Posted on 02/25/2004 5:00:23 AM PST by ninonitti
U.S. Sen. John F. Kerry [related, bio] used an appraisal pegging the value of his Beacon Hill townhouse at twice the amount listed on City Hall records in order to get the $6.4 million loan he needed to resuscitate his presidential bid.
The Kerry campaign says the elegant Louisburg Square townhouse that Kerry shares with is millionaire wife, Teresa Heinz Kerry is worth $12.8 million - exactly double the Christmas Eve mortgage the senator got from Mellon Bank.
But Boston's Assessing Department puts the value of the swank, five-story mansion - with six fireplaces, five bedrooms, a private elevator and roofdeck - at $6.6 million as of Jan. 1, 2003. The assessed value actually dropped from 2002's figure of $6.95 million.
The home's true value is significant since federal election laws allow Kerry to finance his presidential bid by borrowing only against his own assets - prohibiting him from tapping into his wife's millions.
``It could be a very, very big excessive contribution by his wife if, in fact, he's using more than half the real value of the house,'' said Don Simon, a Washington-based campaign finance lawyer who is unaffiliated with any presidential campaign. Kerry Heinz is limited to donating $2,000 to her husband's campaign.
The conflicting valuations also raise questions about the propriety of the loan - taken from Mellon Bank of New England, a subsidiary of Pittsburgh-based Mellon Bank, N.A.Kerry Heinz, heiress to the Heinz ketchup fortune, has a long history with Mellon Bank. The bank also serves as a trustee for The T & J Louisburg Square Nominee Trust, the entity that owns the townhouse.
The Kerry's personal attorney, Paul Bschorr, denied any favoritism.
``It's a straight forward mortgage. Straight off the shelf,'' Bschorr said, adding that he'd seen the appraisal but wouldn't provide it to the Herald.
``I've seen it and it's $12.8 million,'' he said. ``I can't release any documentation. It's confidential.''
The loan was crucial to righting Kerry's campaign, which late last year appeared to be in third place in Iowa and running a poor second to former Vermont Gov. Howard Dean [related, bio] in New Hampshire. Kerry's surprise win in Iowa catapulted him to front-runner status.
``It allowed John to exclusively focus on campaigning in Iowa and New Hampshire without going to any fund-raising events,'' said campaign spokesman Michael Meehan. Meehan said Kerry didn't do any fund raising in January and has only attended two fund-raisers this month, adding, ``He's been really freed up.''
But Meehan said the all-important mortgage complied fully with Federal Election Commission regulations.
``The bank did an appraisal,'' and determined the home is worth $12.8 million, Meehan said. ``Sen. Kerry mortgaged his half of the family home . . . and loaned his campaign $6.4 million.''
A city or town's assessment of a home's value rarely matches what a property sells for on the open market, said Meehan. ``Every homeowner in Massachusetts will understand that,'' he said.
When asked about the wide $6.2 million discrepancy between the city's valuation and Mellon Bank's appraisal, Meehan said, ``Take it up with the city.''
Legally, Boston must assess homes at their ``fair market value'' and City Assessor Ron Rakow said his department does a pretty good job of keeping up.
``It's not unusual to see assessments at about 90 percent of the market,'' Rakow said, noting that city workers visited 19 Louisburg Square to check its condition in July 2002.
The Assessing Department's database shows the home in excellent condition with a modern kitchen and modern bathrooms and ``elaborate'' interior finish, meaning it is unlikely that Mellon Bank's appraiser found new conditions that would have doubled the house's value.
``That's a big difference,'' Rakow said, referring to gap between his value and the bank's appraisal. Meehan also said other luxury properties near Kerry's have sold for amounts in excess of the city's assessed value.
City, county and real estate listing records show that a property at 3 Louisburg Square sold in September for $5.5 million while the city's assessment values it at $4,434,500 - 20 percent less.
Another nearby property at 56 Beacon St. is assessed at $5,057,400 but sold last month for $8,550,000 - a 69 percent premium.
