Folly Hill Final Report
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July 30, 1~)7G
The Honorable James A. Vitale
Mayor of the City of Beverly
Executive Suite-City Hall
Beverly, IVIassachusetts 01915
Dear Mayor Vitale:
In accordance with the task assigned to the Folly Hill Task Force upon
mayoral appointment in January of this year, the undersigned hereby sub-
mit a final report and recommendation relative to the retention of the Folly
Hill Country Club acreage as open space and recreation land.
Respectfully submitted,
Folly Hill Task Force
William J. Foley, Ta-sk Force Vice-C hai rman
John C. Kelleher,III,President of the Poard
of Aldermen
Albert Romani, Alderman Ward I
Robert Livermore, Jr., Chairman, Peverly
Conservation Commission
Neiland J. Douglas, Jr., Beverly Redevelopment
Authority
Gino LaPorta, Beverly Planning Board
William DiPaolo, Beverly Recreation Commissil
George Chansky, Esq., City Solicitor
For .the Task Force:
,---~{Ga'C(,;/~: .
William J. FOleY~lcC-Chairn
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FINAL REPORT AND RECOMMENDATIONS OF THE
FOLLY HILL TASK FORCE
SUBMITTED TO: The Honorable James A. Vitale
Mayor of the City of Beverly
July 30, 1976
INTRODUCTION
Rumors concerning the financial plight of the operators of the Folly Hill COlmtry
Club were no surprise to the membership. From the start, the successors to the
DSM ownership had had money problems the extent of which was only vaguely h.'1lown
even to the membership's executive committee. For several years, the executive
committee had complained of the lack of membership and of the need to generate
more revenue from clubhouse operations to meet its financial commitments to the
O\vners. By the summer of 1975, the accumulated deficit on these commitments
(debt service and t:L~es on the cOlmtry club included among them) was speculated at
several hundred thousands of dollars.
Late in the summer of 1975, the Folly Hill COlmtry Club Executive Committee
annOlmced that financial considerations had forced the owners of the property to re-
view their position relative to the profitability of continued ownership and manage-
ment of the cOlmtry club and therefore, the members were to he allowed first op-
tion on the purchase of the club since ownership had decided to divest itself of the
property. Several unsuccessful attempts to present a viable purchase offer were
made by various factions from within the membership. All of these failed because
the initial capital commitment in each case was insufficient. Meanwhile in its need
for cash, the owners proposed a seven lot subdivision from that portion of the golf
course abutting Goodyear Street. The presentation of that proposal to the Planning
Board unleashed a furor among residents of the Goodyear Street area and caused
repercussions among other groups elsewhere in the city.
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Although it was clear from the start that the Goodyear Street protesters opposed
a new subdivision within their midst because it would alter drastically the character
of their neighborhood, that general 4\ss:i.e soon spread far beyond the bOlmds of that
particular neighborhood. With their disclosure of the Goodyear Street plans and the
exposure of the issue raised by the neighborhood residents, the Folly Hill owners
now faced oPposition from several other quarters of the city (especially from abutting
ward organizations) for now, it was evident that the whole of the golf course acreage
might be developed in a similar manner since the property was suitably zoned to
allow for development.
In a letter to Dr. Evelyn F. Murphy, Secretary: of the Executive Office of En- .
vironmental Affairs, in Febnlary of this year, Mayor Vitale indicated that although
"development of this land area for residential use is perhaps the most viable altern-
ative under consideration by the owners, we are concerned not only because of the
potential impact of such development on city schools and services but also because
the city could lose such a large open space and recreation facility so well situated
within its limits and of such importarce to the local econo~y and to the esthetics of
our community's environment." The Mayor cited these as only a few of the reasons
he had decided to charter "a course to secure the resources necessary to the city's
retention of the land area known as the Folly Hill COllntry Club." Mayor Vitale dis-
closed that he had secured from the owners a right of first refusal on the property
on behalf of the city.
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]J[WJECT DESCIUPTION
The Folly Hill Cotmtry Club is the only country club and golf course in Beverly.
The immediate neighborhood is bOlmded by Raymond Farms on the north, McKay
Street on the east, Elliott street on the south and the Town of Danvers on the west.
