$21 million tax break on Trump land eyed
Five years ago, Donald Trump promised to preserve more than 150 acres of rolling woodlands in an exclusive swath of New York suburbia prized for its luxury homes and rural tranquility.
In exchange for setting aside this land on his estate known as Seven Springs, Trump received a tax break of $21.1 million, court documents show.
The size of Trump’s tax windfall was set by a 2016 appraisal that valued Seven Springs at $56.5 million — more than double the value assessed by the three Westchester county towns that each contained a piece of the property.
New York Democratic Attorney General Letitia James is investigating whether the Trump Organization improperly inflated the value of Seven Springs, according to filings in the case in August.
The investigation also scrutinizes valuations, tax burdens and conservation easements at Trump’s holdings in Los Angeles, Chicago and New York City.
Trump’s son Eric, who now helps run the Trump Organization, sat for a deposition in the case Monday.
The Seven Springs appraisal, obtained by the Washington Post, appears to have relied on unsupported assertions and misleading conclusions that boosted the value of Trump’s charitable gift — and his tax break, according to two independent appraisers who reviewed the document at the Post’s request.
The appraisal was written by Cushman & Wakefield, a commercial real estate firm that has worked with Trump over many years and whose New York headquarters are in a building co-owned by Trump.
The firm established the value of the 212-acre estate by assuming a future buyer could build and sell 24 mansions on the land, without providing evidence such a subdivision would meet local regulations.
Over two decades, Trump himself tried and failed to build on Seven Springs — first a golf course and later various housing developments — but the projects were stymied amid local opposition and environmental disputes.
‘Misleading’
The appraisal also claimed the land preserved under the easement had no economic value of its own, which one independent appraiser described as “crazy.”
The tax break is calculated by subtracting the value of the conserved property from the value when it could be developed.
“This is not a good appraisal, and it’s misleading, and it’s thin as all get out,” said the first independent appraiser, who spoke on the condition of anonymity.
“What you get is appraised values for these 24 hypothetical lots that appear to be much higher than they ought to be.”
A spokesman for Cushman & Wakefield said: “We do not comment on ongoing litigation.”
The Trump Organization’s chief legal officer, Alan Garten, said that he couldn’t comment because the investigation is ongoing, but that “the allegations are categorically untrue.”
Trump bought the property in 1995 for $7.5 million with the intention of transforming it into an exclusive private golf course, with a stately clubhouse and luxury residences nearby, according to Trump’s public statements at the time.
But Trump’s building plans never came to fruition.
His project met with stiff resistance from neighbors and local officials who worried about traffic problems as well as environmental degradation, according to planning documents obtained through a public records request and news coverage at the time.
Trump also faced a complicated tangle of planning rules, as the property is spread over three neighboring towns: Bedford, North Castle and New Castle.
By 2004, the Trump Organization had given up on the golf course and instead proposed building 15 homes on the site.
But his subdivision plans also bogged down amid local opposition and a multiyear legal battle.
By May 2013, the Bedford planning board passed a resolution giving Trump’s company “final plat approval” to develop the residential lots — pending a list of 26 conditions the Trump Organization would have to meet within 180 days.
The Trump Organization didn’t complete that process, and those conditions never were met, said Joel Sachs, the town attorney.
By the end of 2015, Trump had signed an agreement with the North American Land Trust, a nonprofit based in Pennsylvania, promising not to develop 158 acres of Seven Springs, or about three-quarters of the property.
The mature deciduous forest of oak, maple and hemlock on Trump’s land stood adjacent to another nature preserve and clearly held ecological value, according to one person involved in the conservation easement who spoke on the condition of anonymity.
“That’s not even a question,” the person said. “This totally fits into land that gets preserved for conservation easements.”
But the key question was its monetary value — and how much Trump would get to deduct from his taxes by agreeing not to develop it.
Problems found
As the Seven Springs deal was being set up, appraisers from Cushman & Wakefield valued the property at $56.5 million, claiming that if it weren’t to be preserved, 24 homes, each worth an average of $2.1 million, could be built on the vacant part of the property, the document states.
But the two independent appraisers who reviewed the document found significant problems with that report.
For one, they said, the appraisal doesn’t mention Trump’s history of difficulties developing Seven Springs or offer much beyond unsubstantiated assertions that such a subdivision would comply with local planning rules.
“Imagine that we were wealthy developers and we were interested in purchasing that property from him,” McLaughlin said. “We would take into account that history. And we would say, ‘Well, gee, if we buy this property today, how likely is it that we are going to be able to develop it if he had all this problem trying to get the approvals?’”
A third person who reviewed the appraisal, Timothy Lindstrom, a Virginia attorney and conservation easement expert, cited some areas where the document might be “vulnerable” but found fewer problems with it.
“While there are no appraisals that are immune from IRS quibbling, my overall reaction to this appraisal was that it was competently done and provided realistic values supported by proper analysis and data,” he said.