Red Hook real estate tax beats projection - Money going to open space protection

RED HOOK - Nearly a year since it took effect, a controversial real estate tax is beginning to pay dividends in the Town of Red Hook.

The town's real estate transfer tax, which has been in effect since August, has raised a little more than $239,000, according to Dutchess County Clerk Brad Kendall.

The tax, which passed a public referendum by a mere 31 votes in May 2007, is a one-time 2 percent fee applied to the difference between the sale price and the county median. For example, if the median county price was $380,000 and a home was purchased for $400,000, the transfer fee would be applied to the $20,000 difference, for a fee of $400.

The median home price for Red Hook - $324,700 - is established every July by the state Office of Real Property Services, Kendall said.

Tax revenue only can be used to fund initiatives aimed at preserving open space, farmland and historic structures.

Robert McKeon, who heads of the town's agriculture and open space committee, helped craft the law. He said officials initially estimated the tax would bring $225,000 annually to the town.

Buyers stay interested

"The fact that these results are as high as they are confirms that this is not a deterrent for buyers who want to locate here because of the working farms and other open spaces," McKeon said. "As current residents become less able to contribute additional tax dollars, it is increasingly important that we have this revenue stream."

Last month, the Red Hook town board approved formation of a seven-member committee whose sole responsibility is to make recommendations to the town board about how to use the money.

Red Hook Supervisor Sue Crane said one possible use for the money would be to supplement the town's farmland protection bond.

In 2003, Red Hook residents approved a $3.5 million bond to purchase the development rights of critical farmland in the town. Crane said about $1.5 million of the bond remains and more than a dozen farmland preservation applications are under review.