Rvenues fell $1 million at the Martha's Vineyard Land Bank in the fiscal year just ended, reflecting a distinct new cooling in the overheated real estate sales market that has made an indelible mark on both the economy and the culture of the Island in recent years.
The land bank fiscal year ends on June 30 (because the date fell over the weekend this year, the land bank closed the books on Friday, June 28).
Total revenues at the land bank were $6.8 million for fiscal year 2002, a 13 per cent drop from the previous year.
The land bank had projected a 20 per cent decline in revenues this year, so the drop did not come as a surprise. "The land bank had foreseen this trend - I would characterize it as a noticeable but not significant dip," said land bank executive director James Lengyel yesterday.
The dip is not a one-year aberration but in fact appears to represent at least a short-term downward trend in real estate sales. In 2001, total land bank revenues were $7.8 million, a six per cent drop from the previous year. In the year 2000 the land bank collected a record $8.3 million in revenues.
Established in 1986 by an act of the state legislature, the land bank collects a two per cent transfer fee on most real estate transactions. The money is used to buy and manage conservation land on the Vineyard. Land bank revenues are considered one barometer for evaluating the real estate market on the Vineyard.
Land bank property transactions are recorded on a calendar year basis, while revenues are recorded on both a fiscal year and calendar year basis.
Since its inception the land bank has collected $77.5 million in revenues. The land bank now owns 2,008 acres in a diverse collection of 55 conservation properties marked by small green and white wooden posts across the Island, including farmland, beachfront and woodland.
"I do like the fact that we have broken the 2000 mark [for acres purchased]. I think it's a happy milestone," Mr. Lengyel said.
Total revenues at the land bank were $4.8 million in 1987, the first year revenues were collected. Since then the total revenues have followed a steady up and down cycle, along with the real estate market.
The extreme low came in 1991, when the land bank collected $1.8 million. The high came in 2000 with the record $8.3 million.
"It's linear in the sense that you can see it change from the late 1980s until today," Mr. Lengyel said.
Also notable is the trend toward large transactions. In 1994, 15 per cent of all land bank revenues in the calendar year came from sales of $1 million or greater, and there were 12 of these sales. In 2001, 59 per cent of all land bank revenues were generated by sales of $1 million or more, and there were 72 of these sales. "It's been a very steady increase in these sales every year," Mr. Lengyel said.
But total revenues and total acres purchased tell only part of the story. Mr. Lengyel said the trend in total transactions is also an important indicator - and total transactions in 2002 dropped to a five-year low. In 1999 the land bank processed a record 2,090 real estate transactions; last year the number dropped to 1,552.
"That's a drop of a quarter, and I think it goes a long way toward explaining what is happening here - we don't see a drop in our [property] acquisitions and we don't see a change in the price of property, but we do see a drop in the actual number of transactions, " Mr. Lengyel said.
The land bank executive director, who is not a real estate broker, declined to speculate about the reason for the drop in transactions. "It could mean a number of things. It could mean that the interest among buyers is reduced and that's why there are fewer transactions. Or it could mean that sellers have reduced their interest in selling. I would leave that to a wiser mind to discern," he said.
He said projections for the coming fiscal year are still being developed.
Ironically, the drop in land bank revenues last year came in the same year that the land bank recorded the single largest transaction in its history. On July 24, 2001, the $64 million property sale at Herring Creek Farm in Edgartown generated a fee of $650,000 for the land bank.
Mr. Lengyel acknowledged that without the Herring Creek Farm sale, land bank revenues would have seen an even sharper drop, but beyond that, he said, the significance was limited.
"One can look at the land bank's numbers and say what they would have been if this had not occurred - and this was the single largest transfer - but there are always anomalous events that one can point to at the land bank," he said.
Far more significant, Mr. Lengyel said, is the propitious picture that lies ahead for the land bank. Land bank town advisory boards (there is one in each of the six Island towns) continue to tackle the ongoing task of examining maps and identifying key properties for possible purchase.
Concluded Mr. Lengyel: "The revenues are on the receivable side, but on the accounts payable side we are still talking about approximately $60 million worth of real estate that we are interested in conserving - and we think we can fund about half of that. So we see these numbers in that context."