Meehan said he would not provide a copy of the bank's appraisal. ``You can ask the bank if they will turn over the appraisal,'' he said. He said Kerry has already disclosed more than he is required to under Federal Elections Commission law.
Ron Gruendel, a spokesman at Mellon Bank's corporate headquarters in Pittsburgh, said the firm's dealings with the Kerrys are private.
``Our relations with our clients, those are proprietary and we don't discuss those publicly,'' Gruendel said.
However, banks do provide copies of an appraisal to the borrower as a routine matter, meaning Kerry could get his appraisal and release it himself.
I'm going to have to phone Jack or Ellen to see who's lurking here @ FR ;~)
Absolutely true. Tax assessment value is about half what you can typically sell a house for in Boston. Business tax assessment variances are even wider -- that's been a political game here for decades.
When asked about the wide $6.2 million discrepancy between the city's valuation and Mellon Bank's appraisal, Meehan said, ``Take it up with the city.''Yes.
Then go after him for back taxes for what he paid artificially low property taxes on.
And investigate the hell out of how he got such a sweetheart appraisal in the first place.
But, of course "DemocRATS never do the time even though they did the crime"
Whoda Thunk?
Actually this is a good idea. I can't imagine a government (dontcha love 'em) not basing their appraisal of an actual transaction. In florida, any official appraisal is overridden by an actual market transaction.
Depening on who you know in the municipality the valuation on the property sorely lags behind the realty's reality
the property owner is in no jepordy of back taxes .... but everyone who is not 'connected' pays the burden of the undervaluation
Kerry has a copy of the appraisial ... unless he is so tight with the bank that they just did a pencil appraisal (suspicious on a jumbo loan of this size)
but he's a democrat ... there's no price to pay for corruption of government and no accountability for your actions
.
It wouldn't surprise me if John and Teresa hadn't had appraisals done before, for the opposite reason: to convince city authorities that the valuation was lower than the city's tax assessor had judged.
Certainly in the case of commercial real estate property, challenges to the Board of Adjustment (or whatever the local real estate tax department calls itself) are routine. Typically, an outside appraiser hired by the property owner to demonstrate to the tax authorities that the value of the property is lower. The same applies, I'm sure, for owners of high-priced residential property -- though, sad to say, I have no experience with $6 million or $12 million townhomes.
It will be interesting to see, assuming this is a matter of public record, whether such an "independent" appraisal, designed to plead for a lower valuation, has been done in the past. Surely the Kerrys don't want to "have it both ways," do they?
Appraisals can be very useful, whether their intent is to demonstrate to the tax authorities that a property is lower in value, or to demonstrate to prospective buyers that the value is higher (lenders usually bring in their own appraisers, of course, though the property owner typically pays the bill). Of course in each case, one's instructions to one's hired appraiser would be rather different. Which is why some cynical sorts refer to the letters attached to a master appraisers name, "MAI," as "Made As Instructed."
Big shockeroo when an unknowing person buys a house figuring the taxes will be the same as the former longtime resident, and then the house is reassessed since it's changed hands.
I think the statistics are that the average buyer of an existing home in our county is socked with a tax bill that is 2 1/2 times what the previous owner was paying before the reassessment.
Maryland and its counties also have a limit on assessment increases, HOWEVER the actual assessment is always carried on the assessment form. The adjustment, that takes into account the limit, is made on the tax bill. I doubt that many settlement lawyers, hired by the buyer, would not inform the buyer what the actual assessment is.
In addition, the property assessments for the whole state are available on-line. If a buyer is "surprised" it is because they haven't done due diligence.
By the way, some towns in Massachusetts also put their assessments on-line. Barnstable, on Cape Cod is one. Perhaps Boston does as well.
What a forthcoming kind of guy! I'm sure his military records will also be released, any day now . . .
Sure you can if your client will let you.
Let's see the press start demanding copies of Kerry's loan documents. I'm sure that will happen shortly after a flock of monkies fly out of Dan Rather's butt.
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