On Monday, I talked about what I think is a lame property deal issue written by the Plain Dealer and fed to them by former PD reporter-turned-Strickland-bonecrusher Sandy Theis. It is non-issue, making a big deal about a property sale involving land that was difficult to build on and thus sold for under market value.
But the super-duper lawyer Brian Hester at Plunderdumb is not finished pushing this story which was originally fed to blogs, calling Kasich “Clintonian” and making a big deal about a arm’s-length transaction:
I guess it all matters on what your definition of “arm’s length transaction” is. To me, if your arm is doing a celebratory “reach around” to the other side at the bargaining table, it’s not really an “arms length transaction.” John Kasich and his lawyer/business partner/campaign donor apparently disagree.
Today’s front-page story on the Cleveland Plain Dealer was a story first broke by Bill Sloat over at the Daily Bellweather. (Well, actually, it’s been news since Kasich ran for President in ‘00, but Sloat brought it back up a few weeks ago.)
Here the key paragraphs:
[Kasich] paid a fraction of the price of neighboring parcels for a home site on 10 acres that backed up to a heron rookery, and was adjacent to a golf course. The county initially thought the land was worth $172,500. Kasich insisted it was only worth what he paid: $105,000.
Yet public records examined by The Plain Dealer suggest the story of Kasich’s land deal is nuanced and complex. It appears Kasich got a good price, but anything else may be conjecture.
Kasich said there was nothing unusual about the deal.
“This was a plot of land that other people didn’t want to have,” Kasich said in an interview last week. “It was troubled property.”
Kasich claims nobody wanted the property… except the article mentioned that two developers separately considered buying the property and Kasich’s neighbor had actually made an offer for it… higher than what Kasich offered. Oh, and that the owner was able to “unload” similiar [sic] lots she owned on the same street later at twice to six times the price per acre she sold it to Kasich.
So for Kasich to claim he was buying property that the owner was having trouble unloading was, well, just not true. Second, the property was being sold by the owner’s widow, which ordinarily means that the property is selling at a below market price as property generally will be bought cheaper than otherwise because the seller is motivated to sell quickly. In fact, every person in the story agrees that the seller was motivated to sell as quickly as possible, so price was not a controlling factor.
In fairness, Kasich and the lawyer who represented the owner during the transaction claim (and the lawyer testified to the County Board of Revisions as such) that the deal was an “arms length transaction.” That term is generally defined as:
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.
Except that Kasich admits that he was friends of both the seller and her late husband. And he bought the land for 1/6 of the price per acre of similar sized lots that the SAME BUYER sold in the SAME SUBDIVISION, ON THE SAME STREET later. The difference in price cannot be explained, as Kasich and the seller’s attorney tries to suggest, by the mere fact that Kasich’s lot didn’t already have sewer access which should only be about $20,000 in additional costs. The difference between Kasich’s per acre price compared to the closest similar lot per acre to his price would almost have covered the cost of installing a sewer system alone. So Kasich’s price was more than enough to cover the additional costs ten times over, likely even more than that.
But, Modern, why would the lawyer for the seller be motivated to say it was an “arms length” transaction if it wasn’t? Oh, I dunno:
HARTMAN, RONALD F
WESTERVILLE, OH 43082
ATTORNEY AT LAW
KASICH, JOHN R
VIA CITIZENS FOR KASICH
That might have something to do with it. It was likely Hartman who told Kasich about the availability of the land in the first place. Kasich, apparently, was not separately represented by either legal counsel or a real estate agent. He didn’t need to be as Hartman was hardly an adversial [sic] representative.
Hartman not only likely was the person to invite Kasich’s offer and was a significant donor to his congressional, and then later, presidential campaign, but he then represented Kasich in front of the Delaware County Board of Revisions to get the County to overrule its own property appraisal’s valuation of the property and accept the contractual price that Kasich paid, even though it was substantially less than any other similarly sized lot in the same street had been sold by the same seller (and Kasich had no independent appraisal showing that the property was only worth what he paid for it.)
Not only that, but the Plain Dealer reports that a few years after getting Kasich this deal and then getting Kasich a major property tax break by successfully fighting the valuation, Hartman and Kasich went into business together… flipping real property in Delaware County at significant profits.
So, it’s really it’s Kasich and his own lawyer/business partner/campaign donor coming to Kasich’s defense.
The problem here is, with property sales, almost everything is an arms length transaction, as it is a sale involving a willing buyer and willing seller, both of whom understand all details (ie, market value). And under Ohio law, the sales price becomes the appraisal price, which is how the government decides how much in property tax to gouge you with.
However, it is possible that a family member could sell to another far below market value. And the only instance an arms lengths transaction is challenged– er, unless you are a hack Plain Dealer reporter writing what Sandy Theis tells you to — is when a family member sells to another family member or when the property is sold at an auction.
But to use ModernEsquire’s and Theis’ level of suspicious scrutiny, then the Plain Dealer should write a silly article about Gov. Ted Strickland’s questionable sale of his Columbus condo.
This is the same Condo the Blackwell campaign raised questions about in 2006, as the Stricklands paid taxes in Columbus while claiming to live in a crappy, unfurnished shack located above his former congressional campaign office in Libson. (He wasn’t a resident of the district he represented in Congress.)
Since Strickland now works at the Governor’s mansion (surrounded by boozing inmates and prison drug smuggling operations) he sold his condo in Whitehall at 5561 Chowning Way.
And according to Franklin County Auditor Clarence Mingo’s website, it was sold to Judy Newman.
So how well did Strickland know Newman?
From the Governor’s website:
Office of the First Lady
Todd Rensi will serve as chief of staff. Rensi, of Columbus, was an aide for Frances Strickland throughout the gubernatorial campaign and a longtime staff member at the Ohio Democratic Party.
Judy Newman, of Lucasville, who worked in Strickland’s Congressional office as a field representative since 1999, will serve as project coordinator in the first lady’s office.
And since Strickland bought the property for $135k in 2003 then sells it for $128K for years later for a $7000 loss (Another brilliant personal investment strategy by the Governor!), Columbus Public Schools are getting less tax revenue.
And, unlike Kasich’s sale which involved property that was difficult to build on and install plumbing in, Strickland’s condo was built and in good condition.
In reality, Kasich’s and Strickland’s property sales are perfectly legitimate, arm-length transactions. But Democrats here have set such a high standard that almost any property sale is immediately suspect… if you are Republican.
I won’t hold my breath waiting for the biased Plain Dealer to cover Strickland’s property transaction anytime soon.