Sonny’s Land

So it seems that the Perdue camp found the Taylor “Above” ad about the Florida land sufficiently stinging enough to send out a response. Personally, I thought that the high road was working well for Perdue, and nearly everyone I’ve talked to (non-politicos) found the Perdue ads much more effective than the Taylor ads. (Quote: “It’s always Taylor and kids. Taylor and kids. They’re all the same”.)

In any case, Taylor proponents have latched on to this property deal as representative of Sonny’s ethic and appear to be prepared to ride it all the way to election day. While I’m no fan of Taylor, my interest here is mostly as a former Disney employee, former resident of Lake Buena Vista, Florida, and avid Disney vacationer.

So I decided to dig a little more into this parcel of land and see what I could find out.

From Sonny’s 2005 ethics disclosures, we see that the parcel of land is described as follows: “Section 27 Township 25, Range 27 East, of the Florida Fruit and Truck Land Company’s plat as recorded in plat book “B”, page 68 of the public records of Osceola County”. Additionally, the property has a value of $185,700.00, and a purchase price of $2,038,000.00.

Mark Taylor’s “Above” ad values the land at $40,000,000, apparently as a result of a comparative land valuation with parcel 35-25-27-4881-0001-0120. This parcel of land is a single family home, subdivided from a much larger parcel that is nearly adjacent to the Perdue land. The comparative property appears to be in a new subdivision called Reunion West Villages North, which are part of the Reunion Resort and Golf Club. The main part of the club property resides over the interstate to the south of I-4 from the Perdue and comparative properties.

Both Perdue’s land and the comparative parcel are located a few miles west of the Disney property on I-4; in fact they reside in between the World Drive exit of I-4 (Celebration, Magic Kingdom, etc.) and US-27. That indeed puts them in prime location for future development, as so much of the area’s growth is westbound along the I-4 corridor.

Now, on to the property valuation. Critics of Perdue have been very vocal about the disparity between the $2M and $185,700 figure. In order to find out what the property is worth (in the tax sense), I visited the Osceola County Property Appraiser’s site (www.property-appraiser.org). Using Sonny’s disclosure, I found two parcels that are owned by George Perdue III:

27-25-27-3160-000A-0085 – Value $16,200 (10/21/2005)
2.16 Acres submerged land (swamp), .591 Acres Zoned Commercial

27-25-27-3160-000A-0090 – Value $169,500 (10/21/2005)
10.6 Acres Submerged land, 6.44 Acres Commercial

In addition to the Osceola County Property Appraisers reports linked above, I called the Kissimmee office of the appraiser and confirmed that the information above was correct. I was additionally told that the submerged land above was possibly usable as commercial land, but it would require additional permits, surveying, and approvals to change the watershed areas to improvable commercial property.

Why the disparity between the prices? Certainly this parcel of land qualifies as a ‘good investment’ – it’s located in a growing area, next to high end homes. There are any number of commercial opportunities available to the owner. However, out of 40 acres, only about 7 is immediately usable according to the land records. Painfully, Taylor’s comparison of a single family home in a high-end golf community with the commercial property facing an interstate is deeply flawed. Further, Sonny’s purchase of the land for $2 million appears to be fair, and is consistent with the price previously paid for the property. But as we all know, the business of land valuation for tax and asset purposes is a complicated, messy business. Sonny’s claim that the property is worth under $200,000 is clearly supported by the available legal documents. Much as the land that PeachPundit HQ sits on here in lovely Alpharetta, Georgia is worth $161,900 (according to Fulton County), it’s all in the improvements and the future value.

Expect part two of this report later in the month – we have a family vacation planned to Disney in a few weeks and I’m going to visit the land personally to scope things out.

18 comments

  1. Decaturguy says:

    “Sonny’s claim that the property is worth under $200,000 is clearly supported by the available legal documents.”

    The only legal document that would really matter is the purchase price for the property and that was $2 million, not $185,000. If Sonny really paid $2 million for property worth only $185,000 then he got screwed. The more likely scenario is that he purposefully undervalued the land in the financial disclosures in order to keep his net worth low.

  2. Clayton says:

    Decaturguy – your claim of lowballing the value for net worth purposes is crazy. If the land was found to have toxic waste, and suddenly was worth $0 – would Sonny’s net worth still be $2M just because a bill of sale says so?

  3. GrandOleDawg says:

    I personally am surprised that this has gotten as much attention as it has, although I feel it’s primarily among us politicos. I just really don’t see this weighing that big on voter’s minds in November. From what I’ve seen of Governor Perdue, and from what I hear from folks who know him much better than I, I feel his a man of great integrity and handled this all on the up and up. However, even if the Dems are successful in creating some sort of perceived ethical flap, I just don’t see that being enough to topple Sonny.

