Blog 3 Two Fairhopes

Blog 3:   Two Fairhopes.  

On November 15, 1894 a group headed south to what would become Fairhope, AL  They were full of hopes and dreams of a better world, a more fair economic system.

When they arrived in Baldwin County, other people were living here and owned the land.  FSTC had to buy land for their colony.  They did not have a lot of money, and some people did not want to sell their land.  Other people came to the area who did not want to be lessees, and bought land.  So the land of the Colony is scattered about from downtown to Highway 181, with gaps here and there.  It is not one contiguous area.   Lessees lived  (and still do) next to people who owned their own land.

It was originally intended that all lessees would be members of the Colony, but it was very expensive.  Many could not afford to become a member.  The Colony desperately  needed to lease the land.  There was already property tax in Alabama and the Colony was not exempt.  They had the burden to pay the taxes on  the unleased land and the same time they were trying to build the necessary infrastructure to make the town work.  The Colony quickly agreed to lease to people who were not members. 

The FSTC Constitution says that "There shall be no individual ownership of land within the jurisdiction of the Corporation, but the Corporation shall hold as trustee for its entire membership, title to all lands upon which its community shall be maintained."  From the start they could not create a contiguous community.  Rents were being used for community improvements that non-lessees got the benefit of without paying rent, as well as paying the property taxes on the unleased lands of FSTC.    Many lessees were resentful. 

Ten years after arriving in Fairhope, the Colony incorporated in the state of Alabama as a Single-tax and other Mutual Economic Association."   (Title 10A Alabama Business and Non-Profits EntitiesCode, Chapter 20 Special Purpose Entities, Article 9: Single-tax and other Mutual Economic Associations.) 


To see the Code of Alabama section relating to FSTC: 

http://alisondb.legislature.state.al.us/acas/codeofalabama/1975/coatoc.htm

 

Just 4 years after FSTC was incorporated in Alabama, the City of Fairhope was formed. FSTC had failed to provide the things necessary for a community to thrive, so a City with the ability to tax was needed.  Those lessees tired of their rents supporting the other people in the area who did not pay the rents, wanted a City to form, as well as other citizens who wanted the infrastructure in place faster than the Colony could provide. 

Since 1908 there has been a City of Fairhope and the Fairhope Single Tax Corporation.  Since Colony land is spread out from downtown to out on Highway 181, many lessees fell within the City limits of Fairhope, and many others did not.  So some were paying city taxes in addition to rent, and others were not. 

The existence of the FSTC and the City of Fairhope and their connection is confusing to many people. The two entities, while sometimes cooperating with each other, are entirely separate.  FSTC is not a government, but a land rental company whose lease agreement states that all value from the land goes into a trust for the benefit of the lessees.   The City has taxation powers to pay for the needs of the City.   A City does not have to pay property taxes on its property; the FSTC does. 

The FSTC had reserved much of the bay front land for the enjoyment of all.  (The stretch from Pier Street all the way to the VFW is not one the FSTC reserved, but was created because of City efforts.) 
 During the depression FSTC owned a lot of land that was not yet leased and they had to pay the taxes on that.  They had to pay taxes on the parks they had created.  Many of their lessees were struggling to pay their rent.  It was at this time that FSTC gave the parks to the City, alleviating the burden of paying the taxes on the parks and maintaining them.  The parks are a great asset to the City of Fairhope. The  City of Fairhope has done a great job in maintaining them.
  
 As Paul Gaston wrote, "Since 1908, when the municipality was created, there have been two Fairhopes...the 'colony' people living on single-tax colony land and  supposedly taking part in the Goergist principles, and the non-colony people, living on privately owed land" who basically have no connection with FSTC.  The City of Fairhope (and state and county and school board, etc) levy taxes on all the people living in Fairhope, including those on Colony land.  The rent the Colony lessees pay therefore became an "extra tax" instead of a single tax.   Many resent that they must pay more than their next door neighbor.  A lessee farmer on 181 pays FSTC close to $3000 more than his next door neighbor who is not a lessee.  That cost is added to his production cost.  Henry George did not believe in taxing production.  

Today we have two Fairhopes.  The 20% who live on Colony land and pay an "extra tax" and the other 80% who do not. 

For a map of how the Colony and the City of Fairhope and the Fairhope Community fit together, here is a map from TheFairhopeCourier.com  as provided by Jesse Patterson. 
Yellow:  Fairhope City Limits
Green:   Colony (FSTC) within city limits
Blue:      Colony (FSTC) lands outside the city limits
White:   Fairhope Community and it extends over a broader area than is shown on this map. 

Blog 10 Oath of Membership Provisions 4 and 5

Blog 10    Oath of Membership                                                      Provisions 4 and 5

All new members sign the FSTC Oath of Membership.  It has just five provisions. 

