This is the expert report we commissioned to analyze all four appraisals and make recommendations on the path forward. One particularly interesting element is the discussion of Naushon Island in Buzzards Bay. This is an example of another valuable piece of land which was placed in a perpetual trust and is being rented and managed professionally.
Feoffees Opposition to Motion to Stay and Motion to Report
Probate – Feoffees – 120126 – Opposition to Motion to Stay and Motion to Report
There is actually a wealth of interesting information in the document below, including many financial statements for the Feoffees we had never seen before.
Probate – Feoffees – 120126 – Supporting Materials to Opposition
School Committee Opposition of Motion to Report and Motion to Stay
Your tax dollars at work. The School Committee must have some extra money floating around outside of the funds approved by Town Meeting and restricted by the Selectmen. This is a duplication of the Feoffees’ effort, since they have already opposed these motions.
Probate – SC – 120126 – Opposition of Motion to Stay Entry of Judgment
Feoffees Motion to Strike Affidavits
Here the Feoffees complain about all of the interveners affidavits.
Tri-Board Meeting Report
Tonight’s Tri-Board meeting to discuss the Trust Administration Order was three hours of minutiae punctuated by a half hour of substantive discussion on the spending policy. In particular, the italicized phrase in the sentence below:
“The educational uses of the distributed funds shall be determined by the Ipswich School Committee, with preference when feasible for supplemental enrichment programs and uses that provide educational enhancement for Ipswich public school students.”
There was a surprisingly large variety of opinions among members of the three boards as to what was appropriate. The range went from a suggestion that the School Committee should not, in any way, restrict the potential uses of the funds in the Trust document to suggestions that there should be no leeway for the funds to be used for anything but enhancement and that this could be best enforced by Trustees that are sufficiently independent of the School Committee, possibly through a granting structure as had been discussed in earlier versions of this document. There was much discussion, but in the end it was up to the 5 members of the School Committee in attendance. Rachel Roesler moved to strike “with preference when feasible” and this motion failed by a vote of 3-2 (with Jen Bauman joining in the affirmative). Then Barry moved to strike only “when feasible” and this motion passed 3-2 (with Jeff Loeb and Laura Dietz joining in the affirmative). It was not clear at the time why those in the affirmative thought that removing only this part of the text would have any substantive effect in practice, since “with preference” and “when feasible” seem to be duplicative.
It would appear that there is no clear consensus on this issue among the three boards, and since we are confident that this trust document is not going to be implemented anyway due to the intervention, there may yet be opportunities to revisit the question with a broader constituency participating.
So while the outcome was not what we had hoped for, we did get one critical thing that we were denied in the decision to sell Little Neck: a public airing of the question, with the cameras rolling, and where members of the boards could be held accountable to the statements made in the meeting.
Tri-Board Meeting, January 24, 2011
7:30 in the Selectman’s Meeting Room in Town Hall. Agenda here.
The School Committee, Selectmen and FinCom will discuss the proposed Trust Administration Order that the court required be revised as part of the agreement for judgment.
Points of interest compared to previous versions of this document are:
* A new policy requiring reinvestment means it will be more difficult to diminish the principal over time (good) , but also reduces the amount that the Feoffees will be able to distribute each year. Given this change, the School Committee should present their analysis of how much they anticipate the Trust distributing in future years, and how this compares to the additional costs that the school system would have as a result of students from the new year-round residences so that we can see whether there is any money left for “enhancements”.
* The trust document doesn’t give the new trustees any say over the usage of the so-called “additional” $3M of back rent that distinguishes this deal from the original $29.1M deal that the School Committee has opposed for over a year. This money is committed to be spent “off the top” and is not included in the calculation of the principal of the Trust fund for future generations.
* The primary concern that remains with this document is that it leaves too much control in the hands of School Committee, and only requires funds to be used for enhancement “when feasible” (see Section 3). Our vision of the way this Trust should work – whether based on cash or land – is more like a foundation that makes grants based on the merits of an application for funds. Earlier versions of this document hewed closer to this line. As written, it will be much too easy for these funds to just be absorbed into the school budget over time.
