An Essex County Superior Court judge has backed the town of Essex in its fight against a class-action lawsuit filed by northern Conomo Point residents, who have claimed the second year of lease rates charged by the town are far too high.
The residents at Conomo Point own their homes during the length of the current so-called bridge leases, which can run for up to five years and are meant to be a “bridge” between long-term leases that expired in December 2011 and future agreements, which could include a sale.
The Point residents, meanwhile, lease their land from the town, which has owned the land for more than a century. Residents pay annual rent to the town, in addition to taxes on the land and houses.
The case came before Essex County Superior Court Judge Richard Welch III, who had also decided another case tied into the rent appraisals and home ownership.
In that earlier ruling, Welch decided that two Conomo Point residents did not own their homes that are tied specifically to the land on which they rest, and they cannot be moved. Yet, two other residents whose houses can be moved off the land are the property of the residents, the judge ruled.
The ownership issue and rates of appraisal are significant in the event the town decides to end leasing or not sell the land to the residents.
In the new appraisal ruling, Welch pointed out the various complexities and problems in determining value at Conomo Point.
While the town hired one appraiser and Conomo Point residents found another, some of the second-year bridge leases raise the residents’ payments by tens of thousands of dollars from one year to the next. The appraisers were asked to determine the land-only value.
“First, the vacant lots, i.e. ‘land only’, do not exist,” Welch wrote. “Instead the lots (owned by the town of Essex) are ‘improved’ by cottages or houses (some owned by the town and some by the occupants).”
He also pointed out there is no information when it comes to renting the structures at market rate and no comparable information about leases covering the land and the structures, largely because there is no land-lease and house ownership situation precisely like Conomo Point anywhere else. Therefore, he found, there is no equivalent market rate nearby.
Special state legislation requires Essex to rent out Conomo Point land at fair market value, and the town had to determine that rate.
Welch wrote critically about Conomo Point, however, opening with a quote from Mark Twain in his findings and later writing, “Mr. Clemens might have taken some pleasure in watching the town of Essex attempt to skate on thin ice mandated by the Massachusetts Legislature.”
In addition, the state legislation permitted, but did not require, preference to the Conomo Point tenants in determining market value, according to the court document.
In seeking the appraisals, the town tapped Mark Tyburski of the Hingham-based Tyburski Appraisal Corporation. According to the court document, Tyburski chose to compare Conomo Point to Ipswich’s Little Neck, where the land is leased to homeowners. But those rental rates were “woefully out of date,” the court document states.
The Conomo Point tenants hired appraiser John Petersen of the Boston-based firm Petersen, LaChance, Reagan Pino LLC.
Welch determined that Petersen simply asked a few of the Conomo Point residents what they charged to sublet their properties.
“It is questionable how reliable this oral information was given that the occupants of Conomo Point would have a financial incentive to ‘low ball’ any rents they received in their not-so-legal subleases,” Welch wrote.
The judge also determined that the capitalization rates posted by both appraisers were questionable, but that the town acted in good faith throughout the lease negotiation process, while the plaintiffs attacked a compromise they had suggested.
Welch also included some historical aspect, pointing out that Conomo Point is named after a sagamore of the Nipmuck tribe, called Masconomo or Masconomet, who allegedly sold a large part Essex County to colonists in 1638 for 20 pounds.
“If Masconomet was to rise from his grave at Sagamore Hill in Hamilton and look down on the rocky tidal spit that reaches toward the North Atlantic, now known as Conomo Point, he might be shocked to see the dwellings and even more shocked at the rental prices,” he wrote.
Welch determined that future leases will have to take into account the rental value of the homes and acknowledge that the rents are dramatically higher.
“The town of Essex has been more than fair with the Conomo Point occupants while fulfilling its statutory obligations and the fiduciary duties owed to other Essex residents who may not enjoy the pleasant views at Conomo Point,” Welch concluded.
James Niedzinski can be reached at 978-283-7000, x 3455 or at email@example.com.