 [It must be noted that words can often have different meanings to different people and are therefore subject to interpretation.  The law in the United States is based on ‘case law’ because the various laws are subject to interpretation and the court cases refine and define the meaning.   This is my personal interpretation of the words of the Oath.]

 Provision 4:

"To bear in mind that it is my responsibility to give careful consideration to the desires of the members and the lessees, provided that are not contrary to the best interests of the corporation and not in conflict with the Constitution of the Fairhope Single Tax Corporation."

 

Is the Council breaking the Oath by not giving careful consideration to the desires of the lessees and members? 

Recently many lessees came to a 'public investigation.'   The FSTC would not let them stay.  FSTC did not carefully consider their desires.  The lessees were told, "One final chance.  We can stay here in air conditioning, if the non-members will be kind enough to leave as we're requesting.  We really don't want to call the police in and make a scene."   

The lessees were also told at that 'public investigation' that "This is an internal piece of business dealing with FSTC owned by the FSTC members.  The members are the people who have stakes, not tenants."  

Does that show careful concern for the desires of the lessees?  Many members present also asked that the 'public investigation' actually be public.    Their desires were also brushed aside even though the FSTC constitution had called for a 'public' investigation.   

Does FSTC send a survey to the lessees to find  about their desires?  Do they poll the lessees as to how they would like to see the demonstration money spent?  Do they send information to the lessees?   Lessees have asked that the rent bill be divided into its various elements of administration fee, taxes, and demonstration fee.  Has the FSTC tried to do this?  Have they inquired of the lessees about what they thought were 'matters of general concern?'  Do they send the lessees any reports showing how the demonstration fee and the administration fee is spent?   Do they send the lessees information letting them know there is an opportunity for members and lessees to voice their concerns each month right before the meeting officially starts?  Do lessees get copies of the minutes so they will know what is being planned for their Colony?   

Are the members asked about their desires for their corporation? 

 

What are the best interests of the corporation?  It is my opinion that the best interest of the corporation would be to do what is in the best interest of the FSTC community as defined by the FSTC constitution—the community of lessees.  

 

Provision 5:

                                                                                     

"And at all time give full support to the decisions of the majority."    

  

 

When the membership has gotten full, accurate, and timely information,  and the voice of the lessees has been heard,  I will give my support to the decisions of the majority.   When more information comes to light, that might show that it was not the best decision, I certainly think the Council and members and lessees have a right to change the decision.   

 

 

 

 

Blog 9 The Oath of Membership Provision 3

FSTC Blog 9    Membership Oath                                                                       Provision   3

 

 

All new members sign the FSTC Oath of Membership.  It has just five provisions. 

 

[It must be noted that words can often have different meanings to different people and are therefore subject to interpretation.  The law in the United States is based on ‘case law’ because the various laws are subject to interpretation and the court cases refine and define the meaning.   This is my personal interpretation of the words of the Oath.]
 

Provision Three

“To work for the FSTC in whatever capacity I am able, to the end of bringing understanding to the citizens of the area and to the State of Alabama officials whenever possible, and to do so without regard for any personal or individual circumstances.”   

 

I have spent the last 18 months researching all I can about FSTC.  I have studied the FSTC charter and the legislative act that established FSTC as a ‘special purpose mutual benefit’ corporation under the laws of Alabama.  I have studied the sections of the Alabama Code pertaining to the FSTC and how it must operate in Alabama.  I read the IRS provisions for a 501c4 tax exempt corporation.  I have studied the Supreme Court decisions in the Rezner vs. FSTC cases that changed the way FSTC must operate. 

I have looked at the Alabama laws pertaining to leasehold interests and the responsibilities of fiduciaries to a trust.  I have read many old Fairhope Couriers and I have read Paul Gaston’s book about FSTC’s founder, E. B. Gaston.  I have scanned Progress and Poverty to refresh myself on Henry George theories.

I have tried to bring an understanding of FSTC and how it operates today to the members, the lessees, and the citizens of the area by sharing this knowledge through emails and through my blog site.

There are many members in good standing who do not attend FSTC meetings and do not even get the minutes of the meetings and have no idea what is happening.  Some don't even vote.  Are these members following the oath?

The first thing FSTC did when it was established in Iowa, before the founders moved to Fairhope, was to start a newspaper--The Fairhope Courier--which they owned for years. E. B. Gaston was the Secretary of FSTC and the editor of the Fairhope Courier for many years.  He eventually bought the Fairhope Courier and continued publishing it.   FSTC used the newspaper to promote an understanding of FSTC to the citizens of the area and the world.  The public was welcome to meetings. 

The Alabama Supreme Court ruled in Rezner vs. FSTC that "Also, with the exception of the right to participate in the governance of FSTC, the non-member lessees have the right to be treated with strict equality with members in "the distribution of benefits." They do not have the right to vote, but the have the right to be treated with strict equality with the members at least in the distribution of benefits.  To be equal in such they must have a voice. 

