Statement from Interveners on their Appeal

Appeals – Interveners – 121106 – Public Statement

STATEMENT OF LITTLE NECK INTERVENERS

NOVEMBER 6, 2012

Ten months ago we intervened in Essex Probate Court to stop the proposed sale of Little Neck. The sale approved by the Probate Court violated the terms under which William Paine donated the land in his last will and testament in 1660, with instructions that the land “never be sold” and that it be held in trust “forever” for the benefit of the Ipswich Public Schools. Today we have decided to withdraw our appeal.

We made this decision reluctantly because no court of law in Massachusetts has actually examined the facts in this case or made a reasoned legal decision on the validity of breaking Mr. Paine’s will after 352 years. To the contrary, we have been denied an opportunity to argue this case on its merits. If the Supreme Judicial Court had accepted our petition to take this case under direct appellate review, some of the most prominent U.S. experts in charitable trusts and land trusts were ready to submit briefs to the court supporting our appeal. There was agreement among many legal experts that the breach of Mr. Paine’s will to allow the sale of Little Neck would be a violation of well-established law governing charitable trusts and protection of donors‘ intent.

While we hate to let down the many people in Ipswich and around the country who have supported our cause, as a practical matter pursuing the case further before the Massachusetts Court of Appeals is unlikely to achieve a different result. The SJC was the court in the best position to protect the public interest and reach the merits of this case. If we do not get a satisfactory result from the Court of Appeals, the SJC is now unlikely to accept a further appeal having already denied our petition for direct appellate review.

One thing that is especially troubling to us is that the Attorney General has never been held accountable for her actions. Ipswich citizens had been raising alarms for decades about the mismanagement of the Little Neck charitable trust, and two Assistant Attorneys General reported in writing in 2001 and 2002 that the trustees (Feoffees) were in breach of their fiduciary duty. Yet instead of seeking removal of the trustees, as was the Attorney General’s legal and moral obligation, the situation was simply allowed to get worse. That gross mismanagement of the trust, which the Attorney General allowed to continue, led to tenant disputes which were then cited in court as the sole rationale for the necessity of breaching Mr. Paine’s trust and selling the land.

Anyone thinking about donating land or property for charitable purposes in Massachusetts should now think twice in light of the Little Neck case. It is clear the Attorney General cannot be counted upon to uphold the intentions of donors and testators. It’s also clear that current state law on charitable trusts – which allows the AG to be the sole representative of the charitable donor and to exclude concerned citizens from the legal process – enables the AG to avoid scrutiny and cover up her own failure to properly oversee public charities in Massachusetts.

The one bright light in this case is the number of concerned citizens in Ipswich and beyond who spoke out against the injustice of violating Mr. Paine’s will and cheating the Ipswich Public Schools out of tens of millions of dollars in future income. When citizens could not get straight answers about the management of the Little Neck trust more than a decade ago, they convinced the town meeting to authorize an investigation. Over a three-year period, voters at two town meetings and at a town election voted overwhelming to demand the removal of the Feoffees – back when it would have made a difference in protecting the Little Neck trust and stopping a sale. Before the case was heard by the probate court last year, 681 citizens joined the judicial process by signing an amicus curiae (“friend of the court”) legal brief opposing the sale. After the sale was rubber-stamped by the court, an overflow turnout at town meeting voted to oppose the sale and support our appeal.

We will forever be grateful for that support – and for knowing that so many of our neighbors and fellow citizens are willing to stand up and be counted when it really matters.

Andrew and Susan Brengle

Peter Buletza

Douglas DeAngelis

Joanne Delaney

Cara Doran

Tammy Howe

Jacquelyn and Jonathan Phypers

Kenneth Swenson

Robert Weatherall, Jr.

Jason and Michelle Wertz

Clark Ziegler

Interesting History from the Attorney General

We just happened to notice that the Attorney General recently posted a quarterly report from the year 2002 in which she states “the allegation is basically that the feoffees operate for the benefit of the renters rather than for the benefit of the schools, and this appears to be the case.”

History – 20021001 – AG Quarterly Report

Given that this took almost 10 years to get posted on the Attorney General’s site, it should be very interesting to see what gets uncovered over the next 10 years.

Tens of millions of dollars?

In the most recent Chronicle article, Doug is quoted as saying that the schools have lost “tens of millions” of dollars due to the mismanagement of the Grammar School Trust by the Feoffees.  Here is the background for that assertion.

At the links below you can find a PDF chart as well as the actual Excel spreadsheet used to calculate the difference between what the Feoffees have provided to the schools and what they could have provided with prudent management for every year since 1968.

Other – 120212 – Feoffee Deficit (PDF)

Other – 120212 – Feoffee Deficit (Excel file)

The value of Little Neck as a rental property in 2010 is taken as an average of the four appraisals.  The value for previous years is calculated using the Boston Case/Schiller Home Price Index from 1987 forward:

http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us

…and National Association of Realtors national median values before that:

http://www.realestateabc.com/graphs/natlmedian.htm

For the estimated distribution, we start with the average cap rate from all four appraisals and then reduce it by the average expenses from the appraisals.  In our case, we reduce it still further in order to account for the effects of keeping the property seasonal and hiring a professional manager, both of which we feel are critical to achieving the highest net return for the beneficiaries.  We also give the Feoffees “credit” for payments toward the wastewater system, since this is necessary to retaining the value of the property and would not be captured in the “normal” operating expenses.

Lastly, all numbers are brought into 2010 dollars using the CPI numbers from here.

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

Please send any comments on ways you feel this analysis is faulty using the contact link.

In summary, it is not necessary to come to the conclusion that the Feoffees are “bad people” in order to come to the conclusion that they are ill suited to the task of being Trustees of this Trust.  All we are asking is to let professionals have a chance to manage this asset properly before liquidating it and cheating the schools out of yet still more tens of millions of dollars.

 

2011 Spring Town Meeting funding vote

Many of those who attended the January 5, 2012 meeting where the School Committee “explained” its vote were surprised and confused to hear Chairman Loeb state (and committee member Laura Dietz concur) that “The vote at Town Meeting was not ‘not to sell’.  The vote at Town Meeting was to support the School Committee relative to the sale and the change of governance.”

We encourage you to go back to the actual presentation of Article 26 at the 2011 Spring Town Meeting.

Watching this is 15 minutes well spent.  Never is there any indication that by voting in favor of this article the town was supporting the sale of Little Neck.  Quite the opposite: Mitch Feldman’s presentation of the article on behalf of the Finance Committee was focused on the “benefits of land ownership” (9:00) and his central point was that short term pain is required to achieve a long term gain for the community.  At 5:50 he specifically defines the article as “all three boards asking for another $300,000 so that the School Committee attorneys can continue to oppose the proposed sale and to seek to change the governance of the Feoffees”.

The School Committee was last to speak and they had the opportunity to clarify any statements they felt might be misleading or inaccurate.  Chairman Loeb chose only to say “The School Committee supports this motion unanimously” (12:40)

No reasonable person would have left the Annual Town Meeting believing that the School Committee had the town’s blessing to agree to the sale of Little Neck.  The proposed sale may not technically violate the language of Article 26, but it is hardly consistent with what the voters of Ipswich were led to believe and it is hardly the course of action that voters had a right to expect from the School Committee.