The Hamptons consistently commands some of the highest real estate prices in the U.S. year after year. Beautiful beaches and flat farmland define its landscape. Quaint main streets are at once charming and chic. For its merits, the area has attracted artists, writers and the well-to-do set for more than a century. But as the Hamptons started gaining recognition and popularity, the potato farms were quickly replaced by housing developments. Recognizing that overdevelopment of the East End would threaten the area’s agricultural heritage and natural beauty, a small group came together to start The Peconic Bay Region Community Preservation Fund (CPF) to protect the farmland, open space, and character of these East End communities.
The Community Preservation Fund
Celebrating its 20th anniversary this year, the CPF has raised $1.2 billion and has protected 10,000 acres on Long Island’s East End. Established in 1998, CPF is financed by a 2% transfer tax on all real estate transactions. The tax was approved by voters in Long Island’s five East End Towns: East Hampton, Riverhead, Shelter Island, Southampton, and Southold.
“The 2% Community Preservation tax offered an opportunity to…preserve the landscape and the character of the community.”
—Paul Brennan, founding member of the CPF
As a founding member of the CPF, Douglas Elliman agent and lifetime Hamptons resident Paul Brennan, reflects on the early days. “At that time farms were fast disappearing. We were trying to figure out a way to preserve them, but there was no monetary stream that could keep up fast enough with the development. The 2% Community Preservation tax offered an opportunity to get a revenue stream that would make sense. It would preserve the landscape and the character of the community, which is what we all loved and what people were coming out here for in the first place. The more we could preserve that, the better off we were going to be.”
The Real Estate Connection
The money buyers pay in Community Preservation tax goes directly to the Town in which the property purchased is located. The Town uses the funds to protect open space, farmland, and historic structures. Though it may seem counterintuitive, the real estate market in the Hamptons continues to thrive while keeping development in check. “Real estate values rise because there’s not as much product,” Brennan explains. He believes that his clients’ property values benefit from the East End maintaining the bucolic feel that has always attracted buyers.
In addition, when the real estate market does well, so does the Community Preservation Fund. If property values are going up, then the Community Preservation tax collected on those sales is higher. But success is measured in more than dollars—for CPF, it’s about the 10,000 acres of land that have been protected.
With 30 more years until the tax expires, the Community Preservation Fund is setting their sights on water quality. Earlier this year, voters approved a $362 million bond that will be used to update 6,350 cesspools and septic systems with sewer connections which will significantly reduce harmful nitrogen pollution in the Great South Bay.
It’s clear that voters are behind the CPF. Brennan’s explanation for the community support is that “[the CPF] is the one tool that communities under threat of unbridled development can use to preserve a semblance of the rural character that is nature’s gift to be enjoyed by all.”