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Photo by Jim Powers
The Eilert property at 169 Polpis Rd., being acquired by the Nantucket Land Bank, with the house retained by the seller, seen across wetlands from Polpis Road. |
By Jason Graziadei
I&M Senior Writer
The Nantucket Land Bank purchased a 12-acre property off Polpis Road for $4 million this week, but it could be the last major acquisition of open space by the commission for some time, as its cash reserves have dwindled and the tanking island real estate market has slowed its revenue to a trickle.
The 12 acres off Polpis Road include sweeping views of Folgers Marsh and Nantucket Harbor to the north, and the property abuts extensive conservation land to the south. Land Bank director Eric Savetsky called the new acquisition “a gateway to the Middle Moors,” and said the Land Bank will add a parking area and trail to connect it to the other conservation property in the area.
The deal with the Eilert family will allow it to keep three acres, including the old farmhouse on the property, while the Land Bank will acquire the 12 acres surrounding the structure. The long dirt driveway leading into the property will be shared by the family and the Land Bank, Savetsky said.
Lucy Eilert said she and her daughters were pleased that the vast majority of the property would remain in conservation. “We have always been conservation-minded,” said Eilert.
The farmhouse on the property was once owned by the late Harry Gordon, and was one of the first structures built “in the country” down Polpis Road, Savetsky added.
“We were talking to the family about buying the whole property, but it was quite expensive and the house itself is very old and somewhat historic, so we came up with a solution that was a win-win, where the family kept one building lot with the house and the Land Bank bought the remainder of the property, basically 12 acres,” Savetsky said.
“It’s a gateway to the middle moors, and an additional access to the moors for the public,” he added. “We worked with the family, and in fact, one of the daughters approached the Land Bank because they wanted to see if it could be preserved rather than developed. They came to us first, so it was never listed on the market.”
Land Bank commissioner and selectman Allen Reinhard was instrumental in orchestrating the deal between the Eilerts and the Land Bank, and said the acquisition will provide the public with a new access point to the middle moors that is closer to town.
“This whole middle moors area is the heart of Nantucket, and there’s only five roads that go in, so here’s a golden opportunity right off the Polpis Road,” Reinhard said. “The will connect to the whole trail system in the middle moors.”
The major acquisition will likely be the last big news from the Land Bank for some time, as the purchase drained its reserves to about $3 million, approaching the bare minimum it is required to have on-hand to cover debt service costs on the roughly $31 million it owes for various property acquisitions in recent years.
With real estate sales on Nantucket slowing to a crawl, the 2 percent fee paid to the Land Bank on all property transfers on the island has generated far less revenue for the quasi-governmental organization over the past year.
“Looking at January, February and March of this year, compared to last year, we’re down 70 percent,” Savetsky said. “There’s just nothing happening. Traditionally it’s a slow time of the year for sales, but being down 70 percent, I don’t think we’ve brought in a million dollars this year yet. And with our debt service we’ve amassed over the years to buy property, we need a good chunk of money just to pay the debt service before we think about new purchases. So basically, our purchasing is on hold at the moment, unfortunately. We had a great run, and did some great things, but until the real estate market starts to move again, we can’t do too much.”
During the boom years in 2004 and 2005, when more than $1 billion in real estate changed hands in both years, the Land Bank was flush with cash, and moved aggressively to acquire open space and waterfront properties around the island. In the fiscal years between 2004 through 2007, the Land Bank spent more than $71.2 million to acquire over 308 acres of island land. In the most recently completed fiscal year 2008, the Land Bank spent just $13 million to acquire 4.48 acres.
“We were buying pretty rapidly at that time, really over the past couple years our cash on hand has been pretty high,” Savetsky said. “There was a lot of money coming in the door and a lot of money going out the door with our acquisitions, paralleling the real estate market. Now with a trickle coming in the door, that keeps us afloat with trying to pay the debt service.”
In the 2005 fiscal year, Land Bank revenue from the transfer tax reached its high-water mark when it received nearly $25 million. Over the past two fiscal years the revenue has held steady at about $15 million, but information for the most recent fiscal year 2009, which ends in June, is not available.
In 2007, the Land Bank sought the full faith and credit of the town in backing its proposed borrowing through bonds or notes of $30 million, a measure which voters approved at that year’s Town Meeting. At the time, the Land Bank had cash reserves of about $15 million, which have now dwindled down to about $3 million, a figure which includes some acquisitions currently in the works, Savetsky said.
Besides one more large acquisition that could take place in the fall, Reinhard said the Land Bank would likely have to wait until the market rebounds before purchasing another big piece of the conservation puzzle.
“Until the market picks up, I would say the odds are not good,” Reinhard said. “Given the current fiscal situation, it’s important we take a close look at our fiduciary responsibility. We have one year’s worth of our bond payments in the bank in one account, and another account with one year’s worth of operating expenses. On top of that, we’ve talked about establishing another reserve fund, or rainy day fund, as a backup to our backup. We’re a pretty conservative group.”
Asked whether the purchase of the Eilert property overly benefited the family since it got to keep three acres that will be surrounded by open space, Land Bank commissioner Leslie Johnson, who voted in favor of purchasing the new Polpis property, said the Eilerts had to give up much of their privacy and will have to share the access driveway with the public.
“You can say they benefit, but basically their property is public, so they’re making a sacrifice,” Johnson said. “They’ll have people driving up their driveway, walking and utilizing it. When I look at different purchases we consider, we have to really scrutinize what the values are, and I have a tendency to assess it in terms of who benefits, but I think this is a win-win.”
Johnson said the purchase of the Eilert property in Polpis was in the works long before the current downturn, and emphasized that while the recession persists, the Land Bank can take stock of all its recent purchases and concentrate on maintaining them for the public.
“This (the purchase of the Eilert property in Polpis) has been on the stove percolating for a couple years, so this wasn’t something we decided and said lets use the last of our money,” Johnson said. “We made the commitment while the market was in an upswing, and now it’s finally coming to fruition.
“As soon as we saw the decline in the market at the end of last summer, we were even more conservative because we have to be aware of our debt service and that’s not a bad thing,” Johnson continued. “That means prices come down and when we can make acquisitions again, they’ll be more affordable and now we can take a back seat and protect and preserve the properties we have.”
The Land Bank is required to keep about $2.7 million on hand to cover at least one year of debt service costs.
“We’ve been doing the worst case scenario calculations to make sure we’re in good shape for two years, and it comes down to not purchasing anything new until there’s a rebound,” Savetsky said.
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