Chicago Tribune
July 6, 2007
Booming suburbs yield bounty for longtime real estate investor
By Mike Dorning, James Kimberly and Ray Gibson, Tribune staff
reporters. Tribune national correspondent Andrew Zajac contributed from
Washington
July 6, 2006
During his long career in public service, House Speaker Dennis Hastert
has amassed a multimillion-dollar fortune through real estate holdings
that belies the humble image of a former small-town high school
wrestling coach.
He lives on a 127-acre homestead near Plano that includes farmland, a
pond and woods, situated along a creek and adjacent to a private forest
preserve. Based on the price Hastert received for a sale of adjoining
undeveloped farmland in December, his land alone is now valued at more
than $4.5 million. In all, Hastert's net worth has soared from no more
than $290,000 to more than $6 million during his 19-year tenure on
Capitol Hill that has seen him rise from the back benches of Congress
to speaker of the House.
Hastert's accumulation of wealth through a series of land deals has
been the subject of recent scrutiny since a private research group last
month questioned his sale of land near a federally funded highway
project that he championed. The transactions appear to comply with the
law.
In addition to the land in question, Hastert also owns a townhouse near
the U.S. Capitol assessed for tax purposes at $399,000. He owns more
property in Illinois, Wisconsin and Florida that together is worth more
than $1.8 million. He carries little debt.
While others vigorously pursued riches in the stock market in the last
20 years, Hastert plowed ahead in land, aided in part by an inheritance
of about $200,000 from his father eight years ago but primarily through
a few profitable real estate transactions in his fast-growing suburban
home community.
His biggest payday as a real estate investor -- $2 million -- has
stirred controversy because it dovetailed with federal assistance he
secured for the Prairie Parkway. As part of a real estate partnership,
Hastert sold land that is 3 miles from the proposed freeway. The $207
million funding was inserted into the fine print of a mammoth federal
transportation bill.
He accumulated that wealth while he earned an annual salary that has
ranged from $77,400 when he first entered Congress to his current
salary as House speaker of $212,100 and as he put two sons through
college. His wife brought home a teacher's salary until she retired
about six years ago.
Booming market cited
Hastert spokesmen say he has never used his political influence for
financial gain, stressing that Hastert reaped rewards along with many
other property owners amid a land boom in his home region.
"This is somebody who has spent close to three decades putting all of
the spare money he has in properties," said Mike Stokke, the speaker's
deputy chief of staff. "Some of those properties were successful and
some were not."
Hastert declined to be interviewed for this article.
Critics have accused Hastert of profiting in an outsize way due to his position.
"I think what's going on with the speaker is he's saying, `This is good
for my district. Why can't it be good for me too?'" said Keith Ashdown,
vice president of policy at Taxpayers for Common Sense, a Washington
watchdog group. "He's become a really rich man as a public servant."
Hastert and his supporters argue that he did nothing more than reinvest
the proceeds from sales of inherited property and of his home in a
booming local real estate market.
Stokke added that the speaker has been a public advocate for the
Prairie Parkway for many years and that his intent to use his political
power to press for construction of the highway has been no secret.
Indeed, Hastert's advance maneuvering to fund the project was
front-page news in the Tribune as long ago as 2001, a year before he
began purchasing the land near Plano.
An examination of public records covering Hastert's financial dealings
offers a picture of an enthusiastic real estate investor who
consistently concentrated his wealth in property and repeatedly took
advantage of opportunities to expand existing holdings either by
purchasing nearby land or increasing his stake in partnerships. He
started with property received from his family and his wife's family,
but he has regularly committed his own savings to build his property
holdings.
Hastert first began to reap substantial profits in 2002, when he moved
from his Yorkville home and sold to a developer the surrounding land on
Route 34, which has become a central corridor for growth in the region.
But his big winnings, responsible for most of his fortune, have come
from the controversial tract associated with the freeway, land near
Plano that he purchased in two transactions in 2002 and 2004. In
addition to the sale of his Yorkville house, Hastert cashed in two
other real estate investments during the months before the first of the
two land purchases, tying his financial fortunes to the property.
According to Hastert spokesman Ron Bonjean, the speaker spotted the
post-and-beam house that is now his residence and the surrounding
farmland on his way home from a 4th of July parade in Dixon, Ill., in
2002. "He fell in love with the property when he saw it. It was his
dream home," Bonjean said.
At the end of 2002, just after Hastert purchased the property near
Plano, property records and congressional financial disclosures
indicate that his net worth stood somewhere between $1.2 million and
$1.5 million, less than a quarter of his current wealth.
