putnam south florida tax break ethics

Government Multiplied Insider's Ranch 4 Times Over
inspector general sweeten the deal appraiser

Ex-Congressman Got Millions in Land Deal

Current Ag chief Adam Putnam got rich in ‘05 selling land $20 million above appraised value -- which is what happens when we pay owners for land instead of pay neighbors. This 2012 article is from the Palm Beach Post, Jun 10.

by Christine Stapleton

Adam Putnam -- former congressman, current commissioner of agriculture, and widely viewed as the future of Florida politics -- became a very rich man in 2005 when taxpayers spent $25.5 million on 2,042 acres of his family’s ranch that had been valued at $5.5 million a year earlier.

The South Florida Water Management District needed only 600 acres of the ranch in Highlands County for environmental purposes. But it bought all 2,042 acres and did it in a way that arranged for the Putnams a lucrative tax break, while allowing the family to continue grazing cattle on the land rent-free until the district needed the land. After paying the family’s attorney $3.9 million in legal fees, the total deal cost taxpayers nearly $30 million.

Seven years later the district has used only 150 acres and has no plans for the rest. The Putnam cattle graze on, courtesy of Florida taxpayers.

Putnam was a congressman at the time of the deal. Congressional ethics rules do not bar such real estate transactions as long as Putnam did not use his position to sweeten the deal. Putnam said his older brother Will negotiated the deal for the family.

Adam Putnam’s financial disclosure reports show his income from the family business jumped from under $100,000 in 2004 to between $1 million and $5 million after the deal.

As the district negotiated deals, its inspector general repeatedly criticized its acquisition strategies. Inspector General Allen Vann wrote that the District’s appraisal process lacks essential controls and recommended appraisals be competitively bid and that the independence of the district’s own appraisers be protected by separating the appraisal section from the land acquisitions section. In other words, the people orchestrating the deals shouldn’t be able to influence appraisals.

Vann also criticized the district for letting landowners in the deals have a say in the district’s appraiser selections. All of those criticisms were ignored during the Putnam negotiations.

Despite the inspector general’s criticisms, the Putnams were consulted in the selection of appraisers. The Putnams and the district agreed on an appraiser.

The district, in justifying the price, said that the $12,500 per acre was below the average price of $13,946 that it paid for all the other land it bought that year. However, the $13,946 reflects all types of land -- from a several hundred-acre park to thousands of acres of ranchland -- from Orlando to Key West.

The district arranged a “friendly condemnation” lawsuit, which ended with the Putnams getting 30 percent above the appraised value and other perks. Among them: a rent-free lease without an expiration date; and a tax break available to landowners under threat of condemnation, which gives them more time to buy new land to offset taxes that otherwise would be due on the sale of the old land.

The friendly condemnation also assured the Putnams’ attorney, Prineet Sharma, $3.9 million in attorney fees. The friendly condemnation worked like this: The district filed the lawsuit on July 14, 2005, which left no doubt that the Putnams had been threatened with condemnation and qualified for the tax break. The next day, the district settled the suit and the deal was done.

For years the district tried to buy the Putnams’ land to help restore the natural flow of the Kissimmee River.

The Putnams have been widely known in Florida’s agriculture industry for decades. Adam Putnam was elected to the Florida House of Representatives in 1996, rising to chair the body’s Agriculture Committee. He grabbed the national limelight in 2001 when, at 26, he became the youngest member of Congress.

In February 2006 he became chairman of the Republican Policy Committee. By the end of that year he was elected head of the Republican Conference, the third-ranking minority leadership position. In 2010, Florida voters elected Putnam the state commissioner of agriculture.

Vann, currently audit director at Florida International University, stood by his reports when contacted in April but declined further comment. Ruth Clements, the district’s land acquisitions manager who negotiated the Putnam deal, retired on May 22 and declined an interview.

And the cows graze on.

To read more

JJS: By the way, what did Putnam's family do to their land so intensely that later the public must come by and restore it for the good of all?

Here's another ethical question. While it is wrong to fraudulently appraise and to rob the public blind, is our system of paying individuals for land instead of pay one’s community a bigger wrong? No owner made land, no lone owner made it valuable -- the market does that (as the article noted), and the market is the part of community who’re actively seeking to buy (or lease) more land.

Further, the owner who is selling (or leasing) is abandoning their particular parcel for greener pastures; why should s/he be paid to vacate if that’s what they want to do anyway?

While paying one’s neighbors for land may seem odd, it is what happens in most US port districts, which are publicly owned, in Hong Kong, which exists on public land, in Singapore, which taxes land up to 10% of selling price, and in the planned Garden Towns of England where land is owned by a corporation of residents and investors. The results in all these places -- such as more vibrant economies and more attention to esthetics -- show that the public recovery of the socially-generated value of land does work for the good of all. Plus -- and a big plus -- it makes possible the elimination of taxes on our salaries, sales, and structures.

Finally, if we did understand that the worth of Earth should be (part of) our common wealth, then such shady dealing as over-appraising land would be much more difficult to pull off. Insiders might still have the means but not the motive, since they could not reap any more profit from a land deal than any other member of their society. It’s called geonomics and it’s both effective and ethical.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

If the state won’t collect the commonwealth …

During this bottom, who catches a break?

Family farmers worse off despite high prices

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