Ipswich rent dispute reaches an impasse

Little Neck case is hurting schools

The landlords and homeowners of Little Neck have hit an apparent impasse in their attempts to negotiate a resolution to a protracted rental dispute that is contributing to a severe fiscal crunch facing the town's public schools.

For the past two years, the managers of a nearly 350-year-old trust that owns the 27-acre neck and most of the homeowners who serve as their tenants have been at loggerheads over the terms of a new lease, a dispute that is the subject of litigation.

Efforts to resolve the conflict appeared to break down recently, a circumstance that is itself a source of conflicting interpretations from the two sides.

The homeowners say that, frustrated by the landlords' decision to end mediation and what they contend is a refusal by the trust to put a reasonable offer on the table, they opted to switch law firms to concentrate on pursuing their claims in court.

An attorney for the trust strongly disputes the suggestion that the trust was not attempting to reach a deal. He said after a month of negotiations, lawyers for the two sides had worked out the terms of a new lease when tenants opted to fire their lawyer.

The conflict affects the public schools since, under the terms of a 1660 bequest of the land overlooking the Ipswich River, the trust managers, known by the medieval term "feoffees," are required to rent the land and distribute the proceeds to benefit the public schools. Recently, until two years ago, the feoffees had been making payments to the school district nearly every year. The last payment, in 2006, was for $588,000.

But due to the dispute, those payments have been effectively frozen. The district received no funds in 2007 and none to date in 2008, and the prospect that it will receive any money for the remainder of this year remains uncertain.

The loss of the feoffees' funding has contributed to a financial squeeze facing the district that has prompted the School Committee to seek a $1,491,000 Proposition 2 1/2 override this spring.

In July 2006, the feoffees proposed a lease that would increase the rents for the neck's 143 seasonal homeowners from the existing $5,000 to $9,700, and for its 24 year-round residents from the existing $5,500 to $10,800 for fiscal 2007-09. The rents for the 17 subsequent years would be set by the feoffees at a later date.

Some tenants signed, but most did not, and a group representing the latter - the Little Neck Legal Action Committee - sued the trust in December 2006 to contest the rental terms. The trust countersued.

This past Feb. 13, the feoffees' attorney, William H. Sheehan III, announced that the trust was ending a mediation effort that had begun the previous June and making a revised rent offer to tenants who had not yet signed a lease.

Under it, the rent for seasonal homeowners would be set at $7,900 for fiscal 2008 (plus a one-time payment of $1,800), and gradually increase to $10,900 in fiscal 2012. The rents of year-rounders would go from $8,690 in fiscal 2008 to $11,990 in fiscal 2012. Starting in fiscal 2013, the rent for seasonal tenants would be determined by taking 5 percent of the total value of the land on the neck and dividing it by 167, the number of tenants. The rent for year-round tenants would be 10 percent above that figure.

The feoffees originally intended to give the tenants 30 days to sign the lease. But Sheehan said it was later agreed to extend that time period, at the request of the tenants' attorney, "to discuss additional language changes."

Mark DiSalvo, co-founder of the Little Neck Legal Action Committee, said tenants were surprised and angered at the feoffees' decision to break off mediation. And he said both the feoffees' Feb. 13 lease offer - which his group unanimously voted to reject on March 2 - and a subsequent offer provided after that date were unacceptable, noting that they contained terms previously rejected by homeowners.

He said that left tenants no choice but to focus on the court case by hiring a law firm specializing in litigation.

"We made a judgment to go to an all-litigation team because [the feoffees] demonstrated they would not present us with a lease. . . that we could reasonably recommend to our membership," he said.

But Sheehan said that from Feb. 13 until March 14, he negotiated a revised lease with the then-attorney for the tenants' group that "incorporates many of the changes the tenants wanted. It doesn't include everything they want. But that's how it goes when you are trying to negotiate. The feoffees didn't get everything they wanted. . . To suggest we were not trying to reach a deal is totally unfair."

Sheehan said under the revised lease, the rent for seasonal tenants would be frozen at $9,700 per year from fiscal 2008 to fiscal 2012, which would result in the same overall amount of rent paid over those five years as under the lease outlined on Feb. 13.

For the years starting fiscal 2013, the same process would be used as under the Feb. 13 lease, except that homeowners would pay slightly different rents based on the values of their parcels.

Sheehan said those already under lease have been given the opportunity to sign the revised lease.

School Superintendent Richard Korb said the loss of the feoffees' payments is "part of the problem" that has led to the district's fiscal bind.

But he said, "The major issue is the structural deficit that exists as a result of inadequate funding from the state," coupled with a decline in town revenues due to the slumping economy.

The override would allow the district to avoid a series of steep budget cuts that have been identified to close a projected $966,000 deficit, and to restore some previous cuts.