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How to Buy a Mansion You Can't Afford (The Obamas)
No Quarter ^ | 2/4/08 | City Nell

Posted on 06/04/2008 5:19:15 PM PDT by freespirited

 
 
 

The Obamas’ new home has received a lot of attention in the corporate media and on the blogs. This post will discuss other perspectives.

Hyde Park, where the Obamas have lived since 1994, is home to the University of Chicago (UC) Law School and at least one of UC's hospitals. Leo Struass taught in the university's Committee on Social Thought. The Federalist Society was born at UC, and it is the alma mater of many Neo Cons, including Supreme Court Justice Antonin Scalia.

Kenwood, where the Obamas’ new home sits, is a small neighborhood, only 1.09 miles in area. It is bound on the south by Hyde Park, on the north by North Kenwood, and on the west by the neighborhood of Highland. Kenwood was once one of the most elite neighborhoods in all of Chicago.

This map shows the juxtaposition of the Hyde Park and Kenwood neighborhoods:

kenwood.jpg

According to 2000 census figures, both neighborhoods boast racial diversity.

Group Identification Hyde Park Kenwood
White 15.9% 43.5%
Black 75.7% 37.7%
Hispanic 1.64% 4.11%
Asian 4.27% 11.3
Other 2.52% 3.39%

A census commissioned by Century 21 Real Estate in 2005 reveals how Hyde Park and Kenwood are comparable in almost every category, with Kenwood having the smaller population.

Neighborhoods Hyde Park Kenwood
Population Estimate 22,600 9,514
Avg. Family Income 81,800 88,839
Median Age 39 45
% of Population with Bachelors Degrees 21.03% 21.75%
% of Population with Postgraduate Degrees 42.49% 32.14%

The Obamas had decided that politics was Barack's ultimate future while still dating. In 1991, then Michelle Robinson, who was then Obama's fiance, left her job at the law firm of Sidley Austin Brown & Wood. She went to work for the city of Chicago, first as an assistant to Mayor Daley, then as the Executive Director of Public Allies Chicago, a nonprofit that provides leadership training to young adults interested in public service careers.

In 1996, she left the Public Allies to help create a student volunteer program at The University of Chicago. By the time of this interview, she was the Executive Director of Community Affairs for The University of Chicago Hospitals. This is how Michelle portrays her change of career:

She was devastated when her father died from MS complications. “That’s when I started analyzing my life, sitting in a firm,” she recalls, adding that in that same year she also lost one of her best friends from college to cancer. She soon left the firm to pursue a much lower-paying path in the public sector.

The fact is Michelle was actively recruited for City Hall by a close friend, Valerie Jarrett, who was Mayor Daley’s Deputy Chief of Staff at that time. Valerie later became the Finance Chair of Obama's 2004 US Senate campaign and then First Treasurer of Barack's political action committee, Hopefund.

It helps to have friends at City Hall. Among other positions, Michelle was appointed twice to sit on the board of the Commission of Chicago Landmarks for two consecutive terms. Michelle maintained this board seat from 1998 to March 2005, although normally a member only serves one 4 year term.

Flush from the success of Barack's speech at the 2004 Democratic National Convention, the Obamas decided it was time to find a residence more fitting for their anticipated new status. Barack's 1995 autobiography Dreams of My Father soared, and they knew Alan Keyes was no threat to their future success in the US Senate elections.

Sitting on the Commission of Chicago Landmarks board, Michelle knew of a permit, waiting for review and approval to sell, for a designated Historical Georgian revival home built in 1910 with four fireplaces, glass-door bookcases fashioned from Honduran mahogany, and a 1,000-bottle wine cellar owned by a doctor in Kenwood. The Commission is supported not only by donations and taxes but also by charges for permits. It's a pretty extensive process, and they want a complete history of the house and property when a permit is requested. Once the Board approves a permit, the application goes to the city planning or zoning commission if more than a simple sale is involved.

