Assemblyman Fred W. Thiele, Jr. today announced that his legislation to authorize the Towns of East Hampton, Riverhead, Shelter Island, Southampton, and Southold to establish a Town Community Housing Fund has passed the Assembly (A.2633). The state legislation is an authorization. The decision to create such a fund would be a home rule decision by the town boards, subject to a mandatory referendum.
Under the proposed legislation, the Community Housing Fund could be used to (a) provide financial assistance to first-time homebuyers not to exceed 50% of the purchase price, (b) the production of community housing for sale, (c) the production of community housing for rent, (d) rehabilitation of existing buildings for community housing, (e) housing counseling, and (f) the acquisition of real property in existing housing units, to result in production of community housing for sale or rent. Towns would have to adopt a Community Housing Plan before the fund could be implemented.
Town Community Housing Funds would be financed by a ½% addition to the existing 2% real estate transfer tax that funds the Community Preservation Fund. In addition, the legislation would increase the exemption on the transfer tax for improved property to $400,000 in the Towns of East Hampton, Southampton, and Shelter Island to provide more relief to affordable housing purchasers. The exemption would increase to $200,000 in Southold and Riverhead. The exemption would only apply to transfers of $2 million or less and will result in a tax cut for transfers under $1 million on the South Fork and on Shelter Island, and $400,000 or less on the North Fork and in Riverhead. This legislation would effectively result in a tax cut for approximately half of all real estate transactions on the East End.
Finally, the purchase price limit for the exemption for first time homebuyers in the towns of East Hampton, Southampton and Shelter Island would be increased from 120% to 150% of the purchase price limit as defined by the state of New York mortgage agency (SONYMA). These amendments to the exemptions will mitigate any adverse impact from the transfer tax on the provision of community housing.
The affordable housing crisis on the East End has been exacerbated by COVID-19 and the sudden and drastic increase in second home purchases. This has driven up the cost of real estate on the East End, as we are watching our housing supply disappear.
Thiele stated, “The lack of affordable housing has reached crisis proportions. Local employers have difficulty hiring and retaining employees because of housing costs and availability. Local volunteer emergency services are experiencing difficulty in recruitment and retention. Long-time residents are forced to leave the area. This has all been made worse by the COVID-19 pandemic, which is driving up the second home real estate market on the East End. However, this legislation will provide Towns with a meaningful tool that can make a difference by providing housing opportunities for its residents at a much greater rate than they can with existing resources and programs. Ultimately, it will be the voters who will get to decide.”
The legislation is carried by Senator Palumbo (S.6492) and is currently under the review of the Senate Local Government Committee.