Southold Town is moving closer to launching a down-payment assistance program for first-time homebuyers, with officials Tuesday settling on several key provisions including a $999,999 maximum purchase price, limits on applicants’ liquid assets and a loan-forgiveness incentive for volunteer first responders.

Meanwhile, the town has scheduled a public informational session on its broader community-housing effort at 6 p.m. Sept. 29 at Town Hall. Officials are expected to explain proposed housing-code changes and provide updates on the programs under development. Residents will also be able to ask questions and offer feedback.

At Tuesday morning’s work session, Community Housing Project Supervisor Andrea Sullivan told the Town Board the proposed purchase-price cap would better align the program with the income limits already established under state law.

“The maximum purchase price limits don’t really align with what the income limits also established by New York State town law that those individuals could actually afford,” Sullivan said.

The proposed $999,999 ceiling also keeps purchases below New York’s mansion-tax threshold. Councilwoman Alexa Suess said the lower cap should address concerns raised when substantially higher theoretical purchase-price limits were discussed earlier.

Under the program being developed, the town would provide assistance equal to 18% of the purchase price, allowing a buyer who contributes another 2% to make a 20% down payment.

Recipients would still have to qualify independently for a mortgage, with lenders determining whether applicants have sufficient income and credit to carry the loan.

“They would have to qualify for a mortgage, and so a third party would assess their information,” Sullivan said.

The town is also considering limiting applicants’ liquid assets to no more than 25% of the home’s purchase price.

Sullivan said those assets would include cash, checking and savings accounts, certificates of deposit, money market accounts, stocks and other holdings that can readily be converted to cash. Board members said retirement accounts may need to be treated differently, and the precise definition remains under review.

One of the most significant additions would allow volunteer first responders to earn forgiveness of the town’s down-payment assistance loan over 10 years of service.

Sullivan offered the example of a household receiving $150,000 in assistance. The loan would be forgiven in monthly increments over 120 months, or 10 years, provided the recipient continued qualifying volunteer service.

Someone who completed only five years of qualifying service would have half the loan forgiven and remain responsible for the balance.

Existing active first responders would also be eligible. Their prior years of service would not count toward forgiveness, but their continued service after closing would begin the 10-year clock.

Sullivan said the town could use compliance with the Length of Service Award Program, or LOSAP, to verify service rather than requiring monthly monitoring. After 10 years, a participant seeking full forgiveness could provide documentation showing that the service requirement had been met.

The down-payment program is expected to be the first of several initiatives financed through Southold’s Community Housing Fund.

Sullivan said the program currently represents about 22% of the envisioned housing-fund allocation. Other planned uses include subsidies for affordable-housing developers and loans for construction of accessory dwelling units.

Supervisor Al Krupski cautioned against locking too much money into rigid categories, saying the town should retain flexibility to fund viable affordable-housing opportunities as they arise.

“I don’t want to miss … one opportunity of some sort of affordable housing just because we set aside money for some other part of the program that might not happen in five years,” the supervisor said.

Sullivan said the Town Board could later adjust funding among programs depending on demand and how each initiative performs.

The proposal is not yet final. Sullivan said she will revise the program guidelines to incorporate the changes discussed Tuesday and review them again before presenting an implementation plan outlining how town departments would administer the program.

Short-term rental limits

Southold Town officials are also aiming to move a proposed overhaul of the town’s short-term rental regulations toward a public hearing, but the Town Board still needs to settle one of the proposal’s central questions: how many short-term rentals should be allowed.

Krupski said Tuesday that he wants the board to agree on a percentage before setting the public hearing.

“I would like to have a number [and] set the public hearing at the next meeting for the short term,” the supervisor said. “We need a percentage.”

Town Attorney Ben Johnson said the board must also decide when the new regulations would take effect if adopted.

Board members also discussed the administrative cost of running the program, including staffing and benefits.

Krupski said many of those costs would be relatively fixed regardless of the precise percentage of homes ultimately permitted as short-term rentals, because the town will have to commit staff to administer the program.

“We need to get through this because it’s going to take a lot of staff time to set the program up. This isn’t like we pass it … and then move on. We’re going to pass it and then work on it.”

Public comment time limits?

Town officials are also considering a more formal time limit for residents speaking during Town Board meetings, saying lengthy and repetitive comments can make it harder for others to participate.

Krupski said Tuesday that he has seen residents leave meetings before getting a chance to speak because earlier speakers went on at length.

“We have people speaking for so long, we get so much repetition in their speeches that it discourages people to come. People who are there to speak, they get up and go home.”

Councilman Brian Mealy pointed to Eastern Suffolk BOCES, where speakers fill out participation cards and are told in advance how long they may speak. After everyone has had one opportunity, speakers can request another turn.

Mealy said such a system can help ensure “everybody can have a chance to speak.”

The discussion centered largely on a possible three-minute limit. Councilwoman Alexa Suess suggested the town could adopt a more flexible protocol rather than rigidly running a timer every time someone speaks, particularly at lightly attended meetings.

Greenport Village Trustee Marybess Phillips, who was at the work session for a different issue and joined the discussion, said strict limits can sometimes frustrate residents who feel they are not being heard, but she agreed that boards also have to make room for competing viewpoints.

Councilwoman Kate Stevens said she would support at least testing a time limit. She said limits can actually broaden participation by forcing speakers to focus their remarks while preventing a handful of people from consuming most of the available time.

“I found that it actually increased the voices because there was more time for more people to talk,” Stevens said.

The board did not adopt a new policy Tuesday and indicated it first wants clarification of Southold’s existing rules.