GloucesterTimes.com, Gloucester, MA

September 18, 2013

Subletting fuels Long Beach incomes

Rockport officials mulling options on leases

By James Niedzinski
Staff Writer

---- — ROCKPORT — With the future of leases on town-owned properties at Long Beach still up in the air, real estate ads and other listings show that some of the tenants are already in the money:

They’ve been leasing their cottages on the town-owned land for up to $3,000 a week during the summer months.

The 154 seasonal cottages are on town owned property that is leased to the residents, who own the cottages as season residences. According to the most recent leases, which began on Jan. 1 2004, a front row of cottage land is leased for $2,100 a year, while back row property draws rent for $1,300 a year, with those rents paid to the town, increasing annually based on consumer price index.

Now, town officials and Long Beach residents have been locked in debate over the extension of leases beyond the current Dec. 31 expiration date, with potential hikes in rent to the town among the major sticking points, and some Long Beach residents indicating that significant rent hikes will be unaffordable.

But websites including Craigslist and TripAdvisor showcase a number of cottages to rent on Long Beach; some being sublet for as much as $3,000 a week during summer months and up to $1,600 a week in September and October.

Long Beach regulations, adopted in 2004 by the Board of Selectmen, state the cottages cannot be used for “primary income” purposes or commercial use.

“No transfer of rights in any lot shall be recognized as valid, unless by the Board of Selectmen,” the town regulations read. “Transfer of ownership includes, but is not limited to, adding a party to a lease, transferring to a real estate trust or sale.”

Under the current lease agreements, a tenant who is determined to have broken town regulations could face fines, have their leases non-renewed or even terminated altogether. There is no specific mention, however, of subletting a cottage in the lease itself. In draft language for upcoming lease agreements, officials have sought to end subletting and transfers without written consent from the town.

One Long Beach tenant, Rick Veistra, said he has invested considerable time and money into repairing his cottage at 152 Long Beach since buying it in 2005.

It was being held up with planks of wood and it was falling apart; “It was the worst house on Long Beach,” he said.

By subletting, Veistra said, he was able to repair the cottage. It now has four bedrooms, a family room, bay windows, ceiling fans, cable, a wireless internet connection, outdoor shower and other appliances, according to the Craigslist ad.

But with lease rates, taxes, insurance and other fees associated with leasing and subletting a cottage, Veistra said the prospect is not all that lucrative.

“These are not money-making operations,” he said.

Because the properties are so close to the beach, they are exposed to more wear and tear; screen doors for example, only last five years before the salt eats away at them, Viestra said.

Subletting is nothing new at Long Beach. Philip Pollard, who leases property at 34 Long Beach, said he, too, rented out his property at one point.

“You’re probably going to see more of it. (Residents) just can’t afford the taxes,” Veistra said.

Viestra is not alone on that front.

Steve Sheehan, secretary of the Long Beach Improvement Association, said many tenants do not want to rent out their properties and enjoy living in a beach side community, and some want Long Beach to be their permanent home.

“Unfortunately, the rising taxes and lease and sewer betterment forced owners to have to rent,” he wrote in an email to the Times.

According to the leases, residents pay sewer costs which are assessed by the town; the town provides water to the seasonal residents while the tenants cover other utility costs.

Veistra added while the town is considering what options to pursue next, not all Long Beach residents are as wealthy as some might think; some are retired and on fixed incomes.

In addition to their rents, the seasonal homeowners also pay property taxes on the assessed value of the cottage and the property combined. In a Letter to the Editor appearing in Tuesday’s Times, Long Beach residents Erick Johnson and Louisa Casadei-Johnson said they pay $8,000 in annual taxes in addition to $2,500 a year to rent the land — essentially $417 a month for six months’ use.

Selectmen Wihelmina Sheedy-Moores said Tuesday that nothing in the Long Beach regulations prohibited subletting; officials only had to sign off on transfers of property. As long as someone was not renting for the entire season for example, that would not qualify as primary income, she said.

Selectmen Paul Murphy, however, said he was unsure of the specifics of subletting, adding nobody has checked to see if the lease holder is the one living at Long Beach.

“I have no knowledge of anyone policing that situation,” he said.

Town Administrator Linda Sanders did not return calls placed by the Times on Tuesday.

But while some tenants only have a week or two left in the season, others are already taking reservations for 2014.

“They have taken (subletting) for granted,” former selectmen Joanne Wile said.

Wile was a town official when the regulations about primary income purposes were adopted, but recalled agreeing that subletting was allowed. She added that, in the past, one person has owned more than one Long Beach property.

Officials have subletting, and many other factors about Long Beach leases and the adjoining seawall to consider; the 10 year leases expire Dec. 31.

“It’s always been that way,” Wile said.

James Niedzinski can be reached at 978-283-7000, x 3455 or at jniedzinski@gloucestertimes.com.