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Problematic Precedent in Public-Private Deal

Wed, 12/01/2021 - 18:21


In one of the more heavily debated purchases of its kind in recent years, East Hampton Town will soon close on the purchase of less than two wooded acres, comprising three two-thirds-acre lots, off Green Hollow and Buckskill Roads in East Hampton. The arrangement was framed on one side as a sweetheart deal that would benefit only a handful of neighbors, several of whom agreed to contribute money to see it done. On the other hand, proponents said that preserving the site would prevent yet more high-end weekend houses from being built in a place already oversaturated with development. Both things are true and may be a sign of things to come.

Eight donors who have property in the immediate area pledged $2.6 million; the town is to tap the community preservation fund for the remainder of the $6.8 million price. From the start, there was an effort to keep the names of the neighbors and the seller secret. It took a Freedom of Information request and successful subsequent appeal by David Buda, a close town board observer, to learn the facts. According to a document the town eventually released unredacted, the top private pledge was $1.53 million from Clarence Lee, whose Icon International is based in Greenwich, Conn. Stuart and Vicki Match Suna promised $300,000, as did Andrew Yuder. Kenneth Wyse and Steve and Paige Debiasi, and Jeffrey and Lauren Baris made pledges of $150,000. Michael Grunberg came aboard at $50,000 and Lori Katz and Michael Goldstein, $15,000. Mr. Lee’s involvement is unexplained, since neither he or Icon International do not appear to be local property owners.

The seller, in papers obtained by Mr. Buda, was identified as Nelson Gerard. Mr. Gerard, a former East Hampton resident, had successfully sued the estate of the late Marvin Hyman and his wife, former East Hampton Town Justice Catherine Cahill, over a nearby piece of land, which the town had bought in 2004 for $1.9 million.

As another critic of the public-private agreement, Jaine Mehring of Amagansett, said, the new arrangement was to primarily benefit “some neighboring homeowners who themselves have aggressively developed and over cleared their own properties.” It is difficult to make a counter-argument to this point, though we think it may be a model of more land deals going forward, at least until there is a significant real estate downturn.

As the community preservation fund has been understood to work, towns seeking to use their share of the 2-percent transfer tax cannot pay more than values as set by appraisers hired by the municipalities. As property prices rise further, these official appraisals often do not match the sellers’ expectations. And while private donations do not change the rules, they could make some otherwise out-of-reach purchases more palatable. Had the town sought to shoulder the $6.8 million deal alone, without the contributions from the interested parties, it might have failed. Indeed, it only passed by a 3-to-2 vote.

Clearly, the $2.2 million price per lot in the Green Hollow deal is excessive and a tempting encouragement for sellers to hold out for more money, but we may see many more like it ahead as supply dwindles and prices soar.

On another important note, it should not have taken a Freedom of Information request for the town to have been open about who was involved among the neighbors. As the documents showed, officials, including Town Supervisor Peter Van Scoyoc, who voted for the acquisition, knew exactly who they were. This is information that should never have been kept from the public and a key detail that must be made transparent in any future community preservation fund transactions.

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