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State Assemblyman Fred W. Thiele Jr.
Fred W. Thiele Jr.
Fred W. Thiele Jr.
The Community Preservation Fund, since its creation in 1999, has been so wildly successful — it’s approaching $2 billion in revenue for the five East End towns to use for open space and farmland preservation, as well as water quality projects — that it regularly draws attention, from taxpayers and officials alike, as a wellspring of solutions.
Rarely does a campaign go by when someone seeking town or village office suggests, during the campaign, that some CPF revenues should be diverted for other uses meant to “preserve the community” — creating affordable housing, say.
State Assemblyman Fred W. Thiele Jr., who was one of the architects of the CPF legislation, sat down recently to remind his constituents what the CPF is — and what it isn’t.
Q: I’ve always said that the Community Preservation Fund is seen as a panacea. And I think some of it is in the name, it’s because it’s the Community Preservation Fund. And people say, “Well, in order to preserve this community, we need X, Y and Z beyond what the Community Preservation Fund does.” So, I want to talk with you a little bit about why we can’t use the Community Preservation Fund revenues for other uses.
Because it was set up as a dedicated fund for a specified purpose. The irony that strikes me with this, is that … Most of the time you hear people say, “We voted for that money for that purpose, and the government stole it, and they’re using it for something else that we didn’t want them to use it for.” And, here, this fund has been in place for 25 years. There’s never been even a smell of a scandal that it has been diverted for this use or that use.
It’s been used for exactly what we told the public we wanted to use the money for, which was, first, land preservation, and then water quality preservation. So, it is a dedicated fund for a specific purpose that we told the voters that’s what we would use it for. That’s what they voted for.
And, yes, there’s a spike in the amount of the revenues that we have, because of what’s going on in the real estate market with the pandemic. That we have more money than we know what to do with in this fund? It isn’t true.
First of all, on the North Fork, Riverhead, Southold and Shelter Island, They’re generating about 15 percent of the total funding. They have more land to protect than they have money. They’re not even getting into water quality, because they don’t have enough money to finish their land preservation program, first of all.
So, what you’re talking about is kind of a South Fork phenomenon, because of what’s happened in the real estate market here. But if we took every dollar that we’ve raised — every week in your paper there’s another story about another three projects that the Town of Southampton is doing on land preservation, or another two projects that East Hampton is doing on land preservation. It’s not as if suddenly there’s no more land left to preserve, and there’s money lying there. There isn’t.
Q: Fair or not, it seems that the conversation has started to become, well, when do we stop spending money on land preservation and start spending it on — say, affordable housing? And then obviously you set up a separate tax to do affordable housing, because as you said, you can’t …
… And it’s also a dedicated fund — it’s only going to go to affordable housing.
[The CPF program] runs to 2050. What are we going to do? We’re going to suddenly take, oh, we’re going to take all the Community Preservation Fund money, now we’re going to use a big chunk of it for affordable housing. What are we going to do in 2028, when there’s a real estate market crash, and we need money to just pay the debt service on the land preservation portion?
It’s just — it’s reactionary, actually. It’s, like, well, we had a big year … It’s like being in your household, and you got a big bonus payment at your job. And it’s like, hey …
It’s like the State of New York right now, actually. We’ve got a big … between the federal dollars and the rebound of our tax revenues, I’ve got colleagues, they’ve got like $50 billion — “Hey, let’s spend it here. Let’s spend it there.”
You need to do this in a planned way. We need a dedicated fund to do land and water, and we also need a dedicated fund for housing. And the voters need to separately vote for that.
It’s just, what’s inherent in the argument that gets made is that we don’t need the money anymore for land preservation or water quality protection. That in my opinion, is just untrue.
Q: Can you talk about the debt service a little bit?
Well, yeah, certainly. People forget that in the first five years of this program, the towns borrowed substantial sums of money up front, to make sure that land just didn’t disappear and they could preserve it. In fact, one of the problems for one of the towns, Riverhead, they didn’t have enough money to pay the debt service on the bonds that they took out up front. We had to pass special legislation for them that allowed them to stretch out their payments so that they didn’t have to go into the general fund.
So there’s a long-term plan for this. Just because there’s a spike in revenue now, the idea that, “Well, hey, let’s take all that money now and use it for housing …”
I think this is being done in a thoughtful way. And that is we’re setting aside a separate half a percent for housing, and we’re planning that between now and 2050. We are also increasing the exemption on the low end, so that certainly helps with housing also.
And the one thing we haven’t even talked about yet is the bond holders and the bond covenants. These bonds were sold with a dedicated revenue stream attached to them. When we added water, we had to add another 10 years or 20 years to the fund. So we had the extra money, so nobody could accuse us, we weren’t liable to an argument from the bond holders, that we were taking money away from the bonds that were already dedicated.
Q: So, explain that. The terms of the bonds are based on the idea that there’s future money coming in, right?
Yeah. It’s the full faith and credit of the town, but these CPF dollars are behind it. And if you start raiding the fund for other purposes, you run the risk of a lawsuit from the bond holders — that money that’s supposed to go to protect those bonds is being diverted to another purpose.
Q: Is land preservation an effort that has an end game, or is it something that continues indefinitely?
