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Talking Real Estate With Southold Town Supervisor Scott Russell

Originally Posted: June 19, 2012

John A. Viteritti

In the heart of Southold Town sits Town Hall, home to the office of Supervisor Scott Russell. (Photo: Nicole B. Brewer)

Southold Town Supervisor Scott Russell was looking forward to a busy summer when we sat down in his office at Town Hall to discuss the state of real estate in the town and many hot-button items effecting the East End.

JAV: Scott, it is generally agreed that there is a need for affordable housing for seniors, young families, what is generally referred to as "work-force" housing, while at the same time addressing the need for conservation, preservation, environmental considerations in a time of economic hardship and demands for austerity in government spending. How do you view these often competing needs?

SR: You're right. It's almost an irony that we are a Town that is very assertive in its preservation goals but at the same time laments the fact we don't have affordable housing opportunity. Can we have both? I think historically we have proven you can. Site selection is important. We created a "stake holders" group to identify areas in each of the Town's hamlets to identify where we would want to see affordable housing that would be close to the infrastructures, such as schools, restaurants, shops. How do we create affordable housing? You combine federal, state and county grants necessary to offset the land acquisition and construction costs with density incentives that make it marketable and affordable for developers to build affordable housing.

JAV: Please define "density incentives."

SR: Typically residential zoning in Southold would be governed by one or two acre parcels. However, we have affordable housing "overlay" districts which allows up to four units per acre as opposed to one or two units per acre with apartments as part of the mix which may result in up to six units per acre. We can't support infrastructure density beyond that because we do not have public sewers. Greenport Village does have a sewer system that was built under FDR which does permit greater density in and around the Village. We don't even have sub-regional sewer systems in any of the downtown areas.

JAV: So then the greater density provides economic incentives to a developer which results in the creation of more units of housing at affordable prices?

SR: That's right! Now it has become more difficult for developers to come in with development proposals because of the banks' reluctance to lend money, even to some of the most established contractors and developers we have done business with for years.

JAV: Based on the demographics of the Town, which groups are in greatest need of affordable housing? Is it seniors, workforce, families, ownership, rental?

SR: The road to home ownership is always a laudable goal, but in reality, I don't think it's a road, it's a ladder. I think if the Town spent more time creating rungs in that ladder people could climb into home ownership through more affordable opportunities for decent rentals so they could develop equity on their own. The rentals in this Town are outside the realm of what you would consider the norm for the market. Many young people on the affordable housing registry are either recently employed. Their incomes are going to go up, they may get married, become a two-income household they may be in a position to buy a home. Since we currently do not have an opportunity to put them in housing to own, put them in rental housing that is safe and affordable, so that when the opportunity presents itself, they can buy regular housing just like generations before have done who have worked hard and bought housing. We are also looking for housing foe seniors who are looking to scale down who don't want the burdens of carrying these single family dwellings anymore. They want to be in a smaller unit with a common area. They want to be able to lock the door and go to Florida, or visit friends and relatives without worrying about the lawn, the oil burner, the hot water heater. We're losing these people in droves. They want to sell their houses, keep some of the equity, and move into housing that is more affordable for them. We can't provide those opportunities for them.

Southold Town Supervisor Scott Russell. (Courtesy Photo)

JAV: In the not too distant past, the Reverse Mortgage was a vehicle that allowed seniors to tap into the equity in their homes without having to sell. Due mainly to the decrease in values, this has become less of an alternative. Are these some of the candidates for affordable rentals?

SR: We did a survey several years ago and found that most of these people wanted some form of ownership but on a smaller scale or affordable rentals. The problem today for seniors is that they can't find qualified buyers for their properties in this market. The banks aren't there to lend the money.

JAV: What do you think the room distribution would have to be to accommodate families?

SR: We have a lot of young, single people on the affordable housing list. The one and two bedroom units, possibly three would be more than sufficient. For families probably the two and three bedroom units would be sufficient.

JAV: Would you favor mixed use properties to accommodate senior, singles and families?

