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Real Estate Investment: Legitimate or Laundered

Real Estate Investment: Legitimate or Laundered

There is reason to suspect that this region could be involved
By
Editorial

The so-called Panama Papers scandal, which took down Iceland’s prime minister on Tuesday, may seem a long way from eastern Long Island. Because the ownership of many of the most valuable properties here remains secret, however, just who might be hiding next door, so to speak, is a good question. Given concern by United States authorities about possible international money laundering ties to luxury real estate, there is reason to suspect that this region could be involved.

It is difficult to imagine a bigger financial story than the one that broke Monday about an enormous cache of documents from a Panamanian law firm that appeared to specialize in aiding the rich and powerful from around the world in their efforts to hide wealth, including ill-gotten gains. Although American interests have been relatively few in the initial revelations, some are sure to come from among the roughly 11.5 million documents that were leaked.

The common thread between the Panama scandal and the South Fork is a desire of those with the money to keep out of view. Transactions here often involve anonymous limited liability corporations or trusts, which make it all but impossible to know who is buying what, or what the ultimate direction might be when a project needs review by local regulatory agencies. One recent example was the shadowy entity called ED40, whose hidden principal or principals hired a couple of local front men as they sought to convert the East Deck Motel in Montauk to a high-end members-only surf club.

 L.L.C.s and other forms of private partnerships can be legitimate legal strategies for dealing with tax and inheritance issues; their use is not in itself the problem. The New York Times has found that an increasing number of foreign buyers have been using shell companies — like some of those unveiled in the Panama Papers — to find safe investments for dirty money in the United States. As reported extensively in The Times earlier this year, the Treasury Department is planning a trial effort to root out illicit money in high-end real estate deals in Manhattan and South Florida. For the first time, real estate companies in those markets will have to name the individuals behind cash transactions. The Treasury Department could widen its net beyond Manhattan and Miami if early results indicate the problem is as widespread as indicated. It would be naïve not to assume that some of that money flowed toward this area. 

At a local level, partnerships registered in U.S. states that allow anonymity need not be the stuff of international intrigue to be troubling. More information rather than less is key to making good land-use decisions. Knowing who or what is behind a particular project makes sense. This is made acute as more corporate interests focus here, particularly in Montauk, where redevelopment of former mom-and-pop hotels and restaurants appears at a fever pitch. 

Just who government is doing business with should be clear in all cases. While the public might be out of the loop, hidden ownership presents too-easy opportunities for corruption, as seen abundantly in some of the recent Albany scandals.

Think, too, of the record sums of sketchy L.L.C. money tied to East Hampton Airport interests and out-of-town helicopter companies that flooded the November election. Though the Republicans, to which all that cash went, were soundly defeated, that might not have been the case at another time and on another issue. 

It is time that officials work harder to pierce the clouds of secrecy. If the sources of money are legitimate, the owners of the L.L.C.s and the like should have nothing to hide.

Misguided Solar Ban

Misguided Solar Ban

A stunningly wrong direction
By
Editorial

All but lost amid the discussion of new setbacks and coverage rules for construction in Sag Harbor was a proposal to ban rooftop solar energy systems in nearly the entire village. At a time when climate change is dominating headlines and scientists think the polar ice caps are going to break up sooner rather than later, officials in Sag Harbor are heading in a stunningly wrong direction.

Following a prolonged moratorium on most major construction, Sag Harbor Village is getting set to adopt new regulations governing house sizes with an eye toward preserving beloved streetscapes. So far, so good. But one aspect of the plan is to codify a practice of the architectural review board not to allow solar panels and other visible alternative energy installations in the historic district. Unfortunately, the district encompasses a large portion of the village — notably including the commercial center — from Mashashimuet Park out to Long Wharf and from Havens Beach to the Redwood Causeway. A property owner could appeal a no vote by heading to court in the hope of going solar, but, in reality, few would take it that far. 

Even though New York’s power grid is thought to be somewhat less reliant on the fossil fuels implicated in global warming, alternative energy strategies for electricity and heating are among the steps that Americans must take if we are to head off the most damaging effects of climate change. With predictions of massive sea level rise by the end of the century, it is almost inconceivable that a coastal community like Sag Harbor would keep its collective head in the sand.