The doctor who owned the Kenwood home wanted more than the Obamas could afford. As Barack has stated in numerous press interviews, buying the home would be a stretch. Barack contacted his patron Tony Rezko, despite knowing he was under investigation at the time, in order to see what could be done so the Obamas could afford their dream house. Sub-division was likely the agreed-on solution. In order to divide the lot, which the doctor purchased as one entity, he would have to:

– Hire an approved architect and general contractor, who had been involved in renovations and sub-divisions in Kenwood previously

– Have the lots surveyed and new plot plans drawn

– Re-start the Landmark Commission permit approval process

– Hold a public hearing (required).

On page 51 of the Commission on Landmarks Ordinances, one finds a justification for the doctor agreeing to subdividing the land.

The applicant bears the burden of proof that the existing use of the property is economically infeasible and that the sale, rental or rehabilitation of the property is not possible, resulting the property not being capable of earning any reasonable economic return.

Pages 51 and 52 of the Landmark ordinances show how many proofs and other forms of extensive documentation are required in order to subdivide the land. Can any rational person believe the doctor would have been willing to go along with having his property sub-divided, and all the work and time involved, without compensation and assistance? Who paid for this?

With Michelle sitting on the Landmarks board, Commission approval wasn't expected to be an issue, even though I have not located notice of the Public Hearing from any of the involved boards. From there it would go to the City Planning Board and the Zoning Boards, which also require public hearings. Each of these steps average between 6 weeks and 3 months to complete.

The doctor’s property was located in what Chicago Zoning Terms refer to as Residential Single zone 1, or RS1. This means the house the Obamas bought required 6,250 sq. ft of area. Even if it had the designation lowered to RS2, it still would have required 5,000 square feet, as seen on page 5 of Chicago's zoning ordinances. Starting on page 8, the ordinances specify setbacks and how much space must be available on each side of a building. The open space on the building's sides normally conform to Fire Regulations, so that equipment can access all portions of a building during crises.

Public Records at the Chicago Commission on Landmarks, the Chicago Planning Department and Chicago Zoning Boards would show the exact dates of permits, hearings and approvals. Michelle was so confident she listed the Obamas’ condo, which was located on the first floor of a Hyde Park Brownstone. In October 2004, Michelle expressed surprise to a Chicago interviewer that the Condo had sold so quickly, which meant they either had to put off a closing date or write in a lease agreement for a specified amount of time in their Condo purchase contract.

2004 was a year flush with success for the Obamas: the autobiographical book sales increased; the DNC speech had been well received; Obama won his US Senate seat; and Michelle received a recent promotion to a $316,962-a-year position as Vice President at The University of Chicago Hospitals. Their income was over 1.67 million dollars, with anticipation of even greater gains ahead.

All that needed to be done, in the name of the doctor, on the Kenwood property was completed by March 2005, and the house was finally listed. Michelle Obama resigned her seat on the Chicago Commission on Landmarks at the same time. Barack and Michelle closed on their new home in June of 2005, for $1.65 million dollars, $300,000 less than the asking price, and most likely using the proceeds of their Condo for a down payment, while taking out a mortgage for $1.32 million from Northern Trust. Tony Rezko's wife purchased the newly divided sub-plot for the full price of $625,000 and closed on the same day.

The City of Chicago requires parking permits, or people must rent space at parking garages for around $30 per diem. There is no overnight on-street parking. The Obamas had no yard to park on, and most likely parked on Rezko's property.

Within in a month of purchasing their new home, the Obamas began the same process the doctor previously went through. Because Tony Rezko was being indicted, they needed to be distanced from him. So the Obamas hired a lawyer and an architect. Additionally, the Obama’s wanted to put up a fence separating the two properties. On page 21 of the Landmark Ordinances above, it states fences for Historic homes can be no more than 5' high and must not be visible from the street. If the Obamas had purchased a prefab chain, picket or wooden fence, they would have lost the Historic designation and also the eight-year property tax freeze benefit accrued by agreeing to keep the house in conformance with Landmark regulations.