SR: Yes. Why not? Many of our communities reflect that kind of housing mix. It is true though that that type of mixed use may not address the specific needs of seniors.

JAV: If you use the limited resources to accommodate the needs of seniors, many of whom may not be year round residents doesn't that take away resources to meet the needs of the other groups we identified?

SR: You have to consider that the seasonal owners are paying full taxes and using the Town's services perhaps three or four months out of the year. Also seniors don't typically put children into the schools, although school enrollment does reflect that we are losing young families to greener pastures.

JAV: An argument posed against the need for affordable housing is the decline in school population, but the converse argument is the decline in the school population reflects the lack of affordable housing?

SR: Yes, that is certainly a factor, but so is the lack of meaningful employment; skilled jobs that may last thirty or forty years. We're trying to focus on that as well. The primary employer in the Town of Southold is the government. Twenty-five percent of our employment is in government related jobs, whether the government is the Town, the County, the State, the schools, police, fire, it's still the government. We're also trying to focus on the amenities in addition to our fine schools that will make Southold attractive to young families.

JAV: I know that you have been involved with the future of the Capital One building in Mattituck. Would you speak to that?

SR: Yes. One of my biggest fears is that we are going to have a very nice, but very empty building if we don't do something about it in the near future. We're losing the jobs and the taxes they paid. We need to focus on what we can get there. We're not likely to attract a single major company. We would have to attract multi-tenants to the building each who employ forty or fifty of our residents.

JAV: How would you define workforce housing?

SR: It is for the young and middle workers. Sea Tow and Peconic Landing are examples of good employers. The hospital [Eastern Long Island Hospital] is our single largest employer.

JAV: Must you be a resident of the Town to qualify for affordable housing?

SR: Yes. We may have to revisit that, because there are people who may want to live in the Town but can't find affordable housing. Perhaps that would be an issue that the Town's Housing Advisory Commission could consider. But it would seem to me that priority should be given to those who live and work in the Town.

JAV: I would conjecture that the rehabilitation of existing housing has the advantage of increasing the value not only of the house being rehabilitated but also those in the surrounding area. Please address that point.

SR: The good thing about focusing on the existing inventory is that it's consistent with the goals of preservation, retaining the existing character of the community. It also increases the assessed value of the existing housing adding to the tax base. We created legislation that makes it easier for an owner to have an accessory apartment which both increases the value of the existing structure and provides affordable housing. Hopefully, that will provide opportunities for young people not yet in a position to buy.

JAV: What are the requirements, (other than health and safety issues addressed by the requirement for a Certificate of Occupancy), for accessory apartments?

SR: The only requirement for an accessory apartment within the existing structure is owner occupancy. We do not permit absentee landlords. We consider that harmful to the community. The pride of ownership and responsibility is still there when the owner is one of the occupants of one of the units. Those units may be offered on the private market. Each year we require that the owner certify that they are the occupant of one of the units. The legislation also allows for a separate dwelling (unit) over a barn or garage for example. That wasn't always the case. Only one dwelling unit was allowed regardless of the size of the property. In the case of these units, they must be occupied by either someone on the affordable housing registry or someone who would qualify to be on the affordable housing registry.

Preservation, conservation, and housing needs must be balanced. (Photo: Nicole B. Brewer)

JAV: Do these additional units require any zoning changes-variances, special use permits, for instance?

SR: If you create an accessory apartment within your existing home there is no need for additional review beyond a building permit. If you create one in a separate structure, such as over a garage, then you do need Zoning Board Authority relief. The Suffolk County Department of Health considers accessory apartments permissible as long as the existing septic system is sufficient to handle the additional wastes. The homeowner must still comply with all the requirements for obtaining a building permit.

JAV: Is reducing the required square footage required by zoning a possibility, in effect making non-conforming structures conforming?

SR: Certainly that's worth looking at. The current zoning requires 850 foot square foot minimum. It would be possible in looking at new projects that might permit four, five, or six units. It also balances the housing needs with preservation by focusing the housing needs on less land. And yes, it also results in greater density. The national trend towards "smaller homes" considering the need for affordable housing and land preservation does have merit.

