State Audit finds Problems at Tuckahoe

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Seven years after Southampton Town created what was hailed at the time as an innovative farmland preservation program, a farmer stepped forward this week to take advantage of the program, the fourth to do so.?Larry Halsey, 65, has been farming his family’s 22-acre plot of land on Halsey Lane in Water Mill since he was 10 years old. He runs the Green Thumb organic farm stand on Montauk Highway, which shares a name with the farm that’s been in his family for more than 300 years, and also farms nearly 80 more surrounding acres.?Eighteen acres of the 22-acre plot—the street frontage that runs along Montauk Highway is excluded—are slated to be put into an agricultural planned development district, which will freeze rezoning of the property for 10 years as long as Mr. Halsey continues to farm the land. In return, he’ll receive 9.5 development credits, which he can sell to the town. The value of those credits will be appraised at fair market value at the time he chooses to sell, but today they go for about $1 million each. Once a right is sold, the property owner forever retires the right to develop one house lot. At the end of the ten years, Mr. Halsey will have the option to extend the agreement.?Mr. Halsey’s parents and three siblings are all co-owners of the property, and while they’re land rich, the legal expense of estate planning has eaten holes in their pockets.?”The appreciation has gone so high, and you’re working for a low salary as a farm wage. It’s hard to maintain any semblance of living,” said Mr. Halsey.?”It’s hard for non-farm families to equate,” he said of residents who might not understand that all a farmer’s wealth might lie in land he doesn’t want to sell. “You have appreciated real estate, but by the time you have lawyers set up shell corporations, it’s an expensive, entangled process.”?Mr. Halsey’s land is one of three properties in town slated to join four properties that have already been granted what planners call “Ag PDDs.” A 23-acre district on Fowler Street in Water Mill and a 12.5-acre district on David White’s Lane in North Sea are also up for town approval in the coming weeks.?At first blush, it might seem odd that so few farmers have taken advantage of the Ag PDD structure, which provides them with an unprecedented ability to cash in the value of their land without having to sell it outright and leave town.?The planning tool would not have been possible without the creation of the Community Preservation Fund, which provides the town with money to purchase land for open space preservation through a real estate transfer tax, and can be used to purchase development credits to accomplish the same thing.?Sagaponack farmers Lee and Cliff Foster were among the first to jump on the Ag PDD bandwagon. Their two plots of land, named One Potato and Two Potato, totaling 50 acres, were put into agricultural planned development districts in 2005, four years after the law was enacted.?Lee Foster says that leaving town was exactly what many farmers planned to do when they heard their land might be upzoned before the preservation method was enacted.?”There wasn’t a public hearing where that room was not jammed,” she said of the 18-month period in which farmers and the town hashed out the Ag PDD law. Every night during that period Ms. Foster said she’d go to bed wondering if she’d need to sell the land her husband’s family had farmed for generations. “Christmas wasn’t a Christmas that year,” she said.?Since the Ag PDD and other farmland preservation measures were instituted in 2001, Ms. Foster said that most of the farmers who had considered leaving have decided to stay. That said, she can almost time the speed with which a subdivision is created after an aging farmer dies.?”There isn’t a real estate agent that isn’t interested in the older farmer,” she said. “It’s not subtle.”?What is subtle, though, is what good effect the town’s zoning measures have had. Mary Wilson, who heads the town’s Community Preservation Fund office, cautions that it’s still far too early to tell if the changes have had the desired effects.?Both Ms. Foster and Mr. Halsey had been stalled for a year by a change the town made to the way the contracts were written two years ago. “Anybody reading it would need a code book on one side of them and a lawyer on the other,” said Ms. Foster. “After one year’s discussion, it came back in its original form.”?At the time, Ms. Foster was planning to create a third Ag PDD called Three Potato on land her family owns on Montauk Highway in Sagaponack. During the time the contracts were rewritten, the Village of Sagaponack was created and now has its own zoning code. Ms. Foster, who serves on the Sagaponack Village Board, said that the village has still not decided how it will interact with the town to create new Ag PDDs.?That’s just another in the series of potential pitfalls that face the users of a nuanced planning tool.?”I find it a fairly complicated process,” said Mr. Halsey. “We worked on it all last winter. There was a change of administration. They kept changing the contracts. They get busy with the politics.”?Ms. Wilson, who is charged with purchasing development rights back from the farmers, estimates that fewer than a dozen properties left in the town can be made into Ag PDDs.?Those that have been preserved through the Ag PDD program—including Ms. Foster’s land, John L. Halsey’s Milk Pail farm in Water Mill, and Art and Stacey Ludlow’s property, also in Water Mill—already have a complex relationship with the town.?Between those four properties and the three currently scheduled to become Ag PDDs, the town might be required to make offers to buy as many as 70 development credits, at an average price of $1 million per credit.?So far, the town has purchased three development credits from One Potato for $2.2 million, and another credit from The Milk Pail.?”The town has no control over when farmers come in with their certificate and ask the town to buy credits,” said Ms. Wilson. “But the town is required to make an offer. We have nothing to assist us in budgeting. We ask the farm owners to tell us what their long-range planning is.”?As the overall real estate market slows, Ms. Wilson said that the CPF will need to be more conservative in its overall acquisition strategies, since the program’s funding depends on a real estate transfer tax. The program will still need to reserve money for farmers with Ag PDDs.?”So far, it’s working fine,” she said, adding that farm owners have given her plenty of advance notice when they plan to sell their credits.?Larry Halsey plans to save his credits to cash in to offset the estate tax if one of the six owners of his property passes away.?”They’re for down the road to save us,” he said. “We’re looking to lock it in with the town, for inheritance planning purposes.”

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