Land Tax: Wide Support

This is the eighth article in a series examining various aspects of real estate on the South Fork.

A plan to impose a 2-percent tax on high-priced real estate sales in East Hampton Town, and use the money to buy open space and preserve farmland, is once again before the State Legislature in Albany.

This time, however, the bill made its trip with a broader base of local support, including members of the real estate and building industries, which have opposed it in the past.

The proposed real estate transfer tax, which would be paid by the buyer, could raise millions of dollars a year until it sunsets in 10 years. All the money would be placed in a designated land bank called the East Hampton Community Preservation Fund, to be used exclusively for the purchase of open space.

Builders Back Bill

"The hour is late," said Edwin M. (Buzz) Schwenk, a former opponent of the transfer tax, at a press conference held Monday to advance the cause of the legislation. "We don't have two years, five years, or 10 years. The East End is on fire, Southampton and East Hampton Town both."

Some Southampton lawmakers are said to favor a similar plan, but according to speakers at Monday's gathering they lack the across-the-board support found here.

During 1996, 768 building permits were issued in East Hampton, and 268 have been issued in the first four months of 1997. The numbers went down in the early '90s but have been rising since 1994.

Meanwhile, said Mr. Schwenk and other speakers, real estate brokers and those in the tourist industries have come to appreciate the importance of open space to the economy of the region. Environmentalists are no longer alone in their concern for preserving the open vistas.

Economy = Environment

"These are the critical years for East Hampton Town," said Supervisor Cathy Lester. "To maintain a healthy real estate market, an active construction industry, and a booming tourist trade, we have to protect the environment."

"Environment really is our economy," agreed Pat Trunzo 3d, an East Hamp ton builder and former Town Board member. Though dependent upon development himself, Mr. Trun zo believes it must strike a balance with the preservation of open space.

Frank Newbold, a managing partner of Sotheby's International Realty, likes the idea of the real estate tax. "I'll think you'll find most brokers do also," he said.

He does not believe buyers will be deterred by the proposed surcharge, which would apply to sales of improved real estate over $250,000 and vacant property over $100,000. "It can be presented as a thing that will enhance their investment, an insurance that their quality of life here will stay high," said Mr. Newbold.

Proponents

It is that kind of reasoning that won Mr. Schwenk over to the land bank bill and prompted him to resign last year as head of the Long Island Builders Institute.

Before then he had lobbied against the transfer tax. Now, as a member of a new environmental group called East End Forever and of the East End Land Bank Coalition, he is one of its most vocal proponents. The coalition is made up of conservation groups, real estate brokerages, and contractors.

The Builders Institute remains vehemently opposed to the transfer tax, but this time around the bill has garnered unanimous bipartisan support from the East Hampton Town Board.

Though East Hampton voters approved a $5 million bond for open space preservation in November, the money does not begin to cover the purchase of 3,500 acres of open space and farmland the town would like to preserve. The land is valued at over $55 million.

Nonprofits Exempt

Open space and farmland sold to nonprofit groups for preservation will not be subject to the 2-percent surcharge. Nor would sales of farmland for continued agricultural use.

"In reviewing this bill, I'm vastly impressed by how fairly it is done, how equitably it is done," said Town Councilman Tom Knobel, a Republican. "Two percent is a small price to pay."

State Assemblymen Fred W. Thiele Jr. and Thomas DiNapoli joined State Senator Kenneth LaValle in supporting the enabling legislation in Albany this week. They hope it will gain approval before the session ends in early July.

Narrower Focus

If they are successful, a townwide referendum on the transfer tax could be on the November ballot. East Hampton would become the first town in the state to have a community preservation fund, following the lead of Nantucket Island, which has had one since 1984.

"East Hampton usually leads the way in preservation efforts," Supervisor Lester told Monday's crowd. "I'm proud of the positive action taken by the board over the years to protect this place."

"Historically," she continued, "if you look at East Hampton since 1984, we have taken bold and innovative steps on environmental protection." For example, she noted, East Hampton was the first town to adopt cluster zoning at a time when realtors and builders both here and elsewhere were strongly opposed to it.

In its first appearance before the Legislature, the land bank bill proposed to create a transfer tax and preservation fund in all five East End Towns. Ms. Lester and its other backers believe that with a narrower focus it will have a better chance of acceptance.

Local legislators believe it has enough support in East Hampton now for a referendum to pass. "Twenty years from now we'll look back and know we had something to do with keeping this great place we live in beautiful," said Councilman Len Bernard.