From the Anchorage Daily News:

U.S. Sen. Lisa Murkowski said this morning that she and her husband intend to sell back their Kenai riverfront property to Anchorage businessman Bob Penney....

Murkowski told reporters in her Capitol office this morning that Penney, a real estate developer who does business in Alaska and Outside, has agreed to buy back the property for the $179,400 purchase price she and husband Verne Martell paid Dec. 22, 2006.

“While Verne and I intended to make this our family home and we paid a fair price for this land, no property is worth compromising the trust of the Alaska people,” Murkowski said in a written statement. “I cannot allow this to become a distraction from the major challenges faced in representing Alaska. So we have decided to sell this property back to Bob Penney at the same price for which it was purchased.”

Read the post that started Murkowski's headache here.

From the Anchorage Daily News:

A government watchdog group filed an ethics complaint Wednesday against U.S. Sen. Lisa Murkowski, charging that her 2006 purchase of an exclusive Kenai riverfront lot was a “sweetheart deal” from Anchorage businessman Bob Penney.

The complaint, brought by Ken Boehm, chairman of the conservative-leaning National Law and Policy Center of Falls Church, Va., also charged that Murkowski filed false information about the land deal on her annual financial disclosure and obtained special treatment on a mortgage from the Ketchikan bank where her sister serves as a director....

Boehm said the difference between the price paid and the true value amounted to an illegal gift to Murkowski of between $70,000 and $170,000, based on the estimates of the real estate agents....

Boehm’s 15-page complaint says, “The facts in this case are so strong that it is hard to imagine a more compelling case for violation of the Senate Gift Rule.”

Sen. Lisa Murkowski (R-Ak) has amended her Senate financial disclosure forms to add information about a riverfront land deal since TPMmuckraker first made inquiries about the transaction.

When I called Murkowski's office in June, a spokeswoman said a clerical error was the reason they had left off the value of the senator's mortgage and written the fragment "11/0" for the date of purchase. The office has since checked off the appropriate column for the $136,000 mortgage and updated the date to read "11/06.

Local government filings show that Murkowski bought the land from developer Bob Penney in December 2006, not November. I called her spokesman Kevin Sweeney just now who said "she went and filled out the paperwork in November."

Note: Our document collection is under repair. We'll get you her disclosure form soon.
Late Update: Here is the disclosure.

It's too bad the construction work on Sen. Lisa Murkowski's new lot has come to a stop because of a possible ethics investigation, Murkowski's husband said on an Alaska talk radio show last week.

Murkowski's husband, Verne Martell, ran through how he and his wife came to buy the property from millionaire real estate developer Bob Penney with radio show host Rick Rydell last Wednesday. Martell said that when it came time to sign the paperwork, Murkowski still had some reservations about it.

"But yeah, when we signed the loan, Lisa signed on it and said, you know, this might come back to bite us. Well, you know, we'll deal with that when it comes," Martell said.

Looks like Martell should have listened to his wife. The Washington Post and other national media have picked up the AP's story on the scandal this weekend, and possibly even more damaging for Murkowski, the Anchorage Daily News ran a scathing editorial about the deal.

Here's the audio from Martell's radio interview. It's well worth a listen:

Update: Reader AR notes that Martell also upends Bob Penney's claim that he didn't know what the assessed value was on the property.

For a millionaire real estate developer, Bob Penney has claimed to be remarkably ignorant of the true value of the riverfront property he sold to Sen. Lisa Murkowski (R-AK) last year.

He sold Murkowski the wooded plot for $179,400, which happened to be the local assessed value in 2006 at the time of the sale. (The property was reassessed three days later for $214,000). Penney claims that when he sold the land to Murkowski he thought the assessed value at the time of the sale remained approximately $120,000, the assessed value in 2005.

"Word of honor, I did not know what the assessed value was," he said. "I thought it was still $120,000."

