N.Y. Real Property Tax Law § 489-bbbbbb: Power to enact local law; industrial and commercial real property tax abatement

§ 489-bbbbbb. Power to enact local law; industrial and commercial real

property tax abatement. 1. Authority to enact local law. Any city having

a population of one million or more, acting through its local

legislative body, is authorized and empowered to determine that

incentives in the form of abatement of real property taxes are necessary

to encourage industrial and commercial development in such city and to

enact a local law providing that such benefits shall be provided in the

manner set forth in this title.

2. Amount of abatement base. (a) Calculation of abatement base. Except

as provided in paragraph (e) of subdivision three of this section, the

abatement base used to determine the amount of the abatement provided

under this title shall be the amount by which the post-completion tax on

a building or structure exceeds one hundred fifteen percent of the

initial tax levied on a building or structure.

(b) Initial tax on building or structure. (i) Determination of initial

tax. The initial tax shall be determined by multiplying the final

taxable assessed value, without regard to any exemptions, shown on the

assessment roll with a taxable status date immediately preceding the

issuance of the first building permit by the initial tax rate. For

purposes of this subdivision, the initial tax rate shall be the final

tax rate applicable to the assessment roll with a taxable status date

immediately preceding the issuance of the first building permit. If no

permit was required, the initial tax and the initial tax rate shall be

determined based on the assessment roll with a taxable status date

immediately preceding the commencement of construction.

(ii) Effect of tax lot apportionment or merger. For a property as to

which an applicant has applied for benefits pursuant to this title, if

such property is apportioned or merged and such apportionment or merger

is not reflected in the assessment roll described in subparagraph (i) of

this paragraph, the initial tax for the newly created tax lot or lots

shall be based on the initial tax of the lot or lots from which they

have been created, which shall be apportioned among the newly created

tax lot or lots in the manner established by the department for purposes

of assessed valuation of real property.

(c) Post-completion tax on building or structure. For purposes of

calculating the abatement base only, the post-completion tax is

determined by multiplying the initial tax rate by the final taxable

assessed value, without regard to any exemptions, that would be shown on

the assessment roll but for the abatement, on the assessment roll with a

taxable status date immediately following the earlier of:

(i) completion of construction; or

(ii) four years from the date of issuance of the first building

permit, or if no permit was required, the commencement of construction.

(d) (i) If the taxable assessed value is later reduced by a court

order or application to the tax commission, then the initial tax or the

post-completion tax shall be the tax as reduced.

(ii) The taxable assessed value used for the calculations in this

subdivision shall be the lower of the actual and transitional value as

provided in subdivision three of section eighteen hundred five of this

chapter.

(e) Mixed-use property. For a mixed-use property, the initial tax and

post-completion tax shall be apportioned between the residential and

nonresidential portions. The department may promulgate rules to

determine the method of apportionment.

(f) Initial taxes not to be reduced by abatement. Except as provided

in paragraph (e) of subdivision three of this section, the abatement

provided under this title shall not be applicable in any year of the

benefit period to the initial tax or to the tax on the portion of the

assessment attributable to land. Additionally, the abatement shall not

result in any credit or refund of real property taxes.

3. Industrial and commercial abatements. (a) Abatement for commercial

construction work. Upon approval by the department of a final

application for benefits, an applicant who has performed commercial

construction work outside of a special commercial abatement area, as

designated pursuant to subdivision two of section four hundred

eighty-nine-gggggg of this title, or a renovation area, as defined by

subdivision three of section four hundred eighty-nine-gggggg of this

title, shall be eligible for an abatement of real property taxes, as

follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. For years one through eleven, the

abatement shall be the amount of the abatement base. For years twelve

through fifteen, the abatement shall decrease by twenty percent each

year. The following table illustrates the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 11 100% of abatement base

12 80% of abatement base

13 60% of abatement base

14 40% of abatement base

15 20% of abatement base

(ii) Minimum required expenditure. For commercial construction work,

the minimum required expenditure is thirty percent of the property's

taxable assessed value in the tax year with a taxable status date

immediately preceding the issuance of the first building permit, or if

no permit was required, the commencement of construction. Expenditures

for residential construction work or construction work on portions of

property to be used for restricted activities shall not be included in

the minimum required expenditure.

(b) Abatement for industrial construction work or commercial

construction work in special commercial abatement areas on buildings

where not more than ten percent of the building or structure is used for

retail purposes. Upon approval by the department of a final application

for benefits, an applicant who has performed industrial construction

work in any area, where not more than ten percent of the building or

structure on which such work has been performed is used for retail

purposes, or commercial construction work in a special commercial

abatement area, as designated pursuant to subdivision two of section

four hundred eighty-nine-gggggg of this title, where not more than ten

percent of the building or structure on which such work has been

performed is used for retail purposes, shall be eligible for an

abatement of real property taxes, as follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. For years one through sixteen, the

abatement shall be the amount of the abatement base. The abatement shall

be adjusted for inflation protection as provided in subparagraph (ii) of

this paragraph. For years seventeen through twenty-five, the abatement

shall decrease by ten percent each year. The following table illustrates

the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 16 100% of abatement base

17 90% of abatement base

18 80% of abatement base

19 70% of abatement base

20 60% of abatement base

21 50% of abatement base

22 40% of abatement base

23 30% of abatement base

24 20% of abatement base

25 10% of abatement base

(ii) Inflation protection. (A) Industrial construction work. (I)

Effect of assessed valuation increases. For years two through thirteen

of the benefit period, except as provided in item (II) of this clause,

if there is any increase in tax in that year that is based on an

increase of taxable assessed valuation since the immediately prior tax

year, such excess tax liability shall be added to the amount of the

abatement base. Such addition to the amount of the abatement base shall

be determined using the initial tax rate.