JAV: Are the number of "short sales" and foreclosures an opportunity for the Town to purchase properties and sell them at affordable prices?

SR: Southold has not been as adversely affected by the market downturn as have some other areas. We have found that the prices of these homes would still be beyond what would in fact be considered affordable.

JAV: How has the downturn in the market affected the Community Preservation Fund?

SR: The fund is doing reasonably well. Our receipts for 2011 are about half of what they were a few years ago. The higher end of the market which consists of a lot of cash deals is still doing reasonably well. The drastic drop has been in the Town's share of the mortgage taxes. Banks aren't lending, and when people don't get mortgages the Town doesn't collect mortgage taxes. Before I took office mortgage receipts totaled $6 million to $7 million a year. This year in a $40 million budget we budgeted $1.2 million dollars for mortgage receipts.

JAV: Is the Town in competition with the Peconic Land Trust with respect to land preservation?

SR: No we work well with the Peconic Land Trust and the Nature Conservancy. The Town has been able to preserve more acreage than both of those groups simply because we have more assets. We have "open space" bonds that they don't have. They expertise is bringing owners who want to preserve through conservation easements and other methods to the Town to negotiate the arrangements.

JAV: What is the status of the purchase of development rights by the Town?

SR: That program is alive and well. We have the opportunity to raise money from the sale of bonds authorized by the voters by a three to one margin, and therefore we're not complexly dependant upon the Community Preservation funds.

JAV: We can't talk about the development of housing without addressing the issue of sanitary systems. What are your thoughts on the subject?

SR: A lot of what we can and can't do is dictated by the Suffolk County Department of Health. There are systems coming down the pike that would address this problem by they are initially very expensive and would add to the overall development costs which might defeat the goal of creating affordable housing. So we're still depending upon the Department of Health to approve our applications for central septic systems for our six unit developments.

JAV: Is there a possibility for government grants?

SR: We hope that the federal and state governments will make grants available to offset the initial costs to in order to develop affordable housing. A cost of seven times as much to install these new technology septic systems won't work for the developer. When in time, these systems are more widely used the costs will come down, just as we've seen with our LED lighting. The Town does have its own sanitary bank. When we preserve 40 acres in perpetuity, we place the savings that result form the preservation into a sanitary flow bank so that developers can create greater density by purchasing sanitary flow credits.

JAV: Would the Town consider a waiver of the Community Preservation Tax for first time buyers?

SR: We had that opportunity and we didn't address the issue. It has since been brought to the attention of the Town Board and to do so now, we would have to go back to the State Legislature and then put it to a referendum. But as a means of creating an opportunity for first time home buyers, I think it is worth looking at. [Assemblyman] Fred Thiele had wanted to set aside an additional 2% for affordable housing but that never came to fruition.

JAV: Advocates of affordable housing and economic development in down town areas point to the example of Patchogue in the "Four Corners" area. How do you view that?

RS: Yes. I assisted in the drafting of legislation that would enable that kind of development. It puts the housing where the transportation and amenities are located and the diversity of your tenants, commercial and residential, makes for a better rent roll. The vacancy collection losses of commercial tenants tend to be higher than residential. So a developer who anticipates a vacancy collection loss of 10% to 15% on commercial space is willing to invest because they know they can put two or three residential units on the second floor with a vacancy collection loss of 2, 3, or 5% offsetting the commercial losses. It diversifies the risk.

JAV: How do you respond to the claim that preservation, which drives up the prices of unpreserved land, is inconsistent with the development of affordable housing?

SR: Yes, it's true that the forces of supply and demand affect prices, but it's not either or. You can offset that factor by permitting grater density. You have to keep working away at both. I believe that the market will start to turn around, banks will start to lend, and builders will want to build, and I want to be here when that happens. Housing isn't going out of business.


John is a St. John's University graduate, licensed Real Estate broker, DOS Certified Instructor, lecturer, teaches real estate license classes at Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. He previously taught at LIU and NYU. www.johnaviteritti.com




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