Assemblyman Fred W. Thiele Jr. sounded optimistic last week as he addressed a crowd in the Sag Harbor Cinema, saying he’s looking forward to a change five years from now in the East End’s affordable housing landscape.
The 2021 passage of the Peconic Bay Community Housing Fund, which found favor with four of the five East End towns in a vote last November, set the stage for the towns to enact affordable-housing programs at their discretion, utilizing a new half-percent real estate transfer tax. The tax was the subject of last week’s housing forum at the cinema, sponsored by the Long Island Association, which Mr. Thiele described as “Long Island’s Chamber of Commerce.”
Matt Cohen, the association’s president and chief operations officer, opened the discussion. “One of our chief priorities is affordable housing,” he told the audience, adding that another is enhancing LIA’s presence on the East End to counter the perception that the organization “hasn’t focused enough” on the region.
Mr. Thiele and the Republican State Senator Anthony Palumbo were the keynote speakers at the event. Mr. Palumbo’s support was key in gaining passage of a bill introduced by Mr. Thiele repeatedly over the past 20 years, only to see it die under the weight of lobbying by real estate and business interests. It was last vetoed by then-Governor Andrew Cuomo in 2019.
The East End’s affordable housing crisis has gotten worse and worse over those two decades, said Mr. Thiele, but, he said with a smile, better late than never.
Mr. Palumbo stressed that the bill “ensures that local governments” will be implementing” affordable housing policies, not Albany. That was a sticking point, he indicated, for Republicans in the State Capitol, whom he was ultimately able to sway. Some of his G.O.P. colleagues, he said, had pretty much told him, “How dare you?” as he lobbied them for support.
In the end, the bill came with a palatable trade-off: an enhanced exemption from the current law. In future, the first $400,000 in a sale will be exempt from the tax in East Hampton and Southampton, and he first $200,000 in Riverhead, Southold, and Shelter Island. (The new law adds a half-percent to the 2-percent transfer tax already in place under the community preservation fund; the previous exemption was between $150,000 and $250,000.)
“This bill is good government,” said Mr. Palumbo, suggesting that while it’s an affordable housing bill, it might better be described as a “reasonably affordable housing” bill.
The new law will take effect in April. Transactions that were in the works between November and April will be grandfathered in to the new numbers, Mr. Thiele said.
The bill provides several options for the four towns that approved it. They can build new housing, offer new rental or ownership opportunities, engage in public-private partnerships to build housing, rehabilitate existing properties as affordable housing units, or provide direct financial assistance to first-time homebuyers. The law doesn’t provide “additional authority to towns,” said Mr. Thiele, “but additional resources.” He anticipated that $20 million to $25 million a year could be generated across the recipients.
The East Hampton Town Board began a push for affordable housing in 2022 and is moving ahead, via a Jan. 19 resolution, with plans to “provide a variety of needed housing opportunities” under the new tax. The urgency is clear, what with the town losing its younger residents and middle-class work force to crippling housing costs, but Mr. Thiele introduced a note of caution: Towns should not get too far ahead of themselves, he said, as they pursue much-needed housing initiatives.
Specifically, he warned officials not to get ahead of their anticipated revenues from the new half-percent tax, given historical volatility in the real estate market.
Towns can “pay as they go” under the new law — in other words, only spend money they have collected — but they can also bond against future anticipated transfer-tax revenues and use the tax to pay off the debt service. Mr. Thiele said he’s been telling officials that if they take the latter route, they should base it on their most conservative revenue projections — and then cut those projections in half.
“Be cautious if you’re going to borrow,” he said.