In addition to the $2 million profit he already has reaped from the
sale of land there, he still holds much of the tract purchased in 2002,
giving him the potential for even larger gains.
Hastert entered Congress in 1987 a man of relatively modest means,
worth no more than $290,000. His financial disclosure forms, which
provide broad-range estimates, reported that he and his wife held
assets totaling between $120,000 and $275,000. The largest: farmland
from his wife's family in southern Illinois and a half-interest in a
building in Plainfield, Ill., that had housed his father's Clock Tower
Restaurant. He listed total debts of between $70,000 and $165,000.
The disclosure did not require him to list the equity he had built in
his home at the time. But Hastert had just seven months earlier
purchased a home in Yorkville for $225,000, Bonjean said. County
records show that he had taken a mortgage of $140,000 when he bought
the property.
Now his net worth appears to be more than $6.2 million, a figure that his staff does not dispute.
Hastert's most valuable asset is his homestead near Plano and the 127
acres of surrounding land. Hastert and his partners, including Kendall
County Republican Party Chairman Dallas Ingemunson, received $36,152
per acre when they sold undeveloped land adjacent to the property in
December. At that price, his remaining farmland is worth $4,591,000,
not counting the value of his 3,500-square-foot house, a swimming pool
and a barn he uses to house his auto collection.
Several local real estate appraisers said that value is consistent with recent prices paid for undeveloped farmland in the area.
Mark Akers, director of appraisal services for 1st Farm Credit Services
in Sycamore, Ill., said recent sales of large tracts of land near
Hastert's property have run between $24,000 and $36,000 per acre.
Typically, property such as Hastert's remaining land would increase
further in value because of the sale of adjoining land to a housing
developer. The builder would have to run water and sewer lines out to
the new development, which in turn would make neighboring land more
attractive to developers, Akers said.
The speaker's other land holdings include a 126-acre parcel elsewhere
in Kendall County he owns with Ingemunson and another partner. Land
records show a purchase price in December of $3,154,000, making
Hastert's one-third share worth $1.05 million. He also owns 275 acres
of farmland on a bluff overlooking the Mississippi River in Eastman,
Wis., that he purchased in December for $756,000.
And he owns 1.33 acres in north central Florida's Marion County, a
horse-farming region that is home to some of the nation's championship
thoroughbreds and has become a burgeoning haven for retirees. The tax
assessor most recently valued the Florida land at $38,280.
His congressional disclosure forms show bank accounts and mutual funds
with a combined value of between $20,000 and $125,000 at year-end. The
same document indicates he had few debts: a mortgage on his Washington
townhouse with a balance between $50,000 and $100,000 and a mortgage on
his Plano residence that county records show had a balance of $520,000
as of February 2006.
An automobile enthusiast, he owns at least 10 vehicles, five of them
antiques, including a 1942 Lincoln Zephyr Sedan and a 1956 Lincoln Mark
II Convertible. He also keeps two 1950s open-cab Mack fire trucks,
owned by his congressional campaign committee. He is not required to
disclose the value of the vehicles.
Hastert began accumulating property long ago. As far back as 1982, a
financial disclosure form he filed as a state legislator shows that he
and his wife held an interest in farmland in southern Illinois'
Macoupin County that they had inherited from Jean Hastert's father. In
1988, Hastert expanded the farm near Shipman from 104 acres to 270
acres by purchasing neighboring land.
By 1985, he also had a half-interest in the Plainfield building that housed his father's restaurant.
Shortly after he won his second term in Congress, he purchased the
townhouse where he still lives when in Washington for $124,000,
according to property records. For many years now, he has shared the
two-bedroom, 1,400-square foot residence with his two top aides, chief
of staff Scott Palmer and Stokke. Records show they paid him a combined
rent between $5,000 to $15,000 last year.
He continued to expand his properties. In 1997, he acquired the land in
Florida from his father, Jack Hastert. In 1998, when land adjoining his
house on Route 34 in Yorkville became available, he purchased the
property for $105,000.
Later that year, his father died, leaving the speaker with a one-third
share (the rest went to his two brothers) of an estate valued at
$575,000 according to a probate report filed by Hastert, who was the
executor.
Hastert received much of his share in property, including another
quarter-interest in the Plainfield building and a half-interest in the
Tollgate Inn, a former restaurant in North Aurora.
