Buchanan’s Sales Yield No Profit
Despite multiple high-stakes real estate transactions, Rep. Vern Buchanan (R-Fla.) reported an unprofitable year in the real estate business in 2008.
The Florida lawmaker, who ranks seventh in Roll Call’s most recent evaluation of the 50 richest Members of Congress, reported no income from these real estate dealings, according to his most recent financial disclosure report.
Although Members are required to report the sale, purchase and profit from their real estate dealings in their annual disclosures, Buchanan’s transactions remain largely cloaked even in the public filing.
The Florida lawmaker’s office declined to answer specific questions about the properties and their sales. One home sold by a Buchanan partnership in 2008 for $1.5 million more than its 2003 purchase price, according to public records.
“The House ethics committee had no questions with our report, meaning we complied with all disclosure requirements and as such will let the public report speak for itself,— Buchanan spokeswoman Sally Tibbetts wrote in an e-mail.
It is unclear whether the ethics committee has actually completed its review of the Florida lawmaker’s most recent report. Tibbetts said Buchanan’s office has not been contacted.
The Committee on Standards of Official Conduct, commonly known as the ethics panel, does not comment on individual lawmaker’s financial disclosures.
According to Buchanan’s most recent financial disclosure, which covers 2008, the Florida lawmaker sold the Avon, Colo.-based Beaver Creek Limited Liability Partnership in June 2008 in a transaction valued from $5 million to $25 million.
Buchanan listed no income from the sale of the property, which he had valued from $5 million to $25 million in his previous financial disclosure.
In his first financial disclosure, covering 2006, Buchanan listed the same value but reported from $1 to $200 in rental income.
Because lawmakers report their assets and liabilities in wide ranges — such as the property owned by Buchanan’s LLC — it can be difficult to gauge the true value of investments. Members are also not required to report losses in their disclosures, only income or profits.
But public records, including sales and tax assessments, can offer a more exact view of a property’s history.
Property records maintained by Eagle County, Colo., state that Beaver Creek of Florida LLC purchased the five-bedroom, five-and-one-half-bathroom home in 2003 for an even $5 million.
Records for the property also state that Beaver Creek of Florida LLC sold the nearly 8,000-square-foot home for $6.575 million in June 2008.
It is unclear, however, how much of an interest in the Beaver Creek of Florida LLC — now inactive or delinquent, according to registrations in Florida and Colorado, respectively — belonged to Buchanan.
Although Members are required to report investments owned via partnerships on their annual disclosures, the rules do not require lawmakers to disclose the percentage that they own.
The Florida Department of State’s Division of Corporations shows Beaver Creek is comprised of Buchanan, as well as John Tosch and Steve Hiteman, longtime Buchanan associates who serve in top posts in Buchanan Automotive Group, the lawmaker’s collection of car dealerships.
In addition to the Colorado sale, Buchanan also reported selling off a Menlo Park, Calif., “investment— condo in July 2008 in a transaction valued from $1 million to $5 million. He did not report a profit from the property’s sale, which he had valued in previous financial disclosures from $1 million to $5 million.
A sales brochure for the three-bedroom condominium near Stanford University states the property was offered at $1.349 million. The San Jose Mercury News reported Buchanan and his wife ultimately sold in mid-July 2008 for $1.1 million.
Real estate records indicate Buchanan purchased the home in 2003 for about $910,000. In his 2006 report, the Floridian reported from $1 to $200 in rental income from that property.
While financial disclosure forms may be complicated for any Member, particularly those with significant wealth, campaign finance expert Marc Elias, an attorney with the firm Perkins Coie, said real estate holdings are not an unusual element.
“There is nothing really different [about] real estate than any other investment,— Elias said. “You can have issues of how you value it from one year to the next, and those issues are present for any illiquid investment.—
He added of his own experience with financial disclosure reports: “Typically, I would work closely with the accountant for the Member, and in the case of a sale of a large piece of real estate, often with a real estate attorney.—
While federal law — the Ethics in Government Act of 1978 — mandates lawmakers’ annual disclosures, the House ethics committee also issues standard forms and instructions to lawmakers to assist in filing the reports.
Both the law and those instructions emphasize that reports should include the gross value of any income, such as property deals, interest payments, rent, royalties and dividend payments.
“If a property is held for investment and there is a profit in connection with its sale, it would have to be reported,— said Rob Walker, an attorney with Wiley Rein who was previously a top aide to the Senate and the House ethics committees.
Members do have options for reporting the value of a property, however, ranging from their tax assessments, a recent appraisal or even the purchase price and date.
“The rules and regulations and statutes relating to financial disclosures provide a certain degree of wiggle room in valuing property for disclosure,— Walker said. “It does occur from time to time the committee has reason to wonder whether the value for a particular property is appropriately given and disclosed.—
Members are exempted, however, from reporting the details of their homes — whether it be their primary residence or a vacation home — so long as the properties produce no income.