Eye Longer Leases at Lazy
Residents of Lazy Point in Amagansett, who own their houses but rent the underlying land from the East Hampton Town Trustees, may soon see a dramatic change to the tenant-landlord agreement.
As they had suggested last spring, the trustees, at their meeting on Monday, discussed extending leases of the modest lots from the present one-year term to 35 years.
Rent at Lazy Point is an anomaly on the South Fork, home to some of the most expensive real estate in the country. Even when the trustees raised the annual rent by 50 percent in 2013, the new figure was just $1,500, a trifle compared to anywhere else in the area.
By 2015, though, the trustees were intent on at least a closer alignment of the rent for their small lots with what they considered market value. During negotiations that lasted nearly a year, tenants beat back a proposed fourfold increase, to $6,000, arguing that while their rent was modest in comparison to elsewhere on the South Fork, the fact that they did not own the land precluded their obtaining mortgages. Their pastoral neighborhood on Gardiner’s Bay also endures harsh winter weather and an uncertain future at an eroding shoreline, they said.
The trustees abandoned the fourfold increase in favor of a 10-percent rise along with a 4-percent transfer fee when a house is sold.
Negotiations over the last five years produced calls to modify lease terms in a way that would allow tenants to obtain mortgages, and last year the trustees, who derive approximately half their annual revenue from the leases and transfer fees on house sales, took up the call themselves.
Jim Grimes, now a deputy clerk of the trustees, said in May that only those with cash to put down or another asset to leverage could buy a house at Lazy Point. “It completely locks out the local person, or even a family member here,” he said at the time, while renovations and upgrades were impossible unless one could pay out of pocket.
By extending leases to 35 years, Mr. Grimes said on Monday, homeowners would be afforded an opportunity to finance improvements and satisfy some owners’ intentions to keep properties in their families, while assuring the trustees a revenue stream for years to come.
The trustees wondered aloud about unintended consequences, such as a building boom. “If they start getting mortgages, are banks going to require them to come into FEMA compliance?” Francis Bock, the clerk of the trustees, asked, referring to the Federal Emergency Management Agency’s floodplain management regulations, which can require houses to be elevated. “If so, we have to realize houses are going to start getting raised on pilings.”
But Mr. Grimes emphasized the potential to spur a large-scale replacement of aging septic systems with low-nitrogen systems, which a substantial renovation or demolition and reconstruction would also trigger. “We want to give the property owner the incentive and ability to do it,” he said. “This 35-year lease, I thought, would allow it.”
The trustees “have to consider the possibility there could be a lot of development,” said John Aldred. But the lots are so small, said Susan Vorpahl, and Mr. Aldred agreed that, given the constraints imposed by modest lots, demolitions and reconstructions were unlikely to change a house’s footprint.
A “crude draft” of a new lease has been drawn, said Christopher Carillo, the trustees’ attorney. “It’s a work in progress.” Once finalized, the trustees will issue a public notice so all residents of the town can comment.