EXPRESS SESSIONS: Industry Experts And Officials Talk About Struggles To Offer Affordable Housing In A Changing Environment

The scramble of people fleeing to the East End from New York City and other metropolitan areas and gobbling up available homes this spring and summer in an effort to escape the coronavirus pandemic quickly led to a lack of inventory of homes for sale or rent, skyrocketing prices, and seasonal landlords choosing to stay in their homes this year, all of which ultimately caused an even more pronounced dearth of affordable housing options on the South Fork.

“What we’re having now, though, is lack of inventory at any rental price points,” Randi Ball, a real estate salesperson at Corcoran said during a virtual Express Sessions event, “The Struggles of Affordable Housing and Year Round Rentals,” hosted by the Express News Group on October 8. “Number one, people are using their homes. They can’t travel, they don’t know what’s going to happen next month. So, that did take a lot of rental inventory off the markets. Also, because everything got so busy so fast, there was a lot of increases in rent. It became really difficult to justify in some instances, especially in the lower-end rental market, of why this would cost that much.

“It was fine for the landlords,” she added, “they rented, everybody rented, there was not a lot to rent. I think there’s a misconception out here that there’s just unlimited rentals, any price point, any season, and that’s just not true. So, as much as it’s been great for the real estate industry, it’s also been very stressful to fulfill everybody’s needs.”

Real estate industry leaders and affordable housing officials from both South Fork towns participated in the virtual forum, held via Zoom, in which they highlighted the ever-present affordable housing crisis, changes that have occurred in the wake of COVID-19, and ongoing efforts to bolster the stock of apartments and homes that could be attainable by lower- and middle-income residents — and even busted some myths regarding local housing efforts.

Representing the real estate industry were Darius Narizzano of Saunders & Associates and Ms. Ball, who were joined by panelists Katy Casey, the executive director of the East Hampton Housing Authority, Curtis Highsmith, the executive director of the Southampton Town Housing Authority, Lee Silberman, the chief executive officer for Habitat for Humanity of Suffolk, and Diana Weir, the director of housing and community development for Southampton Town.

New York State Assemblyman Fred W. Thiele Jr. also briefly joined the forum to discuss his pending legislation for a half-percent real estate transfer tax to support affordable housing initiatives in the five East End towns. The discussion was moderated by Express News Group Executive Editor Joseph P. Shaw, and the panelists were introduced by Publisher Gavin Menu.

The lack of affordable housing on the East End is nothing new — it has been described as being at a crisis level for at least two decades, but the pandemic and the subsequent rush for housing, as Ms. Ball explained, has made it even more pronounced.

Rentals all but disappear during summer, but the rental season came early this year as those seeking to escape the virus came early in March, and stayed late. By most accounts, transplants plan to stay even longer, perhaps indefinitely.

And off-season “winter rentals,” once a salvation — albeit a temporary one — for many year-rounders looking to rent affordable spaces during the leaner colder months as a relief valve, are now at a premium, according to Mr. Narizzano.

“You jump into a winter rental because it’s the only thing you can afford to do, and then you’re just counting down the time until the bomb drops and you’ve got to figure out, where am I going to be for the summer?” he said.

Landlords for what would typically be winter or year-round rentals realize that they can now get summer prices for October and November, he said. “So you’re seeing houses that would normally rent for $2,500, $3,000 a month are on the market for $6,000, $7,000, $10,000 a month, just for two or three months.”

And with the influx of new residents in a post-COVID world comes an increased need for services and people to provide those services, further exacerbating the need for affordable housing and highlighting the lack of housing opportunities.

“Our population is growing into a more of a full-time community,” Ms. Ball noted, “maybe because of COVID, but I think most of it’s here to stay. It means more teachers, it means more hospital workers. It means more volunteer firemen, and all that kind of stuff, and those are the people that I’m really talking about that we need as our population is growing.”

Both East Hampton and Southampton towns have implemented plans for years to increase the stock of affordable dwellings, as development has burgeoned and high-end summer homes have eaten up available property and displaced more blue-collar neighborhoods, leaving year-round residents struggling to survive. Many have fled the state, or sought more affordable options to the west, contributing to snarled traffic during rush hours.

“East Hampton Town has a very good planning apparatus, and that has a lot to do with why it is so nice here. It’s desirable, a lot of people want to be here, it’s been thoughtfully developed,” Ms. Casey said. “I think what we are good at here in East Hampton Town is actually listening to the community when we ask for community input. We listen to what’s being said, and incorporate that in our development of affordable housing.

“So in terms of what we have done,” she added, “I think we’ve developed a variety — diverse housing, rental ownership, small units, large units, senior units. About 20 years ago, a land lease was developed for the affordable ownership program, that was very well crafted, it still is in use today. In the ’80s, quite a bit of housing for ownership was built, and at the time, we kind of didn’t know how valuable the land would become, the properties would become. In the ’90s, there was an incredible surge, and just the open market influences what we do with affordable housing. So it’s time to create more units in a sensitive way with community input and designed for what the needs of the community are.”

