East Hampton Struggles To Keep Housing Inventory 'Affordable'

Two homes built under the flag of East Hampton Town’s historically aggressive affordable housing program are in the process of being sold. Taken together, they offer divergent views of how the town’s efforts to boost the supply of affordable houses has fared in various forms.

The two homes are barely a mile apart, in the dense residential neighborhoods north of East Hampton Village. One of the homes, a quaint three-bedroom cape built on Stuarts Lane in 2008, will soon be back in the town’s inventory of reduced-price houses for sale, and will be made available to someone on the town’s housing waiting list for less than $200,000.

The other, on Bow Oarsman Road in Whalebone Woods, was built in the 1980s as part of one of the town’s largest subsidized housing projects. The town is due back 60 percent of the land value at the time of the sale, which it could then deduct from the next sale price.

But even that may not keep the property in the realm of affordability for another local family from the town’s waiting list, as increasing land values have far outpaced increases in income in the 30 years since it was built.

“Land has become so valuable that, even at 60 percent of the land value, it might not be affordable,” said Tom Ruhle, the director of the town’s Housing Department. “If the house appraises at $600,000, and the land is $300,000 of that, 60 percent is $180,000. So now I have a house that is going to cost $420,000. We don’t have a lot of people on our list who can afford a $420,000 house.”

The town is currently appraising the house at 22 Bow Oarsman Road to determine whether making an offer to purchase it outright is worthwhile. If not, the town will still be entitled to recoup 60 percent of the appraised land value. The money will be put back into the town’s Community Housing Opportunity Fund—but the house would be lost from the rolls of affordable housing.

In contrast, the house at 16 Stuarts Lane will now serve as the gateway into the world of homeownership for a second local family. When it was built in 2008, one of 10 homes built on land owned by the town, the owner was given a 99-year lease on the soil beneath it, for the cost of paying the annual property tax obligation. In return, they got a new house for only the cost of construction.

The agreement with the town allows the buyer to extract appreciation on the structure alone equal to the national rate of inflation—based on the Consumer Price Index—and sell the home back to the town. The cost to purchase it back, approved recently by the Town Board, will be $200,000. Mr. Ruhle said that the home will be offered to the next name on the town’s housing waiting list, for no more than $200,000, and possibly less.

The two properties represent small views into the evolving approaches by the town as it has built or subsidized more than 300 housing units over the years. Some of the earliest projects carried no obligation that the property or any of the value appreciation be returned to the town upon a future sale. Later projects had varying degrees of recapturing value.

The 99-year lease of land purchased by the town has been used in three major development projects, the largest of which was the 26-home Green Hollow development. Mr. Ruhle said it has proven the most effective at helping the town keep the houses it subsidizes in the fold.

“The 99-year lease, with a cap on the appreciation, keeps the affordable houses in our program in perpetuity,” he said. “And that really is the goal, right? To not build housing and have it migrate out of the affordable housing pool.”

And even that approach has posed some conundrums about how to keep the value of the structures in check, as homeowners add amenities to suit their own needs or wants, like additions or swimming pools that could raise the recoverable value of the houses. The town has even considered whether to limit such improvements to keep values in check.

“That’s where it gets dicey,” Councilwoman Sylvia Overby said. “What if you don’t allow people to upgrade their home, like putting in a pool or other amenities? Is that fair?

“The people who own those homes are the backbone of this community, and they want to enjoy the same benefits anyone here does—Whalebone Woods has proven that,” she continued. “But, then, that is what pushes [the houses] out of affordability when they go up for sale. It’s always a new paradigm. We can’t recapture every single house.”