Campaign Contribution

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 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 2000

02/01/1999
1000.00
99034563310

KASICH, JOHN R
VIA CITIZENS FOR KASICH

09/14/1997
500.00
98032683935

08/31/1998
1000.00
98033620544

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 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.

Against the facts that Kasich bought property from a political friend, motivated to sell to him, and at a price that neither party felt need to be based on an independent assessment of the property’s value worth, at a fraction of the price the same seller sold similar lots on the same street…

All while John Kasich was banging his congressional podium expressing faux outrage over Whitewater.

Is this a political homerun against Kasich?

No, (and it’s silly whenever out-of-state hacks like Jon Keeling and in-state hacks like Matt Naugle, who was apparently ready to rail against the Third Frontier ballot issue until Kasich announced his support, to require such an impossibly high standard), most voters won’t decide come November based on this story alone.  However, it’s a telling anecdote about how Kasich has traded in his position of power for his personal enrichment even before he traded in his House Budget gavel for a cushy corporate management position with Lehman Brothers.

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