Even though we do not believe this document will ever be put into practice, since the settlement will not go through, this is an important discussion to participate in. The basic tenets of how the future Feoffees will operate and how funds are distributed are the same whether the asset is land or dollars.
Welcome
Featured
This site is dedicated to making public as much information as possible about the attempt by the trustees (Feoffees) of the oldest charitable trust in the United States (the 1660 Grammar School Trust in Ipswich, Massachusetts) to sell Little Neck, the only remaining asset, in contravention of the will of its donor, William Payne.
Read, explore, ask questions and make up your own mind. If you or someone you know can help us, let us know. You can have updates sent to your email by clicking the “follow” button to the right.
"Knowledge is power." - Sir Francis Bacon "Only the educated man entertains doubts, and doubt is the beginning of wisdom." - Adlai Stevenson "Sunlight is said to be the best of disinfectants." - U.S. Supreme Court Justice Louis Brandeis "Plate sin with gold, And the strong lance of justice hurtless breaks" - William Shakespeare
Appraisal Analysis
There are four appraisals on record, all of which are posted on this site. They represent some of the best evidence of the feasibility of leasing Little Neck, and therefore the illegality of breaking the will of William Paine. See this analysis:
Other – 120117 – Appraisal Analysis
Out of the hundreds of pages of these appraisals, there are literally only 6 pages that one needs to look at (they are all referenced in the analysis). What they show is that while there is plenty of disagreement over the value of the property if sold, there is much more consistency in the value of the property to the Trust if kept. The market rent and implied gross return are in a narrow band, and the numbers from the tenants own appraisal are in the middle of the pack for both. The much-maligned-by-the-Feoffees FinCom appraisal is actually the most conservative in terms of anticipated gross return for a rental scenario.
This plays into the separate, but related, issue of why, even if it were legal, selling is such a bad deal. There are three fundamental reasons:
1) Selling does not create an asset with as much value as rentable land (note that this is a different statement than “the sale is not at market value”). In fact, the $22M generated is almost half the $40.5M average in the above analysis. So the starting corpus value on which to base earnings is almost half.
2) Since none of the appraisers were asked to determine the “value of keeping the land”, none of them attempt to factor in the value to the landowner of keeping the seasonal restrictions on the land. This value is as much or more than the value of the land itself. This is because it would take tens of millions of dollars more in a cash trust to generate and offset the hundreds of thousands of dollars in new costs that would come from lifting these restrictions.
3) In this situation, a safely invested cash trust does not have the earning power of a land based trust. This is demonstrated by the average 4.62% return rates in the attached. Considering that it would be typical for any long term lease to adjust for the CPI, these gross rates can be considered to be the return above inflation. Even considering additional costs unique to land management, and adjusting the lease rates down to reflect seasonal restrictions, the net returns will be well in excess of the most optimistic 2.6% (6% in an environment of 3% inflation with .4% costs) that might be expected from a cash trust . Keep in mind that the School Committee’s own estimate from Summary Judgment was a pessimistic .5% before expenses for this figure. See point 42 of their Summary Judgment Opposition for their analysis.
There is one other important thing to note about this analysis. Look at the last columns, which show each appraiser’s opinion of the highest and lowest value lots on Little Neck. Compare this to the highest and lowest selling prices from the settlement (sale prices for every lot can be found here). A common thing you might hear around town is that “the tenants are going to double their money the next day” if the sale goes through. But what this shows is that this stereotype is not perfect; the reality appears to be more subtle. While the less desirable lots are being sold near “market value”, it is the tenants with the most desirable lots – like those waterfront lots up on the cliff with views down Crane Beach and over to Plum Island – that stand to gain huge windfalls, every dollar of which comes right out of the schoolkids pockets.
UPDATE: We now have the full expert report that lays out the above argument in more detail. It can be found here.
Proposed Trust Administration Order
This is the latest of dozens of versions of the document that would govern the workings of a new group of Feoffees. Read more about it here.
Ipswich Selectmen restrict legal funds
Ipswich Chronicle article.
Ipswich Citizens for Public Trust 