Jim Geraghty kicked it off by asking why Barack Obama would “overpay” Rita Rezko (Tony’s wife, and yes, THAT Tony) $64,000 for a strip of land on a vacant property she owned next to his Chicago home. Headless Blogger jumped on it and asked why Rezko would “overpay” the previous owner of both parcels $384,000 for that piece of vacant land. I burned much of last night trying to do some digging through both the City of Chicago’s online GIS map and the Cook County Assessor’s office website to see what could be discerned from that.
First, I have to thank Headless for refreshing my memory on some of the specifics of the same-day purchases by Obama and Rezko:
- There are actually 3 parcels involved; two listed by the Cook County Assessor’s office as 5046 S. Greenwood Ave. (the house Obama purchased and an outlot behind the house and garage containing a second, small house also presumably purchased by Obama), and one listed as 5050 S. Greenwood (the vacant lot purchased by Rezko). At that time, the “main” 5046 parcel was about 10,400 square feet and the 5050 parcel was about 9,600 square feet (side note; CBS2Chicago said that it was 7,500 feet; guess they didn’t check city records too closely).
- The previous owner of all 3 parcels was looking to sell them all for $2.575 million. On the same day in June 2005, Obama purchased the two parcels at 5046 for $1.65 million ($300,000 less than the asking price), while Rezko bought the 5050 parcel for $625,000 (the full asking price).
- In January 2006, Obama bought 1/6th of the 5050 parcel from Rezko (about 1,600 square feet) for $104,000 (precisely 1/6th of what Rezko paid for it) despite it being appraised at only $40,500.
- That purchase not only increased the “main” 5046 parcel size to its current 12,047 square feet and reduced the 5050 parcel to 8,002 square feet, but it caused the combined 5046 southern property line to “jog” south (so much for the claim that he was trying to “balance” the property lines).
Now, the “why”s. Do bear in mind that this is complete speculation, but I suspect that Obama wanted the entire parcel, but didn’t yet have the ability to come up with $2.275 million (the total amount paid to the previous owner). He got his friend Tony Rezko to have his wife buy the vacant parcel with the understanding that he would pay her back as the additional money from his new job as US Senator came in by buying pieces of the parcel and attaching them to his property. That scheme fell apart after Tony was indicted on federal corrpution charges in October, 2006.
I’m not a lawyer, so I don’t know whether that scheme violated federal law, Illinois law or Senate ethics rules in addition to smelling as bad as Jones Island after a 3-day rain. However, I do know that, had a Wisconsin politician participated in that scheme, he or she would have faced at a minimum a criminal investigation and likely prosecution.
Revisions/extensions (10:58 am 6/6/2008) – Some more info from a March 2008 article in the Chicago Tribune (H/T – Headless):
The house and the adjoining yard had been owned as a single property, but the owners were listing them separately and asking $1.95 million for the house and $625,000 for the landscaped side lot.
Obama disclosed Friday that someone else already had an option to buy the garden lot. But he said Rezko took over that option after Rezko learned Obama was bidding for the house. Obama said he knew next to nothing about those transactions and does not recall when he learned that Rezko was interested in buying the side lot- or even how Rezko learned it was for sale….
At some point before the property sales closed, Obama toured the home with Rezko for 15 to 30 minutes. Obama said he asked Rezko to assess the property because he was a real estate developer in the area. “He said, ‘I’d be willing to go inside and take a look,’ ” Obama recalled….
Rezko later sold the rest of the lot to one of his former attorneys, who now has it listed for more than $900,000. “It appears,” Obama said, “a sale is about to be consummated.”
Curiouser and curiouser.
Double check this but I had heard at one point that Rezko’s lot was landlocked which was the main issue of the valuation. i.e. how do you pay $625K for a piece of property that can’t be used?
I did double-check it, and the only landlocked parcel was the second 5046 one. It is anything but vacant as there is a small house on it. The 5050 parcel once owned by the Rezkos is a corner lot.
There is something potentially-interesting in the Trib article that I didn’t mention because its presentation was a wee bit misleading.
Steve – What is the other thing in the Trib that jumped out at you?
I went through it again and thought this was curious:
“… because a city ordinance required owners of vacant land to install fences.”
Per your research, this was a separate vacant lot before the sale. Why wasn’t a fence required per ordinance?
You are looking at the Rezko scandal from the wrong angle. I don’t doubt that there is something very suspicious about Sen. Obama’s deal. It appears to me that a major motivation for the transaction was to have Rezko pay for a part of the house.
But why not look at the overall issue that Tony Rezko raises: What happens when the government offers money for low income housing? Somebody finds a way to walk off with that money.
The City of Chicago awarded Tony Rezko’s companies 100 million dollars in grants and tax credits to build low income housing. Tony Rezko received 7 million dollars in upfront fees. Most of the projects went into foreclosure or were boarded up. In other words, $100 million dollars was provided to Chicago by the federal government for public housing projects. What happenned? Basically, the money was stolen. Rezko got his money. Davis & Minier (Obama’s old law firm) got their money and I am sure that a bundle was kicked back to some Chicago politicians. Is there a more telling example of how government programs work then that? Is there a better illustration then this of the failure of government social programs? Or why Obama’s programs won’t work.
And, if you want to really give an example of Sen. Obama’s duplicity, why not raise the foreclosed Tony Rezko properties. Can we really believe that he never heard about the problems at the Rezko properties where people didn’t receive heat and repairs weren’t made?
Then there are minority set asides. Apparently, Tony Rezko receives them as well. He establishes black straw parties who supposedly own and manage his companies. One of those straw parties is Allison Davis, the partner in Obama’s former law firm.
What does a community law firm do? Go into partnership with crooks like Tony Rezko.
Anyway, there are many things that can be exploited regarding Rezko and some of them actually illustrate how big government programs such as low income housing and minority set asides don’t work. So I would talk about those things rather than speculating about the house deal.
Headless – That wasn’t the curious thing; it was how Rita got her $500,000 mortgage on her not-high-level government salary. The reason why I didn’t mention it is the Trib didn’t mention whether Tony co-signed, which would have made that mortgage a good risk for the bank.
My guess as to why the fence wasn’t required when the doctor owned the properties was that both properties were owned by the same person. Once ownership of the properties was split, the ordinance kicked in.
David – I’m but a low-mid-level blogger. It’s something Jim Geraghty sunk his teeth into first, and something I had the ability to run down some info that he didn’t have time to do.
I’d rather work with direct associations than “friends and law partners”. The direct ones tend to stick a little better.
Oh that … I think it is old news.
Rita got the down payment from Rezko’s corrupt Iraqi buddy Ayham al-Samarie. The mortgage was rubber stamped during the sub-prime fiasco, maybe cosigned by Ayham.
And this …
http://www.suntimes.com/news/metro/rezko/826685,CST-NWS-rezkofile120320.stng
Can you imagine the MSM uproar if this guy was W’s or McCain’s best friend and next door neighbor?