NY State Senate Bill 2023-S2316

Senate Bill S2316

2023-2024 Legislative Session

Relates to the certification of certain property complying with the residential-commercial urban exemption program

download bill text pdf

Current Bill Status - In Senate Committee Local Government Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to local government
Jan 19, 2023	referred to local government

2023-S2316 (ACTIVE) - Details

See Assembly Version of this Bill:: A120
Current Committee:: Senate Local Government
Law Section:: Real Property Tax Law
Laws Affected:: Amd §485-a, RPT L
Versions Introduced in 2021-2022 Legislative Session:: A9426

2023-S2316 (ACTIVE) - Summary

Relates to the certification of certain property complying with the residential-commercial urban exemption program and the revocation of benefits of such program in certain circumstances.

2023-S2316 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S2316

SPONSOR: RYAN
 
TITLE OF BILL:

An act to amend the real property tax law, in relation to the certif-
ication of certain property complying with the residential-commercial
urban exemption program and the revocation of benefits of such program
in certain circumstances

 
PURPOSE OR GENERAL IDEA OF BILL:

Repeal changes made to Chapter 357 of 2020 by Chapter 132 of 2021.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill would repeal changes made to Chapter 357 of 2020
by Chapter 132 of 2021. Chapter 132 of 2021 included the following
changes to the original bill that would be repealed:

*expand the definition of "commercial purpose or use" to also include
non-residential lawful uses that do not involve the sale of goods or

services directly to the public but have at least 5 employees;

*provide that "mixed-use property" is a property with at least 40%
devoted to residential purposes;

*permit below-grade square footage can be used in the determination of
whether the property constitutes "mixed-use property";

*remove provisions that prevent vacant lands from being eligible for the
exemption;

*remove provisions that require at least 75% of the mixed-use property
to consist of a preexisting structure or building;

*require recipients to include in the annual certification the total
below-grade square footage of residential use and commercial use, as
well as the specific address of the building entrance open to the
public, and if the building is not in active use for a commercial
purpose, an explanation why;

*expand the grounds for revocation to include if the property has not
been in active use for commercial purposes and open to the public for
three consecutive years;

*ensure that the benefit will only be revoked for the years that the
property was in violation of the requirements of the statute; and

*provide that benefits may not be revoked unless recipients are given 30
days' notice of the revocation and reasonable notice to cure any failure
to comply with the requirements of the statute.

Section 2: Establishes the effective date.

 
JUSTIFICATION:

The "485-A" program provides tax exemptions for twelve years following
the conversion of nonresidential real property into mixed-use (i.e.,
commercial and residential) property. The program incentivizes the rede-
velopment of older building stock and, when applied correctly, reener-
gizes flagging areas through an injection of both new residents and new
business activity. However, across Upstate New York, both the letter and
the spirit of the law has been circumvented by unqualified applicants
receiving this benefit-- at great cost to localities who forego signif-
icant tax revenues.

Chapter 357 of 2020 was passed in order to curb abuses of the program
and restore it to its original intent. However, the Executive at the
time requested changes to the bill that resulted in Chapter 132 of 2021.
This Chapter amendment weakened key provisions of the original bill,
including bans of the use vacant lots and a requirement that the build-
ing receiving the exemption be at least 7515 existing structure.

This bill reaffirms the original intent and scope of the 485-A program
by mandating minimum portions of commercial and residential uses and
purposes, clarifying that only above-grade areas of the converted struc-
tures and buildings count toward calculation of those minimum, and
disallowing exemptions for land that was vacant prior to the
construction work. remove the 12% floor.

 
LEGISLATIVE HISTORY:

2022: A.9426

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
January 1, 2024 and shall apply to properties for which the initial
application for exemption are received on and after such date.

2023-S2316 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2316
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             January 19, 2023
                                ___________
 
 Introduced  by  Sen.  RYAN  --  read twice and ordered printed, and when
   printed to be committed to the Committee on Local Government
 
