The house at 11 Suffolk St. in Sag Harbor on...

The house at 11 Suffolk St. in Sag Harbor on Tuesday. Southampton Town will spend $1.3 million of Community Housing Fund money to pay off the property owner's mortgage to keep the six apartments in the building affordable. Credit: Gordon M. Grant

The Town of Southampton plans to spend $3.8 million from its new Community Housing Fund to boost affordable housing in Tuckahoe and Sag Harbor.

In Tuckahoe, the town will use $2.5 million to acquire adjacent parcels where officials plan to build up to 10 affordable single-family homes.

In Sag Harbor, the town is purchasing a deed restriction on a 6-unit multifamily home at 11 Suffolk St. that will require the landlord, Sag Housing LLC, to continue charging affordable rents. The town board on Tuesday approved spending $1.3 million to pay off the Sag Harbor property owner's mortgage.

"We need affordable housing in all different ways," said Kara Bak, Southampton Town’s director of housing and community development. "We need rentals and we need homeownership, so we're trying to diversify it."

The town has amassed more than $15 million in its Community Housing Fund, which voters approved in a referendum in 2022. The town generates revenue through a 0.5% tax on most real estate transactions and sets it aside for affordable housing initiatives.

East Hampton, Shelter Island and Southold also created housing funds in 2022. Those towns have established advisory boards to map out affordable housing initiatives. 

The town is planning to set money aside for down payments and an accessory dwelling units program, Bak said.

The two purchases in Tuckahoe — at 320 Magee St. for $875,000 and 362 Moses Lane for $1.6 million — allowed the town to acquire parcels adjacent to another town-owned property. The town board approved the acquisitions, spanning 1.8 acres, in August.

Town officials hope to build 10 single-family homes on the new land, the maximum allowed under current zoning laws, officials said. 

At a public hearing last month, East Quogue resident Tom Iovane called the purchases a "small, yet significant opportunity for regular, hardworking people in our community" to have a chance at owning a home.

Based on current figures, the homes would be priced at about $507,000 and designated for homebuyers who earn up to 130% of the area's median income. That equates to an annual salary of $203,000 for a family of four, Bak said. The homes would remain affordable "in perpetuity," Bak said.

In July, the median sale price in the Hamptons reached a new high of nearly $1.9 million, according to a report from real estate brokerage Douglas Elliman and appraisal firm Miller Samuel.

Bak said the purchases "wouldn’t have happened" if it weren't for the housing fund.

Once the sale takes place, the town board can decide whether to develop the properties in a partnership with the Southampton Housing Authority or to seek bids from developers.

Susan Mead, manager of Sag Housing LLC, told board members in August that the proposal was a "creative approach" to keeping the apartments affordable.

The property will have a covenant subjecting future owners to the same restrictions, Bak said.

Councilman Tommy John Schiavoni said developers have been buying up houses with multiple apartments and converting them into single-family property homes.

"We thought this was a prime opportunity to save housing stock in an area that is more dense than other areas of the town," he said.

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