But maybe Penney wasn't so out of touch. A few months ago, Penney testified at a state hearing on the economic impact of sports fishing where he seemed much more familiar with assessments in the area. Penney spoke because he is an avid fisherman and a longtime advocate for recreational fishing in Alaska. Here's the audio from one of the comments he made during the hearing:

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Sen. Lisa Murkowski (R-AK) has taken a lot of heat from buying a plot of land far below market value from Alaskan businessman Bob Penney. But she's standing by her decision, saying that she relied on a local assessment to set the low sale price.

Murkowski, who has remained silent since the story broke, finally commented herself yesterday:

"By law in the state of Alaska, the municipalities are required to base their assessment on the fair market price," Murkowski said. "That's what our statute says. What we went off of, what we utilized as our transaction price, was the price that had been set by the municipality."

Despite what the law says, local real estate agents in the area disagree that assessed values do a good job representing market value. In the area where Murkowski purchased her property, value of land is "escalating rapidly" and the assessed value is not keeping up. There is also a limited amount of property along the renowned fishing river.

For Murkowski and Penney, the deal was clearly not based on competitive pricing, but on an agreement between old friends. Penney's family has also been a big financial backer for Murkowski, having donated $10,500 to her campaign fund since 2003.

"I bought the property from a friend that I think I have known since I was probably 5," she said. "It was before elementary school, let's put it that way. My husband knew him before he knew me. So we go back a long way."

...

"And I remember saying, 'Oh yeah, but I can't buy a lot from you. I know you,'" she said. "And he said, 'Lisa, you know everybody in the state."

Nonetheless, if she paid less than what the land is worth, she ought to disclose the difference as a gift. Murkowski's office has filed an amendment with the Senate Ethics Committee, but it'll require a trip up to the public records office to take a look at what she changed. (The office of public records will not give out information over the phone or via fax and the pdf's are not online) We'll have an update for you this afternoon.

Sen. Lisa Murkowski (R-AK) and Bob Penney don't get what the big deal is. If two people reach a property deal, what's the problem? (Even if the price is possibly $120,000 below market value, the seller is a major campaign contributor tied to the federal probe in the state and the buyer is a U.S. senator.)

In an interview with the Anchorage Daily News, Penney couldn't wrap his head around it.

"I really can't understand why a U.S. senator can't buy something they want just like anybody else can," he said.

A few weeks ago, Murkwoski's spokeswoman shared a similar sentiment when explaining why the transaction was no where to be seen on her Senate disclosure forms. "She bought this for personal use just like millions of other people," Danielle Holland said.

Here's the difference: unlike the rest of us, U.S. Senators cannot accept gifts worth more than $250. Based on the $179,400 Murkowski paid for the wooded lot versus the $300,000 locals and real estate agents say the land is worth, she received a gift of at least $120,000. An editorial in the Anchorage Daily News today said she could have only paid a third of what Penney could have fetched had he listed it.

Penney, a major real estate and land developer denied that this was a campaign contribution or a gift, both when I spoke with him and in his statements to Alaska press. He also claims he had no idea that when he sold the land to Murkowski it was assessed by the local government at $179,400. Giving him the benefit of the doubt, I called the Kenai Assessor's Office today to see when owners are notified of their land's new value. Penney would have received a notice March 1, 2006, nine months before the sale went through.

Other members of Congress can attest to the legal headache of accepting illegal gifts, like Rep. Randy "Duke" Cunningham (R-CA). One of Cunningham's most famous bribes was a property deal where he sold his house for well above market value to a defense contractor, Mitchell Wade, who dumped it for $700,000 soon after.

Rep. Rick Renzi (R-AZ) has also gotten into hot water over questionable land deals. So has Rep. Alan Mollohan (D-WV). Mollohan is under federal investigation because of his appetite for land deals with sellers who benefited from his many earmarks.

Under pressure from local media, including talk radio, Sen. Lisa Murkowski (R-AK) caved yesterday, finally revealing the sale price for a piece of riverfront property she bought from Bob Penney -- a developer connected to the Sen. Ted Stevens (R-AK) investigation.

When we first reported the deal on Monday, both Penney and Murkowski refused to provide the sale price. Conservative estimates from local real estate agents put the fair market value of the property at around $300,000.