 AN ACT to amend the real property tax law, in relation  to  the  certif-
   ication  of certain property complying with the residential-commercial
   urban exemption program and the revocation of benefits of such program
   in certain circumstances
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section 485-a of the real property tax law, as amended by
 chapter 132 of the laws of 2021, is amended to read as follows:
   § 485-a. Residential-commercial  urban  exemption  program.  1.  Defi-
 nitions.    As  used in this section, the following terms shall have the
 following meanings:
   (a) "Municipality" means any town, city or village except for  a  city
 having more than one million inhabitants.
   (b)  "Applicant" means any person obligated to pay real property taxes
 on the property for which an exemption from real  property  taxes  under
 this section is sought.
   (c)  "Commercial construction work" means the modernization, rehabili-
 tation, expansion or other improvement of the portion of mixed-use prop-
 erty to be used for commercial purposes.
   (d) "Commercial purpose or use" means [(i)]  the  buying,  selling  or
 otherwise  providing  of  goods  or services directly to the public[; or
 (ii) a non-residential lawful use including,  but  not  limited  to,  an
 office,  hotel, retail store, brewery, distillery, restaurant, cafe, bar
 or tavern, gymnasium, theater, or entertainment venue which  employs  or
 is  anticipated  to  employ a minimum of five employees primarily at the
 mixed-use property for which an exemption under this section is sought],
 INCLUDING HOTEL SERVICES,  RETAIL  STORES,  OFFICE  SPACE,  RESTAURANTS,
 BARS, GYMS, THEATERS, AND CAFES.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00333-01-3
 S. 2316                             2

 
   (e)  "Mixed-use  property"  means  property on which will exist, after
 completion of residential construction work or a combination of residen-
 tial construction work and commercial construction work, a  building  or
 structure used for both residential and commercial purposes of which, at
 least  [forty]  FIFTY  percent  of  the  building  or structure's square
 footage is devoted to residential purposes or use and at  least  fifteen
 percent  of  the  building  or  structure's square footage is devoted to
 commercial purposes or use.   ONLY SQUARE FOOTAGE EXISTING  IN  A  STORY
 ABOVE  GRADE  SHALL  BE  USED  IN  THE  DETERMINATION  OF THE BUILDING'S
 PERCENTAGE OF RESIDENTIAL PURPOSES OR USE  AND  COMMERCIAL  PURPOSES  OR
 USE.
   (f)  "Person"  means  an  individual,  corporation,  limited liability
 company, partnership, association, agency,  trust,  estate,  foreign  or
 domestic government or subdivision thereof, or other entity.
   (g) "Residential construction work" means the creation, modernization,
 rehabilitation,  expansion or other improvement of dwelling units, other
 than dwelling units in a hotel, in the portion of mixed-use property  to
 be used for residential purposes.
   (h)  "Story  above  grade"  means  any story having its finished floor
 surface entirely above grade.
   (i) "Grade" shall mean the finished ground level adjoining the  build-
 ing at all exterior walls.
   (J)  "FLOOR  AREA" MEANS THE HORIZONTAL AREAS OF THE SEVERAL FLOORS OR
 ANY PORTION THEREOF OF A MIXED-USE PROPERTY MEASURED FROM  THE  EXTERIOR
 FACES  OF  EXTERIOR WALLS OR FROM THE CENTER LINE OF PARTY WALLS, EXCLU-
 SIVE OF ANY AREA EXISTING BELOW-GRADE.
   2. Any municipality may, by local law, provide for  the  exemption  of
 real  property  from  taxation  as  provided  in  this section. Upon the
 adoption of such a local law, the county in which such  municipality  is
 located may, by local law, and any school district, all or part of which
 is located in such municipality, may, by resolution, exempt such proper-
 ty  from  its taxation in the same manner and to the same extent as such
 municipality has done.
   3. Upon the adoption of such a local law, non-residential real proper-
 ty, upon conversion to mixed-use property, shall be exempt from taxation
 and special ad valorem levies as provided for  in  subdivision  four  of
 this  section. LAND WHICH WAS VACANT PRIOR TO THE RESIDENTIAL OR COMMER-
 CIAL CONSTRUCTION WORK FOR WHICH A TAX EXEMPTION IS SOUGHT, SHALL NOT BE
 ELIGIBLE TO RECEIVE BENEFITS PURSUANT TO THIS SECTION.
   4. (a) (i) For a period of twelve years from the approval of an appli-
 cation, the increase in assessed value of such property attributable  to
 such conversion shall be exempt as provided in subparagraph (ii) of this
 paragraph.  Such  exemption  shall  be  computed  with  respect  to  the
 "exemption base". The exemption base shall be determined for  each  year
 in  which  there  is  an increase in assessed value so attributable from
 that of the previous year's assessed value.
   (ii) The following table shall illustrate the computation of  the  tax
 exemption:
 
       Year of exemption                      Percentage of exemption
 
           1 through 8                        100% of exemption base
           9                                  80% of exemption base
           10                                 60% of exemption base
           11                                 40% of exemption base
           12                                 20% of exemption base
 S. 2316                             3
 
