To the editor:
A recent letter to the editor proclaimed that, “for the first time in history, the town is receiving ‘fair market value’” from Conomo Point.
It is a common belief that Conomo Point tenants do not pay their “fair share” to the town. This attitude sparked the 1987 lawsuit that was settled in 1991. The agreement offered new leases and raised the rents by a factor of 10 times. Those leases expired in 2011 and the current lease has a one-year term and the rent is set at 3.75 percent of the appraised land value. Tenants continue to pay real estate taxes on the land and building. The town is making a 5.3 percent total return on its land, substantially more than the 1 percent I receive on my money market account.
But the income from rent and taxes is not the only measure of benefit to the town.
Another approach is to establish the “cost basis” of the land. In 1825, the town paid $5,600 for the 150-acre Proctor Farm. An inflation factor of 652 converts the old purchase price into about $3.7 million in today’s dollars. At $24,500 per acre, the cost basis for the 22 acres leased at Conomo Point is about $540,000 in today’s dollars.
Over the past two centuries, the value of the developed land at Conomo has increased to roughly $30 million, a gain of $29 million. It has proven to be a successful investment for the town.
Unfortunately, the current residents of Essex fail to appreciate the magnitude of this success. In the old days, taxpayers understood that the Procter Farm wasn’t going to produce income unless the land was farmed or leased for some private use.
Today, the development on the town’s land includes about 110 buildings that have been built and maintained by the tenants, at no cost to the taxpayers. The construction of these homes has significantly enhanced the total assessed value of the town’s underlying investment in the land.