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Southampton Town to auction development rights to fund affordable housing projects

Southampton Town Supervisor Jay Schneiderman supports the auction

Southampton Town Supervisor Jay Schneiderman supports the auction of development rights, a first for the town. Credit: Gordon M. Grant

Southampton Town later this month will hold a first-of-its-kind auction to sell off development rights — which allow developers to build at greater density than allowed under zoning — to fund affordable housing opportunities.

Up for bid are 15.13 town-owned development rights in the Southampton School District valued at $275,000 each. If all are sold at the minimum bid price, it would add $4.16 million to the town’s Community Housing Opportunity Fund coffers. That money is used to build affordable housing in the town, where high real estate prices make it difficult to retain a local workforce.

There is currently no money in the account, although the town gets money back when homes in the affordable housing program are resold.

“We try to replenish the fund whenever we can,” said housing and community development director Diana Weir.

The town banks development rights when it purchases properties for preservation and has about 700 rights in its bank, said town planning director David Wilcox. The town had previously given rights away to incentivize developers building affordable housing communities but has never sold them, he said.

The rights up for bid resulted from the $1.5 million purchase of a 10-acre North Sea property in 2006 that was intended for affordable housing. A portion of the property was purchased with housing fund money and another portion was purchased with Community Preservation Fund money, which is used to preserve land. Town officials later found the structure of the sale made it difficult to develop housing on the property.

Wilcox noted the initiative is modeled on auctions held by the Central Pine Barrens Joint Planning and Policy Commission to sell Pine Barrens Credits, which allow developers to satisfy county health department wastewater flow requirements.

The commission hosted an auction for credits in 2018 and again in June and received no qualified bids, said the commission’s executive director, John Pavacic.

The market to purchase town development rights, which Wilcox said are about equal to one additional home, remains to be seen.

Those rights could be used to increase subdivision yield, subdivide two undersized lots, build a carriage house on a property or allow for additional sewage capacity with Suffolk County Health Department approval. Bids are due to the town clerk’s office July 11.

“I would think a carriage house would be particularly valuable for someone who was looking to house their own employees,” Southampton Town Supervisor Jay Schneiderman said during a May town board work session on the issue.

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