The Real Estate Transfer Tax Is Not The Only Way

By David Lion Rattiner

It is no secret that the East End is home to farming families who own land worth tens, sometimes hundreds of millions of dollars. The farmers from the East End are a cherished part of the culture in the Hamptons and a big part of the appeal of the area. Local farmers and their farm stands attract the bigwigs of Manhattan, who come out here and in turn spend millions of dollars on their homes and the local economy.

But these two groups have always had a very odd relationship. The land buyers from Manhattan want to own farmland because it is so beautiful and because they can develop it. But at the same time, the local governments don't want the farmers to leave because they know that the current owners want open space, and development of the land will devalue all of the property. It's a Catch-22, and it's why innovative farm preservation programs have gotten attention in the local political system. The success of these programs is a true testament to local governments and political leaders - Democrat, Republican or Independent - who appreciate the importance of the farming culture.

Because of development rights purchase programs funded by the Community Preservation Funds (CPF) of each town, farming families such as the Halseys and the Whites have both a financial and personal incentive to keep farming on the East End. Without these programs it would be virtually impossible for the generational farming families out here to survive on farming alone. Land rich doesn't mean money in the bank unless you sell the land, and as real estate values of farmland have reached the millions, acre-by-acre, plot-by-plot, farmland was getting sold.

Seven years ago the Town of Southampton developed a different farmland preservation program to keep farmers here and allow their land to remain as farms. The program is called Ag PDDs (agricultural planned development district), and it gives farmers the ability to sell development rights credits to the Town if their farmland gets put into an agricultural planned development district, creating a re-zoning freeze on the land for ten years. Should the farmers choose to sell the development rights, the land will forever remain a farm, the farming family gets to continue to own and work the land, but will be unable to sell it to anyone interested in building a mansion on the corn field.

The program was a tremendous credit to the genius behind creating the CPF real estate tax. Without the CPF, many of our farmers would have cashed out and the results would've been horrible. The land occupied by the Milk Pail in Water Mill is owned by the Halsey family and might have ended up as a private McMansion surrounded by a huge fence camouflaged by giant trees.

Most interesting in the news recently is the increase in the number of farmers who have been taking advantage of these development rights purchases. Four farmers in less than a month have begun the legal process of selling their development rights to the Town of Southampton, which by law, thanks to the program, has to make an offer through use of the CPF. Why the increase in such a short period of time? There is some speculation that it has to do with the peaking real estate market - the head of the farming family is simply selling his rights at the time that he feels is optimum.

But in addition to the financial opportunity, this way of life is priceless to the farmers. Selling out the land has always been a last resort, and when a farmer has wanted to sell in the past, it was not because he was headed for retirement in Hawaii but because he simply needed the money. What's remarkable about the recent applications to execute Ag PDDs contracts is that there is a reality in the cost of managing all of this - and it has to be paid with potato money. Farmers are having tremendous difficulty affording the high cost of estate planning, including legal fees, that have plagued nearly every family trying to keep its land and way of life. The paperwork between lawyers and the Town is endless, and when you throw an inheritance lawyer in the mix it can seem overwhelming. But to the farmers, town officials, preservation enthusiasts and the common (or not so common) homeowner in the Hamptons, it's all worth the effort. With a fear looming that we could soon end up looking at even more and more gates, fences and rows of trees, we all realize the importance and the value behind programs such as Ag PDDs that preserve a way of life, and a invaluable landscape.

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