McKay Street is a two lane collector road which carries traffic between Elliott
Street on the south and Dodge Street (Route lA) on the north. . Folly Hill Cotmtry Club is
surrotmded by single family residential houses on three sides with the westerly side
. abutting the multi-family apartments lmown as Folly Hill Apartments. Single family
homes are largely in the $40,000 to $60,000 category. Opposite the COtmtry club at
the comer of McKay and Balch Street, is the McKlY Elementary School. Also located
diagonally across McKay Street is the USM Pond and the industrial property of the
USlVI Corporation. (The pond provides irrigation water for the golf course). In
general) the neighborhood is considered a quiet residential area surrOlmding the
large tract of open space created by the Folly Hill Country Club. The history and
description of the property is generally covered in a synopsis in the Introduction to
this report. A detailed outline is included in the appraisal report submitted by
N. S. Haddad and Associates late in April of this year.
Assessed values are as follows for 1976:
Land, 173 acres plus 36) 140 square feet
Improvements
$622)000
68,000
$690,000
Fiscal year 1976 tax rate $67.50 per $1,000
Fiscal year 1976 ta.'{ bill $46,575.000
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The property lies in a R-22 single-bmily zone. The predominant use in this
classification is single-family residential use requiring a minimum lot size of
22,000. The minimum required frontage is 150 feet, the front set back is 40 feet,
side yard must be no less than 45 feet and the ma..'{imum lot coverage is not to ex-
ceed 15%. All public services commonly fOlmd in the City of Beverly, including
water, sewer, electricity and telephone are available. In addition, there are
contractural rights between the owner of the property and the USM Corporation
that permits use of piped water from the USlVI Pond for golf course irrigation
and emergency use.
N. S. Haddad and Associates, in their appraisal report, have stated that all.
factors considered, the ma.ximum attainable value of the majority of the land area
is as a country club with recreation facilities. The excess land off McKay Street,
along Goodyear Street, off Conway street and off C01.mty Way, has its highest and
best use as a development potential into Single-family house lots~
HISTORY A"i\TD DESCRIPTION OF PROPERTY
The property involved consists of 173.4 acres. It is a rather large irregular
tract of land located on the westerly side of McKay Street. at the junction of
Goodyear Street. To be specific it has 1682.50' frontage on McKay Street, 1166.51 f
frontage on Goodyear Street, 370.24' frontage on Elliott Street and 140' frontage
on County Way.
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^pproxi.mately 130 plus acres are used [or the Fol1~' Hill COlmtry Club \vhich is
composed of an 18 hole golf course, clubhouse building, pro shop building, 12 tennis
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courts, and outdoor swimming pool with cabana and 2 maintenance buildings. For
many years this property was lillown as the United Shoe COlmtry Club. In fact, the
property was purchased by the United Shoe Machinery Corporation as a recreational
facility for its employees. This was back in 1903. At that time it \Vas composed of
a 9 hole golf course. In 1909 the Club House was built and in 1913 the additional
9 holes was added to the golf course. In 1935 the 12 tennis courts (clay) were added.
In September 1971 the property was sold to H. D. C. Inc., Trustees of Folly Hill
Associates for $1,800; OOSlong with a land area adjacent to the west, of similar size.
Associates in 1975. Recently another reorganization of management has occured
and it is understood by the Task Force that Lawrence L. Reeves is now the sole
owner of the Folly Hill COlmtry Club.
Of the forty (40) or so acres not ascribed to the golf course indicated on a plan
prepared by the Hayes Engineering Inc. , dated July 18, 1975, and titled "Plan :of
Land in Beverly, Massachusetts, there is a layout of four distinct sub-divisions of
single family lots which could be achieved by alteration to certain tees and fairways:
Off McKay Street 10 lots 7. 1 acres
Off Goodfyear Street 7 lots 3. 6 acres
Off Convoy Street 12 lots 7. 6 acres
Off COlmty Way 29 lots 22.5 acres
S\vamp of County Way 3 lots
TOTAL 61 lots 40.8 acres
This would aCcOlmt for the 173.4 acres included in the package.
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Purpose and Scope
Shortly after his inauguration in January of this year, Mayor Vitale established
a special task force for the e:"'J}ress purpose of studying the alternatives open to the
City of Beverly relative to the retention of the Folly Hill COlmtry Club acreage as
an open space conservation and recreation area. Financial considerations having
forced the OVvTIers of the Folly Hill Country Club to review their position relative
to the profitability of the land in terms of economic utility, they had proposed
smallscale subdivisions along the perphery of the golf course at points which abut
city streets. Since the golf course acreage is aptly zoned, residential development
was perhaps one of the most viable alternatives lmder consideration by the owners.
There was grave concern that such a large scale development could have a catastrophic
impact on city services and schools, that irreversible damage could be wrought to
the environment and to the aesthetics of that area of our city. Furthermore, the
city could ill afford to lose such a large and beautiful expanse of open space or a
recreation complex of this size so well situated within its limits. Indeed, the
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city's economy could be adversely affected along with the aesthetics of our community's
environment.
