Obama's bargain basement garden view

There are just too many unanswered questions and too many coincidences involving Sen. Barack Obama (D-Ill.) and his personal real estate fairy, convicted political fixer Antoin "Tony" Rezko, to let go of the issue of that unimproved garden lot adjacent to the Obama townhouse.

Let's look at some facts. On June 15, 2005, Rita Rezko, Tony Rezko's wife, closed on the lot in the same-day transaction as that of the townhouse by the Obamas. Seven months later, on January 11, 2006, Rita Rezko, for $104,500, sold to Sen. Obama the 10-foot wide strip of land that was immediately adjacent to his property, reducing the original 60-foot wide, 150-foot deep lot to 50 x 150.

As RezkoWatcher KL pointed out a few days ago,

For just another $104,500 (or $104,000?), Obama got the most important functional benefit of the entire lot, even though on paper he does not own the whole lot:

He gets some additional space, and, apart from an unobtrusive wrought iron fence marking the new property line, he keeps the view. (A very nice view. And I'll bet that the current equitable owners would be willing to rent him the use of that extra land for special occasions like birthday parties etc., maybe even let him park a car on the back of it.)

From a financial perspective, he got everything except the right to call 5/6ths of that lot his own—all for the great price of $1.65 million + $104,500 = $1.7545 million. Quite a discount from the original $2.25 or $2.35 million he would have had to pay for the whole thing.

The question has lingered as to why did Sen. Obama only purchase a 10-foot wide strip when he could clearly have purchased more. The Obamas combined taxable income for 2005 was $1,542,698. They paid out $545,000+ in federal taxes and an additional $13,950 in Illinois state taxes. Investing those tax dollars into real estate, by purchasing the whole lot, would surely have been a better investment.

The second fact is, coincidentally or not, on that magic date of January 11, 2006, the Chicago City Council passed a rezoning ordinance that changed the former R-5 designation to RM-5. The new zoning ordinance had an effective date of February 8, 2006. The former simple residential designation for the lot was changed to residential multi-family zoning.

The Chicago Zoning Code Summary shows RM-5 as Multi Unit (3 1/2 - 4 stories), between 45 and 47 feet in height; allowing 400 square feet minimum per unit; with a 15-foot setback or 12% or average depth of the nearest 2 lots; greater than 36 square feet or 5.25% or rear yard open space and greater than 30% or 50 feet rear yard setback; and total 20% and each side minimum of less than 2 feet or 8%.

RW does represent to understand how these calculations would play out on paper, but it would appear that the 50 x 150 lot would allow for very curious building construction.

Keep in mind that the RM-5 zoning does not take into account any additional restrictions based on the fact that the lot resides within the Kenwood Historic District.

So, let's turn to a real estate listing sheet for the corner lot that predates the January 11, 2006, sale of that 10-foot wide strip of land. On a sheet dated February 15, 2005, the property is described thusly:

If you want to build the house of your dreams this is the lot for you. 60 x 150 is next to totally restored mansion lot begins twenty feet from south end of house. Please bring in all pre approval letters. This lot is in Historic Kenwood.

This means that when Rita Rezko closed on the corner lot on June 15, 2005, it was advertised as the perfect lot for a dream house next to a "totally restored mansion." On January 11, 2006, when Rita sold that 10-foot wide strip of land, she was unloading to Sen. Obama a piece of a lot designated to be rezoned as RM-5 on February 8, 2006.

In this single maneuver, the Rezko-Obama transaction created a 10-foot wide instant buffer between the rezoned multi-unit lot and the Obama townhouse (i.e. the "totally restored mansion"). Most likely, in effect, this ensured that the remainder of the lot would not be built upon by someone wanting to construct a multi-unit dwelling.

Nearly eleven months later, Tony Rezko's real estate attorney, Michael Sreenan, purchased the 5/6 remainder lot. As RW wrote on March 23, 2008, in December 2007 the Hyde Park-Kenwood Community Conference (HPKCC) Preservation and Zoning Policy Committee was not in favor of Sreenan's proposal.

[Long-time Obama supporter Toni Preckwinkle, 4th Ward Alderman,] objected first that the developer did not volunteer that he did not have Landmarks Commission approval, second to the designs and possibly in principle to 6 units in a landmark district based on hundred year old single family mansions. Note that the building would be sited on Hyde Park Blvd., which already has such units all along it (as well as Congr. KAM), but is thought inconsistent with Greenwood Ave. extending northward from the site. The Kenwood Open House Committee, which oversees the district for the city, is also concerned but want[s] to see more. Sreenan says he is only vetting concepts at this time and his options are open.

RW previously wrote: On February 28, 2008, the Chicago Sun-Times' Tim Novak reported Sreenan said he had a "contingent contract" and three or four offers for the lot. However, as indicated in the HPKCC report above, "Whoever buys the land will need the city's OK to build there because it's in the historic Kenwood district."

Novak also wrote

One prospective buyer, who wants to build a single-family home, has met with Ald. Toni Preckwinkle (4th), who says she wants to make sure that whatever's built is compatible with the neighborhood's mansions. Preckwinkle -- an Obama delegate to the Democratic National Convention -- says she rejected a developer's plans to put up condos there. Too "ugly," she decided.

What really happened here? Well, Rita Rezko and Michael Sreenan became place holders for the 5/6 lot.

As RezkoWatcher KL stated, "Obama got the functional value of a $2.35 million house for $1.7545 million."

As of March 25, 2008, the lot has new owners, John D. and Marjorie S. Poulos, who paid $675,000 declared value to Micheal Sreenan. Like Sreenan, they will have to pitch their building plans to Alderman Preckwinkle and the HPKCC.

Is it likely that Mr. and Mrs. Poulos will be successful in their efforts? RW seriously doubts it, and here's why—Alderman Preckwinkle used her political strongarm to keep Alice Palmer out of that Illinois State Senate seat that Sen. Obama got. It's unlikely that someone is going to build a 45- to 47-foot high structure smack-dab on the corner of North Greenwood Avenue and Hyde Park Boulevard and obstruct the Obamas' corner garden view.

The lingering question is what does this whole real estate transaction mean? Did Sen. Obama illegally or unethically benefit from it in some way? It would appear so. Can someone prove it? Let's hope so.