Now, no press is allowed.  Now, though it is not a provision in the FSTC constitution, the FSTC has declared that meetings are private.  No lessees.  No public.   How is that 'bringing an understanding' to the citizens of the area? 

The FSTC Colony is supposed to be a 'model community.’  Is it a ‘model community’  when the people who make up the community, the lessees,  are left out of all decision making and cannot even attend meetings?

My blog can certainly not take the place of open meetings and press in attendance, but I do hope it can bring some understanding of FSTC to interested people everywhere. 

 

 

Blog 8 The Oath of Membership Provision 2

Blog 8  The Oath of Membership                                                        Provision 2
 

All new members sign the FSTC Oath of Membership.  It has just five provisions. 

 [It must be noted that words can often have different meanings to different people and are therefore subject to interpretation.  The law in the United States is based on ‘case law’ because the various laws are subject to interpretation and the court cases refine and define the meaning.   This is my personal interpretation of the words of the Oath and of the Constitution.]

Provision Two

  “To abide by the Constitution of the Fairhope Single Tax Corporation at all times and abide by the established rules of operation and membership of the Corporation.”

 

The Council members,  the governing body of the FSTC, a multi-million dollar land leasing  mutual benefit corporation that serves as fiduciary to a trust fund for the benefit of the lessees, does not get any training.  Maybe that is why it appears that they so often do not follow the FSTC Constitution, or even the laws of the State of Alabama, and the Supreme Court rulings that are the law on how it must operate today.

Let’s look at the FSTC Constitution.

“ARTICLE II PURPOSE:    Its purpose shall be to establish and conduct a model community or colony free from all forms of private monopoly, and to secure to its members therein, equality of opportunity, the full reward of individual efforts and the benefits of cooperation in matters of general concern.”

The FSTC Corporation mailed a letter to the membership dated April 17, 2014.  Among other things that letter said, “It is unfortunate that some members do not understand …. that the mission of FSTC is to help create a better community for everyone.”  FSTC has no ‘mission statement.”  The Purpose in the Constitution seems to be the best indicator of the mission, and it was not to create a better community for everyone, but to demonstrate through its Colony, how a more fair economic system  could be created through use of a ‘land tax’ (like a property tax, but not on the improvements—only the land).  That ‘land tax’ was going to be the only tax needed therefore they called it the ‘single tax.’   

How can the Colony be a demonstration of how beneficial this ‘single tax’ can be, when this tax is taken from the lessees of the Colony and not put back into the Colony?

Where is the 'equality of opportunity and full reward of individual efforts’ when one neighbor pays the ‘single tax’ and the other doesn’t, but it is used to benefit both?   Where is the 'cooperation in matters of general concern' when the lessees are not asked what is of concern to them?

How can the FSTC be a demonstration when they, unlike the founders of FSTC, declare all meetings private?  Nowhere in the constitution does it say that lessees and the public are not allowed at the meetings.  Nowhere in the constitution does it say meetings are not public.  No where does it say that lessees cannot attend.  Nowhere does it say press is not allowed.  In fact, the Supreme Court ruled that except in matters of governance, lessees have the same rights as members.  They can't vote, but why doesn't that mean they can't come to meetings and listen or get minutes?  Why doesn't that mean they are stake holders in the corporations, and not just "tenants with not stake" as was recently said of the lessees?

  “ARTICLE VIII.  Land    Section 1.  There shall be no individual ownership of land within the jurisdiction of the Corporation, but the Corporation shall hold as trustee for its entire membership, the title to all lands upon which its community shall be maintained.”

That seems pretty clear that the FSTC community or Colony is just that area that includes land that FSTC has title to.  In other words, it is the community of lessees.  That is probably why the lease says "all values accruing from the land are held in trust for the benefit of those leasing the land...and no part of rents paid by [the lessee] shall be appropriated as dividends to its members or any other persons, but all shall be administered as a trust fund for the equal benefit of those leasing its lands." 

Its 2014.  There is no such thing as a single tax.  There are many taxes property taxes, and sales taxes, and income taxes for both state and federal government, and many more.  The Colony cannot be a demonstration of the value of the ‘land tax” since it is not exclusively on the Colony.  The ‘single tax’ is taken from the lessees who make up the Colony yet are not allowed at FSTC meetings and do not get communications from the FSTC except for the rent bill, and the ‘single tax’ is then spent to benefit people outside the Colony who do not pay the tax. 

“ARTICLE III Membership  Section 3. Any member against whom complaint of violation of the spirit and purpose of the Corporation or invasion of the rights of its members, is preferred in writing by 10% of its members, may be expelled by the Executive Council, after full investigation of charges preferred.  Such investigation shall be public and the accused shall be entitled to be represented by Counsel.”

The FSTC appeared to “be in violation of the spirit and purpose of the Corporation and of invasion of the rights of its members” when it recently voted to expel two members. 

