Why Is Land Ownership So Secret?

Digging Into Land Ownership

by Harris Worcester

When the special session of the Legislature was considering Governor Briscoe's proposal to tax farmland on the basis of what it can produce rather than on its market value,one or two members had the presence of mind to ask: exactly who are the big owners of this land? No one knew.

Because of the inadequcy of public records, it is practically impossible to figure out who really stands behind the stretches of barbed wire that parcel off Texas' farming and ranching areas, but the few shreds of evidence one can glean from public and private sources indicate that Farmer Jones and his family are no longer alone in the countrlside. Increasingly. their "neighbors" turn out to be all sorts of outsiders: U.S. corporations. land speculators from the city and--to a startling extent--out-and-out foreigners.

Hailing from such countries as Italy, Japan, Germany, and India, these new Lone Star landholders do not represent another wave of immigrant yeomen, like the hardy souls from abroad who settled throughout Texas in the 19th century: rather, these are extremely wealthy individuals and corporations -- absentee landlords seeking a safe-yet-profitable haven for their millions.

To date, foreign interests account for a small percentage of the corporate gentry that is buying Texas soil, but the discovery that they are here at all has intensified alarm among farm groups about the general rise of non-family ownership and about the lack of public information to document the trend.

What we know

All observers agree that less than 1 percent of the nation's farmland currently is in foreign hands, but they also agree that the rate of purchases by foreigners is increasing dramatically. Jules Home, director of the International Real Estate Institute in Belgium (a holding company that assists foreign speculators), estimates that $1 billion worth of U.S. farmland was bought last year by interests ahroad, with most of the acreage being picked up in California's San Joaquin Valley, the Corn Belt states, and Texas. Official government estimates are that foreign purchases amount to about 20 percent of U.S. farm sales today, but private sources say that's an understatement -- the president of AMEREX, the largest U.S. real estate chain assisting foreign clients, claims the true figure is double the government's, and that in some "hot" areas like California, alien investors stand behind as much as 60 percent of current farmland transactions. AMEREX president Gerald Jackson concludes that foreign money has become the dominant force in U.S. agricultural investment.

Rumors of such purchases are rife in Texas, but hard to confirm. For the most part, foreign investors have moved in quietly, often chartering corporations with ordinary-sounding names in third countries to handle their U.S, investments. Moreover, these firms do not deal directly with Texas sellers; instead, they employ U.S. real estate agents, bankers or lawyers to handle purchases without revealing the identity of the buyers. And courthouse deed registries, the only places where a land transaction is likely to be recorded, are a monument to obfuscation, so even when you know which county the land is in, chances are slim that the true owner's name will appear in the records.

After weeks on the phone tracking these rumors through farm organizations, foreign consulates, public records and real estate agents, the Ohserver was able to tie down only these few specifics:

• Prince Franz Josef, the 72-year-old monarch of tiny Liechtenstein, acting through a Paris, Texas, lawyer, purchased a 16,916-acre ranch from the heirs of a northeast Texas farmer last August. Centered on the confluence of the North and South Sulphur rivers, the property encompasses parts of Franklin, Hopkins. Red River, Lamar and Delta counties and is a third the size of His Serene Highness's homeland. [Publisher's note: since this article was written, Prince Franz Josef has become a welfare queen, receiving checks from the U.S. government in return for not growing crops on his land. Just thought you might like to know.]
• The Texas Farmers Union has just launched a "land ownership task force," using its local members to serve as watchdogs of land purchased by foreign interests, and task force member Stan Swanson came in with this early report from Dallam County: in 1977, Italian investors bought three sections of land near Dalhart under the name of Jacki Enterprises, which is chartered in Curacao, one of the Caribbean islands that comprise the Netherlands Antilles. (Foreign buyers of U.S. land like to incorporate in this Dutch territory because the terms of a U.S.-N.A. treaty provide that a N.A.-chartered corporation's income from real property is taxable only in the country in which the corporation is actually headquartered.) Jacki also is negotiating to buy another two sections of Panhandle farmland (in addition to a New Mexico ranch and a Florida orchard), but Swanson hasn't yet pinned down the location. He also reports tht a Holland resident, Tom Mellena, has purchased 160 acres in Dallam County (through a firm called Country Corporation). Swanson also notes that investors from India and the Mideast have purchased several motels in Dalhart (well, international shoppers do need a place to sleep while browsing through the Panhandle).
• Another Italian investment group operating through the Netherlands Antilles, Movenpick N.V. Corporation, bought 1,350 acres of Brazos River bottomland in Brazos and Robertson counties in a transaction handled by City National Bank of Bryan. (CNB is a wholly owned subsidiary of First City Bancorporation. the Houston brtnkholding company whose board of directors (including John Connally, former ambassador to Britain Anne Armstrong, and top executives of Exxon, nuclear power company Brown & Root, and LTV) is internationally oriented. FCB has international offices in London, Nassau, Tokyo and Singapore.)
• Realtors are a secretive group, but it was possible to drag some general infermation out of a few of them. National real estate agencies, such as AMEREX and Oppenheimer Industries, now list Texas farms and ranches, and AMEREX president Jackson told the Observer that his firm sold "seven pieces of land scattered around Texas about six months ago" to a Canadian group. EuroTex Investments, a Houston company catering to West European clients, sold 4,000 acres in Northeast Texas and is closing a piece-by-piece transaction in West Texas involving 15,000 acres. The Henry S. Miller Company of Dallas, which not only maintains branches throughout Texas, but also boasts three European offices, has negotiated the sale to foreigners of some 10,000 acres of Texas agricultural land. Across the border in Clovis, New Mexico, a relatively small agency, Denn Eldridge, claims to have sold several thousand West Texas acres to an international clientele.
• Less specific reports of foreign buying include: two sizable tracts near Paris, one purchased by a West German partnership and the other by a Panamanian firm; a ranch near Carrizo Springs bought by a German; large tracts of prime Red River bottomland near Texarkana being eyed by European investors; and an Austin-area ranch that a Canadian broker might buy on behalf of a German client.
• An ironic aside: The W. R. "Bob" Poage Building in Temple houses federal offices there and is named for the area's 42-year incumbent congressman, who served for many years as chairman of the House agriculture committee. It turns out that the Poage Building is now owned by Moks Corporation N.V., another Netherlands Antilles front headed by Dr. Hy Mok of Hong Kong.

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Tomorrow, Part Two: "Does foreign ownership matter?"