Call It What It Is

Southampton Village was originally settled in 1640 and incorporated as a village in 1894. Its bona fides as a historic place are strong, and there are notable pressures that threaten the village’s quaint roots, particularly when it comes to architecture and the design of its houses.

Southampton Village has four historic districts, including the Lewis Street Expansion Area, which was designated in 1993. One district is named the Beach Road Historic District. According to a State Parks’ Historic and Natural Districts inventory form: “These large, upper-income residences were originally built by some of America’s most prominent and wealthy families (including the Mellons, Duponts, and Ladds) as their summer retreats.”

While not every property in the village’s historic districts is owned by a multimillionaire or billionaire, many are. So Southampton Village Trustee Ed Simioni was right to question why a tax exemption was being offered to owners of historic properties: This is a tax break that will benefit the wealthiest property owners, almost by design. And there is a cost: “When one property is given a tax break, others must absorb the difference,” he pointed out.

Understand that the new tax exemption, which the Village Board adopted, 4-1, on February 25, is not just being given to everybody with a home in the historic districts. The exemption is only for future rehabilitation work done for the purpose of historic preservation. Rather than a property’s tax assessment going up immediately based on the improvements, the qualifying improvement would be fully exempted from an assessment increase for the first five years, and that exemption will then be reduced by 20 percent each year until it phases out. There is, in essence, a nine-year benefit for anyone who invests in work to preserve a historic house.

When one property owner is given a tax exemption, even a partial tax exemption, everyone else pays to make up the difference. That’s just how tax assessments and tax levies work. In this case, one property owner would dodge an increase in his or her tax bill for years, and other village property owners wouldn’t see their own shares lowered as a result. So, in essence, that burden is shifted from one person to many. This is a completely defensible strategy — as long as there is a justifiable benefit to the entire community.

Still, it was baffling to hear Mayor Bill Manger attempt to reframe the exemption as a “deferment.” A deferment would mean homeowners are being given additional time to pay their taxes, but what they would owe stays the same. This law actually reduces total taxes owed. It is a temporary exemption, but it is an exemption nonetheless.

The first clue that this is truly an exemption should have been the words “provide a tax exemption for historic properties” — right there in the title of the local law. The second clue should have been the dozen additional times the legislation includes the words “exempt” and “exemption.” This is a tax break, plain and simple. It’s simply inaccurate to insist on calling it a “deferment.”

At last week’s Board of Trustees meeting, Manger told Simioni to “go back to business school” — a sincerely unfortunate lapse of decorum, made all the more lamentable by the fact that it is Manger, in fact, who needs to brush up on the difference between “exemption” and “deferment,” and the impact exemptions have on the rest of the tax base.

Because the historic rehabilitation exemption only affects future home improvements, other residents will not see their share of the tax levy go up when a property owner receives the exemption. However, they also won’t see their share of the tax levy go down immediately — and that is at the heart of Simioni’s concerns. The difference in one’s tax bill may be imperceptible when looking at the exemptions one property at a time, but, cumulatively, these exemptions will add up.

The village has exemptions for senior citizens and people with disabilities, with income limits. It also has a partial exemption, which phases out over 10 years, for property alterations that align with the Americans With Disabilities Act. Other exemptions are for volunteer firefighters and ambulance personnel, and veterans.

There are a number of good reasons to offer property tax exemptions — and promoting historic rehabilitation is a good reason. Historic homes are a large part of the village’s charm, and their upkeep benefits all residents in terms of property values and quality of life.

Property owners in historic districts don’t have all of the same property rights as others do. They are restricted on what they are allowed to change; when they replace a roof or siding, they may have to pay exorbitantly more than other homeowners do. This exemption is a relief from the expenses they must incur. And as the village is in the process of exploring further historic district expansion, this could assuage some of the concerns of property owners who don’t want to be included.

But regardless of the merits of the new village law, arguments in favor of it should be accurate and respectful. When they aren’t, it’s fair to wonder whether other motivations are in play.