SalemNews.com, Salem, MA

BEVERLY - A three-year battle with the Cummings Center over how much the sprawling ofice park is worth is costing the city thousands of dollars in legal fees.

The city has already spent $45,000 on lawyers, and Mayor Bill Scanlon has asked the City Council to set aside another $45,000 as the case continues.

This year the Cummings Center, the city's largest taxpayer, is paying $1.6 million in property taxes on an assessed value of $87.4 million.

Neither side is saying how far apart they are in their assessments, but Cummings Center founder Bill Cummings says the difference is "substantial." "We wouldn't appeal if it was a matter of a few thousand dollars," Cummings said.

The Cummings Center has appealed the city's last three assessments - for 2005, 2006 and 2007 - to the state Appellate Tax Board. All three appeals are now being handled as one case. The state board has yet to make a decision.

If the company wins, the city will have to pay back some of what the Cummings Center has already paid. Scanlon said he does not know how much that would be, but he expressed confidence that the city will win its case.

"We don't think the valuations have been unjust," Scanlon said. "We don't expect to lose anything here."

The city is about to increase the Cummings Center assessment to $99.3 million, a 13.6 percent increase, according to City Assessor Frank Golden. That would raise Cummings' property tax bill to about $1.8 million.

Golden said he wouldn't be surprised if the Cummings Center challenges the latest assessment as well. He said the two sides have been "far apart" in their opinions of how much the 2.3 million square feet of property is worth.

The city has hired the same outside appraiser, Emmet Logue from Hunneman Appraisal, for the last several years to assess the Cummings Center's value. It has also hired a Boston-based lawyer, James Masterman of Greenberg Traurig, to handle the appeals.

Golden said the city is basing its assessment mainly on what the Cummings Center and other office parks are charging for rent.

"I think our number is solid," he said. "Obviously, the mayor is standing his ground. We have an expert appraiser, we have a fine attorney. We're just trying to see this thing through and protect our rights and get what we think we should from that property."

The dispute between the city and its largest taxpayer is a sharp contrast to the first 10 years of the Cummings Center, when the two sides shared an agreement to keep the office park's taxes below market rate.

When Bill Cummings bought the property for $500,000 in 1996, the city allowed him to pay less than half of the full property taxes as an incentive for him to develop the site, the deteriorating former United Shoe factory.

Cummings has transformed the area into a thriving office and retail park with more than 4,000 employees. He began paying full taxes on the property for the first time in 2006.

Bill Cummings said his challenge of the city's assessment has nothing to do with the fact that he is now paying full taxes. He said the company simply believes the city is overvaluing the property.

"The appraisers we've had, who are quite knowledgeable about commercial real estate, have evaluated it and determined it's considerably higher than it should be," Cummings said.

Scanlon said it's "very common" for big companies like Cummings Properties, which owns the Cummings Center, to challenge the local assessments of their properties. But Bill Cummings said that's not true.

"We might have had three before in 30 years, and we operate in nine different communities," Cummings said.

One of those cases, in 1996, won Cummings Properties a rebate of $700,000, including interest, according to published reports. That case involved property in Woburn that had been contaminated by toxic chemicals.

The same attorney who won that case for Cummings - John Lynch, a partner in the Boston law firm Lynch, DeSimone & Nylen - is representing the company in the case against Beverly.

Cummings and Scanlon, who as mayor was instrumental in working out the tax deals to bring Cummings to Beverly, have often touted the Cummings Center as a model of how a city and a private developer can work together.

Asked about that relationship now, Cummings said, "People in good conscience can disagree. We don't think there's anything personal about it. The mayor has a job to do and we appreciate that."

Scanlon downplayed the dispute, saying the city has money set aside to cover the legal fees. He said he doesn't know how much money is at stake for the city, but said every $1 million of property value is worth about $19,000 in taxes to the city.

That means if the two sides were, for example, $10 million apart in their assessment, the difference in property tax for one year would be $190,000.

"Our position is we will protect the public's interest, and if it costs us money to do that, we will do that," Scanlon said.

Cummings Center

Year Assessment Property taxes

2008 $99.3 million $1.8 million*

2007 $87.4 million $1.6 million

* Estimated