Why Rick Perry's Land Deal Could End His Campaign: $572,238 in Profit

8
48 Flares Filament.io 48 Flares ×

Rick Perry's land deal has put Texas' Governor into criminally dangerous legal territory, jeopardizing his campaign and thrusting the 10-year incumbent into a political scandal we haven't seen in Texas since the days of Sharpstown.

Rick Perry made $572,238 off of a land deal thanks to his political buddies. From the DMN:

The Dallas Morning News found evidence that Perry's investment was enhanced by a series of professional courtesies and personal favors from friends, campaign donors and the head of a Texas family with a rich history of political power-brokering. 

Perry spokesman Mark Miner refuses to answer media questions about the land deal. Perry himself has brushed off the charge, but rumors are that top advisors in his campaign team have gone into lockdown to figure out how to handle the allegations. It may only be a matter of time before law enforcement agencies are brought in to investigate the charges themselves — much like they've done with political criminals across the country.

What exactly did Perry do? Here's Part One: a recap of the land deal, focusing on exactly how Perry profited $572,238 on this scandal. Tomorrow, I'll post Part Two, which looks more closely at some of the friends in high places Perry got involved to help him make a profit.

The following news sources were used for the summary, which you can find below the fold:

Perry Profits $139,238 – Buys at “Arms-Length” From His Best Friend, Senator Troy Fraser 

In February 2001, Perry bought his Horseshoe Bay resort from Republican Senator and best friend Troy Fraser. He paid $310,762 — that's a $300,000 price plus interest. The DMN hired an appraiser, who said the selling price should have been $450,000, which means that in the original purchase of the home, Perry profited by $139,238.

The man who appraised the deal had questions about it:

McDaniel, the chief appraiser for Llano, said he calculated the appraisal by comparing the governor's lot to some in another high-end development at Horseshoe Bay. He still has questions about the Fraser-Perry deal being an arm's length transaction.

“Obviously, everybody would have concerns in regards to it coming from one political person to another political person that are of the same party affiliation,” McDaniel said. “It is a brand-new subdivision. Did the senator get a bargain on them when he bought into it? Maybe, because he bought two.” 


Perry Profits $14,000 – Has Chairwoman of Texas Public Safety Commission Ask to Lower His Tax Appraisal
 

Months later, Perry used an attorney named Colleen McHugh — who was the chairwoman of the Texas Public Safety Commission — to appeal the tax appraisal on his resort. Within two weeks, the Burnet County CAD's chief appraiser lowered the assessment by over $100,000. The Texas Observer was the first to report that Perry profited from the lowering of his appraisal:

 According to Burnet appraisal district Chief Appraiser Stan Hemphill, attorney Colleen McHugh of the defense firm Bracewell & Patterson (now Bracewell & Giuliani) filed a protest on the governor's behalf in November 2001. At the time, McHugh was Perry's chair of the Texas Public Safety Commission. The protest argued that Perry's lot was worth $100,000 less than the appraised value. In December 2001, days after Bracewell announced it had recruited Perry Chief of Staff Barry McBee as a lobbyist, the district agreed to reappraise Perry's lakefront lot at the stated purchase price. That first year, the devaluation lowered Perry's tax bill from $8,418 to $6,308. Over its six-year life, the lower appraisal kept more than $14,000 in the governor's pocket that he otherwise would have payed as taxes to local government entities.


Perry Profits $350,000 – Sells Property Far Above Market Price
 

From the Dallas Morning News:

Appraiser Green concluded in her report to The News that Perry's lot was worth $800,000 when sold. Her findings were based on recorded sales of five other properties in Horseshoe Bay in the year before Perry's sale.

Her appraisal also took into account that Perry's lot had only 35 feet of lake footage, by far the smallest of any lot on The Peninsula.

By buying below market value, and selling above, according to Green's appraisals, Perry was able to add $489,238 to his profit. 

Perry's appraiser is called into question, as well:

The News hired a Dallas firm to review Green's work and that of Robert J. Thompson of San Antonio, who did the appraisal for The Bank of Texas.

Thompson based his appraisal on two property sales near Perry's lot whose values were not reported to the Multiple Listing Service, and a third parcel that was listed but had not been sold.

The report to The News by Stephen Crosson, chairman of Crosson Dannis Inc., faulted Thompson's work. “The value expressed in that thing is just essentially unsupported,” Crosson said of the bank's appraisal.


Perry Profits $69,000 – Never Pays a Commission Fee

Normally, when someone finds you a person you can sell your property to, you pay that person a commission fee. That even happens to people renting apartments. But Rick Perry got special treatment, and went back on his word to pay such a commission:

Steered by Mitchell, Perry signed an agreement with Horseshoe Bay Resort Realty listing his lot with a sales price of about $1.2 million, said Michael Gordon, director of real estate operations. The agreement included a standard provision that Perry would pay a commission if the property was sold, Gordon said.

Perry's office did not respond to a request by The News for a copy of the listing agreement.

[…]

Perry did not pay a real estate commission on his sale to Moffatt. Mitchell said the waiver of the fee was a favor to Moffatt. The fee, typically 6 percent of the sales price, could have amounted to as much as $69,000.

 


$139,238 + $14,000 + $350,000 + $69,000 = $572,238 Profit from Perry's Land Deal

Check back tomorrow, as I lay out exactly who it was that made Rick Perry all his money…

Share.

About Author

Phillip Martin

Currently the Research and Policy Director for Progress Texas and the Texas Research Institute, Phillip Martin writes occasional long-form pieces for BOR that promote focused analysis and insight into Texas politics. Born and raised in Austin, Phillip started working in politics in 2003 and started writing on BOR in the summer of 2005. Phillip has worked for the Texas Democratic Trust, the Texas Legislative Study Group, and now the Progress Texas family. He is a lifelong Houston Astros fan, a loyal Longhorn, and loves swimming at Barton Springs Pool.

8 Comments

  1. Be careful of the appraisal part…
    You need to watch the bit about how he pulled strings to get the appraisal lowered.  Bill White did the same thing. And suddenly his $2 million house was only worth $1 million. As for the value, the value is what a buyer and a seller agree on. Nothing more.  

    Be sure to let us know when Rick Perry is indicted.

Leave a Reply

2015 © Skytop Publishing All Rights Reserved. Do not republish without express written permission.

Site designed and developed by well + done DESIGN

48 Flares Twitter 13 Facebook 35 Filament.io 48 Flares ×