The Hampton Beach Improvement Company

Chapter 2 -- Part 4

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Coincident with the beginning of the street railroad was the establishment of a private company that, to quote one critic, has been "a thorn in the side of the town" almost from its beginnings. The Hampton Beach Improvement Company (HBIC) had its 99-year lease approved at the same April 1897 special town meeting that granted property-tax concessions to the street railway. (This meeting is discussed in more detail in the first chapter.) If the Town made a poor decision in granting the lease, the company made a shrewd decision in requesting it, and the Town has made many efforts to correct its mistake. As Selectman Harry Munsey said in 1953, the company lost money for many years at the beginning, but he "wouldn't be surprised if it was a pretty good thing now."

For an annual rent of $500, the HBIC leased all of the Town-owned land from Island Path to the mouth of the river. The actual area of the leasehold now is the land between Ashworth Avenue and Ocean Boulevard. It did take some vision to undertake the lease, because the land was mainly sand dunes, and, before the street railway was built, the section appeared to be worthless. In fact, the HBIC's articles of incorporation, as written in the town records in September 1897 refer to "beach wastelands." The company's first tenant probably was street railway promoter Wallace D. Lovell, who for $500 leased the site of the current Casino complex. Lovell apparently guaranteed the local men a large rental payment, because if his plans for the line failed, the HBIC still would have been obligated to pay its annual rent.

According to current company general manager E.L. Batchelder, Jr., there were as many as nine men involved with the company in April 1898 when the lease was signed. In 1914, the Union reported the HBIC was composed of Warren M. Batchelder, Joseph Hobbs, James F. Blanchard, and George A. Johnson, who was manager. Except for Hobbs, these men all signed the articles of incorporation, along with Samuel W. Dearborn and Fred E. Sanborn. Throughout much of its existence, the company has been managed by the Batchelders. Butcher Warren Batchelder, manager at the time of his death in 1938, was followed by his son, postmaster Edwin, and, since 1963, grandson Edwin, Jr.

In September 1897, the company filed for incorporation with the New Hampshire secretary of state, listing capital stock of $1,000 (40 shares at $25 each). According to the terms of the lease, the Town was obligated to build a road across the easterly front of the property. The lease was filed with the Registrar of Deeds in February 1898 and became effective on April 1. Soon afterward, engineer William T. Ross began to construct the gravel road that became Ocean Boulevard. The lease said that no house with a value under $750 could be built fronting on the new road and that the HBIC had to use its best efforts to lease the lots and to have cottages and other dwellings build as soon as possible. While the Town did not derive much income from the lease, it hoped to profit from taxes on new buildings in the area. Another important part of the lease prohibited the sale of alcoholic beverages on the leasehold and required the HBIC to add that clause to its subleases. The failure of the company to prohibit the keeping or sale of alcoholic beverages would result in forfeiture of the lease.

By May 1898, the News-Letter reported that the tract had been surveyed by Ross, streets were laid out, and several leases were signed. Although the Town built the original Ocean Boulevard, the HBIC was, and still is, responsible for what are now the lettered streets and sidewalks in the area. Currently the Town plows the roads and bills the HBIC for the service. Leasing was swift that first year because there was little other available land for building at the Beach. By November 1901, the Union reported that more lots had been leased than at any time since 1898, and it predicted that few vacant lots would remain within two years.

Some people objected to what was happening at the Beach adjacent to and in the leasehold area, and a committee was appointed at the 1901 town meeting to investigate complaints and to report back one year later. According to the report of committee members John N. Bradford and E.P. Young, the newly laid out Beach road was the easterly border of the leasehold and all of the land from the highway to the sea was Town-owned property and subject to Hampton police jurisdiction. Further, the report said, neither the street railway company, the HBIC, nor the selectmen could authorize the leveling or the removal of the sand dunes, an activity then underway across from the Casino. The removal of these dunes, nature's natural protection for the lands behind them, later made the seawall necessary. The report also criticized the action of the police, who were prohibiting people from selling farm or home grown produce along the roadside. "Let our highways and all our unleashed public domain be as free for the beggar as for the nabob," the report argued.

Bradford and Young leveled their most serious criticism at the HBIC for permitting liquor sales on their leasehold, an allegation that, if proved, would have canceled the lease. The committee said that in one case, a man who sold liquor illegally in the leasehold was taken to court, but the matter was dropped by request of the selectmen. This lack of enforcement was to be brought up again a decade later.

