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Jun 4, 2008 9:26 AMPublication: The Southampton Press

Albany tightening controls on Community Preservation Fund

Jun 4, 2008 9:26 AM

Albany is tightening the reins on how the five East End towns can disperse revenue collected by their Community Preservation Funds.

State Assemblyman Fred W. Thiele, Jr., one of the architects of the decade old fund, is set to introduce revisions to the CPF in the State Legislature on Thursday, June 5.

Mr. Thiele’s revisions center on fiscal controls and aim to ensure that the funds are being used for their intended purpose, mainly to purchase land for preservation, and not to subsidize other functions of government.

The CPF gets its revenue from a 2-percent tax on most real estate transactions. A common practice among the towns has been to borrow money against projected revenues in order to acquire land immediately. That money is then paid back when the funds roll into town coffers. But, with a softening real estate market there has been a growing concern that the cash cow that has been the CPF won’t be as plentiful as it’s been in the past.

To address that concern, Mr. Thiele is proposing that when towns purchase land with borrowed funds, they be required to pass resolutions stating that they have sufficient revenues to cover that debt.

Mr. Thiele’s revisions also address uses of CPF revenues for purposes other than land acquisition. As it stands now, the CPF law allows for up to 10 percent of the funds to be used for “stewardship and management” of properties purchased with CPF dollars. To narrow the scope of the provision, Mr. Thiele is calling for the towns to adopt a three-year “stewardship and management” plan for each purchase. That plan will set out a description and estimated cost of each project. Mr. Thiele’s revision states that no CPF revenue could be used for stewardship purposes unless the project is included in the adopted plan and has a useful life of at least five years under the local finance law.

According to Mr. Thiele, stewardship and management refers to projects that would protect open space, accessory uses that relate to the purpose of the property, and the restoration of land to its natural state, which could include the demolition of existing structures on acquired parcels.

Of initial concern to Southampton Town Supervisor Linda Kabot, was a prior suggestion by Mr. Thiele to disallow for CPF employees to be paid with preservation funds. Southampton Town’s CPF department has an annual budget of $500,000, according to Ms. Kabot, including salaries. Ms. Kabot argued that if the town could no longer tap into CPF revenues to fund the department, then the town would have to hit taxpayers to make up for the loss.

Mr. Thiele said he has no problem with employees being paid with CPF money, so long as those employees work exclusively on preservation. Mr. Thiele makes it clear in his revision that those employees who work only part-time on CPF matters charge only “actual costs,” which must be audited. To make clear that the CPF was not intended to fund the operational costs of government or to pay for anything that may be only remotely related to CPF purchases, the revision would prohibit “costs relating to elected officials” from being charged to the fund. East Hampton Town was criticized for paying the salary of former Councilman Job Potter from its CPF revenue.

To guarantee the integrity of the fund, Mr. Thiele is requiring that each town commission a yearly audit of their CPF, to be performed by an independent firm. The audit is to be started within 60 days of the close of the fiscal year and be completed within 120 days of the close of the fiscal year. Once the audit is submitted to the state comptroller it is to be made available to the public within 30 days of completion. The cost of the audit may be charged to the CPF.

“Overall we’re happy with these revisions,” Ms. Kabot said.

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