SalemNews.com, Salem, MA

June 20, 2013

Estates expected to get 'agricultural' tax breaks

By Jonathan Phelps
Staff writer

---- — HAMILTON — A developer is expected to move forward with plans to buy the 86-acre Aquila Farm on Bay Road for six large, equestrian-themed homes after residents last week rejected the town’s proposal to buy the property.

While the properties will be marketed as “large estate parcels,” much of the land is expected to continue to receive property tax breaks for its “agricultural and equestrian nature,” according to UpperCross Development, the company that has an agreement to buy the farm from owner Deirdre Pirie for $4 million.

The town had the right of first refusal to buy the property because of its agricultural designation, which had allowed it to be taxed at a lower rate under state law. But Town Meeting voters rejected the proposal to purchase, 481 votes to 391. The vote required a two-thirds majority.

Approximately 70 percent of the current property is expected to remain under Chapter 61A, the agricultural designation, according to a letter from James Kroesser, an attorney representing UpperCross, sent to selectmen in April.

While the tax rate remains the same under Chapter 61A, the assessed value of the land is reduced at a calculated rate, creating the tax discount. Homes continue to be assessed like any other property.

Kroesser said that 10 to 12 acres will be used to build the new homes, making them no longer eligible for Chapter 61A designation. The rest of the property will remain as agricultural.

“In every way possible, UpperCross intends to preserve the agricultural and equestrian nature of the property,” he wrote.

In order to qualify for Chapter 61A, property owners must have at least 5 acres that are “actively devoted to agricultural or horticultural uses,” according to state law. The law defines “actively devoted” as producing $500 gross income coming from products from the land or animals on the property.

“If you cut down a tree and sell it for $500, it will count,” said Selectman Marc Johnson, who strongly supported the town’s purchase of the land.

Johnson said Pirie had a farm manager and maintained the property as a small-scale working farm. The farm has been in operation since the 1750s and most recently served as an organic farm with a greenhouse and as a boarding facility for horses.

“These will be backyards,” Johnson said of the new developments. “They will not be operating these properties as a farm in any sense of the word. These will be pastures and horse turnout areas, which don’t qualify under 61A.”

Selectman Jennifer Scuteri agreed.

“The legislation was intended to protect and preserve local farms, not the backyards of McMansions,” she said.

Johnson, however, said it’s all legal because they will meet the requirement under state law.

Once the 86-acre property is split into the six lots, they will be sold to the individual builders, Kroesser wrote in the letter. It is unknown how each property owner plans to use the properties for agricultural or horticultural purposes.

Kroesser did not return phone calls seeking comment on the properties that will qualify for 61A. Lawrence Frej, a principal for UpperCross, declined comment.

Town officials proposed that the town purchase the land to use it for conservation, public horseback riding and hiking trails, and sports fields, and to sell a portion to a developer to build a cluster of cottage-style homes, duplexes or senior apartments.

At Town Meeting, Selectman Scott Maddern said using 14 acres of the land for mixed-use housing could have brought in an estimated $500,000 to $525,000 in increased tax revenue to the town, while the plan by UpperCross would bring in about $170,000.

UpperCross claimed that the property, including two additional properties on Bay Road owned by Pirie, would bring in between $225,000 and $250,000 in tax revenue. The town did not include the two additional properties in its figures because the town wouldn’t have bought them.

Johnson said one potential buyer is planning to buy two lots and not build a home on one of them, meaning the town will lose out on more tax revenue.

“It means the revenue estimates they came up with will be far less,” Johnson said, noting that the town missed out on a real opportunity to generate a significant amount of new tax revenue by buying the property and moving forward with mixed-housing plans.

Staff writer Jonathan Phelps can be reached at 978-338-2527 or by email at jphelps@salemnews.com. Follow him on Twitter at JPhelps_SN.