Having no confidence in the local police, the committee reported,

Whenever any one of Hampton's police force is only slightly competent, seldom on hand when danger threatens, usually in sight at free lunch with beer on tap, the town in our opinion had better do with less men and more manhood.

We are convinced from our study of this lease the policing of the leased premises is a matter belonging to the lessee. The demised premises is leased them for ninety-nine years, and among the conditions is, that they will not allow on the premises the sale, or keeping for sale, of intoxicating liquors, or disorderly houses or any public nuisance. The Beach Improvement company are pledged to do that. We find nothing in the lease intimating that the town is to furnish them with police.We believe that a forfeiture by one of their tenants is forfeiture of the whole.

The report then cited the section of the lease that said that if the HBIC violated any terms of the lease, it would lose the lease. Bradford and Young concluded that the committee should be continued with enforcement powers with respect to the 99-year lease and that the police should be ordered to enforce the Sunday law, which closed stores and businesses and also prohibited Sunday gunning off Boar's Head.

Apparently the HBIC cracked down on merchants selling liquor on their leasehold, but the matter would come up again many years later, when the question of permitting liquor licenses in town was a hot issue.

A decade later, the Town and the HBIC were in controversy again, with instigator Merrill H. Browne using the front page of the Union to keep the problem before the public. One critic described Browne as a young lawyer. He apparently was not a property owner and perhaps not as native, since he was the only Browne in town with an "E" at the end of his name. From 1910 through 1913, Browne wrote lengthy letters to the newspaper taking on the selectmen regarding taxes, urging the construction of a new town hall, battling with Howard G. Lane over the regulation of the town's clam flats, and taking the Boston & Maine Railroad, the Exeter, Hampton & Amesbury Street Railway, and the Hampton Beach Improvement Company.

Writing a letter to the December 15, 1910, Union, supporting his plan for a new town hall to replace the aging structure then in use, Browne suggested, "Look about you and see how you have been improving the Improvement Co., paying their bills and running a bureau of charity for their special welfare." Opponents of the new town hall felt it was not affordable, but Browne wrote, "With her [Hampton's] sewer assessment practically taken care of by the increases in the town assessments upon buildings benefited by the sewer, with an increase in the valuation of all property on Ocean Boulevard between Mr. Jenkins' [Café] and the Casino, that is benefited by the new breakwater, can there be any proof that she can't afford it [the town hall]? Can't she afford to leave the leased land alone for a while and enjoy a few home improvements?"

In a rambling letter the following week, in which he paraphrased Thomas Jefferson -- "Thousands for a town breakwater, but not one cent for a Hampton Beach Improvement Company breakwater"- Browne argued that since the HBIC received the leases from their tenants, they should have paid for the breakwater themselves. Meanwhile, he said, the Town owned valuable property on the North Beach that was about to be leased and that had no breakwater protection. "Some years ago," Browne wrote, "about 1898, the town of Hampton killed one golden goose [by leasing to the HBIC], just before she began laying her golden eggs. Don't let her kill this second golden goose she has caught" by not protecting the North Beach with a breakwater.

The following week, Beach resident John A. Tucker wrote supporting Browne's efforts to highlight the town's problems with growth and development at the Beach, but Tucker was in favor of spending money for Beach improvements, especially for water and sewer: "Your correspondent [Browne] seems perplexed over the existence of the Improvement Co.," Tucker wrote. "I cannot say much about that Christmas gift lease. It may have turned out a good thing for those adventurous men financially .... It has also been a great thing for the town. It opened a track of waste land and has produced a pet industry for the town. If it should prove that the town was a loser, which they are not, the lease can easily be broken."

But a few sentences later, Tucker outlined an argument that has been going on in Hampton ever since the Beach was developed. Suggesting that the poor streets and roads at the Beach were not the fault of the HBIC, Tucker argued, "All we have at the beach we pay for and give the Town besides a good royalty in taxes. We need a fire house at the beach and we are going to get it in the near future. The beach is a benefit to the town." Also, he explained, all of the public improvements at the Beach "were performed by town .... laborers supervised by the town's man, and a beach market was a prime outlet for town men selling produce, ice, and milk."