In a front-page story today in the Anchorage Daily News, Murkowski and Penney revealed the sale price to be $179,400. That just happens to be the same value as the 2006 local government assessed value for property tax purposes. But Penney claims that he thought the assessed value at the time of last year's sale was still $120,300, the 2005 assessed value. In any event, shortly after the December 2006 sale to Murkowski, the 1.27-acre plot was reassessed at $214,900, which real estate agents and locals told me is still much less than what Penney could have fetched on the open market. Nationwide, the assessed value for property tax purposes is usually less than the fair market value of real estate, oftentimes substantially less.

"Word of honor, I did not know what the assessed value was," he said. "I thought it was still $120,000. . . . Who the hell would ever think it would jump like that?" Penney said.

Whodathunkit?

As the Anchorage Daily News editorial put it this morning:

Anyone who sells Kenai River real estate at the assessed value is either a fool or doing somebody a favor. Anybody who buys it at assessed value knows -- or should know -- she is getting a sweet deal.

Bill Allison at the Sunlight Foundation has weighed in on our coverage of Sen. Lisa Murkowski's (R-AK) murky land deal with campaign contributor and real estate developer Bob Penney, who is tied to the Sen. Ted Stevens (R-AK) investigation. As we reported, Murkowski has refused to disclose the sale price of the plot.

Allison swings at Murkowski's claim that the sale price is exempt from Senate disclosure rules because she plans to use the 1.27 acres of wooded riverfront property for "personal use." Allison took a look at the relevant federal law and concludes that the exception Murkowski gives is meant for residences, rather than any kind of use.

[The law] would seem to indicate a pretty air tight requirement to report the sale -- even if Murkowski is living in the woods, I don't think that would qualify as a personal residence.

We'll let you know if Murkowski changes her mind.

Late last year, Alaskan real estate developer Bob Penney testified before a grand jury about his cozy relationship with Sen. Ted Stevens (R-AK). But it looks like Penney also has financial ties with Alaska’s other senator: Lisa Murkowski (R). At around the same time, she quietly bought a prime piece of property along the bank of the Kenai River from Penney.

Because of Alaska’s weak records requirements, it’s unclear whether Murkowski got a special deal from Penney. The market value of the 1.27 acre plot is worth around $300,000, according to Kenai real estate agents and locals. Both Penney and Murkowski's office refused to reveal what Murkowski paid.

The arrangement alarms some watchdogs who see ethical and even legal issues stemming from the deal. Ryan Alexander, the director of Taxpayers for Common Sense, said that Penney's history makes it look like he deliberately does business with Alaska politicians with an eye for future gain.

"It raises more than question, it raises concern," said Alexander. "It puts [Murkowski] into that web of folks that has raised eyebrows."

The only available information on Penney’s sale price (land transaction prices are not public record in Alaska) is a Deed of Trust, available here, that shows that Murkowski purchased the riverfront plot in late December of last year with a mortgage of $136,000. A borough assessment values the property at $214,000 – but real estate agents said that is well below what Penney could have fetched. Based on a review of Murkowski's disclosure records, it's unclear if she had enough cash on hand to handle such a large down payment.

Thanks to a TPMMuckraker reader in Soldotna who photographed the area where the wooded plot sits, we can catch a glimpse of the view. The photos are up here.

The land is near Penney's lodge where he co-hosts the annual Kenai River Classic with Stevens. The event draws politicians and heavyweight defense executives from companies like Lockheed Martin and Boeing for a weekend of fundraising -- and reveling. The invitational is tagged as a charity event meant to raise money for salmon habitat preservation, but it's been criticized as a meet-up for influence peddling.

The longtime friends, Penney and Stevens, are also business partners. Penney brought Stevens in on a Utah land deal that turned a $15,000 investment into $100,000 for the senator. And the two own stakes in the same racehorse with former Veco executive Bill Allen, who recently pleaded guilty to federal bribery and conspiracy charges in a cash-for-votes scheme involving state lawmakers.

Around the same time Penney sold Murkowski the riverfront property, he testified before a grand jury investigating Stevens in the broad federal probe into political corruption in the state.

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