Like wind, solar resources must be part of an effort to slow the emissions that are causing the earth to warm. Yes, aesthetic concerns about the village must be taken into consideration, but they cannot be the end of the discussion.

Hamlet Studies: Residents First

Hamlet Studies: Residents First

The town and its consultants have evinced a fundamental misunderstanding of the local business environment
By
Editorial

East Hampton Town has begun work on a set of so-called hamlet studies. Six in all, they are supposed to result in recommendations for the town’s commercial areas. The objective is to produce a document that will guide future land-use decisions and allow commerce to function while avoiding sprawl and other negative effects of growth. So far, the effort has consisted of forums at which interested residents have weighed in. These have been worthwhile, but we worry that the planners are missing a key element: the nature of the town itself.

In a statement of goals for the studies, the town and its consultants have evinced a fundamental misunderstanding of the local business environment. In materials provided at the forums, references are made to a “thriving tourist economy” and to East Hampton as a “premier international resort community.” We are troubled by these characterizations.

The greatest irritations to year-round and summer residents alike in recent years have come from transient visitors and the businesses that cater to them. These give very little back to the community, both in social terms and in terms of dollars, and yet the costs they engender are high. It is no longer correct to call a community with a majority of second homes a resort, international or otherwise.

Unlike the hamlet studies organizers, it is our belief that the truly important commercial activity within East Hampton Town is related to houses, landscaping, and people who spend a meaningful amount of time here. The so-called resort economy, by contrast, is dominated by seasonal businesses whose suppliers and work force are from away, and whose profits flow to distant corporate offices. Meanwhile, ordinary residents are left to deal with noise, litter, traffic, and a good hunk of the costs, through taxes, of cleaning up the messes and law enforcement.

Public meetings are to start in late May at which the hamlet studies will begin to take shape. Before that happens, town officials and the consulting firm must think long and hard about what kind of community this really is and in whose interest the forthcoming recommendations should be. 

For our dollar, the answer is that residents and people who make long-term commitments to this place must come first. The indifferent, extractive tourist industry cannot be allowed to lead the discussion without a full accounting of its real impacts and, as we see it, minimal benefits.

Ospreys Return But Threats Remain

Ospreys Return But Threats Remain

The Water Mill osprey
The Water Mill osprey
Peter B. Robinson
Time was that osprey, or what locals call fish hawks, were few and far between on the South Fork
By
Editorial

The osprey were a couple of days late this week — or they were right on time. It depended on whom you asked and where, in turn, they were looking.

Two seen on March 26 appeared to be checking out the suitability of a nesting platform along the side of Napeague Meadow Road. They landed and perched tentatively, then rose and did it again, appearing unsure of whether this would make a good home for the summer. In Water Mill, two osprey appeared to joust over the attention of a third, which had settled comfortably onto her own platform with the intention perhaps of nesting and laying her eggs.

Time was that osprey, or what locals call fish hawks, were few and far between on the South Fork. The widespread use of D.D.T., an effective pesticide to control mosquitoes, had the terrible effect of weakening their eggshells, and their population plummeted. Gardiner’s Island became one of their only breeding grounds. After D.D.T. was banned in 1972, their numbers began to increase. Today, osprey are common again — a testament to sensible regard for the natural world. So, too, has the number of bald eagles grown, among other birds of prey.

But threats remain for the osprey. They are top-level predators, which means that the contaminants that fish lower on the food chain consume accumulate in their bodies. Though D.D.T. is gone, plenty of other pesticides, manufacturing agents, furniture flame retardants, and pharmaceuticals continue to pour into the environment here — many via inadequate residential septic systems. Elsewhere, osprey are used by researchers to monitor contaminants. For example, the chicks in an osprey population in Montana were found with off-the-charts levels of mercury related to copper mine sludge.

Local governments on the East End are studying options, including remediation projects already begun or in the planning stages, as in the Hook Pond and Georgica watersheds in East Hampton. As we look at osprey this spring and marvel at their lengthy migration and stunning efficiency at catching fish, we should think as well about the world that they — and we — live in, and if we all can do more to keep it — and ourselves — well.

New Approaches Needed In the Housing Crisis

New Approaches Needed In the Housing Crisis

East Hampton Town may soon see at least one new affordable complex — in Amagansett
By
Editorial

The South Fork has a housing crisis. Just ask almost any employer or a prospective employee who has considered moving to the region for a job. Places to live are all but unavailable. So far, attempts by local government to find solutions have failed to meet demand. 

