Pictured Above: New York Governor Kathy Hochul, then Lieutenant Governor, at a 2018 opening ceremony for the Peconic Crossing workforce and artist housing complex in Riverhead.
New York Governor Kathy Hochul signed legislation Friday, Oct. 8 allowing the creation of Community Housing Funds in each of the five East End towns, squeaking in under the Saturday deadline to sign legislation drafted in the state legislature’s last session.
The Community Housing Fund, sponsored by South Fork State Assemblyman Fred W. Thiele, Jr., would be funded by a 0.5 percent real estate transfer tax on hefty real estate transfers here.
The framework of this new fund follows that of the wildly successful Community Preservation Fund, land preservation funds in each of the East End towns that Mr. Thiele helped to create more than two decades ago.
Community Housing Funds could be used to provide financial assistance to first-time homebuyers not to exceed 50 percent of the purchase price, for the production of community housing for sale or rent, for the rehabilitation of existing buildings for community housing, housing counseling, and the acquisition of real property in existing housing units, to result in production of community housing for sale or rent. The legislation could also be used to enter into public/private partnerships to provide housing opportunities and employee housing for local businesses.
The first $400,000 of the sales price would be exempt from both the Community Preservation Fund and Community Housing Fund taxes in Southampton, East Hampton and Shelter Island towns, while the first $200,000 of the sale price would be exempt from the taxes in Riverhead and Southold towns.
The exemption would only apply to transfers of $2 million or less, meaning that, if implemented, people will pay less than they are paying now into the Community Preservation Fund for transfers under $1 million on the South Fork and on Shelter Island, and $400,000 or less on the North Fork and in Riverhead.
There would still be an exemption for first-time homebuyers, as is the case with the existing Community Preservation Fund, but the purchase price limit for that exemption for that exemption in the towns of East Hampton, Southampton and Shelter Island would be increased from 120 percent to 150 percent of the purchase price limit defined by the State of New York Mortgage Agency.
According to Mr. Thiele’s office, “these exemption increases will mitigate any adverse impact from the transfer tax on the provision of community housing.”
Mr. Thiele’s office estimates the new law, which would remain in effect until 2050, would generate more than $600 million for community housing.
Community Housing Funds would be set up by each of the five East End towns only if voters approve the creation of the funds through a mandatory referendum — the date of that referendum has not yet been set, but referenda authorizing the Community Preservation Fund had been set in conjunction with the November General Election, and it is too late to get such a referendum on the ballot this year. Mr. Thiele’s office said the referendums would likely be held in conjunction with the 2022 general electon.
Each town would have to adopt a Community Housing Plan before the referendums.
An earlier version of this bill was vetoed by former governor Andrew Cuomo back in 2019.
The bill passed the New York State Assembly on May 24 and passed the State Senate, where it was sponsored by State Senator Anthony Palumbo of New Suffolk, on June 10.
The affordable housing crisis on the East End “has been exacerbated by Covid-19 and the sudden and drastic increase in second home purchases,” said Mr. Thiele. “This has driven up the cost of real estate on the East End, as we are watching our housing supply disappear.”
“The lack of affordable housing has reached crisis proportions. Local employers have difficulty hiring and retaining employees because of housing costs and availability,” he added. “Local volunteer emergency services are experiencing difficulty in recruitment and retention. Long-time residents are forced to leave the area. This has all been made worse by the Covid-19 pandemic, which is driving up the second home real estate market on the East End. However, this legislation will provide towns with a meaningful tool that can make a difference by providing housing opportunities for its residents at a much greater rate than they can with existing resources and programs. Ultimately, it will be the voters who will get to decide. My sincere thanks to Governor Kathy Hochul for approving this legislation and giving East End residents the power of self-determination on the issue of affordable housing.”
In June 2019, the New York State Comptroller issued a report, “Housing Affordability in New York State” which concluded that “Suffolk County is the fourth most expensive county in the state with regard to rental housing and the second most expensive with regard to owner housing. For 31.8 percent of Suffolk renters and 17.5 percent of homeowners that burden is “severe”.”
On the East End, according to the report, “housing prices are higher, and incomes are lower than in the rest of Suffolk. According to the U.S. Census, the median value of an owner-occupied home in Suffolk in 2019 was $397,400. However, in East Hampton the median value was $869,600 and in Southampton $671,600. At the same time the median household income in every town in the Peconic Bay Region ($73,161-$96,687) is below that of the rest of Suffolk ($101,031). The Peconic Bay Region is one of the most expensive housing markets in the state.”
State Senator Anthony Palumbo of the North Fork sponsored the bill in the New York State Senate.
“Making all of Long Island, but especially the East End, a more affordable place to call home has been and will continue to be one of my top priorities as State Senator,” he said. “The passage and enactment of this bi-partisan legislation is an important first step toward ensuring that everyone from first responders, to the local workforce and young families have an opportunity to achieve the American dream of homeownership here on the East End.”