These information snippets relevant to the Feoffees Trust appeared in the form of Letters to the Editor of local newspapers.
(Elsewhere on this site there is also an overview of the Feoffees Trust and its relation to Ipswich Public Schools, and a graph of Feoffees contributions in recent decades.)
To The Editor:
Ipswich is dealing with two different Little Neck trust problems at the same time. The first problem was many years of ridiculously low rents resulting in very little income to our schools and town. The second problem is the current Little Neck renters' strike resulting from how "market rate" rents were phased in.
The two have been smooshed together into a single "Feoffees problem". After all, there are big similarities. Both problems resulted in non-payment of money to our schools and town. Both grew out of questionable actions by the then-current Feoffees. Both were exacerbated by a lack of public transparency of The Feoffees decisions and actions. And most proposals that address either problem also take account of the other.
But there are big differences too, the most significant being different Feoffees and different decades. Consider the first problem: The low rents (at least in the three decades before 1990) resulted from possibly criminal negligence by those Feoffees (who are mostly now dead). Those Feoffees seem to have made decisions with more of an eye toward low rents for their friends than toward the benefit of Ipswich schools and town. Now consider the second problem: There seems to be virtually no attempt by the current Feoffees to personally benefit from their being a Feoffee. But their insensitive implementation of "market rate" rents resulted in a bunch of really ticked off tenants and and no money at all. [Correction: A surprise lease demand triggered the tenants renters' strike; alleged mismanagement of the sewering project also contributed. The phasing in of market-rate rents was completed three years before the renters' strike began.]
Little Neck rents more than quintupled (!) from the early 90's to the mid 00's. The Feoffees committed to adjust the rents again every year to match the very latest appraisals. I'm not at all surprised that renters (like me) grumble an awful lot at their rent being changed unpredictably so often as every year. If we're going to punish somebody for the former low rents, it should be somebody other than the tenants; that's only fair - the low rents weren't the tenants fault. A more sensitive approach might have avoided ticking off tenants so much they put their payments into an escrow account rather than giving them to The Feoffees. A more sensitive approach might have involved adjusting rents less frequently (yet still regularly) -for example every three or every five years; yet another approach might have involved averaging together several different appraisals.
In our zeal to keep the first problem from happening again, we've caused the second problem. We've let the pendulum swing too far the other way.
(Our dithering isn't helping either. Ipswich couldn't decide for several years whether or not to "sewer the necks". So at the last minute The Feoffees had to sewer Little Neck themselves and deal with the resulting millions of dollars of cost overruns. Currently the big winners seem to be the lawyers. It's been calculated that the total related legal expenses paid by The Feoffees, the Little Neck tenants, our School Committee, and so forth over the last several years have totaled over $3 million.)
We need to ensure the first problem of absurdly low rents won't happen again, and we also need to resolve the second problem of the current renters' strike.
Chuck Kollars
Central Street
To the Editor:
Determining a fair Little Neck sale price to convert The Feoffees from a land trust to a money trust may be tricky: The various assessments are not the "true" value of the land; rather each is simply somebody's well educated guess. Assessments are often used as negotiation starting points.
Land prices vary considerably depending on how the land will be used. This is already obvious on Little Neck in the wildly different per-acre assessments of the housing lots, the "double" lots, and the shared facilities lots. Prices for lots with new construction limited to small single story summer houses (likely for continuing "summer colony" use) are one thing; prices for the very same lots but allowing unlimited construction (likely for use for ocean view residences) would be much higher.
Peak land values assume good delivery of all municipal services, which for Little Neck would likely require Ipswich to pay to widen the roads, run bigger electrical wires, increase water delivery with bigger pipes or a water tower, improve the sewer situation, and so forth.
A glance at how very much various recent assessments disagree illustrates there's no one right answer. Little Neck assessments are even less reliable than most because --as none of that land has ever been sold so far-- there are no "comparables". And nobody knows yet what rules a condo association might put in place - for example past assessments with the property mostly restricted to summer only use have been quite different from assessments of the very same property but allowing year-round use for all.
And with the mortgage crisis, property prices are bouncing around an awful lot at the moment.
For all these reasons and more, what price to sell Little Neck for isn't so clear as it may seem at first.
Chuck Kollars
Ipswich
To the Editor:
Little Neck has been a "summer colony" for as long as anyone can remember. It's on the low end of summer vacation property prices, and provides an option to people who can't afford most other vacation properties. There are somewhat similar summer colonies at Long Beach in Rockport and at Conomo Point in Essex.
Drive around Little Neck now and you'll find it mostly deserted. But look at Little Neck in high summer and you'll see a singularly different social milieu: As a guest, you'll barely be able to drive around because of all the people in cutoffs and flip-flops walking in the middles of the streets. You'll see many cars jerry-parked on bits of open land around every house. And you'll see tweens and little kids everywhere. Imagine vacationing in a bungalow on Cape Cod, with lots of similar bungalows crowded around. Now imagine you know your neighbors from last summer, and the summer before, and the summer before that, and the summer before that... And imagine you all go to the same beaches every day and use the same boats every day. That's what Little Neck is currently like.
