Issue #47, March 2, 2007

A VIEW OVER THE FARM TO THE OCEAN FOREVER

by David Stoll

A variation on a deal reached in 2005 closed on February 15, resulting in the preservation of 24 acres of oceanfront farmland in Sagaponack Village. That parcel is part of 57 acres of land owned by John C. White and his family. White’s ancestors acquired the property more than 300 years ago. Under the deal, the Town of Southampton bought the development rights for the 24 acres for $14 million, but left title to the land with the White family.

Today, the land is rented out to farmers, and five cottages near the dunes are rented out to lucky summer visitors. Because the Town now owns the development rights, the cottages cannot be replaced with McMansions and the farmland cannot be turned into condos. There is no reason to assume that the Whites would have done any of this, but by selling the development rights to the Town, they have ensured that the land will be preserved as it is for future generations.

Under the original deal, back in 2005, the Town was going to buy the development rights with the help of the Peconic Land Trust, because the purchase price would require the Town to draw too much money from the Community Preservation Fund (CPV) at one time. The CPV was established to provide a pool of money for the East End towns to use for land preservation. It is funded with taxes assessed on most real estate sales. Although the CPV is flush, thanks to the real estate boom of the last few years, $14 million for a single transaction is a lot of money.

Thanks to a recent State law, however, the Town was able to borrow a portion of the purchase price, obviating the need for participation by the Peconic Land Trust. The Town used CPV funds for a $3.5 million payment at the closing, and issued a note to pay the remainder in three installments over the few years. As an incentive to landowners to permit the Town to proceed in this way, the law provides tax advantages to a seller who agrees to be paid by a town in installments. The Whites are the first Southampton Township owners to avail themselves of this law.

The White family has already sold the development rights to other parts of their property to the Town, and yet another sale is in the works, this time with the participation of the Peconic Land Trust. John White began this process of arranging for the disposition of the family farmland back in the 1980s as part of his estate planning. By selling the development rights and retaining the land, he preserves the current use and enjoyment of the property for future generations of Whites, while also ensuring that the special character of Sagaponack is not destroyed through overdevelopment.

Even so, White did want to ensure that there was also sufficient cash for his heirs, so he planned to sell three oceanfront parcels to a private citizen. The concern about cash may seem odd today, given that the Town just paid $14 million for merely the development rights to 24 acres. (If sold completely, the parcel could be worth more than $30 million.) However, back in the 1980s, prices were much lower. In fact, White had agreed to sell 9.6 oceanfront acres for just $2.1 million.

That sale still has not been closed. Over the many years it took to subdivide the land (a condition of the sale), prices skyrocketed, and White wanted out of the deal. As reported here last year, the intended buyer, Texan Anthony Perello, sued to enforce the deal, and White counter-sued to get out of it. Eventually a Federal judge ruled that the deal must go forward. White claims that his Trusts & Estates lawyer, who represented Perello in the real estate transaction, should have protected White. White appeal the ruling and the he case is still pending.

Even if the Perello matter ends with enforcement of the sale and subsequent construction of three enormous side-by-side mansions, a majority of the White farmland is already protected or soon will be. This is good news for all who appreciate the Hamptons not only for the beaches and soirees, but also for the diversity in types of land, including the ever-dwindling farms.