Browne was back in print the following week, wondering just why the Town issued the HBIC lease. He said he had met only one man who had actually opposed it when it was debated at town meeting in 1897. Others told Browne that no one could have foreseen what happened, but he wrote, ".... the mere fact that a man of Mr. [Wallace D.] Lovell's judgment and ability as a business man wanted such a lease ought to have aroused a suspicion and have been a good cause for reflection." Here perhaps is an indication that Lovell was in fact behind plans that led the local men to seek the lease. For whatever reason the Town voted for the lease, Browne said the HBIC was a thorn in the side of the Town, sinking deeper every day as the company "pocketed money that would have come to the town," and the thorn ought to be removed.

A week later, on January 12, 1911, Browne was back again, this time arguing that as a lawyer he had reviewed the lease and believed it could be broken, especially regarding the tenants who were illegally selling liquor. To support his ideas, Browne presented some financial data. He suggested that the HBIC had a new income of $4,500 per year, based on the rental of some 200 lots at $25 per year; less the $500 paid to the Town. The $4,500 represented, he said, 10 percent of what the property was worth, or $45,000. The rental fee of $500, he argued, was equal to a tax of $20 per thousand on $25,000 worth of property. Therefore, Browne said, if HBIC net income indicated a worth of $45,000 and the town lease fee indicated a value of only $25,000, the difference was $20,000 in valuation for which the Town was not receiving taxes.

Browne's arguments against the company led the 1911 town meeting "to instruct the selectmen to cause the Hampton Beach Improvement Co. to fully observe the terms of its lease."

Browne wrote to the newspaper again in the June 22 edition, denying rumors that he had "sold out" to the HBIC and presenting copies of correspondence between himself and the company attorneys. Browne said that a suit might be avoided if the HBIC would agree to a revision calling for the company to pay "a sum equal to what the latter [the Town] would derive from taxation of the lands, now illegally exempted thereon."

Outraged that Browne would print in the paper what they considered to be a private letter, the HBIC responded in the July 6 edition. In describing Browne company manager George A. Johnson wrote, "A year or two ago there blew or, was forced across the line into New Hampshire, a bright legal gentleman who located at the Beach at Hampton wanting cheap notoriety and also some free advertising as he said himself." An adjacent letter from HBIC lawyer John H. Bartlett of Portsmouth offered to write up a concise history of the HBIC (which regrettably he didn't do), outlining the thousands of dollars that the men had invested in transforming the unimproved wastelands into valuable taxable property. If their plans failed, Bartlett said, the responsibility for paying back $500 per year for 99 years would have bankrupted the families of the promoters.

"I will say in closing," Bartlett wrote, "that these gentlemen entered into a good-faith agreement with the town of Hampton and they intend to abide by that agreement as one man will abide by an honest agreement made in good faith with another honest man, and if you have any objections, you will have to go ahead in your own way." In September, Browne replied to the HBIC, countering local thoughts that he had been scared by the two HBIC letters. Browne said their responses were nothing but an attack upon himself and they still did not address the issues he was raising -- namely, the illegal selling of liquor and the unfair lease payment.

In December 1911, Browne presented the company with a "Christmas gift," a petition for a writ of mandamus suit against Selectmen Joseph B. Brown and Frank E. James, requiring them to assess taxes against the HBIC. Perhaps in response to this motion-and combined with the dispute over the payment of sewer construction fees-the 1913 town meeting voted to take legal action to annul or break the HBIC lease. Browne, who often said in his lengthy letters that he was not seeking personal gain, ran in the 1912 Republican primary as a candidate for representative to the General Court, New Hampshire's House of Representatives, and finished third with 30 votes, well behind nominee Herbert Perkins, who had 194 votes.

Following comments regarding lawsuits made by Selectman Brown at the 1913 town meeting, George Johnson said the HBIC was not suing the Town but had responded to a town suit against cottage owners who had not paid their sewer assessments for improved lots that had not been leased but they believed the cottage owners should pay the sewer assessments for their lots. In 1912, Johnson said the company paid the Town $1,400 for its lease fee and assessments.

In August 1912, a campaign letter from Merrill H. Browne said that as a result of his suit against the Town, the HBIC was taxed for the first time, assessed at $50,600. The company paid the tax under protest and took the Town to court. In November 1914, the Supreme Court ruled in favor of the HBIC, saying that when the lease was signed, the land was worthless. The court ordered Hampton to refund taxes paid for 1912 through 1914, a total of $1,844.49. Lawyers' fees and court costs were $2,000 more. So ended the Town's first attempt to annul or revise the HBIC lease, and Merrill H. Browne was rarely heard from again.

