With a potential referendum on the Community Housing Fund on the horizon, the Southampton Town Board is compiling a list of programs and strategies for creating affordable housing — and Councilman Tommy John Schiavoni extolled one method, “shared equity,” as among the most exciting.
In East Hampton, Town Housing Director Tom Ruhle said that an appointed task force is working on its plan, the adoption of which is part of CHF law. There’s been no final decision on strategies officials will include, but he said of shared equity, “That concept is definitely high on the list of things we’ll be looking at very seriously.”
State Assemblyman Fred W. Thiele Jr. agreed the shared equity concept is exciting and, he believes, among the most important.
“From a big picture point of view, the East End cannot build its way out of the current affordable housing crisis,” Thiele said this week. Existing infrastructure — water, roads, schools — cannot handle the increase in density, nor is there enough land to do so. Further, he continued, it seems that every single project that increases density for affordable housing becomes controversial.
“We have to make more of the existing housing stock affordable if we are going to put a dent in the demand for housing. The shared equity concept does just that,” the lawmaker said. “Instead of a single concentrated big project, the shared equity concept can put existing houses and dwelling units within reach of local families on a much broader scale without adversely impacting any one community or neighborhood.”
It could help preserve neighborhoods, too, Ruhle observed. He recalled 20, 30 years ago, when there were neighborhoods dotted with small, affordable homes. Then, with the advent of “teardowns” and “McMansions,” he said, “People buy in these older neighborhoods and build big fancy houses.” The program could save houses that might otherwise be bought and demolished.
In a shared equity program, the town would split the price with a potential homebuyer, chipping in up to half the cost of a house, Schiavoni said.
“We’d go in as partners,” he explained, then offered an example: Say a couple finds a house that costs $900,000, but the absolute most they can put together through savings and bank loans is $600,000. Through a Community Housing Fund shared equity program, the CHF would come up with the remaining $300,000 and enact a covenant for 30 percent of the value of house. “They own the entire home,” he underscored.
Over time, the homeowner could buy out the town’s share. Otherwise, when the owner sells, that 30 percent of equity in the house will be returned to the Community House Fund. That’s 30 percent of what the sale price is, the value of the house, “up or down,” the councilman said. “And if they lose money, we’re in it with them.”
In a scenario in which the homeowner wishes to buy out the town’s equity, the cost will be equivalent to 30 percent of the appraised value, according to Schiavoni.
“The so-called ‘shared equity’ or ‘direct financial assistance to homebuyers’ in the Community Housing Fund law is the provision that I think is the most important and will do the most to provide housing opportunities for local families,” Thiele said. “It gets folks into the housing market who otherwise couldn’t afford it.”
With the down payment being the greatest barrier to families entering the housing market, the CHF helps them over that hurdle with loans of up to 50 percent of the purchase price that, in the case of the shared equity model, don’t have to be repaid until the house is resold. Both the homeowner and the town enjoy any increase in equity.
“The importance of this tool is obviously that it overcomes a major barrier to homeownership. Further, the town is able to continue to grow the fund to help other families, while the homeowner also gets a share of any increase in equity,” Thiele said.
The program will promote homeownership, and through homeownership, people become vested in their communities, Schiavoni said.
“From a practical point of view, you want to try to help people buy houses and stay in the community, and what better way to do it than in a shared equity situation?” Ruhle agreed.
“We want to give deference to our first responders,” Schiavoni said, speaking to another aspect of the shared equity concept. Volunteer first responders would get an additional percentage off the town’s percentage.
“If someone is a first responder, for each year they get their length of service award point, they get a percentage off what they got from the town in shared equity,” he said. “If you’re riding an ambulance for several hundred calls a year, we want you to live in the community and raise your family there.”
Keeping young families and volunteers in town helps preserve the social fabric of the community, the councilman said. “We want to maintain the feel of our communities, and homeownership is one of the ways we’re going to do that.”
Schiavoni recalled that he first learned of the idea when it was mentioned in 2017 during a campaign screening with editors at The Southampton Press. He reported that the method is used in high-end areas like Lake Tahoe.
“Private banks do this — they’ll invest in the community this way to get the equity. … We’re not doing it to make a profit. We’re doing it to keep people in the community, which is an investment in itself. Investing in the long-term health of our community is appropriate and something that we need to do,” he concluded.
In East Hampton, the town has a history of implementing the shared equity concept, Supervisor Peter Van Scoyoc pointed out. “Shared equity is something we already do,” he said, reminding that the town has programs of leasing underlying land.
But officials are looking at possibly expanding the program to include equity in structures, with the repayment of loans or grants upon sale, he said, “so it goes back into the fund.”
The supervisor echoed an oft-expressed sentiment: There’s no one solution to the affordable housing conundrum. In compiling East Hampton’s plan, he said, “We’re looking to make this as broad as possible to address all the various situations people have.” The problem will have to be attacked through a variety of methods, Van Scoyoc said.
Last fall, Governor Kathy Hochul signed the long-aborning Peconic Bay Region Community Housing Act, which allows towns to impose a 0.5 percent tax on real estate transfers. The revenue would be used to create and sustain the Community Housing Fund dedicated to providing affordable housing solutions.
The new tax would be added to the 2 percent tax already collected for the Community Preservation Fund, which is a dedicated fund to be used for the purchase of open space, historic properties and farmland, with a section carved out for water quality improvements. Voters approved the CPF in 1998 and, since it began to amass revenue the following year, it’s raised some $1.85 billion and preserved more than 10,000 acres of open space, farmland and historic sites throughout the five East End Towns.
Through their housing plans, the towns will have to tell voters how they will spend the money that will be generated by the transfer tax.
“In my opinion, providing financial assistance to homebuyers through a shared equity program or other similar concept should be where the bulk of the fund is spent,” Thiele said. “This is where the towns can get the biggest bang for their buck.”
Public hearings on the measure that, if approved, would see the creation of a Community Housing Fund in the Town of Southampton will be held on Tuesday, June 14, at 1 p.m. in Town Hall, and on Tuesday, June 28, at 6 p.m. in Hampton Bays at the senior center.
Dates for East Hampton Town hearings have yet to be announced.
Language for the referendum must be submitted to the Board of Elections by August 8.