A picture of the front view of Obamas’ house reveals landmark and zoning requirements.

obamashome.jpg

The concrete wall and evergreens were most likely done after the city appropriated land for sidewalks, and the paving of what has been noted as a wide and busy thoroughfare. If you notice, the trees were planted one to two feet behind the concrete wall, most probably a result of zoning constraints.

The new fence was specially fabricated to conform to historic standards, and the $14,000 cost was billed to Rezko per agreement by Obama and Rezko. Obama states he paid for the architect and Lawyer. Strangely enough the fence actually sits ON the property line between the two lots. Obama agreed to yard maintenance for both properties. And given Obama's history with the Harvard Law Review and his limited known court experience from public records, Obama most likely either edited or personally wrote the legal documents for his sub-division and the fence. On January 12, 2006, the Obamas closed on the 1/6th of Rita Rezko's property they purchased for $104,500.

Facts not specifically cited above, and much more, can be found in this Chicago Tribune article.

This MyDD diary features a special video from NBC news that provides broader views of Obama's property. The diarist makes note of an SUV sitting on the 1/6 new parcel of Obama's land.

In all likelihood the driveway was previously on Rezko land. Behind the house is most likely an old carriage house converted into a garage. Parking on the street in that type of neighborhood is prohibited by zoning and fire safety laws, unless someone in authority had been previously notified of a large gathering.

One other event of note occurred in 2005. Daniel Mahru, Rezko’s partner in Rezmar for 16 years until the two men had, according to Mahru, “a difference of opinion," resigned from Rezmar, Rezko's slum landlord operation. Did Mahru leave because he knew any shady deals while Rezko was being investigated would lead to disaster?

There were lots of people involved in the purchase of the Obamas’ house, and they would all be owed some kind of consideration for their help and support. Obama's favors from Rezko amount to $925,000, plus an additional $14,000 for the fence, bringing the total cash value to just one person to $939,000.

Will Rezko sit quietly in jail or will he bring Mayor Daley, Governor Blagojevich and Senator Obama down with him?

How will Obama repay the “favors” he owes all these people?

I am sure Patrick Fitzgerald will reveal all these connections and much more in Rezko’s upcoming trial at the end of this month.



TOPICS: Politics/Elections; US: Illinois
KEYWORDS: obama; obamamansion; obamatruthfile; rezko
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Needless to say, no Republican could get away with such a sleazy real estate transaction.
1 posted on 06/04/2008 5:19:15 PM PDT by freespirited
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To: freespirited

Jury finds political fundraiser Tony Rezko guilty on 16 of 24 counts in Ill. corruption trial

By MIKE ROBINSON, Associated Press Writer CHICAGO (Associated Press) -- A prominent fundraiser for Sen. Barack Obama and Gov. Rod Blagojevich was convicted Wednesday of fraud and money laundering after a high-profile federal trial provided an unusually detailed glimpse of the pay-to-play politics that has made Illinois infamous.

Antoin "Tony" Rezko, 52, showed no emotion as the jury delivered a mixed verdict that found him guilty of scheming with the government's star witness to get kickbacks out of money management firms wanting state business, but acquitted him of charges that included attempted extortion. z,p. The jury delivered its guilty verdict on 16 of 24 counts after a nine-week trial.

Rezko has known Obama since he entered politics and was involved in a 2005 real estate deal with the Democratic presidential candidate, although testimony barely touched on their relationship. Most of the focus was on shakedowns prosecutors said Rezko arranged when he was a top adviser to Blagojevich.

Neither Blagojevich nor Obama has been accused of wrongdoing.

Rezko's defense attorneys maintained that the government had little evidence tying him to corruption and that the star witness, admitted political fixer Stuart P. Levine, was not credible because years of drug use had damaged his memory.

Levine was a member of a state board that decided which hospitals got built and was on a panel that decided which investment firms got allocations from a $40 billion fund that pays the pensions of retired teachers.

While Obama's name rarely surfaced during testimony, the case drew attention to Obama's relationship with Rezko, a man Sen. Hillary Rodham Clinton derided in one televised debate as a "slum landlord."

