Pataki's Post-Election Payday

Governor Cashes in Himself, and Hands Us Big Overdue Bill

Two days after George Pataki was re-elected, the never off-message Governor went off-schedule, secretly slipping away to Essex, New York (population 716), where he looked at the 300-acre south farm property, overlooking Lake Champlain. The Governor's schedule indicated he would be in New York City on November 7, but instead he was as far away from it as he could get and remain in the state—all the way up to the Canadian border. While neither the governor's office nor the realtor who owns the farm is discussing its possible sale to Pataki, Essex town supervisor Ronald Jackson told the Voice he "heard from people who know the governor" that "they signed a contract last week, but haven't closed the deal."

Eight days after the election, a board of state preservation officials in Florida, appointed by Governor Jeb Bush, decided to pay a company whose investors include Libby Pataki, the governor's wife, $15 million for a canker-ridden citrus grove along the border of Palm Beach and Martin counties. Since the Pataki group—headed by Richard Hayden, a lifelong, wealthy friend of the governor's—acquired the grove in 2000 for a reported $4.4 million, they will be getting a $10.6 million windfall on the sale, which Florida officials said will close in January. The state previously declined to designate the property for preservation acquisition because it does not contain any pristine wetlands.

Should the Patakis acquire the Essex farm with the proceeds from the Florida sale, they may well structure the transaction in such a way as to avoid paying capital-gains taxes, a common use of what are called 1031 investment-property swaps under the federal code. Financial-disclosure forms filed by the governor indicate that Libby Pataki has an 8 percent interest in a small Hayden investment company, Old Blue LLC, that purchased the grove in partnership with another firm, New Orange LLC, whose three principals are major Florida developers. Assuming that the two entities are 50-50 partners in the ownership of the grove and that Libby Pataki paid for her interest, she will turn at least a $420,000 profit.

The Pataki family triples its investment in a Florida citrus grove and moves to buy an upstate dairy farm.
photo: Holly Northrop
The Pataki family triples its investment in a Florida citrus grove and moves to buy an upstate dairy farm.

This is an amazing turnaround since the canker hit the grove after the Pataki purchase—forcing the removal of thousands of trees and presumably reducing the land's market value. The owners were not interested in selling the 1430-acre parcel before the canker crippled the grove in the fall of 2001, but have aggressively pursued a state purchase since, securing an inexplicably high price. As recently as 1999, the state offered only $3444 an acre for property adjacent to the Pataki plot that does contain pristine wetlands. It is now paying almost $10,500 an acre for the Pataki land, roughly $360 an acre more than the price for the nearby wetlands, which the Martin County water quality chief said "contain the bulk of the environmentally sensitive portion of the tract."

On the other hand, an official at the Essex County tax assessor's office told the Voice that the New York property Pataki is negotiating to buy consists of two parcels. One is 229.3 acres, including a red dairy farm, a white house built in 1880, and a cabin on the edge of an old pasture. The second is a 77.4-acre vacant adjacent tract. Across the road from the farm is 1710 feet of Champlain lakefront. The Press Republican, an upstate paper with a Plattsburgh bureau, reported that attorneys for Pataki have visited the Essex County Government Center to get documents needed for the transaction.

Pataki initially told the Press Republican that he went to the north country to meet with outgoing Republican state senator Ron Stafford, who is retiring after 37 years in the legislature, about remaining "in some capacity in state government." But local officials said that Stafford's law firm is actually representing the governor in the acquisition, and Dorothy Bliss, who has lived on the Lakeshore Road farm as a tenant for decades, said that Stafford and Pataki have visited it three or four times, starting this summer.

Mrs. Bliss talked to the governor and senator about the property. "What I heard," she told the Voice, "is that he was traveling up the lake with some friends, he was going to dinner around here in Essex, and he spotted the big red barn, and just admired it. He stopped and I told him where he would have to go and who he would have to talk to," sending him to the owner, Donald Duley, a Plattsburgh realtor. Duley has put the property up for sale on and off, ever since he closed its dairy farm in 1989, according to the Valley News. It used to house 40 to 100 head of cattle.

State GOP chair Sandy Treadwell, a personal friend of the governor's, owns a substantial amount of property in the next-door town of Westport. In addition to his recent farm visit, Pataki also met with Plattsburgh mayor Daniel Stewart to discuss the $3 million in state funding that, the governor announced in October, would be given to the city for downtown waterfront revitalization. "I want to see where we go from here," Pataki told reporters, indicating he supported a plan to create a multi-modal transportation facility there. Noting the state's difficult financial condition, he nonetheless said, "We're going to look to see what we can do."

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