Crain's Chicago Business
July 26, 2006
By Greg Hinz
June 26, 2006
As U.S. House speaker, Plano's J. Dennis Hastert has a well-earned rep
as someone with a knack for holding his fractious GOP caucus together.
But Mr. Hastert appears to have a greater talent — as a savvy
real estate investor who, with help from friends, knows how to be in
the right place at the right time.
At issue are recent reports that Mr. Hastert has made a profit of $1.5
million to $2 million selling land near the proposed Prairie Parkway
that he long has pushed in Kendall and Kane counties.
In some ways, the story is not as damning as you might have read
elsewhere. It's far from certain that the Parkway, and Mr. Hastert's
work on its behalf, contributed much to his profits.
On the other hand, anyone who sells land for $36,000 an acre purchased
four months earlier for $15,000 an acre is a speculator, and powerful
federal politicians generally would be well-advised not to speculate on
land near where they want a federally funded road to be built.
Mr. Hastert long has pushed for a new highway in the west suburban
fringe. Along with the Illinois Department of Transportation (IDOT), he
has argued that the best way to handle inevitable growth is to get out
in front of it.
Others disagree, asserting that the houses won't come if roads don't
lead. The clash has been vicious at times, with Mr. Hastert and Mike
McCoy, then chairman of the Kane County Board, exchanging verbal
fisticuffs several years ago.
Mr. Hastert won that battle on July 31, 2002. That's when IDOT
Secretary Kirk Brown formally designated a 500-foot-by-33-mile corridor
for the Parkway.
Unbeknownst to Mr. Brown, something else was going on at the same time.
As Hastert aides tell it, the speaker "fell in love" with a secluded
195-acre farm on Little Rock Creek that he drove by on his way home to
Yorkville from a July 4 appearance that year. He bought it weeks later.
At its eastern edge, the farm is located 2.4 miles as the crow flies
from the Parkway corridor — and 5.5 miles from the nearest
currently proposed Parkway interchange.
In February 2004, Mr. Hastert made a second purchase. At the suggestion
of longtime associate Dallas Ingemunson, the two and a partner bought
another 69 acres adjoining the Hastert farm for $15,000 per. "We had
confidence the market would hold," Mr. Ingemunson says. Besides, he
adds, the seller wanted a quick cash deal, so they got a good price.
I'd say. Four months later, Mr. Ingemunson says, the Hastert group
signed a contract to sell the 69 acres for $36,000 per — a 140%
profit. Mr. Hastert also sold 69 acres of his farm that lacked the road
access the rest of the property had, according to Mr. Ingemunson, about
tripling his money. Mr. Hastert took most of his combined profits not
in cash but in the form of a one-third interest in 140 acres that an
Ingemunson-led group owns just south of the farm, Mr. Ingemunson says.
Hastert aides say that land provides a nice buffer from crowds. Mr.
Ingemunson says it's for sale and should net more than the $25,000 an
acre his group paid.
Meanwhile, Mr. Hastert was in the process of earmarking $207 million to
start work on the $1-billion-plus Prairie Parkway. The earmark didn't
formally come until the federal transit bill passed in 2005, but the
bill originally was supposed to pass in 2004.
Art Zwenke, who bought the Hastert land for a 1,600-home development,
says he'd pay the same price with or without the Parkway. Most —
though not all — other sources I talked to say the Parkway may
help commercial growth but won't do much to boost already-rising
residential land values.
On the other hand, why should taxpayers pay $207 million just to help the big-box crowd?
The appearance here may be worse than the reality, but it's not good.
If I ever go into land speculation, I'm going to ask Mr. Hastert and
his friends for some advice.