The Associated Press recently ran an article by Rodrique Ngowi about a charitable trust fight in Massachusetts. It seems that a gentleman in the 17th Century donated his property for the benefit of local schoolchildren. Homes were built on the property and the rents, generally, went to local schools. This appears to have worked well for 351 years.
Recently there have been allegations of mismanagement, lawsuits, etc., and the trustees want to sell off the land to the renters as a settlement. This would change a trust which held real property to a trust which holds cash that can be invested.
Here’s a brief excerpt from the article:
“BOSTON (AP) — With only eight days to live, a wealthy, ailing Massachusetts merchant wrote in his will 351 years ago that he was leaving a spectacular 35-acre seafront property for the benefit of public school children, decreeing the land should never be sold or wasted.
The dying wish of William Payne, one of the state’s earliest settlers, created the nation’s oldest charitable trust and eventually led tenants to build 167 cottages — most of them used by summer vacationers — on the land he left for the seaside city of Ipswich. The rent money has generated some $2.4 million to help fund public schools over the last 25 years.
Now, the trustees want to tear up the will, convert the property into condominiums and sell them to the tenants to settle a 2006 lawsuit filed by the tenants over rent increases. But hundreds of Ipswich residents have gone to court to block the settlement, saying it violates the sacred intent of Payne’s will and shortchanges the schools.
The Massachusetts Appeals Court is considering whether to nullify the settlement and is scheduled to hear arguments in the case March 2.”
Do I have an opinion on this? You bet I do!
Generally I agree with the public administrators. A revenue stream based on a diversified portfolio is less risky, and easier to manage, than a revenue stream based only on income from real property. If a fair price is paid, they should make the deal.
This is a much different case than the one raging in San Diego’s tawny neighborhood of La Jolla, where a public benefit trust set aside a tidal basin for a children’s pool. The basin has been taken over by a pod of harbor seals, much to the consternation of some local divers. In the Children’s Pool matter, the land was used for a particular purpose. In Massachusetts, it was just used to gain revenue.
It will serve the beneficiaries much better if the Massachusetts trust property was converted to liquid assets.