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PaperclipPerfector  7mo ago (text post)   26370 thread views

Culture War Roundup for the week of September 25, 2023

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I’m typing this on my phone, so I’m not going to mess with links.

First, the county assessor lists Mar a Lago’s market value as $37 million. If it’s true that the judge valued it at $17–25 million, there’s already a major discrepancy. It’s worth noting that Trump paid $12 million for it in 1995, equivalent to $24.3 million today. For the property to be only worth $25 million, the judge has to assume that property values haven’t risen faster than inflation, which seems awfully dubious from where I sit. He also has to assume that the county assessor overvalued the property by 1.5–2.2 times its actual worth, which is interesting given his complaint that Trump has been overvaluing his property. Perhaps he felt the best way to compensate for Trump’s overvaluation was to opt for a noticeable undervaluation?

Secondly, some neighboring properties’ asking and sale prices are instructive. 168 King Rd. (4,874 sq. ft., not ocean-front) just sold for $14 million, against an assessed value of $4.1 million (and a market value of $8.4 million; I’m not clear what the difference between the two is). Another nearby property (500 Regents Park Rd—6,488 sq. ft., ocean-front) is listed for sale at $40 million, against an assessed value of $6.4 million ($12 million market value).

Mar-a-Lago’s main building, by contrast, is 37,414 sq. ft. The property also contains five more buildings, two pools, and five tennis courts, to say nothing of the land. That it’s all worth a measly $17–25 million doesn’t pass the smell test.

Wealth inequality has increased vastly more than inflation and things like Palm Beach estates are limited in supply and the people who buy they have vastly more wealth.

First, the county assessor lists Mar a Lago’s market value as $37 million. If it’s true that the judge valued it at $17–25 million, there’s already a major discrepancy.

The judgement takes its numbers from the county assessor:

From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a - Lago at between $18 million and $27.6 million.

Possibly you're comparing the current valuation to the valuation in the relevant periods?

I also don't think you can reasonably use neighbouring properties prices as a guide to Mar-a-Lago's value when Mar-a-Lago has very different land use restrictions applied to it.

I know you aren’t from the states so you likely don’t have this local knowledge. Property tax values are untethered from actual FMV. The system isn’t designed to determine the real value of property. If you look at real estate, it is often sold well above the assessed property tax value. Indeed in many places even after a sale establishes fmv the property taxes don’t reset the valuation.

Also, land use certainly affects valuation. If Trump tried to sell MAL what do you think he’d get?

I don't have any real idea what it's actually worth. I was initially sceptical of this assertion that property tax values are different from actual values, but it seems legit, so - weird way to run a country, but ok.

But since we're abandoning that as an anchor, we don't have any actual numbers to work with. There doesn't seem to be an actual fair market value appraisal included in any of the court documents. So what we have is a highly unusual property with highly unusual use restrictions. It's very difficult to know what it's actually worth.

Fortunately, I don't think it's necessary to generate an accurate valuation to be able to determine that Trump's valuation was fraudulent. The fact that the 1) use restrictions exist, 2) they are inevitably going to impact the value significantly, and 3) that Trump's valuations assumed they did not exist is enough to satisfy both the judge and myself that he did the wrong thing.

The tax assessment thing is very odd. I learned a lot about it when I bought my house and realized it’s insane.

But I’m not sure your assessment of Trump’s valuation is fraud is accurate. It seems — solely from the comments here — like the judge is making a factual conclusion about the value of MAL and therefore saying Trump didn’t account for the land use restrictions and is fraudulent. Perhaps the judge is simply wrong re value? Citing to the assessor makes me think the judge is just wrong.

Again I think Trump would only be fraudulent is if he told the lenders there was no land use restriction.

It seems — solely from the comments here — like the judge is making a factual conclusion about the value of MAL and therefore saying Trump didn’t account for the land use restrictions and is fraudulent

He's not. He does cite the county assessor's valuation, probably foolishly, but the argument is not "The valuation is above the county assessor's valuation, therefore the land use restrictions were not accounted for, therefore fraud". The argument is "we have Trumps's SFC statements, they don't disclose the land use restrictions, therefore fraud".

Defendants further imply that they may ignore the plain language of the 2002 Deed restrictions because they would likely be able to use the Florida judicial system to get out of their contractual requirements ; they further assert that because they may successfully breach their contract in the future, they were not required to consider the restrictions of the 2002 Deed when valuing the property NYSCEF Doc . 1292 at 48-51 . This argument is wholly without merit. At the time in which the defendants submitted the SFCs, the restrictions were in effect, and any valuations represented to third-parties must have incorporated those restrictions; failure to do so is fraud. Assets values that disregard applicable legal restrictions are by definition materially false and misleading

One I’m not sure there is a duty to disclose a publicly knowable fact. Second, was there an assessment report provided by Trump that stated the value or did Trump merely write a value? it isn’t clear from what you said but it sounds like the latter which means the judge is saying he doesn’t think the value was right because he doesn’t think it properly corrects for land use.

Second, was there an assessment report provided by Trump that stated the value or did Trump merely write a value?

I think he did both. I'm not familiar with exactly how it all works, but perusing the court documents, it seems that he provided a written report describing the properties as well as a spreadsheet breaking down their value.

In this spreadsheet for example he calculates Mar-a-Lago as being worth $531 million in 2012, based on the average price acre of two nearby properties ($25 million), multiplying that by Mar-a-Lago's acreage, and then adding a 30% premium for "completed facility and greater buildout".

So he's explicitly basing its valuation on the price of nearby properties that are not encumbered by the same land use restrictions and making no acknowledgement of or adjustment for those restrictions.

One I’m not sure there is a duty to disclose a publicly knowable fact

In general, no. Certainly Trump had no duty to seek a loan on favourable terms.

However, given that he elected to seek a loan, and that he provided financial information as a part of that loan application, I do think he had a duty to ensure that the information he provided was not knowingly misleading.

The issue is not "is the judge's valuation correct?" (In part because the judge did not make a factual finding; that does not happen on a motion for summary judgment) It is whether the judge's finding that the undisputed facts show that the value claimed by Trump was higher than the actual value is so unreasonable that it can only be the product of corruption or stupidity.

And, the problem with your discussion of the amount the Mar A Lago "should" have appreciated, is that, as the court emphasizes, subsequent to Trump's purchase, substantial land use limitations were attached to Mar A Lago. Which obviously is going to reduce the value of the property. Note also that the decision says that from 2011 to 2021, the assessed value of the property ranged between $18 million and $27 million, which is indeed substantially more than inflation (the BLS inflation calculator tells me that $18 million in Jan of 2011 was equivalent to just under $23 million in Dec of 2021)

Edit: Note also that Trump's attorneys were free to submit evidence that the County's assessment was inaccurate. Did they? There is no evidence that they did.

And while 500 Regents Park Rd might be listed at $40 million, Zillow tells me that it sold in March of 2020 for $7.5 million, compared to its assessed value of at the time of $3.2 million. And that is the relevant time period: The time when Trump et al filed documents claiming what Mar A Lago was worth (again, the decision says that the time period in question was 2011-2021).

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