Rezko, a real estate developer and fast-food entrepreneur, had been friendly with Obama for years, even offering him a job after Obama finished law school. Obama turned down the offer, but a political friendship developed.

Rezko donated more than $21,000 to Obama and raised far more for his campaigns in Illinois, though not his presidential bid.

He also advised Obama on the purchase of a new Chicago home and, in his wife's name, purchased a vacant lot next to the new Obama home at the same time from a couple who insisted on selling both pieces of property simultaneously. The purchase raised questions about the extent of his help. The charges against Rezko had nothing to do with Obama, who has donated $150,000 in Rezko-related contributions to charity.

Rezko, 52, was charged with scheming with Levine to split a $1.5 million kickback from a contractor who wanted to build a hospital in northern Illinois and to shake down money management firms wanting to invest in the teacher pension fund.

Rezko denied he had anything to do with such a scheme.

Rezko attorneys claimed that once FBI wiretaps picked up Levine talking about payoffs and other corruption he needed to provide federal prosecutors with a "big fish" like Rezko in order to get a deal and avoid a possible life sentence.

Levine did make a deal with prosecutors under which instead of life he will probably get a 5 1/2-year prison sentence and forfeit $5 million. He admitted on the stand that for 30 years he attended twice-a-month marathon drug parties, where he shared drugs including cocaine and crystal methamphetamine with male companions.

Rezko attorneys said Levine's brain had been so badly damaged that he couldn't recall what Rezko had said and done years ago.

2 posted on 06/04/2008 5:24:45 PM PDT by Lady GOP
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To: freespirited

Too complicated. Unless the Obamas did not really pay anything for the strip of land the strip of land story is just a distraction.

The scam about the initial transaction is simpler. The Obamas offered $1.6 million, the sellers wanted $1.9 million. The Obamas say “would you take that if we find a buyer for the adjacent property?” Sellers agree to $1.6 million for the house property and $600,000 for the empty lot. IOW, the Obamas got $300,000 from the Rezkos laundered through the property transactions. They got something for $1.6 that is worth $1.9.


3 posted on 06/04/2008 5:32:53 PM PDT by Shermy (Has there ever been two presidential candidates more phony than McCain and Obama?)
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To: freespirited

I have a very good legal source in Chicago that tells me the the Gov. is going down as well. That he will be indicted and serve time. The question is whether or not they will both keep quiet or try to get shorter terms.
Also..from nearly the same source..the big increase in salary for Michelle concurrent to the grant to UC Hospital is a very sensitive issue. Bringing it up with a UC manager caused a very combative answer as a recent dinner party.


4 posted on 06/04/2008 5:32:59 PM PDT by Oldexpat
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To: Oldexpat
the Gov. is going down as well. That he will be indicted and serve time.

Most of our governors do, from both parties.

5 posted on 06/04/2008 5:35:00 PM PDT by Graybeard58
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To: Lady GOP

“purchased a vacant lot next to the new Obama home at the same time from a couple who insisted on selling both pieces of property simultaneously.”

Not true, but clever Obamaganda. Seller did not demand sale of both properties simutaneously. Obamas only offered on the house, but did not have enough financing. Seller demanded sale of both properties simultaneously as part of a package deal to sell the Obamas the house at a lower price.

You can count on this tactical misunderstanding to be part of the regularly heard Obama spin.


6 posted on 06/04/2008 5:36:44 PM PDT by Shermy (Has there ever been two presidential candidates more phony than McCain and Obama?)
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To: Shermy

Is this the community he organized?


7 posted on 06/04/2008 5:42:06 PM PDT by Jet Jaguar (Who would the terrorists vote for?)
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To: freespirited

“2004 was a year flush with success for the Obamas: the autobiographical book sales increased; the DNC speech had been well received; Obama won his US Senate seat; and Michelle received a recent promotion to a $316,962-a-year position as Vice President at The University of Chicago Hospitals. Their income was over 1.67 million dollars, with anticipation of even greater gains ahead.”

