Early CPF Advocates Reflect on Program's Legacy as Fund Hits $2 Billion Collected in Five East End Towns

In February, just months shy of its 25th anniversary, the Peconic Bay Region Community Preservation Fund surpassed $2 billion in revenue raised, far exceeding any expectations that advocates originally had for the program.

It’s a figure that the architects and lead proponents of the fund could not imagine when the 2 percent tax on real estate transactions on the East End was first enacted. While they were conscious of the threat that overdevelopment posed to quality of life and natural resources in the region, none had anticipated real estate values taking off as they did over the past quarter century.

The money that the tax has brought in for each of Long Island’s five easternmost towns has enabled the preservation of farmland and open space, the creation of parks, and the protection of historically and culturally significant properties.

Today, some may take the CPF for granted, but the lawmakers and organizers who worked toward the CPF law’s passage still recall the uphill battle they faced over many years to make the CPF a reality. They are also aware of how different life on the East End could have been without it.

“I have frequently said it was an overnight success that took us 14 years to get done,” said State Assemblyman Fred W. Thiele Jr. of Sag Harbor, who shepherded the legislation through Albany. “In the initial push for this in the ’80s, there was strong opposition from the real estate industry and from the building industry, and they were able to block this legislation because the statewide organizations that represented those industries were opposing it.”

The bill never passed both houses of the State Legislature in that decade, and therefore never made it to the governor’s desk to be signed into law.

Thiele was elected to the Assembly for the first time in 1995. During the mid-1980s, he had pushed for the CPF as the attorney to the East Hampton Town Planning Board.

Judith Hope was the town supervisor in East Hampton then, and her husband, the late Tom Toomey, was an avid aviator, Thiele recalled. They had flown to Nantucket, off Cape Cod in Massachusetts, and learned about the island’s 2 percent real estate transfer fee.

Thiele wrote the first draft of the Peconic Bay Region CPF bill then. He based it on the Nantucket legislation and adapted it to fit within the structure of New York law rather than Massachusetts law. Assemblymen John Behan and Tom DiNapoli and Senator Kenneth P. LaValle introduced the bill to the State Legislature in 1985 on East Hampton’s behalf, but it didn’t get far — and then the housing recession of the late 1980s set in.

“So nobody was trying to put this bill forward in the late ’80s and early ’90s, during a time when real estate had actually taken a dip out here for a while,” Thiele said. “So as the economy improved in the 1990s — and I also happened to get elected to the State Legislature in 1995 — we made another push, and that’s when we were successful.”

They learned the lessons from their first attempt and tried a new tack the second time around, having realized, according to Thiele, “the only way to overcome the opposition of builders and Realtors in Albany was to make builders and Realtors here locally part of the coalition.”

The new coalition included, among others, Tom Tobin, the president of Bridgehampton National Bank; builder Pat Trunzo; Buzz Schwenk, the head of the Long Island Builders Institute; and from the real estate community, Paul Brennan, in addition to the environmental groups, civic groups and towns that were already on board with the idea.

“Getting local builders and local Realtors on board is basically how we were able to offset these state organizations and get it passed finally, in 1998,” Thiele said.

Thiele said the adopted legislation contained 90 percent of what had been in the first draft. The changes included additional categories that CPF money could be spent on.

“When we started, it was completely an open space and farmland bill,” Thiele said. “We wanted to acquire open spaces. And then as the coalition grew, it was like, ‘Well, how about land for active parks and recreation?’ And then we also added historic preservation.”

He noted that many people still don’t realize that the CPF can acquire land for active recreation. CPF money can’t be used for ball fields, playgrounds or swimming pools, but towns and villages can spend other money to put recreational facilities on land acquired by the CPF. “It’s a land acquisition fund,” Thiele said. “It’s not a public works capital fund.”

One political compromise required that there be a willing seller, meaning CPF money cannot be used to purchase property that was condemned by eminent domain. “That was a concession we needed to make in Albany to get the bill passed,” Thiele said.

A CPF bill applying only to East Hampton Town passed the State Legislature in 1997, but Governor George Pataki vetoed it, citing, among other reasons, concerns that other East End towns were omitted from the legislation.

Then, in June 1998, in a Southampton farm field, Pataki put his signature on an East End-wide CPF bill. However, the measure still needed to pass in referendums, and it was possible that in some towns the voters could say “yes” and institute the CPF tax, while in others they could say “no.” Ultimately, that November, a majority of voters in each of the five East End towns gave the CPF their support.

Thiele credited Kevin McDonald — then with the Group for the South Fork, and now with The Nature Conservancy — as the tip of the spear when it came to getting the referendums passed in the towns after it had gotten through Albany.

“It was one of the most exhilarating, grassroots, public risings in support of a better future that I have ever seen, and I have not seen it duplicated since,” McDonald said. “It was energizing and validating, and this was a gift the public gave itself and future generations for which they should be very satisfied and proud.”

The CPF was originally scheduled to expire at the end of 2010, but in 2002 voters overwhelmingly approved its extension to 2020. Then, in 2006, voters agreed to another extension by a decade. In 2016, voters were asked to extend the life of the program again, this time by two decades, making the new expiration date December 31, 2050, and to allow for up to 20 percent of CPF revenue in each town to be used toward water quality protection, whether through land acquisition or capital projects. Voters once again said “yes.”

