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Aug 7, 2012 3:59 PMPublication: The East Hampton Press & The Southampton Press

Sag Harbor To Get Less Than Expected Revenue From Condos

Aug 13, 2012 10:38 AM

The redevelopment of the former Bulova Watchcase Factory into dozens of luxury condominiums in the heart of Sag Harbor Village will not pump quite the tax revenue into the village coffers as some officials had hoped—though exact figures are still not available.

“The long and short of it is that condos are treated differently from residential housing, so we will not be getting some big windfall from taxes,” Mayor Brian Gilbride said during a recent telephone interview. “It’s a little disappointing to us, but I guess it is what it is. It’s not going to be a big influx of money.”

Questions over the impact the still-under-construction 64 condos would have on village finances led the mayor to invite former Southampton Town Tax Assessor Ed Deyermond to give a brief presentation on the issue to the Village Board at a special meeting on July 26.

“I was just able to tell them that condominiums have special state legislation—very favorable legislation, I might add—going back to the 1970s that mandates that a condominium, although it’s typically a residential project, must be assessed on an income [rental potential] basis, not market value,” Mr. Deyermond explained. “When you use that approach, you find that a condo is assessed at about 35 percent of its actual sale price.”

As a result, the condos at Bulova, as well as others in the village, such as an also-incomplete condominium construction project on West Water Street, would be affected.

“With the condos going up at Bulova and 21 West Water Street, there was an idea that this might be an influx of taxes,” Mr. Gilbride said.

Mr. Deyermond said the New York Conference of Mayors and the Association of Towns of the State of New York have pushed for the relevant section of the state real estate property law to be amended or eliminated as an issue of fairness, but the powerful New York City real estate lobby remains strongly opposed to such a change, arguing it would negatively affect its members.

But the exact impact of Bulova is yet to be determined, Mr. Deyermond pointed out. “It’s too early. We don’t know what these units will rent for,” he said. “That’s the big question mark.”

Prices have not yet been released, but ballpark estimates have placed the lowest-priced condos at roughly $1 million, and should the entire complex sell, it could mean $100 million or more in revenue. A residential property worth $100 million would bring in approximately $500,000 a year in tax revenue for the school district and $150,000 or more for the village—but the condos are expected to be assessed at a much lower rate than free-standing residential homes.

“This thing is probably not going to be clarified until sometime around 2015, maybe even into ’16—a scary thought.” Mr. Deyermond said.

A 2-percent contribution for the condo sales would still go toward the Community Preservation Fund, he said.

Regardless of whether the units are owner occupied or rented out, they are taxed according to what their rental potential would be.

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Is 2% of every condo sale going to the CPF as if it were a residential sale ?
By SagHarborBob (91), Life is Good on Aug 8, 12 6:56 AM
Yes, Bob, according to village officials, 2 percent of every sale will still go to the CPF. Thanks for the question, it was a good one.
By Bill Sutton, Managing Editor (117), Westhampton Beach on Aug 9, 12 9:13 AM
Still and all it is better to see the building renovated and being used than boarded up. Sag Harbor is looking better all the time.
By summertime (589), summerfield fl on Aug 8, 12 9:53 AM
the powers inside and outside the village that sought to keep out affordable housing on the complex site had the hidden agenda of property values--now they will have a fraction of the money in tax revenue and investors will have all of the sale and resale price.
it will be ironic that the factory town that gave jobs to hundreds of working class people will have a factory building laced with tax loopholes to keep it affordable for people who do not need the money.
By disinterested observer (4), Southampton on Aug 25, 12 3:50 PM