Re­port: Perry deal got boost

Land trans­ac­tions ‘smell of spe­cial fa­vors,’ some sug­gest

Austin American-Statesman - - METRO&STATE -

Gov. Rick Perry’s in­vest­ment in a Texas re­sort prop­erty 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, The Dal­las Morn­ing News re­ported Sun­day.

To­gether, they may have en­riched the Repub­li­can gover­nor by nearly $500,000, ac­cord­ing to an in­de­pen­dent real es­tate ap­praisal com­mis­sioned by the news­pa­per.

Perry’s aides said all trans­ac­tions sur­round­ing the gover­nor’s 2007 sale of a lot at a Horse­shoe Bay re­sort were prop­erly han­dled. They cite a bank’s ap­praisal at the time that said the buyer paid Perry slightly less than mar­ket value.

But an ap­praiser who was hired by the news­pa­per this year and has decades of ex­pe­ri­ence in Horse­shoe Bay real es­tate dis­missed the ear­lier ap­praisal as un­sup­ported. County tax ap­praisals at the time also in­di­cated that the gover­nor was able to buy the land at be­low mar­ket value and sell far above it.

Perry said in a brief in­ter­view last week that ev­ery land trans­ac­tion he has made while in of­fice “has been open and hon­est, and at arm’s length,” and dis­closed in pub­lic records.

“So I would just have folks take a look at the

See LAND, B3

Con­tin­ued from B1 record, and I think the record pretty much speaks for it­self,” Perry said.

How it be­gan

The 2007 deal in­volved a half-acre grassy lot at a Hill Coun­try re­sort on the shore of Lake LBJ. The Horse­shoe Bay devel­op­ment is owned by Doug Jaffe, whose San An­to­nio fam­ily has long and some­times con­tro­ver­sial ties to Texas pol­i­tics. Jaffe’s com­pany sold the par­cel i n 2000 to state Sen. Troy Fraser, RHorse­shoe Bay, a long­time Perry friend and po­lit­i­cal ally. Shortly af­ter, Fraser sold the lot to Perry for just more than $300,000.

The news­pa­per’s ap­praiser de­ter­mined in a re­port done this month that the land was worth $450,000 when Perry bought it.

In 2007, Alan Mof­fatt, a Bri­tish busi­ness part­ner and close as­so­ci­ate of Jaffe’s, paid Perry $1.15 mil­lion for the land. The news­pa­per’s ap­praiser found that price to be $350,000 above mar­ket value.

Mof­fatt de­nied that any­thing im­proper oc­curred.

“It just hap­pened that the gover­nor of Texas owned that lot,” he said. “It was a good deal for me.”

If Perry were deemed to have re­ceived any gifts, he would have been re­quired to dis­close them as a state of­fice­holder. He did not dis­close any part of the deal as a gift.

Rais­ing eye­brows

Perry has por­trayed him­self as one of the most fi­nan­cially trans­par­ent gov­er­nors in Texas his­tory and has at­tacked Demo­cratic op­po­nent Bill White for past busi­ness deals and for not re­leas­ing all his tax re­turns.

The head of a non­par­ti­san, non­profit or­ga­ni­za­tion that pro­motes trans­parency in govern­ment said Perry’s Horse­shoe Bay trans­ac­tions look ques­tion­able.

“The man on the street on this would think that this is a se­ries of deals that smell of spe­cial fa­vors be­ing cre­ated for elected of­fi­cials to curry their fa­vor,” said Ellen Miller, ex­ec­u­tive di­rec­tor of the Sun­light Foun­da­tion in Washington.

Doug Jaffe and his late fa­ther, Mor­ris, have built widely chron­i­cled rep­u­ta­tions as big­money back­ers of Demo­cratic politi­cians go­ing back to Lyndon John­son’s days as a U.S. sen­a­tor. But the Jaffe fam­ily also has con­trib­uted to Repub­li­cans when the GOP was in power, and Doug Jaffe gave to Perry’s 2004 cam­paign.

Doug Jaffe found suc­cess in the vend­ing ma­chine busi­ness and made a for­tune sell­ing “hush kits” that al­lowed older com­mer­cial jets to meet govern­ment noise re­stric­tions.

The Jaffes were im­pli­cated in a fed­eral in­ves­ti­ga­tion in the early 1990s of bil­lion­aire rancher Clin­ton Manges, pro­tégé of le­gendary South Texas po­lit­i­cal boss Ge­orge Parr. Manges was con­victed of us­ing the mail to file false claims with a state land of­fi­cial to re­tain an oil lease for the Jaffes.

In 1989, a con­gres­sional ethics com­mit­tee in­ves­ti­gat­ing U.S. House Speaker Jim Wright sub­poe­naed both Jaffes to tes­tify about an East Texas oil ex­plo­ration ven­ture that, de­spite pro­duc­ing noth­ing, earned Wright about $150,000. The Jaffes de­nied as­sist­ing Wright in re­turn for help win­ning a $3 bil­lion mil­i­tary air­craft con­tract.