It is only fair to let you know that I was one of the members expelled.  

 The complaint did not site violation of the spirit or the purpose of the Corporation or invasion of the rights of others as is required by the Constitution.  Instead there were charges of ‘lying in emails, conversations, blog site, etc.”  The Council refused to give a list of the alleged ‘lies’ and refused to give a list of which “emails, conversations, blog site” contained such lies.  They appeared to be violating the spirit of the corporation’s constitution when they gave just 9 days notice—not much time hire a lawyer—when ‘the accused shall be entitled to be represented by Counsel.”   The constitution does not call for an expulsion hearing, but requires a ‘full and public investigation of the charges."  FSTC refused to itemize the accusations and would not let lessees or witnesses or even let the accused’s court reporter stay.  They had no proof of any lies and offered no examples from “conversations, emails, blog site, etc.   The trustees reported that I was expelled for  ‘repeating a story I heard without first verifying it.”   There was no lie, much less lies, involved.  The Council refused to recuse themselves though they had proven their bias by the March10 hearing and the April 17 letter.     It seems they were guilty of 'invasion of the rights of members' by not offering a fair hearing based on the facts and reasons for expulsion as stated in the Constitution.

“ARTICLE IV.  SUPREME AUTHORITY:     Sec. 1.  Supreme Authority shall be vested equally in the membership, to be exercised through the initiative and referendum as hereinafter provided.” 

The membership needs full, accurate, and timely information in order to make informed decisions. 

“ARTICLE VI.  INITIATIVE AND REFERENDUM

Sec. 1.  Upon petition of ten percent of the qualified membership, any act of the Executive Council, legislative or administrative, or any measure proposed by the petitioners, shall be submitted to a vote of that membership at the time set in said petition….

Sec. 2.  No measure of general legislation passed by the Executive Council shall be in force until thirty days have elapsed after its passage without the filing of a petition for its submission to the membership….”

Sec. 1 talks about administrative acts and legislative actions or ‘any measure proposed’ and gives the membership the right to vote upon a petition by 10% of the membership.   Sec. 2 is totally separate and only talks about general legislation limits when new legislation can come into effect.

That 30 days does not limit when membership may petition an action, only restricts when a legislative action comes into effect.  However this year the Council decided that the 30 limit referred to the membership’s right to petition.  If the Council passes an act, and 10 years later the membership no longer wants it, Council says the membership doesn’t have a right to petition. 

This 30 day limitation was not used in the past as an examination of the old referendum files shows.  This 30 day limitation greatly restricts the membership’s right of referendum and therefore restricts its right to be the Supreme Authority.  It is made more onerous by the fact that the minutes do not go to the membership until after 30 days have passed.   Most members would not know about it until it is too late to act.  It is also made more onerous because the FSTC does not follow the Code of Alabama’s provisions that members have the right to inspect and copy all documents, and FSTC does not let the membership have a list of phone numbers or emails of the membership, limiting the membership’s ability to contact other members.     

“ARTICLE X.  NO TAXATION     No taxes or charges of any kind other than heretofore provided for shall be levied by the corporation upon the property….”  So why are lessees charged the $100.00 administrative fee?

“ARTICLE XIII.  INDIVIDUAL FREEDOM.   The natural rights of its members to absolute freedom in production, exchange, associations, beliefs and worship, shall never be abrogated or impaired by the Corporation…”

Members should have the freedom to express their views and to run for office without fear of being expelled. 

Blog 7 Oath of Membership Provision 1

Blog 7.  Oath of membership                                                                    Provision 1



All new members sign an Oath of Membership.   It has just five provisions.

[Note:  Words can often have different meanings to different people and are therefore subject to interpretation.  The law in the United States is based on ‘case law’ because the various laws are subject to interpretation and the court cases refine and define the meaning.   This is my personal interpretation of the words of the Oath and of the Constitution.]

Provision one:

  “I do solemnly pledge myself to promote and  perpetuate The Single Tax Principle that human energy and labor should not be taxed and man should be allowed to keep that which by his labors he creates.”

I have been promoting and perpetuating the Single Tax Principle that human energy and labor should not be taxed and man should be allowed to keep that which by his labors he creates in two main ways:

1.  I support following the lease--the legal contract FSTC has with its lessees--that  says that all rents go into a trust for the benefit of the lessees.  I believe that taking the trust fund monies and spending them outside the FSTC community is taking from the lessees 'that which by his labor he creates.' 

2.  I support informing lessee's of their rights as leaseholders and allowing them to have the information that FSTC has about the value of their leasehold interest, especially as it relates to eminent domain.  I believe that not allowing the leaseholder the full value of his leasehold interest in condemnation cases (such as is happening now on Highway 181 as the State of Alabama is condemning Colony land to widen the highway) is depriving the lessee of 'that which by his labor he creates.'

