This month, New York State Assemblyman Fred Thiele introduced legislation that, if enacted, will authorize East End towns to establish community housing revolving loan funds to help first-time home buyers. The legislation is an attempt to prevent the “affordability gap” – to use Thiele’s words – from growing in the coming years. The revolving loan funds would allow prospective, first-time buyers to receive a loan of up to 50 percent of the purchase price.
The legislation applies to the towns of East Hampton, Southampton, Riverhead, Shelter Island, and Southold and applicants for loans must be residents of or employed in the town in order to be eligible. It is estimated that this fund could provide up to $20 million annually to homebuyers.
Thiele cites an increase in Hamptons’ median home prices of 7.6 percent in 2017, changes in federal tax laws, and popularity of home-sharing services such as Airbnb as factors contributing to this growing gap. “The demand for luxury and seasonal housing has driven housing costs beyond the reach of most moderate income and working class local residents,” stated Thiele.
“We are losing the most precious resource that makes our communities special. Many residents, including young families who are educated in our local schools, are leaving the area for places with more affordable housing costs,” said Thiele. Rather than build more homes to increase affordability and accessibility (which may not be the most viable option given “environmental constraints” on the East End), Thiele sees a solution with the revolving fund – a “tool” that will help middle class and working class residents of the East End.
Increasing housing costs have impacted business and volunteer organizations as well. “Local employers are having difficulty hiring and retaining employees. Local volunteer emergency services agencies are experiencing difficulty in recruitment and retention of volunteers. Schools are experiencing declining enrollments.” explained Thiele. Additionally, with a recent change in federal tax law, deductions are now capped at $10,000 for state and local taxes, which will make the purchasing of a home more difficult for first-time buyers.
The legislation stipulates that a loan be re-payed if the home is put up for sale. Payments will be received by the loan fund and used to assist other homebuyers. The town can also use the fund to provide counseling to first-time buyers. If a town decides to establish a revolving loan fund, there would be a mandatory referendum before the town can pass a local law authorizing the fund.
As this legislation is only in its early stages, Thiele hopes to receive feedback from the community that will inform the finalizing of this bill. “It is my intent to meet with the Towns and all stakeholders in the coming weeks and months to gain as much public input as possible. I will incorporate that input into final legislation before any action is taken in Albany.”
The next steps in this process include introducing the bill to the State Assembly, meeting with towns and stakeholders, reviewing the language used in the bill, legislative action, and a referendum.