Sutton mulls sale of gravel pit
BY TOM REILLY
The selectmen last week heard a presentation by Allan Foster of Foster Appraisal and Consulting regarding the potential value of the gravel pit and other property that the town owns on Hatchery Road.
Sutton acquired the roughly 24.3- acre site from the Massachusetts Fisheries and Game Commission in 1970 for $29,500. The state had previously operated the former Sutton State Fish Hatchery on the land until the legislature voted to dispose of it and other surplus properties back in 1968. The town has since mined the sand and gravel there for Highway Department operations, using the material for winter traction and road building.
In 2006, Aggregate Industries, which abuts the land and shares the hill containing the sand and gravel, offered the town $1.52 million for the property, sweetening the deal by allowing the town to continue to take material from the site for an additional five years. This made the deal worth an estimated $1.7 million, and then-town administrator Joshua Handverger was eager to sell the land, though no site assessment was made. Handverger was publicly opposed by Highway Department chief
Mark Brigham, who stated that there was no clear idea of the value of the land and material. Brigham was also concerned about the rising cost of material
after the first five years.
In the end, no action was taken until Handverger's contract was not renewed and Jim Smith took his place. Assessing the value of the property became one of
Smith's goals and objectives last winter. Brigham was
among the people Smith consulted in his research, and both agreed that the town is doing less road building, contracting this work out through Chapter 90. The use of sand has been de-emphasized in favor of salt, as sand is only good for traction and does nothing in terms of melting ice. Smith said that he had come up with a financing solution that would address Brigham's concerns regarding the cost of materials.
As an abutter to the land and an operator of a sand and gravel mining business, Aggregate Industries already has an easement that would allow it to truck out material over the town's roads. Aggregate has the necessary frontage to the site, and is already mining the other side of the 100- foot hill. It has the equipment on site to do the mining.
Smith said his goal is to establish the value of the property using standards set by the state. Once the assessment is done, the selectmen need to decide is whether to sell the land to establish a minimum bid price. A Request for Proposals would then be sent out. If a satisfactory price came back, then the town would negotiate a purchase and sale agreement with the high bidder. If town meeting ratified the sale, then Sutton would be out of the sand and gravel business.
Smith said that under Massachusetts General Law the proceeds of the sale can only be used for "a purpose in which the town is authorized to incur debt for a period of five years or more." He said the state insists proceeds from the sale of assets be used to fund capital purchases. This is to keep municipalities for selling off of assets in difficult financial times, he noted.
Smith added that the town could not use the money to pay off debt that has already been incurred unless that debt is for a period of at least 20 years and was borrowed to acquire land, perform new building construction or put additions onto existing buildings. The money cannot be used for operational costs.
The Highway Department will lose somewhere between $30,000 and $40,000 in material costs if the land is sold, he said, and the Highway appropriation would need to be increased to make up the difference. Smith said one solution would be to file a home rule petition with the state legislature allowing half the proceeds from the land sale to be placed in a new stabilization fund with the interest applied to annual material costs for the Highway Department.
The town administrator said the actual value of the material is less than the $50,000 for the material itself. Labor costs to mine the material come to four employees for four weeks per year, approximately $12,000. There is also the wear and tear on vehicles, the time and effort that could be spent elsewhere during those four weeks, an estimated $7,500 in tax revenue if the property was put on the commercial rolls, and the liability of performing dangerous mining work with less than state-of-the-art machinery. Brigham acknowledged that "issues could arise" in doing the mining work.
In order for all of this to work, town meeting would need to approve both the land sale and the home rule petition. Smith cautioned that if the selectmen wait until the spring town meeting it could be difficult to get the home rule petition through the legislature before the session ends on July 31. A special town meeting in late February or early March would give the home rule petition a better chance of getting through the legislature, he said.
Spring town meeting voters could also authorize the sale with the condition that if and when the home rule petition is approved, half the proceeds would be placed in the stabilization account. Smith said the sale could be made contingent upon home rule approval — the downside to that action is that it could potentially leave a buyer on the hook for a potentially unreasonable period of time.
Allan Foster told the board that in performing his analysis he needed to consider the value of the land and the value of the material separately, the sale prices of similar properties, and the market value of the material over the period of time it would take to extract it. Foster also noted that the parcel could not be used if landlocked.
If anyone other than Aggregate bought the property, he said, then there would be a need to divide the parcel into two lots, including a cul-de-sac and proper legal frontage. A road would have to be built — half going to the town land and the other to the sold off parcel. This would result in the town selling a 14-acre parcel, of which10 acres would be usable. Foster said that once all of the material was removed then the land could be used for some sort of commercial development. He valued the land at $62,000 per acre, a total of $890,000. He said any potential buyer would be intent on removing all the material. The geologist he hired has estimated that it would take three to five years to do this under typical market conditions.
He said the most logical purchaser is a gravel company or someone who would sell the material to a gravel company. The boundary line runs right through the hill where the mining is done. Foster estimated a price of $3 per cubic yard for the material over five years, noting that a buyer would not pay full price today for what he could not get out of the ground for five years. Smith said he thought the material could be extracted faster if Aggregate buys the property. He noted that Aggregate is "not a typical buyer" as it is already an abutter, has the proper frontage and had the ability to mine. When the value of materials is added to the value of the land itself, the total value for the parcel comes to around $2.3 million, Foster said.
Selectman Kevin Geraghty wondered if it might be better to wait a little longer to sell the property, given both the current economic downturn and the likelihood of a stimulus passage that could lead to an increase in road and bridge repair, all of which need sand and gravel. Brigham said he had been concerned about the loss of material but agreed the town is using less sand, primarily due to environmental concerns about sand going into streams and rivers. He added that he simply does not have the ability to mine the site the way a sand and gravel company could.
Selectman John Hebert said the gravel pit has been a source of discussion for many years and that once the property is mined it will be quite suitable for development as it has access to gas, sewer, water, and rail. He said a nationwide company like Aggregate would move quickly to mine the site in order to develop it.
Selectman Michael Chizy said he prefers to sell the property only after the home rule petition passes. "Aggregate needs this more than we do," said Chizy, "not just for the sand and gravel, but for when it's gone and more attractive to a commercial buyer." He quoted the late selectman Wally Johnson: "God's not making any more land, so be careful what you sell." If Smith can get the stabilization fund idea approved by the state, Chizy said he favored selling, otherwise he has reservations. Smith said that he would try and get the RFP out as soon as possible in order to give the town as many options as possible.