Help For The Real Estate Market

Hamptons Editorial

We speak of the Community Preservation Fund in hallowed tones, and for good reason. This ground-breaking legislation, created in 1999, has been the driving force in preserving thousands of acres of open space, farmland, and environmentally-sensitive areas that otherwise might have been lost to development.

It is easy to forget the CPF is a tax: It is charged to the buyer at the closing of most real estate transactions. That itself is a misnomer; the seller could easily adjust the asking price to reflect the tax. The bottom line, it increases the cost of purchasing the property.

All that was fine and good over the years, when over $1 billion was collected by the five towns for CPF coffers. It corresponded with an unprecedented real estate boom that saw prices rise quickly and steadily.

Two things have happened. The available acreage that is suitable for a CPF purchase has dwindled significantly; we’ve pretty much grabbed for preservation all those parcels that fit the guidelines except those owners refuse to sell. Also, not coincidentally, we’ve expanded the use of the fund. In 2016, East End voters overwhelmingly approved a measure permitting 20 percent of annual CPF revenue to be used for water quality improvement projects.

Assemblyman Fred Thiele is pushing a bill proposing a new tax on real estate transactions to fund a regional program to make houses more affordable for moderate-income, first-time homebuyers. Though laudable on the surface, we question the wisdom of adding another impediment to jump-starting the real estate industry. Now is not the time. With median prices hovering around $1 million, we somehow suspect the middle class will foot part of the bill, and those of us struggling to keep our children in their hometown will instead subsidize home purchases by new residents of the town.

What might work well is a moratorium, enacted, say, after six straight quarters of stagnant growth. Suspending the CPF tax would bring buyers and sellers that much closer to a meeting of the minds. Sales spur growth, and should prices rise as a result, the CPF would be made whole in short order and possibly add increased revenue in the long term.

The powers that be are proposing all kinds of ways to spend CPF nowadays, and some of the deals made have been questionable at best.

It might be time to stabilize the gravy train — the real estate market that has given so much over the years.

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