The East Hampton Town Republican Committee has come up with an idea worth considering about the Peconic Bay Region Community Preservation Fund, the 2-percent tax on a portion of most real estate sales that is used by the East End towns to buy farmland, other open space, and historic properties. The committee has suggested adjusting upward the preservation fund thresholds to make it easier for homebuyers shopping at the lower end of the spectrum to close deals.
When voters approved the C.P.F back in 1998, two key caveats were included. The intention was that only higher-priced purchases would be subject to the 2-percent tax. In most of the five towns, the first $250,000 of the cost of a house or $100,000 of vacant land were not subject to the tax. The dollar amounts have been fixed ever since.
A huge sum of money isn’t being talked about here. However, with the first $250,000 exempt from the 2-percent transfer tax, buyers of the least expensive East Hampton houses might be responsible for paying less than $3,000 into the fund. A sum of that kind could make the difference between being able to cover closing costs or secure a mortgage. Back when the C.P.F. began, $250,000 could just about buy you a house in East Hampton; today, the absolute bottom of the market is roughly $475,000. Considering this, some adjustment appears overdue, although first-time buyers who meet certain income and eligibility limits already avoid the tax.
Another suggestion from the committee, however, would be counterproductive. It has been suggested that all town purchases with the C.P.F. be subject to optional public referendums. This appears to come as much from longstanding denigration of the value of land preservation as anything else and should be rejected. Getting land buys onto ballots, most likely only in November, could effectively shut the C.P.F. down. Only the most patient landowners are likely to be willing to wait and see the outcome of a vote before opting for a private sale.
Changes in the 2-percent transfer tax would require state legislation. Assemblyman Fred W. Thiele Jr. should follow up on the first recommendation, but leave the second one on the cutting room floor.