Brennan recalled that in the 1990s, the Group for the South Fork and his real estate firm at the time, Braverman Newbold Brennan, were almost next door neighbors. McDonald approached him about running point to get the local real estate community involved in supporting the CPF’s adoption in Albany.

“There were builders who didn’t want it, and the Real Estate Board wasn’t particularly kind to it either,” Brennan recalled.

Then he, Thiele and McDonald invited all the local real estate agents to the Wainscott Chapel to lay out what they were trying to accomplish. They began to turn the tide and got support from most of the local brokers, he said.

He had told the assembled real estate community that development, especially development of farmland, would “kill the golden goose” and the East End would end up looking like Nassau County or western Suffolk County. “We had to do something different,” he said.

Brennan explained that the problem at the time was that even though the Southampton-based nonprofit Peconic Land Trust, founded in 1983 by John v.H. Halsey, was working to protect farms, and the county had programs for farmland preservation, they couldn’t outpace developers in buying land quickly enough.

“We just couldn’t,” he said. “We were just getting beat to the punch every time we tried to buy or recommend the county to buy property.”

He said they needed a real income stream that could compete with developers and put land purchases into contract relatively early.

“We’re still having problems with that by the way,” he added. “They still can’t move quickly enough.”

“It was not uncommon before the Community Preservation Fund passed that if somebody wanted a parcel of land to be protected, or communities imagined they wanted a park or something like that, there was no guarantee that the town board would put that acquisition in their capital budget,” McDonald said.

What the CPF option presented was “a permanent dedicated recurring revenue stream that captured the energy in the real estate market,” he said.

When Pataki signed the bill, McDonald gave a statement that he said still stands today: The CPF gave the East End an alternative future much for the better. Had it not passed, there would have been thousands of missed opportunities and the East End would have looked much worse.

Rather than missing those opportunities, the East End can celebrate them, he said.

No one thought the CPF would raise $1 billion, let alone $2 billion.

When the CPF was first proposed in the mid-1980s, it was estimated that it could generate about $15 million per year in tax revenue, Thiele said, and in 2000, the CPF tax’s first full year in effect, it raised $34.37 million.

“When you’re talking about those kinds of numbers, a number that began with a ‘B’ never crossed my mind,” he said.

No one could have predicted 25 years ago what the East End real estate market, and particularly the South Fork real estate market, looks like today, according to Thiele. “That would have required a lot of imagination,” he said.

Annual CPF revenue first reached nine figures in 2014, when it was $107.69 million. It set a record of $139.42 million in 2020 due to the pandemic-driven boom in second-home sales, and shattered that record in 2021 at $210.64 million as the boom continued. The 2022 revenue total was $172.63 million.

“No one ever in their wildest imagination ever expected it to take off the way it did,” Brennan said.

When the CPF was first established, he was the head of Southampton Town’s CPF committee that advised the Town Board on acquisitions.

“To get the committee to buy anything south of the highway was difficult because we were so afraid that we couldn’t pay for it,” he said. “We weren’t sure if we’d have enough money in the coffers to bond it.”

Eventually, those fears were alleviated.

Brennan himself lives across from 30 preserved acres in Sagaponack.

“On a daily basis, I thank my lucky stars that we were able to buy certain things,” he said. “I wish we could have bought more.”

To map out the next 25 years of the CPF, Thiele intends to put together the stakeholders — the towns, environmental groups, industry groups, etc. — to look at the CPF and how to go about fulfilling its mission.

“Based on 25 years of experience and looking forward to what’s ahead, are there changes that we should make in the law?” Thiele said.

He noted that questions have been raised about what’s consistent with the purpose of the CPF.

He emphasized that he is not suggesting a change in purpose to begin using the CPF to pave highways and fix bridges, but rather to improve and preserve community character, which he noted is the phrase that’s used in the law.

On the North Fork, CPF revenue has been lower and there is still plenty of land to preserve, while on the South Fork, revenue is much higher and there is less available land, so some towns are weighing raising the 20 percent cap on water quality spending, Thiele pointed out.

Regarding historic properties, he said the CPF can be used for acquisition, rehabilitation and restoration. “But once you fix them up, you can’t use CPF to maintain them,” he added.

How to make historic properties sustainable is one question for the CPF commission he has planned. He also sees town responses to climate change possibly being consistent with the original purpose of the CPF, though he agreed legislation would be required before the CPF could be used for coastal retreat.

What comes after 2050, Thiele doesn’t know.

“I don’t see any immediate plans to further extend the tax beyond 2050,” he said.

Brennan does not expect it to ever go away. He anticipates the permitted uses will continue to be expanded, such as the addition of water quality protection, and he was concerned about how the CPF has been used in recent years, including $11.2 million approved to purchase John Steinbeck’s Sag Harbor home.

“The problem is now it’s become a spigot that they’re not going to turn off,” Brennan said. “They’re going to keep it going, which was never, that was never intended.”