MADISON (Source: Jason Stein Milwaukee Journal Sentinel — U.S. Senate candidate Eric Hovde, who has sharply attacked farm subsidies going to big businesses, acknowledged that his real estate firm had benefited from such subsidies but said he had not been aware of the collections and would stop them.
Hovde, a multimillionaire with real estate and investment holdings, has built his self-funded U.S. Senate campaign around cutting government spending and the deficit. Meanwhile, Hovde’s Madison real estate firm has been collecting about $2,700 a year in subsidies meant for tobacco farmers.
That’s not the only area where Hovde Realty Inc. has sought to gain subsidies or tax benefits normally going to farmers. In 2006, the Hovde family’s real estate and development firm settled for $22,500 a lawsuit by the City of Madison that charged Hovde Realty with improperly classifying some of its holdings as farmland to lower its property taxes.
In an interview on Monday, Hovde said that he hadn’t benefited from farm subsidies or lower property tax assessments meant for farmers.
But he reversed himself on both points late Wednesday.
He acknowledged that the firm had been receiving the tobacco subsidies, saying that he knew nothing about the payments arranged by lower-level company employees until he was contacted by the Milwaukee Journal Sentinel and The Associated Press.
If elected, “it’s just another thing that I would try to kill,” Hovde said of the “utterly ridiculous” federal subsidy program. “I said, ‘What the hell are we doing this for?’ ”
Online federal records show that Hovde Realty received $2,663 each year in the tobacco payments from 2010 to 2012, for a total of just under $8,000.
Hovde is running in the Republican primary against former Wisconsin Gov. Tommy Thompson, former U.S. Rep. Mark Neumann and state Assembly Speaker Jeff Fitzgerald. The winner will face U.S. Rep. Tammy Baldwin, a Madison Democrat.
Hovde’s campaign opponents pounced on the revelation about the tobacco subsidies.
John Kraus, a spokesman for Baldwin, said the payments raise questions about Hovde’s sincerity about opposing government subsidies.
“People are going to have a hard time understanding why a Washington, D.C., hedge fund banker who manages an offshore account in the Cayman Islands is taking advantage of government subsidies for farmers in Wisconsin,” Kraus said. “He clearly thinks there is one set of rules for him and another for everybody else.”
Brian Nemoir, a spokesman for Thompson, said there was an irony in Hovde calling for cuts to federal spending while his company benefited from federal subsidies.
“Hovde is already a master of federal fleecing, and is seemingly well on the way to perfecting the well-practiced art of political doublespeak,” Nemoir said.
Hovde’s assets are between $58 million and $240 million, according to his Senate financial disclosure, and he’s put $4 million of his own money into his campaign. On the campaign trail, Hovde has been sharply critical of government assistance to businesses as well as to individuals, decrying “sob stories” in the media about individuals receiving public aid such as food stamps.
‘Night and day’
The payments in question to Hovde Realty came under the Tobacco Transition Payment Program, also known as the “tobacco buyout.” The 2004 program was aimed at helping producers transition toward the free market and away from a Depression-era government program meant to boost tobacco prices.
Hovde said the undeveloped land eligible for the subsidy is east of Madison and had been purchased by his father, Don Hovde, a Madison real estate executive and former appointee in President Ronald Reagan’s administration. The Hovde family has been involved in Madison real estate for three generations, and Hovde Realty is now jointly owned by Eric Hovde, who serves as its chief executive officer, and his brother Steve Hovde.
Hovde said that managers in Hovde Realty had made the decision several years ago to stop tobacco farming on the land, though it is still leased out for other farming. Hovde said he supports curbing cigarette smoking but believes the subsidy is the wrong way to accomplish that goal. He added that he also opposes the farm bill currently before Congress because of the farm subsidies in it.
For more than two decades, Hovde built up an investment business in Washington, D.C., that has bought community banks around the country and run a hedge fund. He also funds a foundation for homeless children and families.
A Hovde campaign spokesman noted that the tobacco subsidy payments were much smaller than the nearly $660,000 in federal money that Neumann-owned solar energy companies have received. That money came through the economic stimulus law signed in 2009 by President Barack Obama, which has come under heavy criticism from Republicans.
“It’s just a night-and-day difference,” Hovde said of his subsidies compared to those given to the energy companies.
Neumann spokesman Chip Englander questioned why Hovde would criticize the subsidies, given that a Hovde company newsletter from November 2008 had argued for the federal government to help support the renewable energy industry.
Hovde Realty made use of another government incentive for farmers, Wisconsin’s so-called use-value assessment law. That law allows farmers to lower their property taxes through assessments based not on what the land would bring if sold on the open market but based on the value of what it would bring if rented as farmland.
The law was designed to slow urban sprawl and keep more land in use by farmers.
But the law also allowed for penalties if an owner used the land in a way inconsistent with farming by developing it. In 2002, the City of Madison commenced a series of lawsuits charging that Hovde Realty and other firms had done exactly that, according to records from Dane County Circuit Court and the City of Madison.
The firms fought back by charging that the law was a violation of the clause in the state constitution requiring all taxpayers to be treated the same, though that clause does allow for treating agricultural land differently.
Dane County Judge Michael Nowakowski ruled in favor of the City of Madison, and both sides then agreed to settle. Hovde Realty agreed to pay the city and other jurisdictions $22,500 of the $35,900 originally sought.
Hovde said that once again he had been unaware of this case until it was raised with him by the Journal Sentinel.
“Eric fought city hall over a tax structure that multiple businesses thought was unfair,” Hovde spokesman Sean Lansing said.
Michael May, Madison city attorney, said the settlement was fair, and the city had just been trying to enforce the state law.
Kraus, of the Baldwin campaign, said that either Hovde was not paying his fair share of taxes or wasn’t on top of the issue.
“Where is the self-responsibility he keeps talking about?” Kraus said.
©2012 Milwaukee Journal Sentinel
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Source: Jason Stein Milwaukee Journal Sentinel