Most of what's on Little Neck now could be called "vacation houses", little more than bare-bones summer camps with no heat and no year-round plumbing. Some of them have been passed down through at least three generations, and are now owned jointly by a gaggle of adult grandchildren. Some of them are sublet (mostly to friends) for parts of the summer.
The summer residents heavily use the shared facilities and acreage (not just their own bungalows). Shared amenities include a wharf, community center building, playground, outdoor basketball court, mini softball and soccer field, and all the shore.
Tenants have places on Little Neck because they want to be part of the summer colony ...not because of some unselfish desire to support Ipswich. (How that land is supposed to benefit Ipswich schools and town is nothing more than a quaint eccentricity to most of those residents. After all, the situation of owning your house yet renting the land it sits on is so unusual even real estate lawyers frequently misapprehend it. Although some of the summer residents were probably dimly aware the rental fees they were paying in the past were for some reason ridiculously low, they didn't create the situation and they shouldn't be punished for it.)
Since they're mostly not there during wintertime, Little Neck users are largely unaware of Ipswich town politics and largely unable to speak for themselves (and when they do occasionally make a public statement they're often "tone deaf":-). But there's no good reason to simply ignore their viewpoint.
Little Neck is not just a trust intended to benefit our schools, it's also a very unusual type of neighborhood for the benefit of the whole Town of Ipswich.
Chuck Kollars
Central Street
To the Editor:
The recent appraisal of Little Neck in Ipswich at $42M may sound real nice, but it's make-believe. Little Neck has two distinctly different valuations depending on its use: either as a summer colony or for luxury residences. Although the recent appraisal genuflects toward the summer colony use, it's really slanted toward luxury residence use and prices.
It says explicitly "[I]t is the appraisers' opinion that the most likely and profitable use of other property is for its sale to the current tenants for conversion to 167 units under a condominium form of ownership with the balance of the land held as open space for the benefit of all owners." It salutes summer colony use by excluding any developer's cut and by adjusting prices downward appropriate to a condo form of ownership (although without knowing specific condo association restrictions, the adjustment amount is just a guess).
It even frankly says "[T]he subject is a unique cottage community along the coast of Massachusetts. No sales of any other comparably-sized communities with all the amenities of Little Neck were located." But then it pulls a switcheroo, going ahead anyway using price estimates that only make sense in the context of luxury residences; it prices each and every "lot" separately as if a new luxury residence were built on it.
Here are several of the many reasons why only a summer colony price for Little Neck makes sense. (These reasons each stand alone, so if one falls, it doesn't take any of the others down with it .)
First, the existing cottages would get in the way of using Little Neck for anything other than a summer colony. At worst, depriving tenants of use of the cottages might result in lawsuits and forced payment of compensation. At best, somebody will have to pay for the privilege of crashing those cottages to smithereens.
Second, much of the higher sale price wouldn't really come from the buyer; it would actually be a disguised transfer from the municipal budget (which means by us taxpayers:-). Little Neck could only be used for luxury residences if the existing infrastructure were significantly upgraded: perhaps wider streets, sidewalks, more electricity, and higher water pressure. And there'd be expenses every year too; the new residents would likely loudly demand better fire protection, more police protection, and improvements in sewage disposal.
Third, building a luxury residence in place of every one of the 167 existing cottages would result in absurdly dense development. Only if the existing tax assessment "lots" were somehow approved and grandfathered could this be done. Current Rural Residential B zoning regulations would more likely limit development on Little Neck to only 25-30 new luxury residences, which would greatly reduce the price of Little Neck to only about $10M.
Fourth, looking at Great Neck, at the oldtimers driven out by tax increases, the crashed older houses, the new monster houses, the overcrowding, and the fractured communities, having more of the same does not seem to me the "best use" of part of Ipswich. Should we make Little Neck into a more crowded Great Neck? I hope not.
Fifth, no developer buyers are waiting in the wings (the summer colony offer though is all ready to go forward). Use for luxury residences would require finding willing buyers. Even though that wouldn't be ridiculously difficult, as the price of water-oriented properties hasn't cratered like the rest of the real estate market, the assessors estimate it could take a year or more. But Ipswich has already waited far too long for a Little Neck resolution.
Sixth, existing leases might interfere with a sale for luxury residence use. Existing leases could have been signed for up to ten years. So even without detailed information, it seems reasonable to assume there are at least a handful of leases that continue for several years. [Better information: Currently thirty-two of the homeowners have seventeen years left on their twenty year leases.] Leased land could not be sold to anyone other than the current lease holder without either waiting for the lease to expire or paying acceptable cash compensation.
