Saturday, October 6, 2007

An expensive view

I honestly think our biggest landowner Amherst College, (named after the town not the General) doesn’t pay its fair share. And when you have $1.3 BILLION in reserves, it’s not like you’re forgoing food on the table. Then of course our #2 landowner, Umass, doesn’t carry its considerable weight either.

Since I live less than 10 houses down from this majestic view and cycle past it almost every day between St. Patty’s Day and Thanksgiving, I would certainly not want 20 houses to sprout or—God forbid—a neon, clownish Bank of America building.

Since my great, great Grandfather Tom Kelley, who carried Miss Emily—that would be Dickinson—to her grave, had a final job working as a night watchman for Amherst College, I take no joy in throwing stones their way.

And while I was impressed that Ms. Emily would honor Tom as her chief pallbearer, considering he only had one arm and a long way to carry her coffin; it also occurred to me that Amherst College showed him respect as well (ignoring his handicap) by giving him that night watchman job. After all, when was the last time you saw a one-armed security guard?

So I wondered how the newer property (Dakin Estate) Amherst College acquired 100 yards from this panoramic expanse could be valued at $1 million and this larger track owned forever by the college at four times less:

In a message dated 10/5/07 8:13:25 AM, writes:
It consists of two parcels 1 at 20 Acres and under Chapter 61B is valued at $47,000 and the other at 30 acres at $189,500. These two properties would a lower value from the Dakin property as the rear portions are broken off by a brook and wetlands so we applied a discount to them. They also lack the access points that the Dakin property has so I considered that land more valuable.

(Chapter 61B means the property is used for recreation/open space and hence has a valuation of only 25% its real value).

Amherst College is, indeed, the #1 taxpayer in town. Homes they lease to professors at reduced rates are valued and taxed like any other housing in Amherst. And the Amherst Golf Course (unlike the town’s) pays taxes as does the Lord Jeffery Inn—unlike the Umass Campus Center Hotel.

Yet they rent their (untaxed) opulent recreation fields and dormitories during the summer to private businesses offering expensive summer camps for soccer, cheerleading, ultimate Frisbee etc. The assessor considers that “incidental use” and doesn’t pro rate the academic exemption to reflect this 2 or 3 months of business activity.

Of course the same scenario applies to Hampshire College, one of the most expensive schools in the country) and other non profits like Churches, the VFW, American Legion and the Amherst Women’s Club, for wedding receptions, anniversary parties, etc.

Umass, however, is a totally different critter. The assessor can’t tax them PERIOD (so that critter would be a Ten-Ton Godzilla). Thus removing Frat Row—that paid Amherst $32.000 in FY07—FOREVER eliminates that revenue no matter what Umass does with it.

Amherst College had two years to implement academic use of the Dakin Estate before the assessor hit them with a $1 million valuation, resulting in a $16,000 tax payment. Umass has no such deadline with the former Frat Row properties.

Although I still think odd to ONLY value the property at $1 million when Amherst College paid $4.3 million. My 25 years of selling experience tells me the value of something is whatever somebody is willing to pay. The assessor however considers Amherst College a “motivated buyer” that does not necessarily reflect the true value of the property.

But obviously others drove the bid beyond $4 million. If Amherst College dropped out and a private developer won the bid for the Dakin Estate, the valuation would instantly have escalated to $4 million (and then five times that when development occurred)

And remember, every $1 million of value equals $16,000 in taxes to the town.

To be continued: Immediately above (Yeah, I work Sunday's)


O'Reilly said...

We don't tax wealthy home owners more than we tax poor home owners so why does the size of the Amherst College endowment figure into your thinking?

Dakin Estates is worth far more in tax valuation if it is developed into a residential area than it is if it left undeveloped. Although I don't know, I would conclude it was acquired not for development but for preservation. Consider the non-monetary value of that purpose.

My guess is that the main problem to homeowners in Amherst is that their taxes are so high as to be a burden. The were high before Romney cut $700 million in local aid and they are higher still since then. An additional $32K here and $32K there is not going to solve the problem for Amherst Real Estate Tax payers.

I'm just saying, the tax exempt status of Umass and Amherst College is not going to change. I believe Amherst College does make a payment to the town in lieu of taxes, although I am not sure and I certainly do not know the amount.

Your determination to help solve the fiscal pressures on Amherst taxpayers (residents) is formidable. Looking for potential lost revenue only may not yield the best result.

LarryK4 said...

No, actually Amherst College does not may a payment in lieu of taxes to Amherst, other than a small amount negotiated for fire protection a few years back when town officials fist got beat up by Umass in a previous "strategic agreement".

Yes, the Dakin Estate was indeed acquired for "preservation" and the College President made the mistake of saying that to the Daily Hampshire Gazette within weeks of the purchase.

And since the assessor reads the Gazette and knows full well that "preservation" is not an academic use...

O'Reilly said...

"preservation" is not an academic use...

I'm not sure your reasoning is supported by the tax code but then again I'm not sure your argument appeals to the tax code as opposed to a more general sense of fairness.

I would be better served consulting a tax attorney than guessing but since I don't have a tax attorney here at the moment I'll venture to assert that the property, both real estate and financial, of Amherst College is not subject to tax because of the college's non-profit tax exempt status except where the property is used as residential property for faculty or fellows.

Is that your understanding of their tax obligations under the law?

LarryK4 said...

Amherst College cannot purchase a commercial property in downtown Amherst and simply rent it to a for-profit business to make money and still have the property off the tax rolls. Umass, on the other hand, CAN. Yikes!

About ten years ago the "Men’s Resource Center" purchased a prime building in the downtown to do their ...well, whatever it is they do; and then rented the upstairs to a for-profit NORMAL business. The assessor kept the lower half of the building off-the-tax rolls but taxed them on the for-profit use of the upper half.