IDOT Interstate Connector News

Chicago Tribune
June 18, 2006

How Hastert benefited from sale

Planned highway could sweeten asset near Plano

By James Kimberly and Andrew Zajac, Tribune staff reporters. James Kimberly reported from Chicago and Andrew Zajac from Washington; Tribune staff reporters Mike Dorning and Ray Gibson contributed to t

June 18, 2006

The complex structure of a real estate transaction in Kendall County last December left House Speaker Dennis Hastert with a seven-figure profit and in prime position to reap further benefits as the exurban region west of Chicago continues its prairie-fire growth boosted by a Hastert-backed federally funded proposed highway.

Instead of cash, Hastert (R-Ill.) took most of his share of the proceeds in land, some of it less than 2 miles from the parcels he and two partners in a land trust sold for nearly $5 million to a developer who plans to build more than 1,500 homes and commercial space on the property near Little Rock and Galena roads in Plano.

Hastert received five-eighths of the proceeds of the sale, which worked out to a profit of more than $1.5 million for him on property that he and his partners accumulated in a little more than three years.

Little Rock Trust No. 225

All told, Hastert and his partners in Little Rock Trust No. 225 received property valued at $3.8million, plus cash, said Dallas Ingemunson, a partner in the trust and Hastert's personal attorney, as well as the Kendall County Republican chairman.

Hastert's share of the proceeds includes a one-third interest in a 126-acre property on Miller Road, just south of the Robert Arthur Land Co.'s planned development, according to his congressional financial disclosure form released last week. The Little Rock land trust acquired the farm for $3.1million, Ingemunson said.

Hastert also received 275 acres of property overlooking the Mississippi River in Eastman, Wis., for which he paid $756,000.

The partners partially took payment in land because federal law allows capital gains taxes to be deferred when a business or investment property is swapped for another business or real estate.

The partners are responsible for capital gains tax on the cash portion of the transaction, Ingemunson said.

Thomas Klatt, the third partner in the Little Rock trust, said the group would like to immediately put the Miller Road farm up for sale but must hold on to it for a year under provisions of the tax code.

"It's not far from the action," Klatt said of the Miller Road farm. "That's how it works out here in the country. The place is booming."

Tom Karpus, director of building and zoning for the City of Plano, said the growth in Kendall County is following Ogden Avenue, with developers moving west from Naperville to Aurora to Oswego to Yorkville and Plano.

"For the last six to seven years land values out here in this area have all gone through the roof," Karpus said.

Last spring, the Census Bureau listed Kendall County as the second-fastest growing county in the U.S.

Proposed Prairie Parkway

Karpus downplayed the impact of the proposed Prairie Parkway, which would run north and south through Kendall County, noting that property prices began rising well before the proposed highway became a serious planning issue. The proposed road is designed to connect Interstate Highways 80 and 88.

Mandel Manion, who has sold real estate in the Plano area since 1991, said the market for farmland really took off in the last year and a half.

Manion said farmers tell her that developers knock on their doors unsolicited and offer to buy their land for $35,000 to $40,000 an acre.

"Maybe the Prairie Parkway has something to do with it, I don't know," Manion said. "I would guess it probably doesn't hurt."

Hastert's family paid $11,000 per acre in 2002 for some of the land he and his partners subsequently sold in December for $36,000 per acre.

The speaker has long been a staunch supporter of the proposed Prairie Parkway and helped secure more than $200million in federal funding through an earmark in federal transportation legislation last year.

Hastert press secretary Ron Bonjean said it is wrong to think that the speaker's backing of the parkway could positively affect his property investments because they are 5 miles from the proposed path of the highway. "It's too far away to have an effect," Bonjean said, adding, "The speaker has bought land like every American has a right to. . . . He is not benefiting from the parkway."

Jan Strasma, chairman of Citizens Against the Sprawlway, which opposes the parkway, disputed Bonjean's reasoning.

"People don't want to live next to the expressway," Strasma said. "They want to live several miles away with easy access.

"If this were some other individual who wasn't in a position of power and influence you would say, `Gee, they were smart, they made some money,'" Strasma said. "In this case it just doesn't look right."

If the Kendall County Board gets its way, residents of the development would have quick access to the parkway via an interchange at Galena Road.

The board last month passed a resolution calling for the construction of an interchange there, although county officials say they don't have the money to pay for it.

County Engineer Francis Klaas said an interchange would not be built unless the state, the federal government or a private developer put up the money. The state of Illinois has said it has no plans to provide highway access at Galena Road.

Wisconsin property

The Wisconsin property that Hastert acquired is a mixture of woods, pasture and cropland.

Sherwood Matti, the farmer who sold Hastert the land, said his real estate agent posted photos of the property on the Internet, where they may have come to the speaker's attention.

Bonjean said he did not know Hastert's plans for the property.

Matti said, "It's a beautiful place. He could develop home lots on it if he wanted."

The property is west of Madison, midway between Dubuque, Iowa, and La Crosse, Wis.

Matti said he sold the land because "I'm 77 years old and I'm done with it."

He said he negotiated through real estate agents and didn't realize who he'd sold the land to until someone pointed out Hastert's name on documents after the sale was complete.

"I'm not a politician," Matti said. "I had no idea who he was."