Well, it does. The towns all have a plan. Part of the law is they had to do a Community Preservation Fund project plan. They have to have a plan for land, they have to have a plan for water quality. I’m not aware of any … No town has come to me yet and said, “We’ve finished our plan.”
… As I said, every week, there isn’t a week that doesn’t go by, I think, in The Southampton Press where there isn’t another announcement about another land preservation project that Southampton or East Hampton is doing.
Q: … Or a letter, or a quote from an official, saying, “What we should do is use some of that CPF revenue to do something else.” It happens all the time. People are constantly saying that, and that’s why I asked the question.
Well, that has been the case with the Community Preservation Fund for 25 years. There’s nothing new about that. When Southampton Hospital was in trouble, people said, “Take money out of the Community Preservation Fund and bail out Southampton Hospital.” When school taxes were too high before the tax cap, people said, “Take money out of the Community Preservation Fund and use it to reduce people’s property taxes.”
I got a letter just this week from somebody, local guy, saying, “Take money out of the Community Preservation Fund. We could use it for fire protection by extending water mains into areas so they get better fire protection.”
It’s the biggest checkbook in town. Everybody has an idea about what the Community Preservation Fund should be used for. And I have to remind people that, to get the State Legislature to pass it, we basically had to swear in blood that it was a dedicated fund.
One of the arguments that the builders, and the Realtors, and all of them used against us is that, “They say it’s for land preservation. They’re going to end up diverting all this money to the general fund. It’s going to go to pay for government.” And we’ve resisted that.
And every time we’ve made a modification, or in this case we want to add to the transfer tax [for affordable housing], it’s been pursuant to a plan, and we’ve gotten the voters’ approval. And it’s been very successful — it’s been scandal free, it’s done what it said it was going to do.
And I guess maybe one of the marks of success is, well, it worked good here, maybe it can work on my problem, too.
Q: Some of this is about the overwhelming success of the CPF, right? It’s done not only what you hoped it would do. It’s done more, probably, than you ever expected it could have done in 25 years.
I don’t think there’s any question about that. It’s generated more … Who could have predicted what the real estate market here was going to do over this past 25 years?
The other thing I have to point out to people, too, where they say, “Oh, geez, Southampton Town’s generated $20 million last month!” And I said, “Yeah, and somebody wants to buy the John Steinbeck house for $15 million.” What we’re generating is more, but what we have to pay is a lot more to preserve land also. So, it’s not just some big windfall.
The beauty of the Community Preservation Fund with land preservation, is that it’s a mechanism that when development overheats, it also generates more money for conservation, so conservation can stay in balance with whatever the development pressure is.
Q: I wonder if adding the water quality effort, as beneficial as it is, may have cracked the door a little bit and got people to say, “Well, if we are able to change it for that, we can change it for whatever my pet purpose is.”
But it really wasn’t a change, right? Because when we originally did the Community Preservation Fund, the general theory was if you preserve all the land that we need to preserve, that’ll preserve the water quality. That was what the Pine Barrens Act was about. Preserve all this land, we’ll preserve all our water quality.
And what we found out is because of legacy development, just preserving the land, which one of the purposes of preserving the land was to protect the water quality, is that it’s not enough. We’ve got to invest in infrastructure. So those two things are joined at the hip, land and water.
Q: Water quality efforts met the original mission of —
Met the original mission of the law. And, listen, housing is really, really important. And the other thing I’ve always said to you is, which I do believe it’s true, is that all this is subject to a referendum. And if you tell the Dick Ampers and the Kevin McDonalds and the Bob DeLucas, all of your civic groups and environmental groups, not that we’re going to do something extra for housing, but that we’re going to take your land preservation and your water quality preservation money — we’re going to take some of that money away — they’re not going to support that referendum. They’re just not.
Q: I’m curious whether you think transfer taxes of this nature are still a viable option to address some other issues. We had an Express Sessions event recently about the fire and ambulance companies. They talked about the fact that paid responders, let’s just talk about ambulance companies for now, that they have to pay part-timers. And the guys and women who do that bounce around all over the island because they’re all part-time. If those departments could afford to pay full-timers a good salary, they could keep local people as the paid people in those positions, and it would be easier to fill them. Is that the kind of a thing that 0.01 percent on the transfer tax, with a new transfer tax — is that something that’s A) something you could sell in Albany, and B) something you think people would support?
Again, this is based on over 25 years of the Community Preservation Fund. If we’re going to do that, we might as well just say it’s a general fund revenue — every town decide what you’re going to use it for. Because, again, and they’re all worthy goals, whether it’s health care, or education, or fire protection, emergency services — they’re all worthy goals.
… At some point, the real estate industry, they’re going to say, “Enough of adding to the transfer tax.”
Q: The transfer tax can’t fix everything.
It can’t fix everything. And, listen, if at some point whether you could sell it in Albany or not, I don’t know. I think it’s premature to even think about that.
Q: I often wonder, just as a thought experiment, if it had been called the Land Preservation Fund — now, that would have offered some clarity.
I don’t remember whether we just stole that from Nantucket, too, when we came up with that. (Laughs.) They called it the Land Bank Bill over there. But community preservation, I think, obviously, it was a marketing tool to try to get it passed.