 FSTC was chartered in Alabama  as a 'mutual benefit single-tax’ entity.  Mutual benefit is to mutually benefit a certain group of people--the Fairhope Single Tax community.  The FSTC constitution says "there shall be no private ownership of land within the jurisdiction of the Corporation, but the Corporation shall ...hold the title of all lands upon which  its community shall be maintained."   That seems pretty clear that the "community" is the community of lessees (2900 leaseholds) where all pay the 'single tax' or 'demonstration fee'  for their mutual benefit. 

The entire Fairhope Community that includes much more than the City of Fairhope  is much larger than the FSTC Colony (Community).  Some of the FSTC Community is inside the City Limits of Fairhope.  Some is not.   

Here is a copy of TheFairhopeCourier.com that shows a map of the FSTC Colony and the city limits of Fairhope.  While yellow is the City of Fairhope, green is the Colony land inside the city limits, and blue stripped areas are Colony land outside the city limits, all of the white area is also in the Fairhope Community.  There is more land that is considered in the Fairhope Community that is not on this map.  It gives a visual picture of how much larger the Fairhope Community is than the Colony. 

Tuesday, July 1, 2014

Colony Lands and City Limits

 

Yellow is the City, Green is Colony land in the City and the Blue striped area is Colony land outside the City. 

These are the current maps distributed by the City and the Chamber of Commerce. The Fairhope Single Tax Colony does not maintain a map of its properties. 

Shading of map by www.TheFairhopeCourier.com

 

How is it not taking from the lessee (those in the blue  and green areas)   'that which by his labors he creates' when money is taken from him that under the contract with the FSTC is a trust for his benefit, and is spent instead to benefit an area larger than depicted by this map?

I've heard members say they don't mind "paying extra" to help our wonderful city.  I don't mind either--in fact I often donate to things that make our city better.  That sentiment is beside the point.  There are 2900 leaseholds who have FSTC leases  (a legal contract with FSTC) that say "all values accruing from the land are held in trust for the benefit of those leasing the land...and no part of rents paid by [the lessee] shall be appropriated as dividends to its members or any other persons, but all shall be administered as a trust fund for the equal benefit of those leasing its lands."  The Supreme Court in Rezner agreed with this lease provision and said FSTC serves as a fiduciary for this Trust Fund to benefit the lessee. 

As to rights of leaseholders when land is being taken by Eminent Domain as it is right now by the State of Alabama to widen Highway 181, I believe that FSTC has a duty to inform the lessees of their rights as the owners of the 'leasehold interest' in the land. 

When someone sells  Colony land, it is the leaseholder who sets the price and sells land and the improvements on it.  FSTC owns the land, but does not get any money when a lessee sells the land (actually the lessee is selling the  'leasehold interest' in the land and the improvements on the land).
People purchasing the  leasehold interest in FSTC land  pay full market value--the same price their next door neighbor on deeded land pays.    That seems to indicate that the 'leasehold interest' is  worth 100% of the value of the land. 

Of course FSTC 'owns the land.'   FSTC holds the title to the land in trust.     All leaseholders pay rent to the FSTC which shows they understand that FSTC owns the title to the land.  That rent includes the property taxes, an administration fee of $100, and the 'demonstration' fee now set at .002 of the appraised value of the land.  

Why would anyone pay the full market value on land they do not own?  They do because that lease gives the lessee the exclusive right to use and enjoy the land for 99 years.   That lease says all rents will be used to benefit the lessees.  That lease is renewable.    It is transferrable.  It is inheritable.  It is valuable. 

Tim Kant, Mayor of Fairhope, has a video about owning FSTC land, where he explains there is no difference in buying and selling a home on Colony land.   It is not a new video, and FSTC is aware of it and has not, to my knowledge objected to it, indicating they agree with Mayor Kant.   You can watch the video here: 

https://www.youtube.com/watch?v=ujI_pccNM5Q

Now that the State of Alabama is condemning land along Highway 181 to widen the highway, FSTC is claiming that "We own the land.  We get  all the money."  Yes, they own the land.  That does not mean they get all the money.  Why not?  Because the law recognizes 'leasehold interest' as a ‘property ownership' that must be compensated in condemnation cases.   In fact, in Alabama, a lessees' losses are covered first.  FSTC paid for two law firms to give FSTC a legal opinion on what FSTC could expect its share in condemnation would be.   Stone, Granade, and Crosby said FSTC's share would be zero.  Maynard, Cooper, and Gale told FSTC not to expect more than 10%.   FSTC does not share this information with the lessees. 

TheFairhopeCourier.com posted these comments that Dean Mosher made at the FSTC July regular meeting.  These were comments were made right before the beginning of the meeting when lessees and members are allowed to express their concerns.   "The question I have for you is a Georgist question." he said after telling a brief history of the past 30 years of the Colony during which he has been very involved. He continued, "Under any kind of Georgist system, how can we justify taking 70% of the leasehold value, in condemnation, that they have created?... Because I would like you to rethink that position."

