, Gloucester, MA

September 4, 2013

Letter: Long-term Long Beach leases don’t add up for town

Gloucester Daily Times

---- — To the editor:

In the face of significant needs for some $40 million of infrastructure improvements, Rockport’s Board of Selectmen may be about to make a tragic error should they continue to subsidize (to the tune of almost $2 million a year) the Long Beach renters by renewing at less than fair-market rates the 10-year leases due to expire at the end of this year.

The renters are not bad people, but merely a small special interest group that has a very good deal and understandably wants to keep it. They benefit materially from past policies and decisions that are now up for review by the selectmen.

The town owns about $60 million worth of beach-front land, from which it gets about only one-tenth of the fair market rent. Market rents would yield the town some $2 million rather than the $300,000 it now collects. This difference amounts to about 10 percent of total current tax revenues, and means that, on average, each Rockport householder is providing a subsidy of some $500 to the Long Beach renters.

The cabins on average have an assessed market value of some $100,000 to $200,000, yet three recently sold for over $700,000, yielding the former tenants a windfall profit even though the town owns the land.

Were the rents at market value, then current renters could not demand such high prices and the town, not the renters, would benefit from the $60,000,000 asset it owns. So it is natural for the current tenants to argue for a 30-year lease at current rental rates.

At the selectmen’s meeting, meeting Ms. Carbone reportedly claimed that she “already paid the worth of the land ...” True, but she did not pay the town that owns the land; rather she paid a former tenant under the assumption that the town would continue to subsidize the renters with below fair-market rents.

All the renters must have other homes for they may occupy the cabins only from April 15 to Oct. 15.

While it is true that the renters also pay town real estate tax on the assessed value of their building and land, nevertheless, the fair market rent for renter paying those taxes is about 5 percent of the land value. Just like the renters, many Rockport homes and condos are used only seasonally yet those owners (who also make little demands on town services for schools, roads, transfer station, etc.) paid full market value for their land and pay real estate taxes on the full assessed value.

As the Times reports, the recent selectmen’s forum was attended by many of the Long Beach renters. The only one speaking against an immediate renewal for 10 or 30 years at the current rents was Wally Hess, who chairs the town’s Finance Committee.

The renters urged the selectmen to renew their current subsidized leases, and they now ask for a 30-year term. Generally, only the renters come to the relevant selectmen’s meetings. If the vast majority of Rockport taxpayers stay silent, then it is likely that the renters will succeed in their demands; it is understandably easier for the selectmen just to renew the leases if they hear no opposition.

Given that the town faces Proposition 2 ½ overrides in order to fund needed capital improvements, the Board of Selectmen should not continue to give away the fair income from this $60 million asset.

In light of their fiduciary responsibility to the whole town, at the very least, the Board of Selectmen should issue only a one-year extension pending the authorized seawall erosion study, the property valuation study to determine a fair-market rent, and a clarification of the FEMA-mandated seawall requirements.

Under such an extension, rents should be raised at least half way to their fair-market value (as shown by recent sales and the assessed values), and the renters’ responsibility for the seawall cost should be made explicit.