East End loses land preservation $
Real estate slump causes tax take to plummet
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With fewer real estate deals going to closing, East End towns have lost millions of dollars for farmland and open space preservation.
The drop in Community Preservation Fund revenue comes as no surprise, given that the program is financed by a special 2 percent tax paid by the buyer on most land transfers. As is the case across the country, the real estate market here continues to be depressed.
In 2008, the five East End townships collectively took in over $56.3 million in CPF revenue. Through the end of this past November, the total had fallen to roughly $37.3 million. Southold's take in 2008 was $5.1 million and Riverhead collected $2.7 million. But in 11 months last year, Southold received $2.8 million and Riverhead's total fell to $1.7 million.
Revenues from the CPF program, which began in 1999, peaked in 2007, when the towns took in $95.6 million. The South Fork generated most of that, with Southampton taking in $53.3 million and East Hampton collecting just under $30 million.
Riverhead's high point came in 2006 when it got $6 million. 2005 was Southold's top year, with revenue of just under $7 million.
When the program was first considered, no one anticipated that it would generate over a half-billion dollars for open space protection.
Riverhead still has $19 million in CPF funds that hasn't been earmarked for any purchases, according to Supervisor Sean Walter, who defeated incumbent Phil Cardinale in November. But the town's current CPF revenues don't come close to covering the preservation program's $6 million yearly debt service, he added.
Riverhead's land preservation debt will be just over $99 million over a 20-year period, with $79 million in capital costs and $20 million in interest. In the past two years, the town has had to dip into its reserves to make debt payments because the CPF revenue stream alone didn't cover it.
"We're not broke," said the supervisor, "but if the real estate market doesn't recover and we don't take in additional money, the short answer is yes, we could be out of the preservation business."
Riverhead set aside $5 million for farm development rights purchases this year, Mr. Walter said, "but the board is going to have to look at that very carefully."
Southold also decided to borrow against future 2 percent tax income, but set a limit of $2.5 million annually for 10 years. "We estimated that, even in dire times, we'd get at least that amount a year," said Supervisor Scott Russell.
Southold has been able to protect land at "remarkable prices" and there are lots of property owners interested in the program, he added.
Southold has four farm preservation projects in the works, another five in various stages of review and two full-title land buys under consideration, according to town land preservation coordinator Melissa Spiro.
"Do we have the gobs of money we used to have years ago? No, but we're far from shut down," she said.
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