The task force was broken down into three sub-committees to facilitate the tasks
directed by the Mayor in his guidance to its members. Meetings were held weekly
at first to insure coordination of ideas, lmity of effort and collateral pursuit of de-
liberations. While certain tasks and investigations were underway the task force
met at intervals to discuss progress and to review the alternatives under consideration.
Se'veral alternatives have been discarded since the task force began its work but
fOllr primary alternatives remained under consideration from the beginning:
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1. Do nothing'_
2. Acquisition of the 173.4 a(;res
a. By outright purchase funded by a city bond issue.
b. By eminent domain proceedings.
c. Purchase utilizing a combination of funding resourses to include a
city bond issue a 50% reimbursement on the purchase price from the
Federal Land and Water Conservation Fund (Bureau of Outdoor Re-
creation) and 50% reimbursement on the appraised value of those portions
of land area which qualify 3l1d (;an be identified as conservation areas.
3. Purchase of development rights by means of negotiated settlement and
considerations.
4. A comprehensive development plan. All other alternatives having been
discarded by the task force, this report focuses on a conclusion and re-
commendation for the adoption of one of these courses of action with justi-
fication to follow.
OUTLINE AND ANALYSIS
. The Mayor's special task force, \vhich became knmvll as the Folly Hill Task
Force, held several lengthy and resolute discussions within a few weeks of its
formation, the first on January 21, 1976. While sorting and enummerating courses
of action \vhich they would eA-plore and pursue with their final report to the Mayor,
the Task Force suggested that an investigation proceed to locate sources of financial
assistance since the fiscal impact of acquisition by the city might become an over-
riding factor should the Task Force recommend that the Mayor pursue acquisition
on behalf of the city. Prcliminiary investigations revealed the city could, in fact,
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qualify for federal and state fiancial assistance to fund a large percentage of a purchase.
On Febnlary 12, 1976 the Mayor mailed a letter of intent to Dr. ~velyn F. Murphy,
Secretary of the Commonwealth's Office of Environmental Affairs requesting that
agency's assistance in the city's quest for funding and guidance through the necessary
procedural steps. Secretary Murphy's ac1mowledgement arrived February 23rd
indicating the requirement for submitti.ng an accepted Open Space and Recreation
plan as an lmsatisfied condition of eligibility for the IIState Self-Help", and "Land
and Water Conservation Ftmd Assistance" programs.
The Mayor's office set about the task of fulfilling those requirements and by
mid-March the Harlow Report (the common name for Beverly's Recreation J\laster
Plan) had been amended, updated and submitted to the Division of Conservation
Services (Mass OEA) and the Open Space/ Conservation Plan was well n~derway
to formation. Meanwhile, the necessary preliminary contacts and consultations
were held .with the Division of Conservation Services, as Secretary Murphy had
directed; and having been granted the appropriation required to secure the services
of a master appraiser, by the Board of Aldermen, the Mayor contracted for a
formal appraisal of the Folly Hill Country Club property.
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The appraisal was completed and accepted the end of April, and the site plans
were submitted for review to the Division of Conservation Services representatives
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who completed an "on-site" inspection on April 28.. .On rvlay 26th, the Mayor's
office was notified of the result of the field inspection by Joel Lerner, Director
of the Division of Conservation Services with advice to file an A-95 notice to both
the Metropolitan Area Planning COlIDCil and the Office of State Planning for review
and comment. Mr. Lerner cautioned that further action on the city's application
would be contingent on the completion of a second appraisal of the property \vhich
is a requirement of the law.
(The aforementioned procedural grOlmdwork and investigations were deemed
necessary by the task Force early on in its deliberations. The members reasoned
that if the city was elibible for federal and state assistance, as preliminary in-
vestigations indicated, the groundwork for the final application must begin by the
most e),:peditious means, for, if it recommended the adoption of this alternative
course by the IVlayor, the final application must be submitted no later than
September for funding this next fiscal year. A delay would do irreparable damage
to the concept of retention. )
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While the Mayor'S office handled the interface with OEA and Division of Con-
seTvation Services, as well as the day to day administration involving the applica-
tion procedures, the Task Force proceeded to research other golf course/re-
creation complexes to gather data relative to management operations and financial
viability. The operations of both private and municipal facilities were investigated;
and finally the research concentrated on comparisons of these, with that of Folly
Hill. Of special interest to the Task Force was the type of management it could
recommend as the most effective. The intent was to draw a conclusion toward the
recommendation of a management form which would most li1.;:ely insure fiscal
autonomy for the recreation complex and at the same time provide sufficient
revenue to the city for debt service (and reduction). The Task Force had de-
cided that one of its implied responsibilities was to effect a total recommendation,
the outcome of which would minimize the net financial burden on the city and ultimately
on the ta.'--payer.