  The Supreme Court ruled in Rezner that FSTC lessees' improvements include the shade trees, the grass, the flowers, the care and nurturing that went into the land, as well as the lessee's good taste in planning were all part of the 'improvements' that belong to the lessee.  FSTC is  not considering those improvements as required by the Supreme Court of Alabama.  That, to me, seems to be taking from the lessee  'that which by his labors he creates." 

 

 

 

  

 

 

 

Blog 6 Can FSTC take a lessee's land?

Yes.  FSTC has the right of Eminent Domain.  If you are a lessee, FSTC can take your land for a public purpose.  I thought just governments could do that.

Once, when I objected to FSTC taking back public park land and then leasing it to individuals, an officer told me, "You know, that corner you live on would make a nice park.  FSTC has the right to take it for a public purpose."   I didn't like the "bullying" suggestion that I'd better be quiet or they would take my land.  I was even more upset to think that FSTC could possibly have the right of Eminent Domain. So, I went home and read my lease.

It says:  "(9) The Fairhope Single Tax Corporation reserves the right to resume possession of all or any portion of the land herein described, for public purposes only, on payment of the appraised value of the improvements thereon. The terms of this paragraph do not apply during the time a mortgage exists on the leasehold interest and the improvements thereon."

Have they ever done that to anyone?   I don’t know.  

I do know that Council members who govern this large land leasing company, do not get any official training in the law of leases, leasehold value, or the rights of lessees.  The fact that they get no official training and have this huge power is frightening to me. 

Right now the State of a Alabama is condemning land to widen Highway 181.  Many leaseholders are losing a good bit of the property they have the right to use and enjoy for 99 years.  So who gets the money the State pays for this land?

The FSTC Council says "we own the land. We should get all the money"

Sounds logical in a way. I do pay a rent bill every year.  But, I paid the market value for the exclusive right to use and enjoy this land for 99 years.  Seems like the State would be taking quite a bit of my land value in this too.

The 5th Amendment of the Constitution says "...nor shall private property be taken for public use, without just compensation."  Is my leasehold interest 'property' that must be compensated for in Condemnation cases ?

The U S Supreme Court says it is. I have an absolute right to compensation in condemnation because it considers leasehold value 'property ownership.'

FSTC, apparently not knowing about leasehold value being considered "property" has taken the position that FSTC ‘owns the land’ and should therefore get all the money in condemnation, but is willing to give some money to the lessee—30%.  

The FSTC had their attorney draw up a document for lessees on Highway 181 to sign, giving FSTC 70% and the lessee 30%.

Director McCawley said he wanted to make it clear that this is not a settlement or offer, but rather that FSTC is willing to share in the proceeds of the forced sale of its asset—the land.  

What about the forced sale oif the lessee's asset--the right to use and enjoy the land exclusively for 99 years?

That is also 'property ownership.'

The FSTC also seems to have forgotten that the Alabama Supreme Court in Rezner ruled that improvements to the land are owned by the lessee.  Those improvements include every blade of grass, every shade tree, every flower, every fruit tree, the time and energy used in nurturing the land, the lessee's good taste in planning, etc.  Appraisers generally give a value for the building and a value for the land.  The value of all the trees and grass and flowers are not included by appraisers generally as "improvements."  Those improvements must be appraised and then subtracted from the land value.  Once land value is determined after subtracting all those improvements of trees and flowers and care, etc, then leasehold value of that land can be determined. 

Suppose you paid $100,000.00 last year for a piece of property.  The lessee selling the property got to keep the entire $100,000.00. FSTC had no claim to it. This year the State decides it needs the entire lot and appraised it for $100,000.00. FSTC comes to you and says "FSTC owns the land and should get that entire $100,000.00, not you.  But we'll share the proceeds from our loss and give you $30,000.00."  Sound fair?

Well, since the US Supreme Court determined that leasehold value is "property" how should a fair split between FSTC and the lessee be decided?  

That's been decided too. The Alabama Supreme Court determined the procedure that must be used in determining a fair split. FSTC learned this in a previous condemnation lawsuit back when Greeno Road was being widened. In that lawsuit, SouthTrust Bank vs FSTC, the Court of Appeals said that the Alabama Supreme Court, in a case known as Drummond Coal, determined the method the courts must use in determining a fair split, and sent the case back to the trial court so the trial court would apply that procedure.  The case was settled out of court and the settlement sealed.  But it is obvious when reading the case at the Court of Appeals level, that FSTC would have gotten nothing.  FSTC subsequently  paid for two legal opinions on what value FSTC could expect in condemnation cases.  Opinions: zero most likely, but never more than 10%.  

This information was paid for with rents from the lessees, but the lessees were not given this information which is crucial to their bargaining position.  

