McHenry and Pittenger?

From Greg Flynn at BlueNC?

How does Patrick McHenry manage to stand tall financially? His personal accumulation of assets through property deals has been a wonder. I’ve always been curious how a paper entry on a form turns into a cash windfall later. Now it seems he has a business partner in Republican State Senator and Lt Governor candidate Robert Pittenger, Lord of the LLC land deals, to help him along.

In Patrick McHenry’s financial disclosure forms filed 5/15/2007 for 2006 there was a new entry for a purchase: Locust-Highway 200 LLC (Real estate/ raw land) a “.00294%” share valued at $15-50,000. The date of the transaction was 2/2/2006. The NC Secretary of States records indicate that the LLC was formed just two days earlier 1/31/2006. The documents show that William R Culp Jr was the registered agent and Christopher E Hannum was the organizer. An annual report filed with the NC Secretary of State 3/7/2007 shows the registered agent and managing member to be Robert Pittenger.

A deed recorded 3/15/2006 in Cabarrus County, Book 6606, Page 86, shows that Locust-Highway 200 LLC purchased a 90.851% share of a parcel of land described as 379.551 acres, Highway 200, Locust. The date is more than a month after McHenry claims he acquired his interest. The stamp tax of $12,759 puts the sale price at around $6,379,500. McHenry’s share of 0.00294% comes to $188 which makes his claim of a $15-50,000 acquisition seem odd. It is possible that he made a mistake on his disclosure form and meant to state either .00294 or 0.294% but the share is very specific.

A listing on Pittenger’s website, which has since been removed, states that the land was annexed and rezoned by the City of Locust in neighboring Stanly County. The rezoning allows 2.4 lots per acre for a total of 960 lots. The other owners of the property besides Locust-Highway 200 LLC are listed in deeds as Paul A Stroup III (3.2675%) and College Street LLC (5.8815%). Annexation and rezoning is apparently a specialty of Pittenger in adding value to land. This development, just northwest of Locust, will be yet another bedroom community for Charlotte, adding to transportation needs in neighboring counties.

Since McHenry’s recorded investment in the LLC, Robert Pittenger and his wife have made $9,000 in contributions to McHenry’s campaign. One contribution of $1,000 was made 3/10/2006 just a few days before the deed was recorded. In the current election cycle Pittenger has maxed out his contribution for both the primary and general having given a total of $4,600 in Nov/Dec 2007. His wife is up to $2,400 for the current cycle.

I still haven’t put my finger on it. I have been suspicious when undocumented personal loans to a campaign get paid off as with McHenry but it’s not unusual for campaigns. To me it’s an untraceable way to siphon off money for personal use. Making property deals with campaign contributors is not unusual for McHenry but this deal is odd. It is less transparent than a deed transfer.

When the “consideration” for a transaction is unknown the asset value can be anything you or your partners claim it to be. The acquisition cost can be and sale cost are malleable. Without an audit there is no way to know how much was actually invested by a partner, how much value is arbitrarily added to the investment or if values are manipulated to avoid capital gains tax.

In this case, McHenry’s participation seems to be inconsequential to the LLC though it seems very important to Robert Pittenger. In this case McHenry could cash out big without ever having invested a penny of his own money.

More on Pittenger via praha at BlueNC:

This stuff comes from Village Scribe Online, which is apparently a really good local Charlotte blog. Charlotte is extremely far out of my orbit, so I'm just discovering these things as an outsider:

The good senator has been a very active land speculator in western Union County. One of the most lucrative was the satellite annexation into Waxhaw arranged by NC Legislature, so Senator Pittenger’s property would enjoy much higher home density than county zoning. That resulting ’school busting’ development is known as Lawson. There are others...

Anyway, Pittenger’s pet bill, his personal multi-million-dollar moneymaking machine, was House Bill 705 from the 2003 session: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2...

A brief recap of the calendar is:

3/26/03 Bill was introduced by Jim Black, legislatively annexing some remaining parcels into the Town of Matthews
5/22/03 Bill received favorable report by house finance committee
5/28/03 Bill passed house; there was still no mention of Pittenger’s Get Rich Quicker scheme
5/29/03 PASSED house bill went to senate finance committee; I don’t know if Pittenger sat on that committe during that session, but he is listed as a member of the senate finance committee now: http://www.ncga.state.nc.us/gascripts/Committees/Committees.asp?sAction=... Standing_77
6/18/03 Senate finance committee amends passed house bill, adds language ANNEXING PITTENGER’S PROPERTY INTO WAXHAW, reports favorable…Surprise, Surprise!
6/24/03 Senate votes to pass H705 with the Pittenger annexation added…vote was 47-1 followed by 49-1 with Pittenger voting “AYE” both times on the bill that would net him millions of dollars; only “NAY” vote was by Sen. Katie Dorsett (D-Guilford)…man, we need more senators like her and fewer like Pittenger and Shubert
6/26/03 Re-voted in house on concurrence after senate passage; 3 “NAY” votes including Rep. Pryor Gibson (D-Anson,Union)