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A bill sponsored by Assemblyman Fred Thiele and Senator Anthony Palumbo that would allow the creation of community housing funds in East End Towns has passed both chambers of the state’s legislature.  

If signed by the governor, the law would allow the town boards of East Hampton, Riverhead, Shelter Island, Southampton and Southold to establish community housing funds that would grant financial assistance to the production of community housing for sale and rent, the rehabilitation of already existing buildings for community housing, and the acquisition of property in existing housing units for purposes of community housing.

The law would also allow income-eligible residents and employees in the town who are first-time home buyers to get financial assistance from the fund for up to half the purchase price.

The law allows the town to raise the real estate transfer tax from 2% to 2.5% to finance the fund. The decision to raise the tax is subject to a mandatory referendum, meaning the decision to establish the fund will go on the ballot at the next eligible election after it goes into effect.

The bill is being passed in the middle of a Long Island housing price spike. According to a report by One Key Multiple Listing Service, the median price for sold property in Suffolk County in May was around $500,000, which is almost a $100,000 jump over the pre-pandemic median. 

“The lack of affordable housing has reached crisis proportions,” Thiele said in a statement. “Local employers have difficulty hiring and retaining employees because of housing costs and availability…this legislation will provide towns with a meaningful tool that can make a difference by providing housing opportunities for its residents at a much greater rate than they can with existing resources and programs,” he said.

If a town elects to create the fund, it would also be required to adopt a community housing plan that would outline and encourage land development, conservation, transportation and public investment. The plan would be a part of the town’s comprehensive plan and is required to be updated every five years. An advisory board would also be established to review and make recommendations on the plan.

The bill also provides for larger exemptions from the real estate transfer tax. In Riverhead and Southold the exemption — from the full transfer tax — would increase from $150,000 to $200,000. In Southampton, East Hampton and Shelter Island, the exemption would increase to $400,000.

Dawn Thomas, Riverhead Town’s community development administrator, said that because Riverhead has a lot of affordable rental housing already, the town can use most of the money in the fund to help first-time homebuyers. She would also like to use the fund to help renovate houses being purchased in the downtown historic district.

“I don’t think we’re in such dire straits as we were during the 2008 recession, where there were no transfers going on,” Thomas said. “So now that transfers are on the upswing and the prices have increased a little bit, I think it’s a good time for us to get involved in it.”

She also said the requirement to make the community housing plan a part of the town’s comprehensive plan gives the town a good opportunity to update the town’s plan for affordable housing.

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Alek Lewis is a lifelong Riverhead resident and a 2021 graduate of Stony Brook University’s School of Communication and Journalism. Previously, he served as news editor of Stony Brook’s student newspaper, The Statesman, and was a member of the campus’s chapter of the Society of Professional Journalists. Email: [email protected]