For Mr. Highsmith, a large part of the challenge of implementing an affordable housing program in Southampton was educating the public on what is meant by the term, that it is not housing strictly for the impoverished. Also, rather than lowering the values of surrounding properties, it could add to the value of a neighborhood.

“So we had to come from a direction of showing the example of affordable housing as being something that fits in and ties into a community,” he said. “It’s not a poor, impoverished program, but it’s individual, school, workforce. They look like — and they are — you.

He said it was a difficult process to educate the public on something that previously did not exist and was not walked about. “To bring something new and foreign into the community became a battle,” he continued. “… We have to show examples of when it was right, it worked, it did well, it was performing well.”

Habitat for Humanity, Mr. Silberman said, is partnering with the two towns to produce single-family homes for residents who make between 40 and 60 percent of median income — a feat only possible because the land on which the homes are built is donated to the organization from the towns. Suffolk County, which used to donate blighted properties it has seized for nonpayment of taxes, has begun selling the parcels instead for added revenue.

The group plans to build 16 homes in the next two years, seven of which will be in Southampton or East Hampton.

One such home, currently under construction in East Hampton, will go to a couple of first responders.

“Without our help, they would be moving out of East Hampton,” Mr. Silberman said. “And when that 3 a.m. phone call comes … who’s going to respond if the first responders can’t afford to live in the town?”

Ms. Weir noted, however, that a large part of the lack of housing options comes from a traditional lack of rental units on the East End. She noted that in most of the country, housing is made up of between 60 to 70 percent homeownership and the remainder is rentals. But rental properties were never developed here. On Long Island, the breakdown was 85 percent homeownership and 15 percent rentals.

“Well, it’s not easy on the East End. Long Island started as a suburb … after World War II, and everything here was a single-family home, picket fence, two kids, a dog, and I have the American dream. Rentals were never really promoted or developed in certain areas.”

There is no continuum for young people graduating from college to come back and rent a little apartment while saving for a house, she added.

Changes to Southampton’s accessory apartment legislation —which allows more apartments in garages and other accessory structures — were meant to change that, she said, in order to provide housing for young professionals who aren’t ready for homeownership.

“Think of the hospitals, the schools, the kids that grew up here,” she said. “There’s just not a potential for a young person to say, ‘I’m going to graduate from school or college, come home, rent an apartment and get a job and start my life.’ So it is very difficult, and what we did here in Southampton is we now reestablished or updated our accessible apartment legislation, which at least will allow more rentals. So the young people or people that are downsizing, seniors that are downsizing and want to be near their grandchildren, can stay.”

Mr. Highsmith echoed the sentiment, noting that while the conversation about affordable housing often centers on making new homes available, not everyone is in a position to buy a home and “some should not put themselves in a position” to purchase a home. Sometimes renting is the better option.

“We need to have a nice mixture of rental property, rental units, whether it be home, accessory apartment, a multi-family, whatever the case may be, a mixture throughout so that we can give our youth the necessary tools to succeed in homeownership,” he said.

Ms. Casey agreed, although she noted that one thing that can help young people afford housing, down payment assistance, is simply not for everyone.

“It’s also true not everybody wants to own,” she said. “They would prefer to have a turnkey property, let somebody else plow the snow, shovel the driveway, mow the lawn, fix the roof. And for younger people, I find they do like rental housing because it gives them a little bit more mobility.

Just like the Community Preservation Fund has done for land preservation for the past two decades, Mr. Thiele hopes his proposed half-percent transfer tax will generate millions of dollars for affordable housing initiatives in the five East End towns if ultimately approved by the State Legislature and signed by Governor Andrew Cuomo, who vetoed the legislation in December.

Dubbed the Peconic Bay Region Community Housing Revolving Fund, the program could be used in a variety of ways by individual towns to promote affordable housing programs — including low-interest loans for down payments, which would only need to be paid back when the home sold, and subsidies for creating accessory apartments in existing homes.

While both houses of the Legislature overwhelmingly passed the legislation last fall, the governor vetoed the measure, fearing that it would create a new tax, which he opposed. Mr. Thiele said he is confident that following conversations with Mr. Cuomo’s staff to explain that exemption increases for the Community Preservation Fund would result in a lower net tax for homes valued at less than $1 million.

Mr. Thiele intends to reintroduce the legislation and is optimistic that if it passes again, the governor would sign it. While it won’t be voted on this year because of delays caused by the pandemic, he is hopeful that he’ll be able to reintroduce it in the 2021 legislative session.

Mr. Thiele explained that how the funds would be used — there are a variety of options — would be left up to the individual towns, through their programs and officials.

