Blog 4 Who is Fairhope Single Tax?

Blog 4

Who is Fairhope Single Tax?

Who is the Fairhope Single Tax today?   Almost no one. 

Less than 1/2 of 1% (100 families) in the Fairhope area are members.  Only members are part of the FSTC.  Only members get any information.  Only members can vote on  FSTC Council members.  Only members can attend meetings. 

That means that 99.5% of the people in the Fairhope area know nothing at all about how the FSTC operates. 

Ah ha.  Bet I got you there.  You are thinking, I know about FSTC.  Didn't they donate the bay front parks?  Yes, back about 100 years ago. 

When they FSTC started over 100 years ago, its founders made many sacrifices. They left their homes in Iowa and moved to a new much less developed area. There were very few of them. They had to acquire land for the settlement, they had to find a way to earn a living in this new area, and they had to do without until they could build the basic infrastructure. There was no guarantee of success, therefore the name "Fair hope". And, becoming a member cost the equivalent of a year's income for a family. 

Today moving to Fairhope does not require sacrifice and an uncertain future. It had become a lovely town. Today, becoming a member requires taking a 12 week course and paying not a year's income, but $100.00. Not members today are direct descendants of people who did make that sacrifice. Many members, even FSTC Council members are not even leaseholders. They are not part of the experiment. 


What are they doing now and where do they get the money? 

FSTC has given generously to the Fairhope Library, the Fairhope History Museum.  FSTC has built sidewalks.  The FSTC gave generously to the veteran's memorial.   They give $3,000 toward the Thomas Hospital golf tournament every year, and have given generously to Thomas Hospital in general.  They have helped area public schools.  They have done many good things with the money.

Where do they get the money?  They take it from a trust fund for the benefit of the lessees.

FSTC was chartered by the State of Alabama as a 'mutual benefit' organization.  A mutual benefit organization is for the benefit of a specific group of people.   Like a yacht club.   FSTC 's group to benefit is the FSTC Community--the Colony. 

The 'FSTC Community,'  as defined by the FSTC Constitution, is the community of those 'leasing the lands.'  It includes about 3035 leaseholds  (businesses, farms, homes, etc.)

The FSTC lease, its legal agreement with its lessees, says this:

Provision 3 of the FSTC lease agreement:

..."no part of the rents paid by Lessee upon the land herewith leased, shall be appropriated as dividends to its members or any other persons, but that all shall be administered as a trust fund for the equal benefit of those leasing its lands."

Provision 4 of the FSTC lease agreement:

"in the distribution of the benefits which its purpose is to secure for residents upon its lands, no distinction shall be made between individuals who are members of the Corporation..

To read the entire lease, click here: 

http://www.fairhopesingletax.com/lease/lease.html

Back in 2003 FSTC got a designation from the IRS giving it a tax exemption.  To do that FSTC  had to say it was a public welfare corporation.  'Public welfare' corporations cannot be 'mutual benefit' organizations, unless that public welfare is something like a housing project for the poor, and therefore it can benefit that group.    So, how did FSTC transform itself from a Mutual Benefit to a Public Welfare organization.  That will be the subject of a future blog. 


The City of Fairhope includes much of the 'FSTC Community,' but not all.  Many  leaseholds are outside the city limits.     The 'Fairhope Community, ' which includes the 'FSTC Community' and the City of Fairhope, is much larger.  The  'Fairhope Community' stretches from Weeks Bay to Fish River and includes Marlow and Barnwell, and Point Clear and Montrose.    I'm estimating that there are 20,000 parcels paying property taxes in the 'Fairhope Community' -- including homes, businesses, farms, etc.  Just 2900 of them are FSTC leaseholds.  That's 14% who are leaseholders. 

The 2900 leaseholds in the FSTC Community pay a 'demonstration' fee the other 17,100 parcels in the 'Fairhope Community' do not pay.  The demonstration fee goes to a trust to benefit the lessees.  FSTC uses that money to benefit not just the 'FSTC Community,' but the entire 'Fairhope Community.'  FSTC (that tiny group of 100 families) feels that anything that benefits the entire community,  benefits the lessees.  That means that 14% pay the 'demonstration fee' that is to benefit them, yet it is used to benefit the other 86% who do not pay demonstration fee.

I've heard some  members who are lessees say,  "I don't mind giving extra to help Fairhope because it is so wonderful."  I don't mind giving extra either--and have done so many times. It is my choice on how I spend my money. 

There are 5000 plus leaseholders who are not members.  Do they get a choice?   Lessees  have a contract (lease) with the FSTC that says, "The FSTC agrees that no parts of the rents paid by the lessee upon the land herewith leased, shall be appropriated as dividends to the members or any other persons, but that all shall  be administered as a trust fund for the equal benefit of those leasing its lands.”   No other persons.   Trust fund for equal benefit of those leasing its lands.  Those are contractual rights and complying with them is a duty of the FSTC. 

The FSTC lease also says that "in the distribution of the benefits which its purpose is to secure for residents upon its lands, no distinction shall be made between individuals who are members of the Corporation, with the exception of the right of members as participants in the government of the Corporation; all shall be treated with strict equality.

Is the FSTC complying? 

Does the FSTC  have the right to take this money from a trust fund to benefit the lessees, and use it to benefit so many others?

The Alabama Supreme Court also ruled that the FSTC had  'fiduciary' responsibilities as trustees for the trust to benefit the lessees.   Suppose you set up a trust to benefit your  child or grandchild.  Then suppose the trustees spent the trust  on a worthy cause, say, world peace.  Would you consider that a breach of the trustee's fiduciary duty?

Do the lessees get a say on how their trust fund money is spent?

They do not.  Lessees get no information from FSTC.  Their only communication from FSTC is their yearly rent bill which includes the property taxes, the demonstration fee, and a $100.00 administration fee.  FSTC does not break the bill down into separate parts for its lessees. Many lessees have no idea how much is property tax and how much is demonstration, or that there is a $100.00 fee tacked on for administration.   

 FSTC does not ask lessees  what they desire.     In the almost 30 years I have been a lessee, I have never been asked how I felt my trust money should be spent. How can FSTC possibility know the desires of the lessees if they do not ask the lessees?
  The President at a hearing on June 9, 2014, "This is an internal piece of business dealing with FSTC owned by FSTC members.  The members have stakes, not tenants."  I am confused.  I thought the FSTC was about using the Colony to demonstrate how a 'single tax' could benefit that Colony.  How can the Colony demonstrate that when the demonstration fee is not used to improve the Colony? 

At that same June 9, 2014, the president of FSTC said, "We certainly suggest that any tenant who believes in Henry George philosophies, take the course and pay $100 and become a member.  That is what we hope."

If lessees want a say, why don't they become members? 


Next blog I'll examine what it takes to become a member of FSTC.