Echeverria, though he’s uncertain whether any action is being taken.
“The Utah attorney general did reach out to my legal counsel,” said Hall, “after receiving a complaint last year. I’m not sure who the complaint was from, but I was told [the attorney general] saw no problem with the transfer.”
He added that the land transfers took place with approval from his Vermont lawyers, but declined to put The Herald in touch with those lawyers.
John Kassel, a Vermont attorney who AVC has hired to represent them said “I’m sure [Hall] did speak to his lawyers before making the transfer, but that doesn’t give [the transfer] a stamp of approval that would prevent the attorney general’s office from taking action.”
Retaining Public Assets
“The plan for NewVistas Foundation was always for it be a nonprofit that does work for the public benefit,” Hall said.
Despite widespread opposition in both Vermont and Utah to the NewVistas development plan, and the IRS’s decision that any development would not be seen as beneficial to the public, Hall says he doesn’t see the transfers as offering him personal gain.
“I have to pay taxes on the property,” he said, “and on my two L.L.C. businesses. So there’s nothing I gain from owning the land personally. Any developing I do will probably have to be paid for by me, and that’s way in the future anyway.”
Echeverria said the intention may prove irrelevant if legal action is pursued. “The NewVistas-Foundation-to- Hall transfers effectively represent a looting of valuable public assets from the public,” Echeverria emphasized.