GloucesterTimes.com, Gloucester, MA

September 18, 2013

Finance panel urges short term Long Beach leases

By James Niedzinski
Staff Writer

---- — ROCKPORT — The Finance Committee has recommended to the Board of Selectmen — the lease negotiators — that the town offer only short-term leases for 154 cottage owners leasing the town-owned land on Long Beach.

Issues such as fair market value in rental rates, how often rent is increased — and how that increase is calculated — were just a few of the issues discussed Monday night in a joint meeting between the Finance Committee and the Board of Selectmen.

Finance Committee chair Walter “Wally” Hess said that, while an appraiser can determine what market value for a property might be, other factors have to be considered to reach fair market value. Hess said the long-term goal of reaching fair market value should come “judiciously” and not all at once.

“That would be enormously disruptive,” Hess said.

Increasing lease rates to reflect fair market value all at once would effectively force out some Long Beach residents, he said; some have said they are on a fixed income, while others are retired.

One option discussed was having an appraiser or another financial expert determining what the rent should be on a periodic basis; instead of basing rents off the consumer price index.

The Finance Committee determined Long Beach properties are worth $63.02 million; and all of the tenants collectively paid $1,005,084 in taxes and rent as of fiscal 2013, which ended June 30. Ultimately, this means the tenants paid just 1.59 percent of what fair market value would amount to, Hess said.

Despite all of the uncertainties about FEMA wave height predictions, seawall and lease options, Hess said some things will remain constant. The town still wants an expert appraisal, to eventually get rents at fair market value and the issues between the seawall and the leases should be treated as separate issues.

Hess said the seawall itself could come with a price tag as high as $22 million; that amount cannot be reimbursed by the Federal Emergency Management Agency, which has a policy to not fund projects that protect private residences, Hess said.

Steve Sheehan, secretary of the Long Beach Improvement Association, said long term leases are still the best option.

“The Finance Committee attempted to over-complicate and over-dramatize the situation,” Sheehan wrote in an email to the Times. “It is unfortunate that what the Finance Committee then verbalized directly contradicted what they submitted to the selectmen in writing.”

The LBIA anticipated about $6.3 million in additional revenue throughout the next 30 years, should tenants get a 30-year lease option. This money would come from Long Beach residents improving upon their cottages and ultimately contributing more in taxes, the LBIA says.

Sheehan said the seawall needs to be repaired not only to protect the cottages, but the town’s extensive land assets behind the wall as well.

“A short term lease means lost revenue to the town and depreciated property values to the owners,” Sheehan wrote. “This would result only in a ‘lose-lose’ scenario instead of the ‘win-win’ that could be easily achieved with a 30-year lease and mortgageable Long Beach properties.”

Selectmen have scheduled another public meeting Saturday at Town Hall at 9:15 a.m.

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