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New Housing Fund Brings in $4.2M in East Hampton

Thu, 04/18/2024 - 11:01
Eric Schantz is the town's housing director.
LTV East Hampton

East Hampton Town’s new community housing fund, voted into law in November 2022 and financed by a half-percent tax on real estate sales paid by the buyer, has brought in $4.2 million in its first year, Eric Schantz, director of the Housing and Community Development Department, reported to the town board on Tuesday. The money is intended chiefly for affordable housing and to help first-time homebuyers.

“This is an opportunity to open up the housing fund for the first time,” he said.

He presented the board with three recommendations for its use, one main program and two pilot programs, stressing that all proposals must be reviewed by the town’s community housing advisory board and undergo a public hearing before being approved. Andrew Garvey, the advisory board’s chairman, was also at the meeting.

Mr. Schantz recommended that $2.6 million go to the town’s request for applications program, explaining that he expects many such requests. Individuals, for example, might propose using the money to buy land or buildings for affordable housing; businesses might use it to build housing for their employees.

The pilot programs were more specific. To defray down-payment costs for first-time homebuyers, Mr. Schantz recommended setting aside $600,000, which, he said, would cover 20 grants of $30,000 each, to be used in conjunction with other town programs such as its Home Ownership Program. Specifically, he mentioned the 16 homes that will eventually become Cantwell Court. “We don’t know yet how much each of the homes in Cantwell Court will cost, but I’m expecting around $500,000,” he said. “Even if they’re less, people that meet the income eligibility still need a helping hand with a down payment to get in there.”

The $30,000 would be structured as a lien, to be repaid to the town as a percentage of the sales price when the house is sold. This point led to debate on the board. Supervisor Kathee Burke-Gonzalez, Councilman David Lys, and Councilwoman Cate Rogers all argued that recipients should just pay back a flat $30,000.

“We’re calling it a no-interest loan, but if your house appreciates twofold, you’re paying back double,” said Ms. Burke-Gonzalez. “I’m not convinced it should be based on the sale of the property, and not just, you were loaned $30,000, you pay back $30,000.”

 “We did it as a percentage to provide for some replenishment of the [housing] fund, but for me it’s one way or the other,” Mr. Schantz replied.

“If you get the luxury of home ownership with town help, then the town should benefit too,” said Councilman Ian Calder-Piedmonte. “Thirty thousand dollars, ten years from now, is not much.”

“If we want to give an incentive, we should do that, and collect what we gave, but we shouldn’t be making an extra return,” said Ms. Rogers.

“I don’t feel we’re disincentivizing. I feel fairly strongly that it should be a percentage,” said Mr. Calder-Piedmonte.

“I agree with my colleague,” said Councilman Tom Flight. If the value of the $500,000 property doubles to $1 million, he said, “You have made out very well as a homeowner” on a $30,000 loan.

“The value we get from keeping the fabric of our community here is priceless,” said Mr. Lys. “I don’t want the town to be a bank and get equity on it. We should discuss it more. There is not a divide here. We all want to move forward.”

“We all one-hundred percent agree,” said Mr. Calder-Piedmonte. “The goal is to solve the problem . . . the town is not trying to make money.”

The second pilot program would set aside $1 million for 10 homeowners, who, for grants of $100,000 each, would agree to build A.D.U.s — accessory dwelling units — on their land. Tenants would have to be year-round town residents, and rents would be capped. After 10 years, the town would forgive 50 percent of the loan, with the remainder to be repaid to the town’s housing fund when the house sold.

The board had questions. The supervisor wondered if a hypothetical Springs School teacher who is “doing the trade parade” but doesn’t live in town, could occupy one of the A.D.U.s.

“You could modify the rules and include people currently employed in the town,” Mr. Schantz offered. An A.D.U. could also house a family member, he noted, providing they met the qualifications. “A third of the [existing] A.D.U. units in the town, the homeowner built for a family member or a friend and is not charging rent.”

“What happens if a homeowner builds an A.D.U. but doesn’t wish to use it for an A.D.U. It has to come down?” Ms. Rogers wondered.

“Yes, if they’re not using it as an A.D.U. We require an annual permit. If my office finds out it’s not rented, we will begin enforcement action. They’d also be required to pay back the full amount,” said Mr. Schantz.

Homeowners might also move into the A.D.U. and rent the big house, he said. Ms. Rogers commented that that could benefit people looking to age in place.

“With our scarce dollars, what’s the biggest bang for the buck?” asked Mr. Garvey of the housing advisory board. “We’re a believer in down-payment assistance and the A.D.U. program, but we also feel more rental units are really the bigger solution out there.”

While Mr. Schantz said that he’d hoped the board would begin the application process by May 1, it was not to be. He still expects to be able to distribute the $4.2 million by the end of the year.

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