State Assemblyman Fred W. Thiele Jr.’s bill to allow the five East End towns to establish Community Housing Funds — like the Community Preservation Fund but for affordable housing initiatives — has passed in both houses of the State Legislature and now goes to Governor Andrew Cuomo for his signature or veto.
The legislation would permit towns to use Community Housing Fund proceeds to provide financial assistance to first-time homebuyers for up to 50 percent of the purchase price and would allow towns to underwrite the production of housing for sale or rent. The money could also be used for rehabbing buildings, providing housing counseling, and purchasing existing housing to turn around for sale or rent.
If the bill becomes law, towns will not be forced to participate. Instead, each town board can only establish a Community Housing Fund and the associated tax via public referendum. Town boards will also be required to adopt a community housing plan that outlines the town’s housing needs and goals before the fund may be implemented.
This legislation also passed in 2019, but Mr. Cuomo vetoed it. Mr. Thiele said then that he anticipates that the governor will come around to supporting the bill when he gets more details on it. Mr. Cuomo was not keen on creating a new tax, according to Mr. Thiele, though the assemblyman pointed out that because the bill increases Community Preservation Fund tax exemptions, the Community Housing Fund would not actually bring in much additional revenue.
The proposed Community Housing Fund tax would add half a percent to the existing 2 percent real estate transfer tax that raises money for the Community Preservation Fund, which is used primarily for open space preservation, parkland and water quality.
Under the existing transfer tax, the first $250,000 of the purchase price is exempt when buying a home in Southampton, East Hampton or Shelter Island. In Riverhead and Southold, the exempt amount is $150,000.
Mr. Thiele’s bill would increase the exemption to $400,000 in East Hampton, Southampton and Shelter Island and to $200,000 in Southold and Riverhead. However, in all of the towns, the exemption will only apply to homes sold for $2 million or less. According to Mr. Thiele’s office, these changes will result in a tax cut for approximately half of all real estate transactions on the East End.
“The lack of affordable housing has reached crisis proportions,” Mr. Thiele said in a statement. “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.”