Finally, an out-of-court settlement like the proposed sale to the cottagers would significantly reduce legal costs and risks. Legal costs are plenty high already and our schools have already been deprived of significant income. Trying to proceed without everyone's agreement might tie up the whole situation in court for many more years. And when it finally goes to trial, Ipswich might win ...but it might lose too. Ipswich badly needs prompt resolution of the Little Neck issue, but not by gambling on court decisions.
The above are a whole lot of independent reasons each separately making the case that selling Little Neck at luxury residence prices is illusory. The recent assessment's $42M is way out of line with the sequence of previous Little Neck offers, which have steadily risen as the price of water-oriented real estate has skyrocketed: $7M in 1999, $10M in 2001, $26M in 2008, and $29M in 2010. $42M may make a nice opening number for some further negotiations, and it may help sway a court a little more toward one side ...but in the end it just won't happen.
Chuck Kollars
Central Street
To the Editor:
In the words of William Paines' will "unto the free scoole of Ipswitch the little neck of land at Ipswitch knowne as Jeferry's neck, the which is to be and remaine to the benefitt of the said scoole ... for ever as I have formerly intended and therefore for the sayd land not to be sould nor wasted", the the subsidiary phrase "not to be sold or wasted" just clarifies the key word "forever".
In 1660 land was the only possible investment in New England; there was nothing like a mortgage nor an interest bearing account. The admonishment "don't liquidate the trust" could be expressed quite simply as "don't sell the land". Nowadays there are more investment options. So long as one can still clearly identify the "asset" generating "income" forever, exactly what form that asset takes (a "land trust" or a "money trust") doesn't much matter.
The two biggest advantages of a "money trust" are it's more transparent -easier to understand and audit- and it generates significantly more income than has historically been produced by the "land trust" (best past return 2.2%; even a plain old large CD currently returns 2.5%).
It's too often assumed that "selling the land" means "giving the proceeds to our schools immediately". But nobody's even considering doing something that would effectively dissolve or liquidate the trust - that's a clear no-no. What's being considered instead is rolling over sale proceeds into an endowment fund, and continuing to pass endowment income to our schools every year forever.
Lawsuits pending before the Massachusetts Probate Court are about things like the method of selecting Feoffees, requiring open and transparent Feoffees proceedings, and enabling conversion from a "land trust" to a "money trust" ...but not about liquidation of the trust. Misleading media reports that somebody is attempting to "break the trust" apparently derive from do-it-yourself lawyering.
Keeping in mind that the Feoffees were created by Ipswich Towm Meeting hundreds of years ago, fair interpretations are that the trust should benefit both schools and town, and that trust income should be "reasonable" (but not necessarily "maximum").
Conversion of The Feoffees asset from a "land trust" to a "money trust" would be good for Ipswich.
Chuck Kollars
Ipswich
To the Editor:
Converting The Feoffees asset to something other than a "land trust" has several advantages:
First, managing Little Neck has become a bigger and bigger job, one that has begun to unreasonably tax the non-professional part-time Feoffees. Past overload greatly amplified the lack of transparency and public accountability, which in turn enabled possible malfeasance. (To put it bluntly, an endowment fund is a whole lot easier to understand and to audit than a property management operation.)
The second advantage is there couldn't be any future interruptions to income to Ipswich schools. The Feoffees are currently blocked by a renters' strike, and so long as The Feoffees asset is Little Neck, it could happen again. Endowment funds though don't go on strike.
The third advantage is no longer requiring The Feoffees to be summer colony "social engineers". Years ago, managing a summer colony was simple: everybody had the same vision, there weren't too many people, and there weren't too many options. But visions of what a summer colony is nowadays are diverging, what was a single nuclear family of cottagers has grown to several dozen people, and there are more and more options. It's no longer reasonable to assume the Feoffees will know what the "right thing to do" is when some cottagers want a new video game network and others want a new volleyball court instead.
Fourth, Feoffees couldn't be accused of mismanagement of any future construction projects, such as happened with the sewering project. Some future construction projects -for example to address the erosion problem more thoroughly- are likely. But our Feoffees needn't be in the middle any more.
Fifth, and probably the most important advantage, is removing The Feoffees from all the future decisions facing the summer colony. It's already hard to get all the adult grandchildren who jointly own some of those places to agree; it will be even harder with even larger passels of adult great-grandchildren. Those cottages will last only a few more decades. How big can replacements be, can they have basements, and can they be winterized? Must they follow a certain style, or a certain color scheme? And how should the summer colony deal with skyrocketing ocean view property valuations, when allowing lots of year-round residences to be built on Little Neck could be so disruptive? All these decisions will face Little Neck management fairly soon. Hopefully something like a "condo association" will handle all these issues and remove our Feoffees from the crossfire.
Getting The Feoffees away from Little Neck would benefit Ipswich.
Chuck Kollars
Central Street
(This note was not previously published because the newspaper editor declined it.)