ANALYSIS OF ALTERNATIVES
After several months of research, field investigations and more than a dozen joint
deliberations, the Task Force submitted the following draft report to the Mayor,
in analysis of the remaining viable alternatives.
Alternati ve I:
*Recommend tj~:.hat the city do nothing. The advantages of this alternative are
all short range:
The city incurs":''; no immediate costs, responsibilites and no financial obligations.
The disadvantage h;~.:ave profound long term implications:
a. The pr::?-Bsent owners have the option of pursuing plans for residential
development of the-:J. 73.4 acre site. The resulting impact on city services, schools
and on . the local en:u:vironment, is the very circumstance we are attempting to
avoid. The long ter::.-.m result could be a great financial burden to the city.
b. Local a21ld abutor opposition will fuel opposition to further development al
growth in other are~S of the city and cause further divi.<0-veness among political
and citizen groups t;-nroughout the city.
c. DevelopJJ:nent of the site into a residential complex will exacerbate an
already strained recreational open space situation in that area of the city.
Alternative II:
*Recommeod the city's acquistion of the 173.4 acres
a. By outrif,ht purchase funded by a city bond issue.
b. By instituting eminent domain proceedings.
c.. Outright purchase utilizing a combination of fLmding sources available
to include:
(1) a bC1l1d issue
(2) a 50'~c reimbursement of the purchase price from the Federal Land
and Wah'r Conservations Flmd (Bureau of Outdoor Recreation)
(3) a 50% reimbursement on the accepted appraisal value of
those portions of the Land area which qualify, and can be
identified as conservation areas.
Analysis of Alternative II:
a. Outright purchase funded in full by a city bond issue was
ruled out because of the adverse impact which such a bonding would have
on the ta:x rate. Bonding for $1,400,000 (est.) will cost $122,880 yearly
for amortization. The total $2,318,750 liability means a $1. 00 increase
in the tax rate today.
b. Eminent domain proceedings could involve additional costs and
lengthy, controversial court proceedings. This variation was also discarded
because it would not promote the city's best int€rests.
c. Outright purchase utilizing a combination of frmding sources
was retained as the only viable variation of alternative 1\vo because of the
minimal impact on city finances, the probable ease of securing federal and
state financial resources as well as the positive public appeal of such project
funding, the varied pOSSibilities regarding management options and the pos-
sibility of securing more public funding for development of recreation faci-
lities on the site.
Advantages of Alternative IIC:
a. Minimal impact on city finances.
b. Possibility of 70% to 80% purchase price refund from federal
and state sources.
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c. Positive impact on city recreation services. Addition of this
acreage and facility to the city's recreation inventory brings available acreage
in line with federal and state standards.
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d. Enhancement of the cityTs future success in securing federal grants
for other recreation/conservation purposes as well as for other important ec-
onomically significant programs.
e. Acquisitions proceedings can be instituted immediately and pur-
chase can be effected within the next fiscal year, thus prohibiting the sale or
development of all or part of the acreage.
f. A comprehensive recreation complex will be available within a
reasonably short period of time for public, rather than private use.
g. An expansive, protected open space area will be preserved with-
in a densely populated section of the city limits in perpetuity.
.b. The facility can be managed and operated in a variety of ways
with provisions for self support and debt amortization.
Disadvantages of Alternative II:
a. Regardless of the percentage of reimbursement from outside
sources, acquisition will entail the assumption of some financial burden by
the city.
b. An annual tax revenue of $46,000.00 will be forfeit. (This dis-
advantage can be overcome and it will be addressed in a paragraph to follow)
c. Depending on the management mode adopted, the cost of operating
and maintaining the facility could exceed the annual revenue generated by
operations.
d. As federally funded project, and all the citizens of the US. are
provided access for use of the facility. (This does not imply a prohibition.
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of fees and charges).
e. The city will be forever restrained from sale or use of the property
except for recreation/conservation purposes.
Alternative III:
. Purchase of development rights to the total acreage.
Advantages of Alternative III:
a. This type purchase could prove less costly for the taxpayer.
b. No additional cost to the city after the original purchase.
c. The golf course and other facilities remain as they are.
d. The area is retained as open space lmtil the city decides otherwise.
e. The city shoulders no operating or maintenance costs for the facility.