The fed­eral Of­fice of In­de­pen­dent Coun­sel re­ported that it also in­ves­ti­gated the Jaffes as part of a probe of for­mer San An­to­nio Mayor Henry Cis­neros, then U.S. hous­ing sec­re­tary. The Jaffes ac­knowl­edged they had made thou­sands of dol­lars in loans to Linda Med­lar Jones, a for­mer Cis­neros girl­friend.

Horse­shoe Bay is an up­scale en­clave started in the 1970s and bought in 1996 by Doug Jaffe, who poured mil­lions of dol­lars into ex­pand­ing it.

Fraser said he of­fered Jaffe $700,000 for a lot in Septem­ber 2000. Af­ter Jaffe ac­cepted, Fraser said he con­tacted him again a day or two later and of­fered $300,000 for a smaller lot. Fraser said he told Jaffe the sec­ond lot was for Perry, though the Morn­ing News re­ported that Jaffe de­nied that in a re­cent in­ter­view.

Fraser said he wrote one check for $1 mil­lion, pay­ing for Perry’s lot with the un­der­stand­ing that his friend, whom he had known since they were teenagers, would re­pay him with in­ter­est.

Vary­ing val­ues

The gover­nor’s of­fice pro­vided the Morn­ing News with a real es­tate clos­ing state­ment show­ing Perry paid Fraser $310,762 for the lot in Fe­bru­ary 2001. Perry used cash from the pro­ceeds of his Austin home sale, spokes­woman Al­li­son Cas­tle said.

Donna Lol­lar Green, owner of High­land Lakes Ap­prais­ers in Mar­ble Falls and the ap­praiser hired by the news­pa­per, con­cluded in her re­port this month that Perry paid well be­low mar­ket price. Us­ing four com­pa­ra­ble lot sales, she placed the ac­tual value at $450,000 at the time of sale.

Fraser and Perry’s spokes­woman ini­tially said that an ethics lawyer was con­sulted at the time of sale and that the at­tor­ney deemed the trans­ac­tion proper. Fraser said the gover­nor se­lected the lawyer. The gover­nor’s of­fice said Fraser spoke with the at­tor­ney.

Cas­tle later said there may not have been an ethics at­tor­ney in­volved. “There was no re­quire­ment to talk to an ethics lawyer or to get an opin­ion,” she wrote in an e-mail.

A county tax ap­praisal at the time of the sale also val­ued the prop­erty at above Perry’s buy­ing price. Perry im­me­di­ately ap­pealed the $414,700 ap­praised value for tax pur­poses and asked Cor­pus Christi cor­po­rate la­bor lawyer Colleen McHugh to han­dle the ap­peal. Perry had just ap­pointed McHugh chair­man of the Texas Pub­lic Safety Com­mis­sion.

An agree­ment was reached with the Burnet Cen­tral Ap­praisal District to lower the tax ap­praisal to the $310,762 sale price, al­though the district said it had no clos­ing state­ment to con­firm the price. The ap­peal saved Perry about $14,000 over the six years that the district main­tained the value at pur­chase price.

Perry did no t c om­pen­sate McHugh be­cause he had paid her $2,850 for ear­lier work on the prop­erty pur­chase, Cas­tle said.

McHugh, a for­mer State Bar of Texas pres­i­dent ap­pointed by Perry in 2005 to the Uni­ver­sity of Texas Sys­tem Board of Re­gents, said it would be im­proper for her to com­ment.

By 2005, weary of tax and main­te­nance costs, Perry ap­proached re­sort vice pres­i­dent and 2002 cam­paign donor Ron Mitchell to help un­load the prop­erty. Mitchell steered Perry to Horse­shoe Bay Re­sort Realty, where he listed the prop­erty for about $1.2 mil­lion, said Michael Gor­don, di­rec­tor of real es­tate op­er­a­tions.

Perry pulled the prop­erty off the mar­ket af­ter four or five months brought no tak­ers, Gor­don said.

When Mof­fatt bought the lot from Perry in 2007 for $1.15 mil­lion, the land was ap­praised for tax pur­poses at $600,000. But a March 2007 bank ap­praisal for Mof­fatt’s fi­nanc­ing val­ued the land at $100,000 more than the $1.15 mil­lion Mof­fatt paid.

Green’s ap­praisal re­port for the Morn­ing News con­cluded Perry’s lot was worth $800,000 when sold to Mof­fatt. By buy­ing be­low mar­ket value and sell­ing above, Perry was able to add $489,238 to his profit from the in­vest­ment, ac­cord­ing to Green’s ap­praisals.

Perry spokes­woman Cas­tle said she didn’t un­der­stand why any­one would ques­tion the ways in which the gover­nor bought and sold the land. Perry has re­ported on his fed­eral tax re­turns that his profit on the sale was $823,000, the largest he has dis­closed from a real es­tate trans­ac­tion dur­ing his term as gover­nor.

Colleen McHugh

Troy Fraser

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.