State Bill Would Take on the South Fork's Housing Crunch
Affordable housing, particularly its scarcity, is among the most pressing issues facing the South Fork’s year-round residents. While revenues from the Peconic Bay Region Community Preservation Fund’s 2-percent transfer tax — $22.6 million in the first quarter and over $1 billion since its inception in 1999 — demonstrate a thriving real estate market, the shortage of housing available to low and moderate-income residents has broad implications.
In the five East End towns, where 60 percent of all housing units are seasonal, many young adults cannot afford to live in their hometown. The pool of potential recruits for emergency services is shallow, and employers have difficulty finding and retaining staff. Many houses are crowded with multiple families and residents, and labor coming from less expensive areas contributes to traffic and congestion.
Relief, however, may be on the way. Last week, Assemblyman Fred W. Thiele Jr. introduced legislation that would authorize the five East End towns to create a work-force housing fund to help residents achieve homeownership. Residents at or under 120 percent of Suffolk County’s median family income would be eligible for the program. At present, according to a release issued by Mr. Thiele’s office, that figure is $130,800.
The fund would provide no-interest loans of up to $250,000 toward the purchase of a home, restrictions allocating existing housing stock for work-force housing, and housing counseling for residents.
A $10-per-square-foot fee on residential construction in excess of 3,000 square feet would finance the fund, the creation of which would be subject to a mandatory referendum. That surcharge — $40,000 for a 7,000-square-foot house, for example — would be included in a building permit fee.
Loans for affordable housing would be repaid to the fund upon the resale of a house and in an amount equal to the proportion of the loan to the original purchase price. As an example, if the fund provided a $200,000 loan toward the purchase of a $600,000 house, and the house was subsequently resold for $900,000, one-third of the resale price, or $300,000, would be paid back to the town and returned to the fund.
“I’m trying to move this in the Assembly between now and June,” Mr. Thiele said on Tuesday. “I think there’s a lot of community support.”
A similar effort several years ago, he said, was derailed by the financial crisis that began in 2008. “This is a bill I had worked on for several years,” he said. “We had had some hearings in the district, generated a report, and did a lot of research.” Today, he said, “Judging by the local real estate market, the recession is behind us. We’re seeing extremely high and escalating real estate prices. I’ve revived this and am trying to move it forward.”
The proposed legislation, said Tom Ruhle, East Hampton Town’s director of housing, “would dovetail nicely” with the town’s Community Housing Opportunity Fund, the December 2014 implementation plan for which recommends creation of a “substantial down payment assistance program” to assist first-time homebuyers in purchasing open-market properties. “Affordable housing is a huge problem out here, which I think everybody knows,” Mr. Ruhle said. “People can’t afford to rent and they can’t afford to buy. It’s a crisis.”
Adding a work-force housing fund, he said, would help to alleviate that crisis. Speaking for himself and not on behalf of the town government, he also said, “I would personally love to see the expansion of the 2-percent land transfer tax to include provisions for affordable housing.”
Mr. Ruhle was not alone. Though none of four real estate professionals on the South Fork responded to a request for comment, Mitchell Pally, the chief executive officer of the Long Island Builders Institute, offered the same suggestion. While the association is formulating a response to Mr. Thiele’s proposed legislation, its East End committee has already voted to oppose it.
“The concept of a work-force housing fund is essential and strongly supported,” Mr. Pally said on Tuesday. “However, we don’t believe the way the funds are being raised is the right way to do so. We believe this is an issue that permeates throughout the entire community, and therefore everybody in the community should be part of the solution, if funds have to be raised.” Affordable housing, he said, “is a societal problem, not just caused by people who are building larger homes.”
“Any time you talk about a fee . . . perhaps in the real estate and building industries, there may be some resistance,” Mr. Thiele conceded. “But it’s necessary to create the balance in the community as far as housing opportunity.”
While a committee tasked with updating the Community Housing Opportunity Fund’s implementation plan recommended an option to fund affordable housing through the C.P.F., the town board asked that that option be removed from the plan, said Councilwoman Sylvia Overby, liaison to the C.P.F. advisory board.
“In a real estate market where the median home price is nearly $1 million, extraordinary efforts must be made to provide the diverse housing options that mean schoolteachers, firefighters, plumbers, and more can live in the community where they work,” Ms. Overby said. “We are a richer community if we are a diverse community. However, C.P.F. was voted on by the public several times for preservation of open space, preservation of historic properties, purchase of recreational opportunities, and preservation of farmlands and farming. A change in C.P.F. would need to be voted on by the public that ushered in the original legislation, in my opinion.”
The danger of allowing C.P.F. money “to be ‘subdivided’ is that other truly meaningful projects might have their hands out as well,” Ms. Overby said, “and where does one stop when all might be worthy?” The C.P.F., she said, “should be true to its origins, and options such as the one proposed by Assemblymen Thiele should be considered.”