Kerry loan twice as nice
By Ellen J. Silberman and Jack Meyers
Wednesday, February 25, 2004
U.S. Sen. John F. Kerry used an appraisal pegging the value of his Beacon Hill townhouse at twice the amount listed on City Hall records in order to get the $6.4 million loan he needed to resuscitate his presidential bid.
The Kerry campaign says the elegant Louisburg Square townhouse that Kerry shares with is millionaire wife, Teresa Heinz Kerry is worth $12.8 million - exactly double the Christmas Eve mortgage the senator got from Mellon Bank.
But Boston's Assessing Department puts the value of the swank, five-story mansion - with six fireplaces, five bedrooms, a private elevator and roofdeck - at $6.6 million as of Jan. 1, 2003. The assessed value actually dropped from 2002's figure of $6.95 million.
The home's true value is significant since federal election laws allow Kerry to finance his presidential bid by borrowing only against his own assets - prohibiting him from tapping into his wife's millions.
``It could be a very, very big excessive contribution by his wife if, in fact, he's using more than half the real value of the house,'' said Don Simon, a Washington-based campaign finance lawyer who is unaffiliated with any presidential campaign. Kerry Heinz is limited to donating $2,000 to her husband's campaign.
The conflicting valuations also raise questions about the propriety of the loan - taken from Mellon Bank of New England, a subsidiary of Pittsburgh-based Mellon Bank, N.A.Kerry Heinz, heiress to the Heinz ketchup fortune, has a long history with Mellon Bank. The bank also serves as a trustee for The T & J Louisburg Square Nominee Trust, the entity that owns the townhouse.
The Kerry's personal attorney, Paul Bschorr, denied any favoritism.
``It's a straight forward mortgage. Straight off the shelf,'' Bschorr said, adding that he'd seen the appraisal but wouldn't provide it to the Herald.
``I've seen it and it's $12.8 million,'' he said. ``I can't release any documentation. It's confidential.''
The loan was crucial to righting Kerry's campaign, which late last year appeared to be in third place in Iowa and running a poor second to former Vermont Gov. Howard Dean [related, bio] in New Hampshire. Kerry's surprise win in Iowa catapulted him to front-runner status.
``It allowed John to exclusively focus on campaigning in Iowa and New Hampshire without going to any fund-raising events,'' said campaign spokesman Michael Meehan. Meehan said Kerry didn't do any fund raising in January and has only attended two fund-raisers this month, adding, ``He's been really freed up.''
But Meehan said the all-important mortgage complied fully with Federal Election Commission regulations.
``The bank did an appraisal,'' and determined the home is worth $12.8 million, Meehan said. ``Sen. Kerry mortgaged his half of the family home . . . and loaned his campaign $6.4 million.''
A city or town's assessment of a home's value rarely matches what a property sells for on the open market, said Meehan. ``Every homeowner in Massachusetts will understand that,'' he said.
When asked about the wide $6.2 million discrepancy between the city's valuation and Mellon Bank's appraisal, Meehan said, ``Take it up with the city.''
Legally, Boston must assess homes at their ``fair market value'' and City Assessor Ron Rakow said his department does a pretty good job of keeping up.
``It's not unusual to see assessments at about 90 percent of the market,'' Rakow said, noting that city workers visited 19 Louisburg Square to check its condition in July 2002.
The Assessing Department's database shows the home in excellent condition with a modern kitchen and modern bathrooms and ``elaborate'' interior finish, meaning it is unlikely that Mellon Bank's appraiser found new conditions that would have doubled the house's value.
``That's a big difference,'' Rakow said, referring to gap between his value and the bank's appraisal. Meehan also said other luxury properties near Kerry's have sold for amounts in excess of the city's assessed value.
City, county and real estate listing records show that a property at 3 Louisburg Square sold in September for $5.5 million while the city's assessment values it at $4,434,500 - 20 percent less.
Another nearby property at 56 Beacon St. is assessed at $5,057,400 but sold last month for $8,550,000 - a 69 percent premium.
Meehan said he would not provide a copy of the bank's appraisal. ``You can ask the bank if they will turn over the appraisal,'' he said. He said Kerry has already disclosed more than he is required to under Federal Elections Commission law.
Ron Gruendel, a spokesman at Mellon Bank's corporate headquarters in Pittsburgh, said the firm's dealings with the Kerrys are private.
``Our relations with our clients, those are proprietary and we don't discuss those publicly,'' Gruendel said.
However, banks do provide copies of an appraisal to the borrower as a routine matter, meaning Kerry could get his appraisal and release it himself.
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