OTISFIELD — Twenty-two of 27 Heniger Park Association members have asked the Board of Selectmen to reconsider an offer to sign 99-year leases with the town.
Selectmen have agreed to clear 90 minutes on their Aug. 5 meeting agenda to discuss the issue with the association members, but have made no commitment whether they will reconsider extending the April 30 deadline.
“We’ll talk about it,” Chairman Hal Ferguson said.
It’s the latest development in an effort by the town to increase the lease payments at the 100-acre park on Pleasant Lake to reflect lakeside property values.
The land was left to the town in 1943 by noted Broadway producer Jacob Heniger, who stipulated that selectmen decide what would be done with it. In 1965, the board drew up agreements allowing people to lease 37 lots for fees ranging from $0 to $50 per year for 50 years. Tenants were allowed to build camps, paying taxes on the full value of them.
The fees were calculated on an assessed value of $15,000 for back lots and $30,000 for lakefront lots, multiplied by the tax rate. Fees of between $0 and $50 was added on.
Under the 99-year agreements, the value for lakefront lots is $213,000 and back lots is $44,340. A land capitalization rate of 2.2 percent is applied as the lease fee. Buildings are taxed at $12 per thousand dollars of assessed value.
If all tenants had signed new leases, property taxes were expected to increase from $9,528 to $100,551 annually, based on the current tax rate.
The new agreement gave tenants the opportunity to continue the lease arrangement for the next 99 years at 10-year increments, or let their 50-year lease run out between 2015 and 2040.
The new terms were criticized by some tenants, who said it forces them to put their property on the market. The terms were rejected by 29 of the 37 tenants. Some put their camps on the market, saying they couldn’t afford to keep them. Some said the terms would prevent them from getting loans from financial institutions.
Late last year, the Heniger Park Association, which is made up of a majority of the tenants, publicly challenged the terms and asked for concessions that would, in part, provide better financing terms. Members argued that the increase was unfair because they do not own the land, making it difficult for them to sell their buildings.
The board conceded to 14 of the 28 requests, including agreeing to work with financial institutions by extending the 10-year incremental lease to 20 years to allow for a longer mortgage.
Those whose leases expire June 30, 2016, also had the opportunity to sign a lease extension until 2040. It was a one-time offer by the Board of Selectmen, Ferguson said.
The request for reconsideration of a deadline extension came from Patrick Casey, president of the Heniger Park Association. He said their concerns were clarified in a letter from town attorney Bill Welch of Bernstein Shur law firm.
In the letter, Casey said the attorney reviewed the association’s request for lease changes that would enable financial lending and offered an explicit assurance by the selectmen to cooperate with lenders on a case-by-case basis to address issues related to terms and the ability of lenders to “cure” in the case of default.
“Our members welcomed this clear and constructive message on behalf of the entire Board of Selectmen,” Casey wrote in an email to selectmen. “Moreover, many members indicated that, had they received such a communication in advance of the April 30 deadline, they would have elected to sign the 99-year lease then on offer.”
Casey said the letter provides lenders they have spoken with enough confidence to initiate a portfolio loan.
“Norway Savings Bank is now developing a loan product tailored to Heniger Park leases,” Casey said. “We all see these as positive developments.”
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