Are the Council’s actions putting the  Corporation  at risk of being sued?   The Council seems realize that they are because the March 2013 minutes say, “It was suggested to get Wilkins, Bankester, Biles and Wynne on board in case litigation is required.”     

Questions from members as to the Council's basis for determining the 30/70 split were never answered.  

Some officers are quick to point out that legal costs can be expensive.  

 FSTC has very deep pockets.  Lessees know that.  Is FSTC  Council using this power of deep pockets to encourage lessees to settle for much less than the courts would probably give them?  I certainly  hope not.  That would be opposite any Georgist philosophy. 

Was that how Henry George intended the 'single tax' to be used?  Is this how the FSTC was intended to treat the citizens of its ‘model community.’   Is this the way to demonstrate how a ‘model community’ should work? 

 _____________________________

Blog 5  How and Why to Become a Fairhope Single Tax Member

Who can be a member?

Why be a member? 

The last blog, "Who is Fairhope Single Tax?" discussed how less than 1/2 of 1% of the people in the Fairhope area are members of FSTC.   That means just 100 families in the Fairhope area. 

 What are the advantages of being a member?   All the values from the land accrue to the benefit of the lessee, not the members, so why be a member? 

Only members may vote on who is a Council member.  Only members may attend meetings.  (No one can tell me when this became a rule.  That provision is in neither Constitution nor the by-laws.  In the early years the lessees were welcome at meetings, and could debate issues.  They just did not get a vote.)  Lessees can come early to the meeting. The first thing on the agenda is ‘member and lessee concerns.’  They can express concerns at that time, and are dismissed before the meeting starts.  Lessees do not get notice of the meetings, and as far as I know, do not know they have the right to express concerns if they did know about a meeting. 

Only members get information about FSTC.  (FSTC started the Fairhope Courier back around 1896 and used to be proud of what they did and tried to get a circulation that reached people all over the world with what FSTC was doing.  Now the press is prohibited from attending meeting.  No one can tell me when that became a rule.)

Only Members may run for office.  There are 12 positions on the FSTC.  All get paid.  No one is volunteer.  The Secretary gets around $40,000.00 a year and is elected.  The others all get $2100.00 a year.  According to the IRS 990  for 2012  the FSTC files each year, each Council member (besides Secretary) works 2 hours a week.  That comes to $21.00 an hour.  Council members do not have to be lessees.  Just members. 

Only members get to divide up the assets if the FSTC ever dissolves.  Those 100 families and the 40 or so who live out of town would divide all the assets of FSTC amongst themselves. 

Yet there is another provision in the lease that says:   "(7) The Fairhope Single Tax Corporation agrees that in case of its dissolution, either by voluntary act of its members or otherwise, and the division of its assets among its members, the Lessee, if a member, shall be entitled to have the land herein described and leased- or so much of it as the lessee may designate- included in the lessee’s portion, at its actual value at the time, exclusive of improvements thereon, and if it exceeds in value such portion, to purchase the excess at such valuation. If not a member, the Lessee may at such time acquire title to the land herein leased by paying to the Corporation its actual value exclusive of improvements upon it."
  

What, the members would get the assets if the FSTC ever dissolved?   But what about my land?   You have a leasehold value that I believe to be quite high--in fact, from what I've read, your leasehold is worth basically 100%.   But FSTC takes a different view.  They are telling lessees on Highway 181 whose property is being taken by the State,  that FSTC should get all the money, but will let the lessee keep 30%. 

Wait a minute.  Don't the lessees pay full market value for the property they lease?  Yes.  If a lessee sells his unimproved land for, say $100,000.00, does FSTC take any of that money? No.  It belongs to the seller/lessee.  The new buyer/lessee pays the seller/lessee the entire amount.  Well, what if the State of Alabama came around a year later and decided they needed the entire piece the new lessee had just paid $100,000.00 for?  Suppose the State appraised that property for $100,000.00.   Would the new lessee get that $100,000.00?  Well, from what I've read  (SouthTrust vs. FSTC and the related Drummond Coal case http://caselaw.findlaw.com/al-court-of-civil-appeals/1249424.html) the new lessee should.  However, the Council of the FSTC feels differently. 

Suppose the FSTC goes to that new lessee who had just paid $100,000.00 for the land,  and said, "FSTC owns the land.  We are entitled to all the money.  But we will be nice and let you keep $30,000.00 and we'll just take $70,000.00?"   Would you think that was fair?

That is exactly what is happening to lessees on Highway 181 right now.  FSTC knows that if the lessee does not accept the settlement offer they FSTC had its lawyer draw up, and takes FSTC  to court, the court would have to follow a procedure that would most certainly give most, if not all the money, to the lessee.  FSTC knows this.  They paid for this information with the lessee's trust fund money.  FSTC, however, does not feel they have a duty to tell the lessees this. (see the case sited above)

The Oath that every member of FSTC must take says that it is their “responsibility to consider the desires of the lessees."   I wonder what the 'desires of the lessees' would be in this case. 