    People, on the whole, are synical. They expect a certain amount of controvery around their public officials. They also come to expect politcal opponents to attack each other with claims that may or may not be valid. An attack on a political opponent only works if it is part of a larger picture you are trying to paint of them. This ad in and of itself will not move many votes. Now if Mark starts coming with other stuff (which he won’t. Partly b/c it’s not there, partly b/c he hasn’t the resources), then you may see Sonny’s number’s start to erode.

  4. jkga says:

    Accounting is just such an exciting topic that, even though I’m not an expert, I feel the need to put in my $.02. I think that Decaturguy’s point is that if markets are what capitalists say they should be, then the price Perdue recently paid *is* the actual value of the property.

    If $2 M is not the true value of the property, then Decaturguy is right – either Sonny did get a bad deal or he’s up to something underhanded.

    About the “toxic waste” analogy – if the property were to become worthless, then its worth would become zero (and Perdue would write off $2 million, not $185,000). Decaturguy isn’t crazy, he’s making an assumption that a recent purchase in the open market reflects the real propertey value better than some municipal functionary’s assessment. Sounds like capitalism to me.

    Unfortunately for me and Decaturguy (if he is a homeowner), DeKalb county is a lot more aggressive in making its assessments reflect market prices than Fulton and Osceola counties apparently are.

  5. Decaturguy says:

    So did I get screwed when I bought this property for $900k in 2004, although FulCo says it’s worth $161k?

    Thank you for proving my point Clayton. You’re exactly right. If you paid $900 k for a property, then the property is worth $900k, not the $161k that the County appraises it for for property tax purposes. I’m assuming that you have a mortgage, but if you do, did you tell the bank the property was worth $161k or $900k? I’m sure you told them $900k or you wouldn’t have been able to get a loan.

    So that brings me back to my original question. If Sonny paid $2 million for the property, why did he list it at $185k on his disclosure? What is he trying to hide?

  6. Clayton says:

    No, the difference between the 900k I paid and the 161k that the land is worth is the IMPROVEMENTS (i.e. the house). If the house burns to the ground, nothing but carbon left… The land is worth 161k. Actually, I could sell it for a bit more – probably about 250 – but the resulting 90k wouldn’t be what the land is worth but speculation in future value.

    Sonny’s land in Florida has absolutely no improvements on it. The $2M he paid is speculation in future value, nothing more.

    Real estate investment and valuation involves a number of critical components – the physical land itself, improvements, and any speculation in value.

    Add in the fact that the Osceola appraiser’s value is likely restricted by yearly caps and other factors when there are no improvements year-over-year, and you get the resulting disparity between the assessed value and the market price.

  7. Bill Simon says:

    I seem to recall that when I filed an ethics complaint against Mark Taylor back in 1998 regarding an allegation that he underreported the value of a limited partnership (that was sold for 10 times his stated “book value”), the winning argument from Lee Parks (Taylor’s attorney) was that the value reported at the time of his disclosure had to be the book value because the market value wasn’t known until 9 months after the disclosure date.

    But, in Perdue’s case, the only thing the book value could be would be the original cost of the land that Sonny paid. That is, the $2.something million.

  8. Decaturguy says:

    Add in the fact that the Osceola appraiser’s value is likely restricted by yearly caps and other factors when there are no improvements year-over-year, and you get the resulting disparity between the assessed value and the market price.

    Again, this is exactly it is a fraud that Sonny listed the appraised value for property tax purposes in his financial disclosure. If Sonny paid $2 million then it is worth $2 million – not $185,000. Who is the Pinocchio?

  9. Mad Dog says:

    Bill,

    I’m still trying to figure out why people are so proud of a governor that overpaid for swamp land in Florida. That was the land he bought sight unseen?

    Right?

    And, Dear Will!

    There are many different kinds of assessments, appraisals, and prices.

    Just to confuse people with some facts.

    And, to somebody, I forgot who….

    Future values? Stocks are purchased on future valuations ONLY in some perspectives that attempt to explain why stocks sell at 16-100 times a current asset value.

    So, if a real estate investor was correctly pricing land by your future market method, they would never be able to sell the land for a profit.

    BECAUSE … the paid the future value as price.

    Give me a break with propping up the Gov at the expense of the truth!

    MD

  10. jkga says:

    Clayton –

    I think that you were being disingenuous. Your analogy to the difference in the amount you paid for your land+house to the amount that Fulton assesses your land only is completely irrelevant to the discussion, since Perdue’s land is unimproved.

    And let me say again, the government’s assessed value is not relevant to anything for accounting purposes (except when it comes to calculating property taxes). If Perdue paid $2 million for the land, then he has an asset valued at $2 million, plus any improvements he adds minus depreciation and write-offs due to fire damage and the like. That’s what should appear on his balance sheet. It looks like his accountant is careless or he’s up to something shady.

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