   (b) No such exemption shall be granted unless:
   (i)  such conversion was commenced subsequent to the date on which the
 municipality's local law took effect; [and]
   (ii) the cost of such conversion  exceeds  the  sum  of  ten  thousand
 dollars or such greater amount as may be specified by local law[.];
   (III) AT LEAST SEVENTY-FIVE PERCENT OF THE FLOOR AREA OF THE MIXED-USE
 PROPERTY CONSISTS OF THE PRE-EXISTING BUILDING OR STRUCTURE; AND
   (IV)  THE  PORTION  OF  THE  BUILDING  USED FOR COMMERCIAL PURPOSES IS
 CURRENTLY, AS DEMONSTRATED BY DOCUMENTATION SUBMITTED BY THE  APPLICANT,
 USED AS SUCH OR IS IN GOOD FAITH CONTEMPLATED.
   (c) For purposes of this section the term conversion shall not include
 ordinary maintenance and repairs.
   (d)  No  such exemption shall be granted concurrent with or subsequent
 to any other real property tax exemption granted to  the  same  improve-
 ments to real property, except, where during the period of such previous
 exemption,  payments in lieu of taxes or other payments were made to the
 local government in an amount that would have been equal to  or  greater
 than the amount of real property taxes that would have been paid on such
 improvements  had  such  property  been granted an exemption pursuant to
 this section. In such case, an exemption shall be granted for  a  number
 of  years  equal  to  the twelve year exemption granted pursuant to this
 section less the number of years the property would have been previously
 exempt from real property taxes.
   5. Such exemption shall be granted only upon application by the  owner
 of  such  real  property  on a form prescribed by the commissioner. Such
 application shall be filed with the  assessor  of  the  municipality  or
 county having the power to assess property for taxation on or before the
 appropriate taxable status date of such municipality or county.
   6.  If  the assessor is satisfied that the applicant is entitled to an
 exemption pursuant to this section, he or she shall approve the applica-
 tion and such real property shall be exempt from taxation and special ad
 valorem levies as in this section provided. The assessed  value  of  any
 exemption  granted  pursuant  to  this  section  shall be entered by the
 assessor on the assessment roll with  the  taxable  property,  with  the
 amount of the exemption shown in a separate column.
   7.  (a)  During  the period of exemption pursuant to this section, the
 owner shall submit an annual certification  to  the  assessor  attesting
 that  the  property complies with the provisions or requirements of this
 section and any additional provisions or requirements as may be provided
 by local law. Failure to submit such certification shall result in revo-
 cation of benefits. Such certification shall include at  a  minimum  the
 following:
   (i)  the  types  of  residential  use and the total above-grade square
 footage [and below-grade square footage] of such use;
   (ii) the types of commercial use  and  the  total  above-grade  square
 footage [and below-grade square footage] of such use;
   (iii) attestation that the portion of the building used for commercial
 purposes is currently, as demonstrated by documentation submitted by the
 applicant,  used as such or is in good faith contemplated [to be used as
 such]; AND
   (iv) [the specific address of the entrance through  which  the  public
 enters the portion of the building used for commercial purposes;
   (v)  if the portion of the building intended to be used for commercial
 purposes is not currently in active use for such purposes  and  open  to
 the  public,  the reasons why it is not currently being used for commer-
 cial purposes and open to the public; and
 S. 2316                             4

   (vi)] all such other information required by the municipality.
   (b)  If  the  assessor is satisfied that the applicant continues to be
 entitled to the exemption pursuant to this section, the  assessor  shall
 approve the certification and the real property shall remain exempt from
 taxation  and  special ad valorem levies for another year as provided in
 this section.
   8. (a) The benefits of this section shall be revoked upon a finding by
 the assessor that:
   (i) the application for benefits hereunder or the annual certification
 required hereunder contains a false statement or false information as to
 a material matter or omits a material matter; OR
   (ii) the eligible real property fails to comply with one  or  more  of
 the  provisions  or  requirements  of  this section or any provisions or
 requirements provided by local law[; or
   (iii) the portion of the property devoted to commercial  purposes  has
 not  been  in  active use for commercial purposes and open to the public
 for three consecutive years].
   (b) Such revocation shall require the repayment of any benefits previ-
 ously granted pursuant to this section [for any year  during  which  the
 property  was  non-compliant  or the application or annual certification
 contained a false statement or false information as to a material matter
 or omitted a material matter.
   (c) No benefits may be revoked unless the  applicant  has  been  given
 thirty  days'  notice  of  such revocation and has been given reasonable
 notice to cure any failure to comply with the provisions of requirements
 of this section].
   9. If the assessor determines that there was a  material  misstatement
 in  an  application filed by or on behalf of the owners for an exemption
 pursuant to this section and that such misstatement provided  the  basis
 for  the  granting  of such exemption, the municipality shall proceed to
 impose a penalty on the applicant of one thousand dollars in addition to
 recovering the amount of any prior exemption granted.
   § 2. This act shall take effect January 1, 2024  and  shall  apply  to
 properties  for which the initial application for exemption are received
 on and after such date.

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