After a good start some years ago and then a period of dormancy, East Hampton Town may soon see at least one new affordable complex — in Amagansett. But the number of units planned is small and would probably mean little for single workers. They certainly would not put a dent in this season’s needs. Regulations already in the town code to allow the construction of so-called accessory apartments were well intentioned but no magic bullet. Obviously much more will have to be done, perhaps tapping public funding in new and creative ways.

In Southampton, Supervisor Jay Schneiderman has taken up the challenge, something he dabbled in while in the Suffolk Legislature. One of his ideas is to seek underutilized houses that might have enough space for an apartment and then to find a way to provide property owners with incentives or help to make conversions. He has set a tentative goal of having 25 units in process by the end of the year. Ideally, these apartments would be earmarked for Southampton residents now living in illegal or substandard housing and for those, like schoolteachers, who do vital local work.

One thing we would like to see is for the incorporated villages in Southampton and East Hampton Towns to get involved. For too long, officials have been content to see second-floor apartments converted to offices and to expect solutions to the housing problem to come from the towns. This is shortsighted. Sag Harbor has the beginning of a housing fund, but hasn’t done much to prove it is up to the task. East Hampton Village does not appear to have paid attention to the housing crisis at all. In the interest of sharing the burden, if adequate places to live are to be created, the central commercial districts must be used as well.

Perhaps in the area of wishful thinking, much has been made lately of micro-houses. These are the cute, sometimes mobile structures that are generally far smaller than allowed by local zoning codes. To the extent that wastewater from numerous tiny houses on existing residential lots could be adequately handled, they might help chip away at the pressing need — as long as they do not become de facto summertime hotels.

Every unit that can be added to the affordable supply matters. All potential sources should be considered.

A Commitment To Wind Energy

A Commitment To Wind Energy

Even small changes warrant serious action
By
Editorial

Concerns about our rapidly warming planet are on the rise. Climate advocates argue that heading off the worst effects of global warming will require cutting fossil fuel emissions, and the key will be a shift to renewable sources of electricity. In the Northeast, to no small measure this will mean wind power — and when one thinks about wind power on a scale large enough to make a difference, that means offshore turbines.

Some scientists now say cataclysmic climate shifts could come within decades, not centuries. But even small changes warrant serious action, given that the effects of sea level rise are already being seen as close as East Hampton’s own bays and ocean beaches. There is evidence that oceanic warming, changes in seawater acidity, and several other factors are already affecting fish and shellfish. Climate scientists believe that powerful storms will slam into our region more frequently as ocean temperatures increase.

The movement toward power generation off the New England and Long Island coasts does not come without opposition, notably from the commercial fishing industry. Fishermen are alarmed about the potential loss of important harvesting grounds, jobs, and even whole communities that could be hurt.

A test project on localized effects is already under way. Deepwater Wind, a private company, is installing five turbines southeast of Block Island, which could supply as much as 90 percent of that island’s power. Monitoring the construction and the operation of these turbines is expected to provide important information that could be useful as proposals for large projects south of Long Island are reviewed.

It might be easy to say that a balance should be found between the two interests, fishing and wind power, but some industry voices continue to say that ocean turbines are simply incompatible with fishing. As for federal officials, they have said the impacts of offshore projects like this are not yet well understood. Given the urgency of climate change, the time for finding balance, as opposed to aggressive action, may be ending. 

If the United States is going to get serious about climate change, each section of the country will have to do its part. Reducing demand for electricity would help to some extent, but in reality we must move well beyond the 13 percent of needed electricity generation now provided by renewable sources. Our region’s greatest single asset in that regard is the consistent wind off our coast. To ignore the role it could play in reducing greenhouse gas emissions would be a terrible mistake.

Promising Initiatives

Promising Initiatives

Progress with electricity and water quality proposals
By
Editorial

Attention to environmental concerns is growing here, with some positive results. We are enthusiastic about a $100,000 study of an electric “microgrid” in East Hampton Town, which could provide clean power and better electrical service during outages. At the same time, PSEG-Long Island is reviewing proposals for load-reduction and renewable generation to deal with soaring summertime demand on the South Fork. One of the companies seeking a deal with the utility, Deepwater Wind, is pushing hard for an offshore turbine contract, something that deserves support if the numbers work.

