Flannery Associates’ purchases near Travis Air Force Base have alarmed local and federal officials

Wall Street Journal, By Kristina Peterson, Jack Gillum and Kate O’Keeffe, July 7, 2023

WASHINGTON—Government officials are investigating large land acquisitions near a major air force base northeast of San Francisco, concerned that foreign interests could be behind the investment group that purchased the land.

At the center of the probes is Flannery Associates, which has spent nearly $1 billion in the last five years to become the largest landowner in California’s Solano County, according to county officials and public records.

An attorney representing Flannery said it is controlled by U.S. citizens and that 97% of its invested capital comes from U.S. investors, with the remaining 3% from British and Irish investors. Flannery previously told Solano County the entity “is owned by a group of families looking to diversify their portfolio from equities into real assets, including agricultural land in the western United States.”

“Any speculation that Flannery’s purchases are motivated by the proximity to Travis Air Force Base” is unfounded, the attorney said.

The Air Force’s Foreign Investment Risk Review Office has been investigating Flannery’s purchases of roughly 52,000 acres, including around Travis Air Force Base, according to people familiar with the matter. But the office, which has been looking into the matter for about eight months, has yet to be able to determine who is backing the group, one of the people said.

“We don’t know who Flannery is, and their extensive purchases do not make sense to anybody in the area,” said Rep. John Garamendi, (D., Calif.) the top Democrat on the House Armed Services Committee’s readiness panel. “The fact that they’re buying land purposefully right up to the fence at Travis raises significant questions.”

Garamendi and Rep. Mike Thompson (D., Calif.), whose districts include the area where land has been bought, have asked for an investigation by the Committee on Foreign Investment in the U.S., a multiagency panel that can advise the president to block or unwind foreign acquisitions for security concerns.

The U.S. Agriculture Department also has inquired about Flannery’s ownership, according to correspondence reviewed by The Wall Street Journal. Nearly all of the land is in unincorporated parts of Solano County, and most of it is zoned for agricultural use, records show. Several of the parcels include wind turbines.

The Journal found that at least 20 parcels surround Travis, known as the “Gateway to the Pacific” and home to the largest wing of the Air Force’s Air Mobility Command, which provides planes to refuel other aircraft and those to transport military personnel and supplies, including munitions used in Ukraine following Russia’s invasion.

The Flannery attorney declined to provide more details about Flannery’s investors. Local and federal officials also say they have been unable to learn the identities of those in the Flannery group.

Flannery’s statement that it is U.S.-owned can’t be confirmed or denied by federal agencies at this time, a congressional aide said. Cfius, which is led by the Treasury Department and includes the Departments of Defense, Justice, State and others, declined to comment.

If Cfius takes up the case, the Treasury Department could subpoena Flannery to get more information about its backers, but people familiar with the panel, whose operations are confidential, have said they couldn’t think of a time when the department had used that authority.

Acquisitions around Travis Air Force Base have raised security concerns among Solano County officials, who have been trying to determine the investors in Flannery and their plans for the land for years, said Bill Emlen, the county administrator.

County supervisor Mitch Mashburn said if Flannery intends to develop the land, it would make sense for the group to engage with local officials—but it hasn’t.

“The majority of the land they’re purchasing is dry farmland,” he said. “I don’t see where that land can turn a profit to make it worth almost a billion dollars in investment.”

A spokesperson for Travis said that its officials and other Air Force offices “are aware of the multiple land purchases near the base and are actively working internally and externally with other agencies.”

In a recent federal court filing, Flannery Associates said it is a wholly owned subsidiary of Flannery Holdings, a limited liability company registered in Delaware. LLCs registered in Delaware don’t have to publicly disclose the identity of their owners.

Use of LLCs to purchase land is a common practice. Nearly one in five homes were purchased by investors in early 2023, including LLCs and other corporate entities, according to data compiled by real-estate firm Redfin of more than 40 of the largest U.S. metro areas.

“While I can see Cfius being interested in who owns real estate near a military base, the fact that a property’s ownership is opaque does not mean anything nefarious is going on,” said Rick Sofield, an attorney at Vinson & Elkins who used to run the Justice Department’s Cfius team.

In May, Flannery filed a price-fixing lawsuit in federal court in California, alleging that landowners had colluded against it to drive up prices, in some instances overcharging Flannery and in others refusing to sell their properties.

Attorneys for the defendants didn’t respond to requests for comment or declined to comment. Flannery settled with one group of defendants in late June and filed notice of a contingent settlement with another group of defendants Thursday.

The 52,000 acres Flannery now owns in Solano County is spread out over more than 300 parcels, a Journal analysis of property records shows. The company said in court filings that it has invested more than $800 million in its acquisitions and acknowledged paying prices of “multiples of fair market value.”

Flannery has offered various explanations for its purchases over time. In 2019, Flannery attorney Richard Melnyk said in an email to a Solano County official that Flannery planned to work with local farmers and might explore “new types of crops or orchards,” he said, ruling out any cannabis operations.

In its May price-fixing lawsuit, Flannery said it planned to use the land for renewable energy and related projects. The entity has allowed many sellers to continue farming or remain on the land and collect income from wind turbine leases for the remainder of the lease, according to court filings.

In a June 5 email to Emlen reviewed by the Journal, Melnyk said Flannery was considering leasing “a substantial portion” of its land to olive growers, including some near Travis Air Force Base.

“Nobody can figure out who they are,” said Ronald Kott, mayor of Rio Vista, Calif., which is now largely surrounded by Flannery-owned land. “Whatever they’re doing—this looks like a very long-term play.”

Flannery’s holdings near Travis raised concerns similar to those sparked by a Chinese-owned company’s plan to develop land 12 miles from the Grand Forks Air Force Base in North Dakota. The plan was halted after the Air Force said it posed a national security risk, and lawmakers have continued to introduce bipartisan legislation restricting foreign ownership of U.S. farmland or increasing transparency around these acquisitions.

The Chinese company’s U.S. arm said at the time the planned facility wouldn’t be used to spy on the U.S.

Flannery told USDA in June that it didn’t need to register its holdings in Solano County because no foreign person “holds any significant interest or substantial control” of Flannery, according to a letter provided by the group’s attorneys.