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NY Attorney General Investigating Trump's $21 Million Tax Break and Inflated Valuation of Property

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NY Attorney General Investigating Trump's $21 Million Tax Break and Inflated Valuation of Property

2020-10-09 18:06:00

By Laura Tucker, Staff writer; Image: Letitia James (Image source: Screenshot)

More questionable pieces of Donald Trump's taxes are being revealed, leading to more legal trouble for him.

In 2015, before he was the president, and before he first refused to release his taxes, he promised to preserve more than 150 acres of woodlands on his Seven Springs estate. This earned him a $21.1 million tax break, helped by a $56.5 million valuation of the property. This is more than double the value three Westchester county towns that each contained some of the property assessed.

New York Attorney General Letitia James is investigating whether the Trump Organization valued the property of Seven Springs improperly, according to court filings from August. It also looks at other valuations, tax burdens, and conservation easements at Trump's other holdings in Los Angeles, Chicago, and New York City.

Eric Trump was deposed in the case on Monday.

The Washington Post obtained the appraisal the tax break was based on. It seems to have relied on assertions and misleading conclusions that raised the value of Trump's charitable gift, as well as his tax break.

Commercial real estate firm Cushman & Wakefield wrote the appraisal. Its New York City headquarters is in a building Trump co-owns.

The 212-acre estate was valued on the assumption a future buyer could build and sell 24 mansions on the property. Trump himself tried to build at Seven Springs — a golf course and later other projects — but these efforts were held up because of local opposition and environmental disputes.

The appraisal was also built on the claim that the land that was preserved under the easement had no economic value on its own. One independent appraiser called that "crazy."

"This is not a good appraisal, and it's misleading, and it's thin as all get out," said the first independent appraiser, "what you get is appraised values for these 24 hypothetical lots that appear to be much higher than they ought to be."

In addition to the tax break for the conservation easement, Trump classified the property in 2014 as an investment property and not a personal residence. This allowed him to deduct $2.2 million in property taxes as a business expense.

It doesn't seem it's being used as a rental property, as it's only brought in between $5,000 and $10,000 in total income since 2015. The Trump Organization's website says, "Today, Seven Springs is used as a retreat for the Trump family."

Seven Springs was built in 1919 by Eugene Meyer, the former owner of The Washington Post. Built in the style of a French chateau, it includes 60 rooms and three swimming pools. The property then became part of Yale University, followed by Rockefeller University. Trump bought it in 1995 for $7.5 million, intending to transform it into a private golf course.

Neighbors and local officials resisted his plans because of traffic concerns and environmental degradation, according to planning documents. In 2004 the Trump Organization proposed building 15 homes on the site.. This became stuck in a legal battle as well, as Trump sued to get access to a closed portion of road that ran through an adjacent nature conservancy preserve.

He actually rented it out in 2009 to former Libyan dictator Moammar Gaddafi, who was in New York for the U.N. General Assembly. A Bedouin-style tent with came.-print drapery was built for this. A stop-work order was issued, and it was deemed a private residence with no permits. Gaddafi never moved in, yet Trump bragged that the dictator still "paid me a fortune."

The Trump Organization hired Ralph Mastromonaco in 2010 to develop site plans. He advised building across all three towns and divided it into nine residential lots. Three years later, the Bedford planning board passed a resolution that gave the company "final plat approval" to develop residential lots, along with 26 conditions to meet within 180 days.

That wasn't finished. The town was never reimbursed for hiring engineers and consultants for this. An invoice dated November 11, 2019, shows Bedford is still owed $46,967.63.

Trump signed an agreement in 2015 with the North American Land Trust agreeing to not develop 158 acres of Seven Springs, around three-fourths of the property. The property with mature trees sits next to another nature preserve that held ecological value.

What's in question is the monetary value of the property. Trump sent $32,000 from his charitable foundation shortly after launching his first presidential campaign. It was later ruled a misuse of charitable funds.

Cushman & Wakeman valued the property at $56.5 million, explaining if it wasn't going to be preserved, 24 homes, each worth around $2.1 million, could be built.

The independent appraisers found fault with this. The appraisal doesn't mention the history of developing difficulties. One appraiser noted concerns of a "sleight of hand" technique when it was compared to sales of nearby property. The appraiser noted that 158 acres after conservation have "no economic value of its own."

There was also a lack of value after conservation, despite the easement allowing Trump rights for the land that included hunting, driving, off-road vehicles, building storage facilities, and dividing it up into three parcels. Yet, the report valued Seven Springs at more than $100,000 per acre than other properties that were similar in size.

Eric Trump relied on Washington attorney Sheri Dillon during the easement process. She repeatedly pressured the appraisers to increase the valuations. 

Mostly it sounds like there are just many questions to this, how this property went from being difficult to develop to being so valuable to earn such a huge tax break. But after reading about Trump's history of tax decisions, this just seems like more par for the course.

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