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East End real estate tax revenue hit an all-time high in 2020 and locals say the booming market driven by the pandemic has made it harder than ever to find affordable housing in the Hamptons.
Meanwhile, local representatives are exploring ways to use future real estate tax revenue to address the issue.
The Community Preservation Fund – which is funded through a 2% tax on real estate transfers in East Hampton, Shelter Island, Southampton, Southold and Riverhead towns – brought in $139.42 million in 2020, up from $77.88 million in 2019, a 79% increase. It was the highest total in its two-decade history, topping the $107.69 million brought in during 2014.
The bulk of the revenue was in Southampton and East Hampton towns which respectively increased from $42.86 million in 2019 to $80.71 million in 2020 and $22.65 million to $40.94 million.
None of that, however, can be used to alleviate the housing crunch as the fund, established by voter referendum in 1998, can legally only finance preservation and water quality initiatives.
Assemb. Fred W. Thiele Jr. (I-Sag Harbor) has introduced a bill that would levy an additional half-percent tax on real estate transfers to fund affordable housing projects. If passed, the law would need voter approval in each town.
“While this combination of extraordinary attractiveness, population density, and wealth has created a strong local economy for the Peconic Bay region, it has resulted in a housing crisis for local families,” the bill states. “The demand for housing in the region is at an all-time high.”
A similar bill was passed by the Assembly and the Senate in 2019, but was vetoed by Gov. Andrew M. Cuomo who cited the added tax burden. Thiele said he was optimistic the new bill could address the governor’s concerns.
Both Southampton Town Supervisor Jay Schneiderman and East Hampton Town Supervisor Peter Van Scoyoc said they thought the housing tax proposal is a good idea for the South Fork.
Schneiderman said his thinking about adressiong the lack of affordable housing has changed. In the past, he believed it could addressed by relaxing zoning regulations and letting the free market build affordable units.
“The choice of building a few affordable apartments or one mcmansion, the economics are clearly in favor of the mansion,” he said.
East Hampton-based artist and affordable housing advocate Scott Bluedorn said his most recent lease was not renewed and rental prices have in some cases doubled from the previous year. Furnished rooms in East Hampton are now advertised online for as much as $2,500 per month.
“Inventory is low, demand is high, and that creates massive price gouging,” he said.
He created the art installation Bonac Blind, a floating tiny house inspired by a duck blind, as a commentary on the alternative thinking needed to find solutions. Bluedorn, 34, believes the CPF should have originally included an affordable housing component as conserving land can drive up the value of surrounding properties.
“The CPF has this dark side to it that it actually just increases land values, which makes it tougher for people to buy property,” he said. “We’re seeing that [legislation] finally, but I think it’s like decades too late.”
Peconic Bay housing fund legislation
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Would give the East End towns the “authority and resources needed to establish a dedicated fund to provide needed housing opportunities.”
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Would levy an additional half-percent tax on East End real estate sales, with exemptions for some buyers.
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Would require voter approval in each town.
Vera Chinese joined Newsday in 2017 and covers the towns of Southampton, East Hampton and Shelter Island. A Long Island native, she has reported on East End issues for 10 years.
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