Land Bank's Year
By MANDY LOCKE
Martha's Vineyard Land Bank revenues will fall slightly below the $8.5 million record set in the last fiscal year. With the close of the fiscal year but two weeks away, land bank executive director James Lengyel projects ending the year with $7.6 million.
Given the recent downturn in the economy, Mr. Lengyel and the land bank commission expected this drop. In fact, the commission predicted a 15 per cent decrease for this year and the next two years. The decline for the present fiscal year represents only an 8.4 per cent decrease.
"It's as we anticipated. That's all anyone in capitalism can ask for," said Mr. Lengyel. The 8.4 per cent drop by no means indicates insufficient funds within the land bank, particularly considering the record leap in revenues they experienced last year - from $6.2 million in 1999 to $8.5 million in 2000.
Aside from the slip in revenue, the land bank recorded a trend of fewer total transactions and more high-dollar sales. To date, 72 transactions exceeded the $1 million mark out of 1,592 total sales. That means fewer than five per cent of all transactions account for 56 per cent of land bank revenues for the fiscal year. In the 2000 fiscal year, 69 transactions crossed $1 million, but these sales were out of a pool of 1,921 transactions.
In other words, the bulk of land bank revenues can be attributed to a small number of high-dollar transactions. Also this year, the number of transactions under $1 million has fallen off - from around 1,852 in 2000 to 1,520 in 2001.
In general, the numbers of million-dollar sales have jumped tremendously since 1994. In the 1994 calendar year, only 12 properties sold for over $1 million. The number of high dollar transactions slowly climbed for the next four years and then nearly doubled from 1999 to 2000. In the 1999 calendar year, only 47 transactions exceeded the $1 million mark. In the year 2000, 81 properties sold for seven figures.
While these trends may be of interest in the real estate business, the stability of the land bank is not affected by these patterns.
"We don't need to pay that much attention to the bricks and mortar of where the money is coming from. As long as revenue fundings in gross are okay, we'll be fine," Mr. Lengyel said.
The downshift in the economy did, in fact, affect how the land bank invests its funds. When the economy began to sour not even a year ago, the commission pulled the principal they had invested in stocks back into more stable investments - namely bonds. They left the interest in the stock market to ride the tide. This redirection buffered the fund from the market's instability.
"When your commodity is so inflation-sensitive, you need to be careful," Mr. Lengyel said. The drop in revenues does not relate to an increase in exemptions from the 2 per cent land bank real estate tax. Only 46 per cent of transactions this year qualified for an exemption. Exemption rates from previous years typically sit at the 50 per cent mark.
Most of the revenues resulted from high-dollar purchases that did not qualify for exemptions. "Most of these are arms-length transactions between people who don't know each other," Mr. Lengyel said. Transactions between family members and the first $100,000 of a first-time homeowner's purchase are exempt from the tax.
As June creeps into the busy months of July and August, Island business owners speculate how the national economic slowdown will affect summer profits. Mr. Lengyel said this preseason anxiety is entirely normal for a resort economy.
"This is about as old as resort towns themselves," he said.
But Mr. Lengyel admits his absence of concern can be attributed to riding the tide of economic ups and downs through the years - including the 31 per cent fall in land bank revenues in 1990.
Out of the $63 million worth of properties that town advisory boards want to acquire in the next four years, Mr. Lengyel said his agency expects it can commit to at least half of them.
"It's really impressive. It's something to be quite proud of," he said.