Support is building for a state bill to create an East End affordable housing fund through a tax on real estate sales in the Hamptons and on the North Fork.
The Peconic Bay Region Community Housing Revolving Fund Act, sponsored by Assemb. Fred W. Thiele Jr. (I-Sag Harbor) and introduced in the State Legislature in January, would authorize the five East End towns to levy a 0.5 percent real estate transfer tax and use the money to provide affordable housing. It would be in addition to the East End’s Community Preservation Fund 2 percent real estate transfer tax, which finances open space acquisition, historic preservation and water quality initiatives. The bill has not been introduced in the Senate.
The lack of affordable housing has long been an issue in the Hamptons and on the North Fork where the second-home market has priced out many middle class workers, who move farther west, adding to traffic congestion and making staffing difficult for employers.
“You take certain areas and there is literally zero [housing] availability to someone making median income or even double area median income,” said Southampton Town Supervisor Jay Schneiderman, who indicated he was leaning toward supporting the bill. “Often, it’s a million just for a tear down.” Long Island's median income is $81,700, according to the U.S. Department of Housing and Urban Development.
The law would need voter approval in each town — Riverhead, Southold, Southampton, East Hampton and Shelter Island.
“I would envision this passing 2-to-1 in Southold,” said Southold Town Supervisor Scott Russell. He added he was inclined to support the bill, as is Shelter Island Supervisor Gary Gerth. Riverhead Town Supervisor Laura Jens-Smith declined to comment and East Hampton Supervisor Peter Van Scoyoc did not respond to a request for comment.
Using 2017 real estate figures, the fund would have generated $1.74 million in Southold, $860,000 in Riverhead, $460,000 in Shelter Island, $13.32 million in Southampton and $6.28 million in East Hampton that year, according to data provided by Thiele.
The money could be used to build affordable housing developments, offer no-interest loans to first-time home buyers, offset impacts on local school districts, to offer housing counseling or to rehabilitate existing buildings for affordable housing.
First-time home buyers making less than $140,040 a year for a family of one or two, or $163,080 for a family of three or more, would be eligible for a loan from the fund of as much as 50 percent of the home’s value. Under the legislation, the loan would not need to be paid until the property is resold. The loan would bear no interest, although the amount repaid would be proportional to the loan’s percentage of the original purchase price. Loans would be repaid to the housing fund and the loan amount would be subtracted from the annual property taxes paid by the property owner.
South Fork and Shelter Island home buyers would not pay the transfer tax on the first $350,000 of a home’s value. North Fork homebuyer’s would not be taxed on the first $250,000. That exemption is phased out for sales of $2 million and more.
Thiele said the only opposition he anticipates is from the real estate industry.
“Our position has always been the Community Preservation Fund has more than enough money to provide affordable housing on the East End,” said Long Island Builders Institute chief executive Mitchell Pally, noting the bill does not address zoning changes needed for added density.
Thiele, who sponsored the original preservation fund legislation in 1998, said the preservation fund has no "surplus" money.
“I’m not sure voters would want to take money away from water quality or open space," he said.