Shortly afterward, Hastert began to shift his holdings. He and his wife
sold the farm in southern Illinois in December 2000 for $418,000,
according to county records. The year before he had reported a mortgage
of between $50,000 and $100,000 on it.
Then, in May 2002, he sold the Plainfield building, receiving $300,000 for his share.
That same year, in July, he and his brother Chris sold the Tollgate Inn
for $290,000. It is unclear how much profit the brothers made on the
transaction.
In October, Hastert and his wife sold their home of 16 years and the land around it, raising $880,000 in two transactions.
Farm bought for $2.1 million
The Hasterts poured their money into a 196-acre farm near Plano that is
at the heart of the current controversy over the speaker's real estate
dealings. When they purchased the farm for $2,125,000 in August, they
initially had to stretch, taking out a mortgage for more than $2million
that they then paid down to $1,075,000 in November after closing on the
sale of their previous home.
Jay Dockendorff, the previous owner, said he had listed the property in
two ways, either $1.2million for the 17-acre core property that
included the house and barn or the higher price for the full 196 acres.
The farm includes woods with more than 10,000 trees, including oak,
hickory and walnut, according to Dockendorff. The private Jay Woods
forest preserve is adjacent.
Hastert was able to acquire the additional 179 acres for $925,000, or
less than $5,200 per acre, a fraction of what he would later receive
for the land he sold, according to Dockendorff.
In February 2004, Hastert took a one-quarter share in a partnership
with Ingemunson and Thomas Klatt, a longtime political supporter and
campaign contributor who owns a local trucking company, to purchase 69
acres adjoining the farmland near Plano. They paid $1,033,000, or just
under $15,000 an acre, and financed the purchase with a $460,000
mortgage.
The 69-acre parcel was then joined with an adjacent 69 acres taken from
Hastert's farm and in December 2005 sold to a housing developer for
$4,989,000, or $36,152 per acre. Ingemunson said the partners
apportioned the proceeds of that sale according to the acreage of land
each had contributed, granting Hastert five-eighths of the proceeds, or
$3,118,000.
Hastert and his partners have said the parcel from Hastert's farm did
not have direct access to a road and that the parcel increased in value
once it was joined with the partnership's land, which did front a road.
Critics have questioned the transaction, pointing out that the sale
went through just four months after President Bush had signed the
legislation that included federal funding for the Prairie Parkway.
The property is 3 miles from the intersection of the proposed route of
the freeway with Galena Road, where the Kendall County Board has
proposed building an interchange, although state highway authorities
have not yet approved it. The property is 5 miles from a proposed
interchange with Route 34, to which Hastert directed $55 million of the
federal assistance that he secured.
Hastert has argued that the route of the freeway is not close enough to his property to affect its value.
Local critics, including Jan Strasma of Citizens Against the Sprawlway,
have claimed the opposite, arguing that homeowners prefer not to live
too close to a highway but do pay higher prices for houses with easy
enough access.
The speaker remains confident in real estate. In a complex transaction
designed to minimize taxes, he and his partners used much of the
proceeds to buy 126 acres of land just south of the parcel they sold.
Hastert also used some of his earnings from the sale to purchase his
property in Wisconsin.
- - -
Speaker's holdings worth millions
House Speaker Dennis Hastert (R-Ill.) recently came under scrutiny when
it was learned that he made a profit of about $2 million as part of a
partnership that bought and sold land near the route of a proposed
freeway for which he secured federal funding.
IN ILLINOIS
Properties sold by partnership to which Hastert belongs
Home outside Plano, Ill.
Purchased: 2002
Price: $2.1 million (Last year 69 acres of the original purchase,
prorated at $748,087 of the purchase price, was transferred to the land
partnership.)
Current value: Remaining land alone is worth more than $4.5 million.
Description: 127-acre property includes a 3,500-square-foot house, farmland, a pond and woods.
Kendall County parcel (co-owned)
Purchased: December 2005
Price: $3.2 million (Hastert's share: $1.05 million)
Description: 126-acre property bought by land partnership
IN OTHER STATES
Eastman, Wis.
Purchased: December 2005
Price: $756,000
Description: 275 acres of farmland overlooking the Mississippi River
Washington, D.C., townhouse
Purchased: 1989
Price: $124,000
Current value: $399,000
Description: Provides living quarters for Hastert as well as rental income
Marion County, Fla.
Acquired: 1997
Current value: $38,280
Description: 1.3 acres in a horse-farming region, transferred to Hastert by his father in 1997
Sources: Tribune research, IDOT