Riverhead Town generated $2.41 million in Peconic Bay Community Preservation Fund revenues in the first quarter of the year, according to Assemblyman Fred Thiele. That’s the most first-quarter CPF revenue Riverhead has seen in the past five years.
Riverhead had the biggest percentage increase in first-quarter CPF revenues year over year among the five East End towns, with CPF revenue rising 32.4% in Riverhead, up from $1.82 million in the first quarter of 2021. Overall, CPF revenue in the five towns grew 1.6%, making it the largest first-quarter total in the CPF’s history, Thiele said in a press release yesterday.
Last year, the fund generated record numbers for Riverhead, thanks to a booming regional real estate market. The fund reached $6.9 million in revenues in 2021, topping its previous high of $6.1 million in 2006. The CPF derives revenues from a 2% transfer tax on real estate sales in the five East End towns and so provides a useful barometer of how active the real estate market is and whether property values are increasing. Riverhead’s 2021 CPF revenue jumped nearly 40% over the $4.9 million the town saw in 2020 — and 2020 revenue was a 44% increase over 2019.
The regional real estate market saw a boom in 2020, fueled by an exodus from New York City to the East End as the coronavirus pandemic swept through New York. The local real estate market continued that trend in 2021, as the transfer tax revenue increase shows. According to Thiele, 2021 saw the highest regional total for CPF revenue since the fund’s inception in 1999. It produced $210.6 million in revenue for the Peconic Bay Region in 2021, Thiele said, breaking a record set in 2020, when $139.4 million was collected.
In the years after the 2008 crash, Riverhead’s CPF reserves were drained to the brink of insolvency. During the local real estate market boom of the early 2000s, facing increasing development pressures, Riverhead Town borrowed approximately $70 million to fund land preservation purchases, planning to rely on future CPF revenue to pay the debt service.
But then the real estate bubble burst and the local real estate market crashed. Riverhead’s CPF revenues followed suit, plummeting from a high of $6.1 million in 2006 to a near-record low of $1.6 million in 2009. The town’s CPF revenues in the ensuing years were not enough to cover its CPF debt service and its CPF reserve — savings socked away during the boom years — was quickly running dry. The CPF debt burden was a major factor in Moody’s downgrading Riverhead’s bond rating in 2015.
Riverhead’s CPF revenues edged up enough in 2016 and the years that followed to allow the town to meet its debt service obligation — an expense that the town budgeted at $4.6 million in the 2022 fiscal year.
Aside from being used for farmland and open space preservation, 20% of CPF revenues can be used on water quality improvement projects, a measure which was authorized by voters in 2016 along with extending the tax’s expiration to 2050. Last year, Gov. Kathy Hochul signed another piece of legislation, authored by Thiele, that would create an additional half-percent real estate transfer tax on East End towns, along with the CPF, to fund a Community Housing Fund to aid in providing financial assistance to first-time homebuyers, rehabilitate or create community housing, or provide housing counseling. The decision to adopt the law is up to each individual town’s town board and subject to a mandatory referendum. The Riverhead Town Board has yet to introduce legislation to establish the fund.
The town-by-town breakdown of the revenue generated in the first quarter, according to Thiele is:
Town 2022 2021 Percent Increase East Hampton $18.75 million $17.5 million +7.1% Riverhead $2.41 million $1.82 million +32.4% Shelter Island $1.13 million $1.34 million -15.7% Southampton $30.25 million $31.32 million -3.4% Southold $3.54 million $3.22 million +9.9% Total $56.1 million $55.22 million +1.6%
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