Condominiums are taxed different than residential properties and bring in roughly half the amount in taxes. GREG WEHNER
Southampton Town Supervisor Jay Schneiderman said this week that his preferred plan to redevelop the Bel-Aire Cove Motel in Hampton Bays into condominiums could add between $6 million and $7.5 million to the property tax base.
Mr. Schneiderman has proposed purchasing the motel, which currently does not operate as a motel and instead provides year-round housing, for $1,060,000 under the town’s Community Development Program. The town then would demolish it, secure the proper permits for redevelopment and then sell it to a developer.
The supervisor has previously suggested that if the property were converted into 10 condominiums, and each sold for $750,000, the property would bring in much higher tax revenue than the roughly $20,000 that the motel—which has an assessed value of about $1 million—currently brings in.
On Friday, Mr. Schneiderman said if the condominiums were assessed at full market value—something he said he would try to ensure, if the property is purchased by the town—10 units assessed at $750,000 would add $7.5 million to the total tax base, as opposed to the motel’s current $1 million assessment.
But while higher taxes could be levied on a redeveloped site, the numbers may be misleading.
Southampton Town Sole Assessor Lisa Goree noted that condominiums are assessed differently from other residential properties, like single-family homes. “Houses are assessed on market value … condominiums are commercial,” she said.
Ms. Goree said condos are assessed based on the income method, meaning their property taxes are determined, like other commercial properties, on how much rent could be collected, if the unit was available as a rental property.
The rules are stipulated by state law. Some legislators have recently discussed reviewing the laws surrounding condominium ownership and how they are assessed, but there has been little movement on the effort.
Homes in Hampton Bays that are assessed between $1 million and $2 million could generate anywhere from $20,000 to $37,000 in property taxes, depending on the location and proximity to water. However, equally priced condominiums nearby in Southampton that sell for $1 million to $2 million would only pull in between $6,000 to $7,000 in taxes.
And that seems to be the case for many condominium complexes in Hampton Bays.
Condominium owners who live at 49 Canoe Place Road paid an average of $4,000 in taxes for 2018. Owners at another condominium complex at 29 Gardners Lane paid approximately $3,500 per year in taxes. A unit in the development sold for $617,500 in 2018.
A single-family home in the same area that was assessed at $667,700 brought in nearly $12,000 in taxes during the same period.
One other development, located at 66 West Tiana Road, had condominium owners paying $7,000 per year in taxes, on average. One of the more recent sales in the development was for $725,000.
Gayle Lombardi, a Hampton Bays resident who has been critical of Mr. Schneiderman’s proposal for the Bel-Aire Cove Motel, said on Monday that the potential increase in property taxes is irrelevant to the evaluation.
“The current motel remits approximately $20,000 a year in taxes,” she said. “Any small condominium or rental development or motel would yield the same in taxes. The current Hampton Bays school budget is close to $60 million, the town budget is in excess of $100 million, and there is still the library, fire, ambulance and other special districts. It is less than a penny on the dollar.”
Ms. Lombardi, an accountant, said that one of her main concerns is that the supervisor and Town Board members are only evaluating the benefits of the proposal to purchase the motel, and not the potential costs and expenditures.
“Supervisor Schneiderman also does not seem to be addressing the potential increase in tax cost and ‘what can go wrong’ in the proposal,” she said, noting potential increases in code enforcement, added demand on the school district and wear and tear on the other community services.
“Those costs will then be borne by the middle-class property owners that are already paying higher taxes than the surrounding wealthier areas,” she added.
Town Board members have not officially voted to purchase the property, and a proposal to purchase it using Community Preservation Fund revenue was shot down by the board in January. Now, board members are looking into whether it will qualify as an Urban Renewal project.
The next public hearing on the matter will be held on February 26 at 6 p.m. at Town Hall.
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