Southampton Town Marks Millions in Housing Money for Tuckahoe and Sag Harbor Properties, Down Payments and Accessory Apartments

Southampton Town is poised to purchase two residential lots in Tuckahoe that could finally bring to fruition a nearly 15-year-old plan for an affordable housing development.

The Town Board next month will hold public hearings on the purchase of a half-acre lot at 320 Magee Street and an adjoining 1.3 acre lot at 370 Moses Lane.

If approved, the town would pay the owners of the land, the Press family, a total of $2.5 million for the two parcels.

The two lots also adjoin 362 Moses Lane, a 5-acre parcel that Southampton Town bought from the same family in 2005.

Plans to develop the property, however, were derailed by Suffolk County, when it was discovered that the parcel had never been legally subdivided from the two adjoining lots and would require septic upgrades on the still privately held parcels in order to allow new development on the town parcel.

But with the purchase of the two additional lots, the town will be able to combine all three and use the full 7 acres for new housing.

Kara Bak, the town’s director of housing and community development, said that the town’s plans for the original 5 acres were to subdivide the parcel into lots that conform to the normal half-acre zoning for the area and that she expects the town will adopt that approach once it has combined the lots.

Under the town’s current zoning, Bak said the 7 acres could accommodate 10 new homes on half-acre lots and their accompanying necessary infrastructure. The homes would be sold to income-qualified buyers chosen via lottery.

The town would work with a developer to design options for the homes that buyers could chose from to fit their needs and financial means, but the purchase price of the homes would be no more than $507,000 and could be less depending on the size and styles of homes selected by the buyers.

The town has had no discussion of putting an affordable housing overlay district on the property, which would allow it to more than double the allowable density of development on the property. East Hampton Town last year put an affordable housing overlay on a 7 acre parcel on Pantigo Road that it then was able to divide into 16 lots, on which the town is currently preparing for the construction of homes that will be sold to buyers chosen by lottery.

The town will hold a public hearing on the purchase of the two additional lots on August 13.

The lots would be purchased with money from the Community Housing Fund — which draws revenues from a dedicated real estate sales tax that is earmarked for use in creating affordable housing in the town.

Southampton Town’s CHF currently has more than $12 million on hand for housing projects and has several initiatives in the pipeline.

The town is contract for the $4.3 million purchase of a 3.8 acre lot on Montauk Highway in Water Mill that the town plans to use for affordable housing — possibly townhouse-style development that would be put up for rent or purchase.

The Town Board is also considering the purchase of a first-of-its-kind “affordable housing covenant” on a multi-family house in Sag Harbor. The house, at 11 Suffolk Street, is currently divided into six separate apartments that are available for rent — a once common arrangement in Sag Harbor that has dwindled as the marketable price of large homes has soared in the village.

If approved, the covenant would require that the property remain divided into separate rental units and that rents charged never exceed affordability rates set by the county according to area median incomes.

The property is owned by Sag Housing LLC, a paper corporation created specifically for the purchase of the building by the Sag Harbor Cinema, which houses its staff in the apartments. The town has proposed paying the cinema $1.3 million for the covenant, which will also be the subject of a public hearing on August 13.

“They need the money to pay off the mortgage and we will get to ensure that it will forever be affordable housing,” Supervisor Maria Moore said of the novel covenant approach. “That is workforce housing and that’s what we are focused on right now.”

The town is also preparing to formally introduce two other affordable housing programs: one that will offer down payment assistance to first-time homebuyers and another that will offer grants of up to $125,000 to homeowners who want to create accessory apartments in an existing house or accessory structure.

The down payment assistance program will offer no interest loans of up to $25,000 or 3 percent of the down payment on a house for a first time buyer. The program can be paired with a Suffolk County program that offers up to $30,000 in down payment assistance.

The accessory dwelling program offers no interest loans of up to $125,000 that can be paid off over 20 years. The money must be spent to create a new accessory housing unit in a house that is occupied full-time by the property owner. Rents are capped and tenants would have to be employed in the town.

The Town Board has set aside $1.25 million for each of the two new programs from the CHF coffers.

“This fund was a really great idea and it is generating probably a million dollars a month,” Moore said of the CHF. “We want to be smart about how to use the money, and we think these programs are a good way to start helping people find housing they can afford. If we want to reduce the traffic, we have to preserve people living in the eastern end of the town so they don’t have to travel there to get to work. There has to be balance.”