“Our philosophy with this was to make the state parameters for the use of this fund as broad as we possibly could, and that is, there’s provisions in there for assistance to first-time homebuyers, down payment assistance, for example,” he said. “Rehabilitation of existing housing, construction of new housing, public-private partnerships to produce housing, basically every option that you could think of where the towns would have an ability to produce housing, we included within the legislation. And the theory of that is that, every town is different, the needs are slightly different, each town’s plan is going to be somewhat different.

“So the idea was to give local governments as much flexibility in devising a plan and how to use the money, allow them to present that plan to the public, have a referendum and then move forward,” he added.

Mr. Shaw noted that the majority of the funds raised would come from higher-priced property sales, and asked the legislator if there was “a philosophical justification for asking wealthy property owners to pay a little more?”

“There’s a reason why 85 percent of all the funds that are generated by the Community Preservation Fund are generated in East Hampton in Southampton,” Mr. Thiele explained, “because that’s where the $5 million deals, the $10 million deals, the $50 million deals are. That’s where the money gets generated.”

Mr. Thiele said it makes sense to ask people buying property on the East End for the first time to make a contribution to the infrastructure of the community that life-long residents have made through their own property taxes for years. “They paid for the infrastructure, they paid for making this community where it is,” he said.

“We’re asking people that are coming in for the first time, making that purchase, well, you need to contribute to that also, whether it’s open space preservation or parks or it’s affordable housing,” he said. “And again, have some enlightened self-interest. … You better have people in the community that can work in the stores on main street, that can be the volunteer firemen, that can serve the ambulance districts, that can do the work that a community needs to have.”

Ms. Ball and Mr. Narizzano, however, urged caution, wondering if it would adversely affect the real estate market.

“The higher the price of your house purchase, the more that you’re already contributing to taxes here,” Ms. Ball said. “The point of people spending all this money to walk into an already infrastructured community … Well, they’re buying here and spending this money, because they’re walking into a prospective community. I think we need to be careful. I mean, the wealthy are … they’re just as concerned with their money as anybody else is, and you don’t want to chase them away.”

Mr. Narizzano, who noted that there is already in place a 1 percent mansion tax on properties valued at over $1 million, said he would prefer that the existing CPF be restructured so that the half-percent for affordable housing come out of the existing 2 percent tax instead of tacking a half-percent on top of that.

“So, you’re already talking about 3 percent on top of any deal that you do out here where it’s already overly expensive,” he said. “So, adding additional tax, no, I think that’s a big mistake.”

Mr. Curtis and Ms. Weir both noted that there remains a strong opposition to affordable housing programs — particularly in neighborhoods where projects are proposed because of “miscommunication, misinterpretation, misinformation” that leads to a NIMBY attitude, or “Not in My Backyard.” Ms. Weir hoped to use the forum as a way to “bust some of these myths.”

“I just wanted to talk about the elephant in the room, NIMBY-ism, okay?” she said. “Let me propose a project, I don’t care where it is, what part of the town, what part of Long Island. … All you have to do is say, ‘Oh, I think we have a piece of property, we might build affordable housing there,’ and everyone comes out with all of their complaints: taxes, schools, traffic, the water, my neighborhood, my property values, wah, wah, wah.”

One myth is that when the towns build affordable housing projects, they become occupied by nonresidents who come out east looking for cheap housing. The reality, is, however, that people generally want to live within a 50-mile radius of their current home or place of employment.

For example, a condo project on County Road 39 in Southampton, Southampton Pointe, has 50 units, of which 15 were set aside for affordable housing.

“We filled them all,” she said. “And 10 of them were from the town of Southampton, two of them within the town of East Hampton, which I consider us because we’re the South Fork. And three were Manorville … and Wading River. All basically within a 50-mile radius.”

At Sandy Hollow Cove and Speonk Commons, a town-sponsored affordable apartment project split between Tuckahoe and Speonk, out of 65 units, 44 went to people who live in the Town of Southampton, 13 went to people from elsewhere on the East End and from eastern Brookhaven, and six went to people who work in the town but were commuting. “And that is exactly what we’re trying to do,” she said, “kick them off the road and get them into the town.”

Ms. Casey spoke to a myth about affordable housing funding.

“A funding myth is if you take money from the state or the federal government, you have to let everybody in,” she said, explaining that most people from outside the area would have no desire to live in the rural East End.

“So there’s a self-regulation to it. Taking state and federal funds does not mean that we’re going to be importing people from away,” she said.

Mr. Silberman pointed to the myth that affordable housing projects, like the homes built by Habitat for Humanity, lead to lower property values in a neighborhood.

“When we build a house, the housing values on that street go up and that’s demonstrable with Habitat all around the country,” he said. “We’ll often take blighted properties, put in a nice house, put a good family in there and everybody benefits from that.”

Ms. Weir added that “Trulia did a survey throughout the country of low-income tax-credit developments that were built … and the property values never went down in any of those areas where those apartments were built.”