Also moving along are several proposals regarding wastewater in the town. We have expressed doubt about certain aspects of a plan by an outside consultant for a treatment plant that somewhat inexplicably would serve downtown Montauk, for example, but other suggestions are worthwhile. One is to require improved septic systems in all new housing developments, which would cut down the nitrogen reaching ground and surface waters. A draft law setting a higher standard than allowed now by the Suffolk County Department of Health Services is expected soon. 

Also taking place is a joint effort among the town, U.S. Department of Agriculture, and the Nature Conservancy to buy and return to nature low-lying house lots on Lazy Point. The money, nearly $10 million, will neutralize as many as 16 houses in a known floodplain, helping to reduce future demands for infrastructure improvements, such as raised roadways or bulkheads. The plan should be a model for other at-risk parts of town, where officials will be soon asked for erosion-control measures that will put traditional public passage along the beaches in jeopardy.

Separately, the town’s just-started hamlet studies, though billed as centered on the needs of businesses, might well be forums at which environmental concerns are raised. Certainly, any big-picture look at land use here would have to take into close consideration the fragility of natural resources and whether there really is any capacity for additional development without tipping the balance into irreversible damage to our surroundings. One truly cannot imagine a thriving community and visitor industry here without healthy waterways, clean air, and pristine beaches.

Important, too, is renewed interest among officials and a new citizens group in restoring Georgica Pond. Georgica, which once supported a modest, if viable, commercial fishery for white perch and blue-claw crabs, has been the site of repeated closures for bacterial contamination and is perhaps the body of water most in need of immediate attention.

We are less enthusiastic about East Hampton Town’s new look at coastal erosion policy. Work is expected to begin soon on an updated resiliency strategy in response to predictions of sea level rise. However, the effort will amount to little unless the town’s erratic-at-best enforcement of existing laws and the counterproductive actions of state and federal authorities change. One can’t fault officials for trying, but the proof will be in implementation — and assurances that future town boards will not simply toss the recommendations aside, as the current board did in downtown Montauk.

That said, these electricity and water quality initiatives represent progress at a time when stresses on our natural surroundings only seem to be growing. Taken together, the picture is promising.

State Salaries In Albany’s Sights

State Salaries In Albany’s Sights

A tough proposal by Gov. Andrew M. Cuomo would hold New York’s legislators to a maximum of 15 percent of their official salaries in outside income
By
Editorial

Doing something about corruption and influence peddling in Albany appears high on the to-do list for lawmakers — except when it comes to their own bank accounts. 

Following a tough proposal by Gov. Andrew M. Cuomo that would hold New York’s legislators to a maximum of 15 percent of their official salaries in outside income, Carl Heastie, the speaker of the Assembly, came up with a far more generous plan, which the Assembly approved on Tuesday. In dollar terms, the governor’s cap on moonlighting money would be $11,925; the Assembly would allow up to about $70,000. In the State Senate, the Republican majority prefers the status quo, in which there is no limit on outside income.

Mr. Heastie proposes allowing up to 40 percent of the annual salary of New York State Supreme Court Justices, whose positions are considered full time, as the limit on outside income. Perhaps aware that his formula might be viewed as bizarre, he announced his plan shortly before 7 p.m. on Friday — hardly the peak of the weekly news cycle.

For how these limits would affect state elected officials one need look no further than Assemblyman Fred W. Thiele Jr., who is set to receive $52,500 for his side job as the Sag Harbor Village attorney in 2015-16. Under the Assembly version, he could continue in both jobs, receiving a base of $79,500 as a part-time assemblyman with add-ons available. Should Mr. Cuomo’s plan prevail, however, Mr. Thiele would have a tough choice to make. There is nothing essentially corrupt about having two government positions, and Mr. Thiele has to make ends meet, but choosing one job or the other would eliminate concerns about just which hat he is wearing at any given moment.

 It is clear that from a conflict of interest standpoint ending legislators’ official status as part-timers is essential. Giving up outside income in exchange for higher salaries should be open for discussion even if it costs taxpayers more. Mr. Cuomo’s tight-fisted limit should be the starting point.