I understand a lot of this article sounds sleazy/corrupt, but if their income was 1.7 million, they easily qualify for a 1.3 million loan. Flame away.


8 posted on 06/04/2008 5:42:20 PM PDT by gate2wire
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To: Shermy

I think it’s a little sleazier than that. The sellers wanted 2.5 million for the whole shabang as one unit—the way they bought it. The Obamas couldn’t afford anything like that at the time so they proposed to the sellers that it be subdivided into two parts—house and side lot. Then Obama got Rezko involved, who offered full price for the lot (600K), leaving 1.9 million to go for the house side.

With Rezko paying full price for his side, Obama was able to get a 300K discount on the house part. There is no access to this supposed Rezko lot except through Obama’s property. Now, who plunks down 600K for a piece of land he can’t use?


9 posted on 06/04/2008 5:44:25 PM PDT by freespirited (Difference #1 between McCain and Obama: McCain is actually qualified to be president.)
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To: Beckwith

excellent!


10 posted on 06/04/2008 5:47:53 PM PDT by dennisw
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To: gate2wire

The allegation is not that they received a mortgage improperly. Obama has explicitly said that they could not afford to buy both the house and lot at the time and therefore could buy only the house side.


11 posted on 06/04/2008 5:51:32 PM PDT by freespirited (Difference #1 between McCain and Obama: McCain is actually qualified to be president.)
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To: freespirited

The Obamas bout at the absolute top of the national housing bubble. Michelle probably hounded Barack until he bought a house, this house. Women go house crazy and church crazy, she kept them in that racist church


12 posted on 06/04/2008 5:51:44 PM PDT by dennisw
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To: gate2wire

Excellent point.


13 posted on 06/04/2008 5:52:18 PM PDT by yankeedame ("Oh, I can take it but I'd much rather dish it out.")
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To: freespirited

Understood.


14 posted on 06/04/2008 5:55:00 PM PDT by gate2wire
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To: yankeedame

Thank you.

Even if one ignores husseins book royalties, his $180,000 senate salary and her $300,000+ salary, make them pretty well off.

This country sure does suck if you’re not white. :-)


15 posted on 06/04/2008 5:59:31 PM PDT by gate2wire
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To: freespirited

So this is what passes for a Mansion? It looks too small and worn out to qualify as a Mansion.


16 posted on 06/04/2008 6:01:44 PM PDT by Doe Eyes
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To: freespirited
With Rezko paying full price for his side, Obama was able to get a 300K discount on the house part. There is no access to this supposed Rezko lot except through Obama’s property. Now, who plunks down 600K for a piece of land he can’t use?

Especially since the land is in a Historic district, where there is no chance of a building being built by an average joe. A friend of a senator and govenor is probably a different story.

17 posted on 06/04/2008 6:16:06 PM PDT by sharkhawk (Here come the Hawks)
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To: Oldexpat
Also..from nearly the same source..the big increase in salary for Michelle concurrent to the grant to UC Hospital is a very sensitive issue. Bringing it up with a UC manager caused a very combative answer as a recent dinner party.

Is Michelle still working for the Hospital?

After Michelle Obama leaves/left the hospital position what will the salary level be for her replacement. Will the replacement get the low base pay or the Senator's wife pay level and how will they justify that?

18 posted on 06/04/2008 6:21:15 PM PDT by RJL
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To: freespirited
Valerie Jarrett, trustee for the University of Chicago and the University of Chicago Hospitals, addresses the crowd at the ribbon-cutting ceremony.

Valerie Jarrett

Valerie Jarrett, trustee for the University of Chicago and the University of Chicago Hospitals, addresses the crowd at the ribbon-cutting ceremony.

 

19 posted on 06/04/2008 6:23:34 PM PDT by dennisw
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To: gate2wire

That’s $500,000 in salaries. Where did the other $1.17 million in income come from? All from book royalties?


20 posted on 06/04/2008 7:12:42 PM PDT by VanShuyten ("Ah! but it was something to have at least a choice of nightmares.")
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