But, I am digressing. Let's get back to the possibility of FSTC ever dissolving.  What would happen?  Well, FSTC would appraise your property, and if you are not a member, they would expect you to pay the appraised value of the property you have already paid for.  

Your contract with FSTC—your lease, says, “The Fairhope Single Tax Corporation agrees that in case of its dissolution, either by voluntary act of its members or otherwise, and the division of its assets among its members, the Lessee, if a member, shall be entitled to have the land herein described and leased- or so much of it as the lessee may designate- included in the lessee’s portion, at its actual value at the time, exclusive of improvements thereon, and if it exceeds in value such portion, to purchase the excess at such valuation. If not a member, the Lessee may at such time acquire title to the land herein leased by paying to the Corporation its actual value exclusive of improvements upon it."  http://www.fairhopesingletax.com/lease/lease.html

This part is confusing because the FSTC lease provision 5 says:  "The Corporation further agrees, 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."

Well, FSTC is not going to dissolve.  That's not something I need to worry about.

Are you sure? There are just 240 members of FSTC.   I have no idea what all that FSTC property is worth, but it would be worth quite a bit.  It is probably enough to motivate some members to try. 

Oh, they would never try to do that. Why not?  They have before.    Back in the 1970s the FSTC Council tried to make FSTC a private, for profit  corporation where the members would get all the income.  From the Rezner vs. FSTC case , Sept. 11, 1987, it says:  "the plaintiffs sought ... an injunction to prevent the dissolution of FSTC.”  See:   https://www.courtlistener.com/ala/6Rsa/fairhope-single-tax-corp-v-rezner/

 Since lessees do not get information, they can't be watchdogs.  Members get some information and have a duty to watch out for the best interests of the Corporation and make sure it is not corrupted.  That is probably the most important reason to join. A member swears an Oath to bring understanding to the citizens of the area, and to do what is in the best interests of the Corporation.  I think the ‘corporation’ is the ‘community of lessees’ but I have never seen a definition.   

How can someone become a member of FSTC?

The FSTC Constitution just requires a person to be over the age of 18, pay $100.00 and be approved by the Executive Committee.  The Executive Committee is made up of the five directors.  Only they can vote on who becomes a member.  If a candidate for membership, his spouse can automatically become a member without taking the course. That spouse's membership is lost if the original member dies or loses his membership.

A member does not have to be from Fairhope.  A member does not have to be a lessee.  They are now required by the Executive Council to complete a 12 week course on a 19^th century economist, Henry George, and his book, Progress and Poverty.  It is interesting that so much emphasis is placed on Henry George and his single tax theory, especially since his ‘single tax’ theory cannot and does not exist today.  It does not exist here in Fairhope and it does not exist anywhere else. 

It is interesting that neither the FSTC Constitution, nor the Lease, nor the by-laws mentions Henry George.  FSTC was chartered by the State of Alabama as a “special purpose, single tax and other mutual economic benefit economic association.” The charter mentioning 'single tax' does not say Henry George, but does mention his single tax theory which does not and cannot work today.   Henry George never intended to tax that tax from just a few people and spend it on the many who do not pay that ‘tax’. 

Suggestions by members that the course be made more relevant, or shortened, or the course material be put on a website, have all been dismissed by the Council. 

The course is just given two times a year.  The class is limited to 20 people.  After taking the course, a candidate files an application for membership with FSTC.  Then they wait, often for months, for an interview by the Membership Committee.  After being questioned and approved by the Membership Committee, the next step is approval by the Executive Council. 

 The Executive Council, without any precedent in FSTC history or law, has been voting on membership applications in Executive Session (basically a secret meeting that members can't attend and votes aren't recorded.) They have blackballed such outstanding people as Betsy Hunter and Mike Wesley and Mia-Burmeister-Laws in these secret sessions with no reason given, and no vote recorded.   

At the March 26, 2014 meeting of the FSTC, FSTC counsel McDowell stated that when litigation or a person’s good name/character is to be discussed, Executive Session is warranted with no explanation, but no votes or decisions can be made during Executive Session.  Many were hopeful that this  practice of blackballing candidates for membership in Executive Session would stop, and even that the Council would resubmit the applications of the membership candidates they kept out with a secret ballot without giving a reason. 

They were disappointed again.   The summer of 2014 saw three more candidates refused even though they had completed the course.   Vote was taken in secret and no reason was state. 

 Members have suggested that the Council have a policy that states why they may turn down an applicant for membership.   So far that suggestion has not been discussed by the Council.

Still, to be a viable organization, FSTC, needs active and interested members.  I urge you to join.

There is no guarantee that after taking the course and being recommended by the Membership Committee, that the Executive Council—the five directors—will approve the application.  It is important that people try.  A stagnant organization is not a healthy organization.   

  

.

 

 

 The Rezner 1987 decision