The matter of contesting the lease was addressed again in 1953, pushed by newly elected Selectman Lawrence C. Hackett. At that time the HBIC was leasing some 326 lots measuring on the average 50 by 100 feet, and a great many of the lots had two houses on them. Hackett figured that if the lease could be broken, Hampton would realize some $2.3 million plus interest over the remaining 44 years of the lease. In November, Hackett raised several issues in a letter to State Attorney General Louis C. Wyman, one being the fact that former manager George Johnson apparently had granted quitclaim deeds to four lots in 1914, a possible violation of the lease. Tax records indicated the owners of the land were paying property taxes to the Town. Hackett also questioned whether the 1898 selectmen legally could have made an agreement to permit a private company to lease a valuable asset for such a long period of time for such a low return. He said the HBIC was not leasing some of its property, another possible violation. Although permitted to lease all of the land to the mouth of the river, Batchelder said they had no plans to assert any claim to the land beyond their present lease area -- nearly everything between Ashworth Avenue and Ocean Boulevard. The lots south of Q Street are not in the HBIC leasehold.

The 1954 town meeting raised $1,000 to hire lawyers to review the legality of the lease, and in December 1955 the Town asked the courts for a declaratory judgment, alleging that under the laws of 1933, the HBIC had allowed its incorporation to be revoked (within three months of the suit, they reincorporated). That suit also alleged that the annual $500 payment, while adequate when the company was challenged in 1914, was out of proportion with the current value of the land that taxpayers were asked to pay a disproportionate amount of taxes as a result of the small payment made by the company. Also questioned was the legality of as many as 37 lots that had been granted quitclaim deeds by the HBIC between 1911 and 1930.

The case was not settled until the fall term of 1966, when the New Hampshire Supreme Court dismissed the suit and awarded attorneys' fees to the HBIC. In effect, the court ruled the lease was valid, saying that the payment of a yearly fee in lieu of taxes was not unconstitutional and that the company which had sustained losses in its early years, was now entitled to make a profit on its investment. As a result of another suit filed in 1963, the selectmen and the HBIC in January 1969 announced an out-of-court settlement and the HBIC agreed to pay $100,000 in lease fees ($4,000 per year until 1988, $6,000 thereafter) over the remaining 29 years of the lease. This did not settle the deeds issue, however, and the lots in question paid no land rent or land taxes until they were finally added to the tax rolls in 1972.

The 1972 town meeting adopted a resolution to grant to tenants in the HBIC area protection for their leases beyond the 1997 expiration of the HBIC lease. (That meeting was not properly warned of the resolution so it had no legal effect; however, annual meetings since that time, and the 1982 special leased-land meeting, have granted all lessees, including HBIC lessees, the right to buy the Town's interest in their lots or to sign a 25-year lease with the Town. This arrangement gives property owners holding leases protection in making new investments and in seeking mortgages that might require terms extending beyond the decreasing life of the HBIC lease. Even with this resolution, many property owners have had problems borrowing from banks, which were reluctant to lend mortgage money on property situated on leased land. This situation is discussed in more detail in the section on the Town's decision to sell its leased lots to lessees and sublessees of the HBIC.)

At the 1971 town meeting, voters approved ballot articles permitting first-class restaurants in the HBIC area to sell liquor and allowing grocery stores to sell beer. This ended a lease clause the alleged violation of which many people believed, at the turn of the century, should have voided the lease. The Town had voted "wet" in November 1970. A 1977 opinion by the Town's lawyers confirmed that the HBIC's tax-exempt status also extended to the payment of Precinct taxes.

The rents charged by the company to its tenants have long been an issue with building owners in the HBIC leasehold, a situation over which the Town has no control. Unlike tenants of a building who can move if their rents increase, the HBIC's tenants are in some ways tied to their land, since they own buildings on the leased lots. Refusal to pay their rent would likely result in an order to move their buildings from the lots. Originally the lot rents were $25 per year, and charges remained low until after World War II, when property values increased dramatically. Increases have been especially marked since 1980.

For many Hampton residents, especially some Beach property owners, a collective sigh of relief will be heard at midnight on March 31, 1997, when the HBIC lease expires. For the Improvement Company, it will be the end of a lucrative business started by a handful of local men who saw the potential value of "wastelands."

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