Pictured Above: David Gallo and Rona Smith at the Feb. 25 forum on affordable housing in Peconic.

A public forum that had been slated to discuss a proposed new affordable housing complex in Peconic Feb. 25 underscored the difficulties Southold Town is facing as it attempts to address the ongoing crisis in housing affordability here.

In December of 2023, Southold Town agreed to sell five acres of land on Carroll Avenue in Peconic that had originally been slated to become part of a sports complex to Georgica Green Ventures, in partnership with Rona Smith’s Housing Initiatives, LLC, for $500,000, after the developers responded to the town’s request for proposals to build affordable housing there.

Ms. Smith and David Georgica Green President David Gallo were scheduled to discuss the project, called “Peconic Point Homes,” at the Southold-Peconic Civic Association’s Feb. 25 meeting, but the town requested that they not discuss the proposal due to ongoing litigation with neighbors of the property.

Many of those neighbors showed up for the forum asking for information about the project, leading to a heated and contentious morning that left many wondering about the future of housing complexes as a housing solution in Southold.

The litigation, initially brought against the Southold Town Board by neighbors Rachel Flatley and Neal Cichanowicz in June of 2023 after the Town Board voted to place the property in an affordable housing overlay district in April of 2023, argued that the property had been purchased by the town in 2018 to be used solely for future town recreational purposes. 

It argues that if the town “wished to purchase property for the purpose of locating affordable housing, it could have and can do so — but it should and must do so openly and transparently by informing the taxpayers that are funding any such purchase that is what it is intending to do. But that is not remotely what happened here.”

New York State Supreme Court Justice Stephen Hackeling granted a temporary restraining order on June 5, 2023 that kept the town from proceeding with the zoning change, but lifted that order and dismissed the case on Dec. 11, 2023, just one week before the Town Board voted to sell the property. The plaintiffs are appealing the case, and oral arguments scheduled for March 6 at 10 a.m. in New York State Supreme Court in Riverhead. 

Neighbors who attended the meeting also called into question the town’s decision to sell the property to the developers for $500,000, well below its market value.

The developers had responded to a request for proposals first issued in April of 2023, which town board members had said would favor an ownership option in response to neighbors’ concerns about rental housing in their backyards.

Their plan consists of a 32-unit complex of units that would be owned by the residents in “eight single-story buildings with four cottage-style attached homes in each building.” The units would range from 636 square feet to 1109 square feet, aimed at attracting residents who earn 80 percent of Area Median Income, with target mortgage payments ranging from $2,323 to $2,972 per month. Units would be sold for between $285,000 and $380,000, and would include covenants ensuring they remain affordable in perpetuity.

Area Median Income numbers would depend on whether a project ends up using Southold-specific incomes or incomes region-wide in Nassau and Suffolk counties, said Mr. Gallo. One hundred percent of Nassau-Suffolk AMI is currently $156,300 for a family of four (it changes every year), but in Southold that number is just $103,079.

But few of the specifics of this project ended up being discussed on Feb. 25.

“The town requested we not present that because of the appeal pending on the group that sought to invalidate the sale,” said SPCA board member Alvin Schein, who helped to organize the program. “Pending resolution of that appeal, we’re not going to present on that subject.”

Mr. Gallo and Ms. Smith instead began to give an overview of their work developing affordable housing, but Kevin Meyers, who has a house nearby on Peconic Lane, jumped up at one point demanding answers as to why the developers were able to buy the property for $500,000.

“I’ll give you $600,000 for it today,” he said, adding that he would build three houses on the property in the interest of preserving the neighborhood. Members of the civic association told him that the developers couldn’t talk about the project because of the litigation. 

“They’re gagged. I’m not. If anybody wants to talk to me, I’ll be outside in the parking lot,” he said, before leaving the room for much of the remainder of the meeting.

“There’s no guarantee that this will survive,” Ms. Smith said of the project at one point in the discussion. “We’ll continue to work on it.”

Mr. Gallo said his company has built over 1,500 affordable rental apartments throughout Long Island and Westchester over the past 12 years, all with on-site property management. 

Their first project, the 28-unit Sandy Hollow Cove complex in Southampton, faced a great deal of backlash from the neighborhood before it was built more than a decade ago, but now, he said, neighbors are happy with the way it blends into the community and they are amenable to more housing of this type in their neighborhood. He added that he often takes people on tours of that complex, and several other complexes GGV has built in East Hampton and Speonk.

“The way we’ve been most successful recently (in changing neighbors’ minds) is by having people visit the communities and meet the residents,” he said, adding that he welcome anyone attending the meeting to come visit other sites. “That was harder when this hasn’t been built. When people see their friends and family members moving in there, we’re being asked to go to the same communities and build more housing on vacant land.”

He added that his company extensively markets lotteries for units in their projects locally, ensuring a large pool of local applicants, though the 1968 Fair Housing Act does require that the lotteries don’t geographically restrict people who can apply. 

If built as an ownership-based project, the Peconic complex would be the first ownership-based development by Georgica Green. Mr. Gallo said that his company to date has worked through a federal tax credit program administered by the states established in 1986, which allows affordable housing developers to sell tax credits to banks to raise capital for the construction, allowing them to rent the properties at below-market rates. 

Mr. Gallo said New York State began a new Affordable Homeownership Opportunity Program two years ago, which provides direct subsidies to affordable housing developers to offset the purchase price for the ultimate residents of the homes.

After some grumbling from neighbors about the money Mr. Gallo and Ms. Smith would make from the project, Mr. Gallo said directly that he was a businessman, though he could easily make more money building market-rate housing.

“I love building affordable housing, but I’m in this to make money, to be clear. But the state sets  up its system so developers don’t earn exorbitant fees,” he said. “But don’t force a developer down to numbers (of units) that don’t work. Then the development won’t be beautiful. There’s a point where the projects start not to work, where they take away the full time manager, or rip out the landscaping allowance. It’s finding that right range, where the project works but it’s not too much or too little. And you need to have some cushion in your numbers. Insurance costs just skyrocketed throughout the entire industry. You need to be prepared for that.”

Mr. Gallo said he didn’t foresee needing tax abatements from the Suffolk County Industrial Development Agency in order to build the project.

“On Eastern Long Island, we usually end up paying the taxes,” he said. “I don’t see there needing to be abatements from the Suffolk County Industrial Development Agency, but other projects throughout Long Island do have tax abatements.”

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Beth Young
Beth Young is an award-winning local journalist who has been covering the East End since the 1990s. She began her career at the Sag Harbor Express and, after receiving her Masters from the Columbia University Graduate School of Journalism, has reported for the Southampton Press, the East Hampton Press and the Times/Review Media Group. She founded the East End Beacon website in 2013, and a print edition in 2017. Beth was born and raised on the North Fork. In her spare time, she tinkers with bicycles, tries not to drown in the Peconic Bay and hopes to grow the perfect tomato. You can send her a message at editor@eastendbeacon.com

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