Southampton Town Takes First Step Along Housing Fund Path

In a unanimous vote, the Southampton Town Board signed off on co-hosting public hearings on a measure that, if approved, would see the creation of a Community Housing Fund in the Town of Southampton.

Supervisor Jay Schneiderman said he hopes to hold hearings at night in Town Hall and in Hampton Bays to attract a wider audience, because, he said, “this is so important.” Dates for the hearings have not been formalized yet.

Last fall, Governor Kathy Hochul signed the long-aborning Peconic Bay Region Community Housing Act, sponsored by Assemblyman Fred W. Thiele Jr., which allows East End 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, or CHF, 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 dedicated to the purchase of open space, historic properties and farmland, with a portion carved out for water quality improvements.

Discussing the CHF during an April 14 work session, Schneiderman estimated that the CHF could amass some $15 million annually for Southampton Town alone.

How will the town use the revenue?

The CHF can provide first-time homebuyers with up to 50 percent of their purchase price in the form of a grant or loan, Assistant Town Attorney Mark McRedmond explained. It can be used to acquire property to be used for sale or rent, build housing for sale or rent, rehabilitate structures for housing, provide housing counseling services, enter into public-private partnerships to provide housing opportunities, and create employee housing for local businesses.

“The legislation is broad — there are a lot of things we can do with it,” Kara Bak, town director of housing and community development, offered.

The work session discussion and agreement about setting a public hearing was the first step on the path to the CHF.

The law will be subject to a vote come November. A simple majority of registered voters need to approve the measure on the ballot November 8.

And before the money may start flowing into the CHF coffers, the town must adopt a plan for it, detailing an array of affordable housing solutions that may be implemented. The plan does not have to be solidified; it can be an outline by the time of November’s vote, and it will also be the subject of its own separate work session discussions and public hearings.

Councilman Tommy John Schiavoni reported that the plan will entail an update of the town’s existing Comprehensive Plan.

The board will hold a public hearing on the local law creating the new fund, establishing the new tax and codifying a change to the current CPF tax exemption. Currently, the tax is not imposed on real estate transfers under $250,000. The new law increases the exemption level to $400,000.

“A home under $1 million, if there’s such a thing in the Town of Southampton, they actually will pay potentially less tax under this scenario,” Schneiderman said.

First-time homeowners also already have an exemption under the CPF, Schiavoni pointed out.

Additionally, the purchase price limit for first-time purchasers has increased from 120 percent of the median to 150 percent, as calculated by the State of New York Mortgage Agency. The current limit is $863,940 for first-time homebuyers. The income limit for applicants is $145,000 for a family of three.

The existing CPF tax is due to expire in 2050; the CHF will expire in December of that year as well. Once approved by voters, the town will begin to apply the tax to conveyances in April 2023.

The law calls for the establishment of an advisory board of seven to 15 residents who would serve without compensation. The makeup of the advisory board must include one representative from the construction industry, one from the real estate industry, one from the banking industry, three from housing advocacy or human services organizations, one from each of the participating villages and the Shinnecock Nation.

Village participation is optional, but residents are subject to the tax whether the villages participate or not, McRedmond said. Transfers of village properties will still be taxed. Intergovernmental agreements would have to be executed between the town and villages’ governments that vote to opt in. The agreement would describe a village’s rights and responsibilities in relation to affordable housing opportunities.

Creating affordable housing isn’t just about the financing, Schneiderman pointed out as the discussion wore on.

“You also have to have a community willing to accept it, political will to make it happen, zoning that will allow it. There’s a lot of components but certainly the funding piece is an important component. The funding piece will allow us to do certain things that require a higher level of subsidy like bridging the affordability gap, helping someone to buy a house they couldn’t already afford,” he said.

Expressing the hope that the local CHF passes this November, the lawmaker pointed out that former Governor Andrew Cuomo vetoed a similar bill in 2019. Assemblyman Fred W. Thiele Jr., an author of the original CPF, has been working on getting the housing fund legislation passed for close to 20 years. Schiavoni and Councilman John Bouvier both serve on town housing committees and signed on as co-sponsors of the CHF legislation.

Putting her name forth as a co-sponsor, Councilwoman Cynthia McNamara said, “We need as many tools as we can get,” while Councilman Rick Martel said, “This is one of those pieces of legislation where we can sleep well at night.”

“If it could be half as successful, a quarter as successful as the CPF has been with creating open space, even a quarter as successful in creating places for our workforce to live, it would be tremendous,” Schneiderman commented.

Next up, the board will discuss the draft plan, which members hope to have track to adoption along with the legislation.