Governor profits from sale of condo
She denies it is a case targeted by a tax she backs on land profits
Gov. Linda Lingle made more than $178,000 by selling a Hawaii Kai condo just 15 months after she bought it -- a sale that would have been heavily taxed under a pending real estate speculation bill she supports.
Lingle, who highlighted her desire to wean the state off an overreliance on land development in her January State of the State address, bought the condo for $416,136 on Jan. 29, 2005, and sold it for $595,000 on April 28, 2006, for a 43 percent profit, according to Honolulu property tax records.
She had planned to take up residence in the condo after her term expires in 2010 and purchased another condo in the same building a few months after the sale, said spokesman Lenny Klompus. She currently lives in the governor's mansion at Washington Place across from the state Capitol.
Under the bill that passed the state House on Tuesday, the Republican governor would have been required to pay a 15 percent capital gains tax on the sale, which would amount to $26,823 on top of existing taxes.
Klompus claims Lingle was not speculating to turn a quick profit. Instead, she sold the condo so she could buy a larger property. She purchased the second property for $614,055 on May 23, according to property records.
"The fact is the governor was looking for a place to live in," Klompus said. "She's not in the speculative real estate business."
If the anti-speculation law had been in effect at the time she made the sale, she would have simply paid the additional taxes, he said.
The bill, which will now be considered in the state Senate, is designed to curb the rapid run-up of prices caused by using properties as investments instead of homes.
"It's another example of words saying one thing but actions saying something else," said House Majority Leader Kirk Caldwell (D, Manoa).
"Someone might have had no intention to cause this rise in real estate prices but still be subject to the tax," said Rep. Maile Shimabukuro (D, Waianae-Makua), chairwoman of the Housing Committee. "This is a disincentive to flipping properties in a short amount of time."
Questions about Lingle's property dealings arose because her sale of the condo was not listed on the Internet among her annual financial disclosure filings with the state Ethics Commission.
But Ethics Commission Executive Director Dan Mollway said Lingle reported the transaction on a candidate disclosure form on Aug. 25, which was not posted on the commission's Web site.
"I don't think she can be said to have violated the state ethics laws, because she was doing what she thought was appropriate and complying with the law," Mollway said. "Given the lack of clarity between the candidates' disclosures and the annual disclosures, that's quite understandable."