To Condemn? That’s the Question

To Condemn? That’s the Question

Sag Harbor hopes to acquire five parcels of waterfront just inside the bridge to North Haven
By
Editorial

Two major municipal condemnation initiatives, which are moving slowly ahead in Sag Harbor and on a long strip of beach on Napeague, warrant more public consideration.

Sag Harbor hopes to acquire five parcels of waterfront just inside the bridge to North Haven, which it would restore and open as a park named in honor of the novelist John Steinbeck, who lived in the village at one time. A Manhattan real estate development firm is seeking approval for condominiums there, and has said outright that it does not want to sell. Condemnation seems appropriate if the developer won’t agree to a community preservation fund deal. The park would serve a clear and overwhelmingly positive public purpose.

On Napeague, however, the outcome would be less certain. Here, East Hampton Town is exploring condemnation of access to the beach as well as a to-be-determined number of slivers of sand between the high-tide line and the toe of the dune or beach-grass line in an attempt to head off a lawsuit from property owners upset about four-wheel-drive traffic and a crowd of beachgoers in front of their houses.

Two issues raised by the Napeague proposal merit frank and dispassionate discussion. The first is cost: Some have warned that a court-set price tag as the result of condemnation could be more than average taxpayers would be happy to bear. Condemnation proponents counter that the land is almost without value and the hit to the town tax rate would be negligible. So far, no one really seems to know which opinion is correct. Even if you like the plan, it’s a rather huge unknown.

The other concern is that condemnation would not necessarily end the court battle. The litigating property owners’ claim could well prevail: that what is known as Truck Beach is an unregulated nuisance. Were the courts to agree, the traditional right to drive on the town’s beaches could be jeopardized. From where we sit, that is a very big and very serious risk.

One other point: Most of the beach-driving crowd and the group seeking legal resolution of their grievances are East Hampton Town taxpayers. Every effort must be made to remember that we really should behave as a single community. Compromise and conversation with the outcomes clearly understood in advance appears the safer course with regard to Napeague.

As for Sag Harbor, we say, full speed ahead.

Alert and Aware Via Social Media

Alert and Aware Via Social Media

It is commendable when local officials embrace those formats to reach the community
By
Editorial

These days we’ve come to expect a 24-hour news cycle. When there’s an accident on Route 27, when a major snowstorm is headed our way or a northeaster is bearing down on us, when we hear sirens or a fire whistle, we (journalists included) tend to want up-to-the-minute details. Should we reschedule that trip to Riverhead? Stay off the roads? Get our boat out of the water? 

For many of us, the first wave of information comes from social media or other online sources, so it is commendable when local officials embrace those formats to reach the community.

We’ve been lucky this winter to have had only a few major weather events, but during virtually every one, East Hampton Town’s highway superintendent, Stephen Lynch, has served as our eyes on the road, letting people know via frequent Facebook posts where the hazards were, what shape the roads were in, and how the Highway Department was tackling its task. 

During our last major snowstorm, on Feb. 8, not only were he and his crew on the roads before dawn, he was also checking in on Facebook from before sunup until well after sundown. He pointed out at 6:42 a.m. that Town Hall would be closed, noted at 7:57 a.m. that bay waters had breached Gerard Drive in Springs at the second causeway, and later that Napeague Meadow Road was also flooded. He posted information on low visibility and falling temperatures as the roads began to ice over around noon, and at close to 5, he let people know that the crews were still out cleaning and treating the roads with a 50-50 mix of salt and sand. He finally signed off just before 9 to let people know that the department would be at it again at 5 the next morning. Well done! 

Also notable for direct communication with the public via social media are the East Hampton Town and Village Police Departments. Both used Facebook and Twitter to alert residents about an ongoing Internal Revenue Service phone scam, for example. The town department spread the word about a separate Craigslist scam involving fraudulent home rental listings, and the department has also been particularly good about posting information on community meetings and police accomplishments.

Among other local officials, East Hampton Town Supervisor Larry Cantwell has taken to Facebook to request opinions from the community and take its pulse on a number of important issues over the last year. Southampton Town has done a good job of communicating emergency messages, including storm and accident-related road closures and delays, via text or email alerts, which it also posts on the town’s website and its Twitter feeds. East Hampton Town could use some improvement in that area. Let’s hope that is on the horizon as the town begins the process of redesigning its website and prepares to launch a new and improved one later this year.