Dan's Papers - April 25, 2008 - The CPF Question: Preserve Land, Or Way Of Life?

Standing in a Southampton farm field on June 22, 1998 with pen in hand, former Governor George Pataki signed New York State legislation that amended laws in the five towns of the Peconic region, creating the Community Preservation Fund. The CPF was to be a vehicle to purchase available open lands in order to preserve the character of the five towns.

To finance the fund, a 2% real estate transfer tax was created. At the time it was hoped the fund would raise $100 million in its first ten years. Now, eight years and four months later, according to Assemblyman Fred Thiele staff member Becky McGrory, the CPF has accumulated more than five times that number - over $518 million. In both Southampton and East Hampton, improved properties (homes) with values under $250,000 are excluded. If an improved property is sold for $2 million, the $250,000 is deducted so that the taxed amount (at 2%) is $1,750,000. The result is a $35,000 tax with the revenue going to the CPF.

In November of 2002, Town of Southampton residents voted for an extension to the CPF, adding its ability to borrow money so that the Town could purchase available land as quickly as possible before prices escalated. In addition, a program called PILOT allows the Towns to use 10% of the CPF funds collected each year to offset the deduction of real estate taxes lost to the towns to pay for services like fire departments and schools. Now under the guidance of proposals put forward by Town of Southampton Councilman Chris Nuzzi, new breaks are being introduced for first-time buyers in Southampton - the recommendation is that first-time homebuyers of properties up to perhaps $476,000 are exempt from the 2% CPF tax.

Recently State Assemblymen Marc Alessi, Thiele and State Senator Kenneth LaValle have started a process to recommend further guidelines on how to utilize the 10%. It is that 10% provision that's the center of some controversy, but McGrory stated that a meeting to address this issue was scheduled well before any controversy arose. And now, it has been reported that Southampton Town Supervisor Linda Kabot would like to create a new system of calculating the funds for the PILOT program. Her proposal will recommend using the actual amount of real estate taxes lost to the Town as a guide to how much can be withdrawn from the CPF, and she plans to have the voters of Southampton involved in the vote on any changes.

Perhaps this is a bowshot being fired by Kabot, indicating a change in philosophy on the needs of the Town and how tax money should be spent. It seems that her intentions are to access the fund to relieve Town real estate taxes by using the CPF. Southampton voters may be put in a position to decide whether the CPF should be used to purchase open lands to preserve the character of the Hamptons, or as a vehicle to help augment the dollar cost of the increases in services to the town.

This could cause a pattern to "go to where the money is" instead of increasing taxes. In East Hampton the issue now is not what can be taken out of the CPF, but about the borrowing of $8 million of the funds for short term budget shortfalls by Supervisor McGintee, and if it violated the spirit or letter of the law. Compound this with the question of what will happen if the struggling real estate taxpayer chooses to save money today at the cost of preserving opens lands for his children and their children. Figures from Thiele's office showed Southampton collecting $3.5 million in January and $3.2 million in February for the CPF this year. East Hampton figures come in lower at $2.09 million in January and $1.1 million in February.

Some argue that their children won't be able to afford to live in the town due to high real estate prices and taxes. The ability of families to stay and live in their hometown may be more important than preserving beautiful vistas. Without trust funds and fixed incomes based on huge investments, many residents realize their salaries just would not enable them to purchase homes and live where they grew up, and feel disappointed that their children have practically no chance at the American dream of owning a house like the one they were raised in, in the town they grew up in. Thus the reasons for Nuzzi's CPF relief to the Town of Southampton's first-time buyers. Thiele, Alessi and LaValle must balance their political philosophies with the stewardship of the Towns of Southampton and East Hampton's future with any new amendments to CPF guidelines.