Disadvantages of Alternative III:
a. Prohibition of housing development on some areas of the golf
course could prove c~stly in the long run.
b. No assurances that the facility would be properly maintained or
operated as at the present by the owner.
c. Probability that O\vnership will present annual requests for tax
abatement and reduction.
d. Such purchase is restrictive and may eventually cause such finan-
cial hardhsip to force o"WTIership to seek redress or relief through the courts.
Alternative IV:
Coincidental Agreement:
Nothing that none of the alternatives mentioned above alleviates another
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pressing problem faced by the Ol,vner, this alternative addre3ses the possibility
of a coincidental agreement to the mutu31 benefit of the parties. The owners,
in the process of developing sizable multiunit residential complexes on a tract
directly adjacent to (west of) the golf course, are sorely in need of an access
route to that tract to provide access and egress for residents of that develop-
ment into the city llmits of Beverly. Denial of such access will not only pre-
clude further development plans but will ultimatley deny the city a substantial
the taJ\.-payer.
b. While part of the "Hill" tract will be developed, the impact on
open space land and on the environment will be minimal because of the develop-
mental concept.
c. The golf course acreage can be preserved as open space/ recreation
land.
d. Developmentfostered by an access to the "Hill" tract could sub-
stantially increase city tax revenues.
e. All of the benefits of outright acquisition can apply if city purchase
is included in the agreement.
f. All of the benefits of alternative number 3 apply if purchase of
development rights is made part of the agreement.
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Disadvantages of Alternative IV:
a. Development of the "I-lill" tract increases the burden on the city
schools and services (Previous history has shown that such impact is rather
minimal and worthy of little consideration).
b. Traffic flow in one, or more, adjacent neighborhoods will in-
crease.
c. Provision of an access road will necessitate usage control of
that right of way.
d. All of the drawbacks of outright acquisition can apply if city
purchase is included in the agreement.
e. All of the drawbacks of alternative number 3 can apply if the
purchase development rights is part of the agreement.
Operations
Haddad Associates, in their appraisal report, included a stabilized op-
erating statement which, they felt, reflected the probable operating per-
formance of the country club. These projections were based "in Part" on
recent historical operating data and included explanatory comments based on
"worthwhile assumptions". In view of the firm's credentials and wide range
of ex-perience with this type of property appraisal, the Task Force is inclined
to adopt the conclusions presented in the Haddad statement, with ODe im-
portant reservation. The Haddad conclusions are based largely on operations
as conducted by present management. The Task Force is of the opinion that
present management policies at Folly Hill have not promoted the full potential
of the complex' operations. Therefore, it has proposed that another type of
management mode would well increase revenues and thereby add substantially
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to the $117,000 net income projection presented by Haddad Associates. (The
stabilized operating statement of N. S. Haddad & Associates is here appended
in comparison with the Task Force's projected statement) It is important to
point out that the approximate $117,000 net income now generated by operations
is now used by present management to reduce and to service its debt obligations.
As the projected operating statement is reviewed, the following points are
highlighted in significance: (Assuming city ownership and operation of the
Folly Hill COlmtry Club facility).
1. Although membership dues would be eliminated as an income item, fees
for the use of these facilities would he collected and, because of the anticipated
increase in patronage at the cornplex, the fees income should exceed the eliminated
dues income by 10 to 15 percent. In the event the total fees increase should not
materialize, or on the outside, even out, or be evidenced by a reduction in the
amotmt of the sum of dues, that reduction could well be offset by the negation
of the $46,545 tax assessment as an e~"pense item.
2. The public golf income will be included as golf fees.
3. Assuming a minimum increase of 10 percent patronage, all
other income figures are generally increased by 10%.
4. E~"penses remain generally the same as those projected in the
lIaddad statement except for Real Estate Tuxes which would no longer con-
stitute a liability.
5. The resultant net income can be used as follows:
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a. To reduce debt. Annual debt amortization on the outstanding
bonds after reimbursement, assuming a 20 year issue should
approximate $60,000. Predicated on the following assumptions:
(Bonding at 6!%)
Purchase price of
less refund 50% from Land
and Water Conservation and
less 50% refund on 60 acres
(conservation land) from state
self-help program (at $6,000 per acre)
Bonded Balance
$1,400.,000
700,000
180,000
$520,000
b. To .finance improvements and development costs for the
.corqpl ex..
c. Provide same revenue to the city for other recreation/
conservation pursuits and projects.
Upon analysis, the Task Force has concluded that the facility, properly
managed, and operated, could not only provide a profit for the management
contractor but it also can help promote the general welfare of the city's
. residents while fully self-supporting.