The town of Essex has negotiated a settlement that reduces the property tax payments for 70 residents of the waterfront enclave at Conomo Point.
Residents received refunds ranging from $200 to more than $6,000 for two years, according to Nina Walker, a Conomo Point resident.
“On the one hand, we’re happy, and on the other we wish it hadn’t come about at all,” said Walker, who received a refund of $5,406.82 for 2012 and 2013. “It’s a mixed blessing at best.”
Tax bills have been just one point of dispute between the summer colony and the town, which is selling off some of the long-rented properties there.
Under the compromise reached in March, the overall assessments for the properties in question were reduced by about $13.7 million over 2012 and 2013, according to figures provided by the town.
The total payout for tax refunds, according to Town Administrator Brendhan Zubricki, was $203,914.
Jeff Jones, chairman of the Board of Selectmen, said that by accepting a settlement, the town avoided litigation and acted in a way that was fair to taxpayers on Conomo Point as well as those elsewhere in town.
“I think the best financial decision is to settle these without pursuing them all individually in court,” Jones said. “It settles it all and we can all move on.”
Essex has owned the Conomo Point land since 1826, when it was used as a poor farm for the needy. Eventually the town began leasing out waterfront parcels to subsidize the farm’s expenses, and some families have rented there for decades.
Compelled by the Massachusetts Department of Environmental Protection for violations of Title 5 (septic system and waste-water disposal regulations), the town has in recent years sought to reshape Conomo Point, which has historically been a summer colony, though there are some year-round residents.
Through several Town Meetings, Essex residents have approved the redistricting of some sections of Conomo Point and the sale of some of the 123 properties, specifically those in the southern section. Tenants in 2011 were offered three-year bridge leases and the right of first refusal to purchase the properties they had been renting.
In the southern area, where there are 41 houses, 33 have been sold, some properties have reverted to the town, and some occupants have decided not to purchase. Both renters and owners are required to pay property taxes on Conomo Point property.
While many tenants have signed the bridge leases, others have not. Lawsuits were filed over the rental increases and whether tenants who have built on the leased parcels own the structures or whether the town owns them.
In a decision filed in October 2013, an Essex Superior Court judge ruled that the rents charged by the town under the three-year leases were appropriate and within an acceptable range. In a separate decision from 2013, a judge ruled that if a dwelling or other building was permanently affixed to the property, it belonged to the town. If the dwelling or building was not permanently affixed, the remedy would be to remove it and move it elsewhere in a “reasonable time.” Both cases are under appeal.
The abatement cases brought to the state Appellate Tax Board argued simply that the assessments were too high.
“These were vastly disproportionate valuations compared to properties that might sell in Essex or might sell in abutting communities,” said Peter E. Flynn, attorney for the residents. “From [the plaintiffs’] point of view, it was an overvaluation, no question.”
As part of the mediation process, both sides brought in experts to provide their own appraisals for the properties, and negotiated from there. The town was represented by attorneys from Kopelman and Paige.
“We were very happy that we achieved the result we got,” Flynn said, noting that litigation would have been expensive for both sides.
Walker said that in her case, the tax assessments have been high in recent years, particularly considering the lackluster real estate market. But Board of Assessors chairman Richard Cairns noted that suburban prices remained strong, including those in Essex.
“Even though the country suffered a [real estate] depression, Massachusetts did not suffer the same depressed values that everyone else did,” said Cairns, adding that small towns did not see price drops similar to those in cities like Lowell, and waterfront property in particular remained at a premium.
“A lot of people questioned why the values were maintained, but we’re going by what’s selling in Essex, and only in Essex,” said Cairns, who used another waterfront area — Lufkin Point — and other parts of town for comparison.
“If the values of the sales are above or below our assessments, we make adjustments accordingly,” he said.
Richard Denton, who received a two-year rebate check of $6,200, said that his experience with the independent appraisers disagreed with those values.
“Our certified appraiser did a comparison of similarly situated properties,” he said. “So our value was based on actual sales comparisons.”
In John Cushing’s case, his Conomo Point Road three-bedroom residence on .09 acres was assessed at $399,400 in 2012, then reduced during mediation to $379,710. In 2013, the property was assessed at $527,000; that was reduced to $431,000.
Some on both sides of the dispute noted that the unusual qualities of the properties and fact that there have been no independent Conomo Point sales hampered the process.
Two factors played a role in spawning so many abatement requests.
First, Conomo Point residents were not allowed to seek an abatement on property taxes until the second of two 10-year leases expired after 2011. Second, the town made assessments based on 70 percent of the land’s value until 2013, when it made assessments based on 100 percent of the land’s value.
After the two sides forged a compromise, total assessments for the affected properties went from $17.97 million in 2012 to approximately $14 million, a reduction of almost $4 million; and in 2013, the total went from $29.97 million to $20.28 million, a reduction of about $9.7 million.
Throughout its history, Conomo Point has provided financial benefits to the town, Cushing said. But with some Conomo Point cottage owners already having difficulty finding buyers, and a seemingly flawed assessment system, Cushing said he thinks there will be some vacancies when properties fail to sell on the open market.
“I think this will put the town on notice that we may be expecting too much of Conomo Point to solve its [financial] problems,” he said. “Something is wrong with the valuation process.”