In 1998, the towns of East Hampton, Riverhead, Shelter Island, Southampton and Southold obtained from the New York State Legislature the right to create a real estate transfer tax of 2% of every real estate transaction that takes place in the respective areas. The legislation was widely supported by East Enders who were concerned about too much land development occurring here. This one-time tax that the buyer of real estate is required to pay has been credited with being one of the most successful land-conservation programs in existence today.
“I don’t think it is an exaggeration to say that the CPF has been the single most important tool in maintaining the rural character of the East End,” says Assemblyman Fred Thiele Jr. (I-Sag Harbor) of the Community Preservation Fund. “The fund has been essential to insuring that conservation could keep pace with the flood of development that has occurred on the East End over the past decades.”
Here on the East End, one of the most important indicators of the real estate market (not to mention valuable forms of tax revenue) is the CPF, which is a transactional tax on all real estate deals in the Hamptons. If the fund is up, that means more deals are being made. If the fund is down, of course, then fewer homes changed hands.
“The CPF has been a very accurate indication of the health of the East End real estate market, particularly the high end of the market, which generates the bulk of CPF revenue,” says Thiele. A look at the numbers indicates there’s some very good news to report.
For the first quarter of 2013, revenues for the CPF were $20.23 million, which is a whopping 92.7% higher than the first quarter a year ago, when $10.5 million was collected. Also of great interest, March 2013 revenues totaled $4.19 million, compared with $3.77 million in March of 2012.
According to these latest results, the CPF has grown substantially compared to last year. In terms of actual transactions, the number in the first quarter was 2,164 compared with 1,459 a year ago; the increases were caused, in part, by tax selling. Thiele states, “The substantial increase in 2013 revenues has been driven by an extraordinary one-month total of $11.13 million for January 2013, which appeared to be driven by year-end closings in response to federal tax changes. However, revenues for both February and March of 2013 were also higher than those months a year ago.”
A large portion of the remarkable overall increase came from the towns of East Hampton and Southampton, where the jump in revenue for the CPF was 106.1% and 88.0%, respectively. The CPF also covers transactions in Riverhead, Shelter Island and the town of Southold, areas in which there was also growth, though fewer transactions overall. For example, on Shelter Island, just $80,000 worth of revenue was recorded in 2012, versus $670,000 in 2013—the increase, mathematically, is an impressive 737.5% for the area, but represents just 3% of the total revenue. Regardless, the numbers mean more money can be used to preserve the East End and keep it beautiful.
Since its inception in 1999, the Peconic Bay Regional Community Preservation Fund has generated $798.88 million, and nearly 10,000 acres have already been preserved, including space at the Wölffer Estate—which contains 115 acres of farmland located in the Village of Sagaponack, preserved in 2001 in partnership with Suffolk County—102 acres of the West Neck Hill preservation in Southampton, and more than 230 acres of barrier island beach and wetlands.
Although the selection process is long when it comes to determining what to preserve and how much money to apportion, it’s also straightforward. “The properties that are on each town’s CPF project plan are selected by the Town Board, upon recommendation of each town’s CPF Advisory Committee,” Thiele explains. “The advisory committees are citizens with expertise in land and preservation. The committees are there to insure that parcel selection is merit-based and not overly political. The plan must be approved as a local law, after a public hearing.”
As for current properties of interest for potential preservation, “each town has a CPF project plan that lists the properties that are eligible and of interest. There still remains substantial work to do to complete these plans,” Thiele says. “In addition, it is anticipated that historic preservation will take on increasing importance as the amount of remaining open land to be preserved dwindles.”