Southampton Inn $29M Expansion Adds Rooms, Worker Housing

The Suffolk County Industrial Development Agency approved $1.64 million in tax breaks for the Southampton Inn's $29 million expansion at 71 Hill Street, a project that will demolish two commercial structures to add 40 hotel rooms and convert a third building into eight workforce housing units.

The IDA board voted unanimously to approve the incentive package after concluding the project would generate a net public benefit of $2.5 million over 15 years. The workforce housing component — converting a 7,500-square-foot office building into eight apartments for hospitality and service workers — was central to that calculation.

Under the plan, the ownership group will raze a 10,000-square-foot commercial building and a decorative clock tower at 71 Hill Street, directly across from the inn's existing 90-room campus. In their place goes a new building with the additional rooms. The converted office building's eight units are intended for cooks, housekeeping workers, and front-desk staff who fill seasonal positions throughout the village but earn too little to rent there.

Studios in Southampton Village routinely list above $2,000 a month even in the off-season, and summer premiums push those figures far higher. For the seasonal workforce that arrives each May and immediately starts looking for a room, the gap between what the job pays and what a lease costs has been widening for more than a decade. Eight units will not close that gap, but they represent a concrete step rather than a planning document footnote.

The tax package breaks down across three categories: a $1.3 million sales tax exemption on construction materials and equipment, a $141,454 mortgage recording tax exemption, and a 15-year payment-in-lieu-of-taxes schedule that will save the ownership group $170,657 on property taxes during the agreement period. After 15 years, the property returns to full assessed valuation.

The IDA's review drew on a January 2026 market study by Camoin Associates, which analyzed room demand in the Southampton market and projected the economic footprint of the expanded property. The study supported the ownership group's argument that the project meets the IDA's net-benefit criteria for public subsidy.

Attorneys for the development group told the IDA board that finalizing construction drawings is the immediate priority, with a summer 2027 target for completion. Two full construction seasons remain before the expanded inn needs to be ready for guests to book the new rooms.

The Southampton Inn has operated year-round on Hill Street for decades. That year-round status carried weight in the IDA review: most East End hospitality businesses concentrate their revenue and employment in the summer months and reduce staff sharply after Labor Day. A year-round property generates more consistent employment and a steadier local tax base, both factors in the IDA's net-benefit calculation.

The approval arrives as Southampton Town pursues several large infrastructure investments simultaneously. The town board recently authorized the purchase of 35 wooded acres near the Jackson Avenue complex in Hampton Bays for a planned sewage treatment facility that would eventually serve the Hampton Bays business district with a sewer system. Officials also held a groundbreaking for the long-delayed Westhampton Community Center on Mill Road, a project that spent years in planning before construction began.

Whether other East End developers incorporate workforce housing into future IDA applications — calculating that the component gets them to a favorable vote — will play out over the next few project cycles. For now, the unanimous vote moves the Southampton Inn expansion to the permitting phase and eight more affordable units closer to reality on a stretch of Long Island where they are needed most.