(II) Physical increases. Notwithstanding the provisions of item (I) of

this clause, if in any of years two through thirteen of the benefit

period, a physical change to the property results in an increase in the

taxable assessed value of the property of more than five percent for

that year, then any increase in taxes for that year shall not be added

to the amount of the abatement base in any year.

(III) If the taxable assessed value upon which an adjustment to the

abatement under this paragraph is based is later reduced by a court

order or application to the tax commission, then the appropriate

adjustment to the abatement base shall be made in accordance with the

reduced taxable assessed value.

(B) Commercial construction work in special commercial abatement areas

on buildings where not more than ten percent of the building or

structure is used for retail purposes. (I) Effect of assessed valuation

increases. For years two through thirteen of the benefit period, except

as provided in item (II) of this clause, if there is any increase in tax

in that year that is based on an increase of taxable assessed valuation

since the immediately prior tax year that exceeds five percent, such

excess tax liability shall be added to the amount of the abatement base.

Such addition to the amount of the abatement base shall be determined

using the initial tax rate.

(II) Physical increases. Notwithstanding the provisions of item (I) of

this clause, if in any of years two through thirteen of the benefit

period, a physical change to the property results in an increase in the

taxable assessed value of the property of more than five percent for

that year, then any increase in taxes for that year shall not be added

to the amount of the abatement base in any year.

(III) If the taxable assessed value upon which an adjustment to the

abatement under this paragraph is based is later reduced by a court

order or application to the tax commission, then the appropriate

adjustment to the abatement base shall be made in accordance with the

reduced taxable assessed value.

(C) Mixed-use property. For a property as to which benefits are given

for both industrial and commercial construction, the inflation

protection provided under this subparagraph shall be based on the

predominant use of the property as determined by the department.

(iii) Minimum required expenditure. For industrial construction work

or commercial construction work in a special commercial abatement area,

the minimum required expenditure is thirty percent of the property's

taxable assessed value in the tax year with a taxable status date

immediately preceding the issuance of the first building permit, or if

no permit was required, the commencement of construction. Expenditures

for residential construction work or construction work on portions of

property to be used for restricted activities shall not be included in

the minimum required expenditure.

(b-1) Abatement for industrial construction work on a peaking unit.

Upon approval by the department of a final application for benefits, an

applicant who has performed industrial construction work in any area on

a peaking unit, shall be eligible for an abatement of real property

taxes, as follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. For years one through fifteen, the

abatement shall be the amount of the abatement base. The abatement shall

be adjusted for inflation protection as provided in subparagraph (ii) of

this paragraph. The following table illustrates the abatement

computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 15 100% of abatement base

(ii) Inflation protection. (A) Industrial construction work, effect of

assessed valuation increases. For years two through thirteen of the

benefit period, except as provided in clause (B) of this subparagraph,

if there is any increase in tax in that year that is based on an

increase of taxable assessed valuation since the immediately prior tax

year, such excess tax liability shall be added to the amount of the

abatement base. Such addition to the amount of the abatement base shall

be determined using the initial tax rate.

(B) Physical increases. Notwithstanding the provisions of clause (A)

of this subparagraph, if in any of years two through thirteen of the

benefit period, a physical change to the property results in an increase

in the taxable assessed value of the property of more than five percent

for that year, then any increase in taxes for that year shall not be

added to the amount of the abatement base in any year.

(C) If the taxable assessed value upon which an adjustment to the

abatement under this paragraph is based is later reduced by a court

order or application to the tax commission, then the appropriate

adjustment to the abatement base shall be made in accordance with the

reduced taxable assessed value.

(iii) Minimum required expenditure. For industrial construction work

on a peaking unit, the minimum required expenditure is thirty percent of

the property's taxable assessed value in the tax year with a taxable

status date immediately preceding the issuance of the first building

permit, or if no permit was required, the commencement of construction.

Expenditures for residential construction work or construction work on

portions of property to be used for restricted activities shall not be

included in the minimum required expenditure.

(c) Abatement for industrial construction work or commercial

construction work in special commercial abatement areas on buildings

where more than ten percent of the building or structure is used for

retail purposes. Upon approval by the department of a final application

for benefits, an applicant who has performed industrial construction

work in any area, where more than ten percent of the building or

structure on which such work has been performed is used for retail

purposes, or commercial construction work in a special commercial

abatement area, as designated pursuant to subdivision two of section

four hundred eighty-nine-gggggg of this title, where more than ten

percent of the building or structure on which such work has been

performed is used for retail purposes, shall be eligible for an

abatement of real property taxes on the non-retail portion of such

building or structure and up to ten percent of such building or

structure used for retail purposes, in accordance with paragraph (b) of

this subdivision, and shall be eligible for an abatement of real

property taxes on the remaining retail portion of such building or

structure, as follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. For years one through eleven, the

abatement shall be the amount of the abatement base. For years twelve

through fifteen, the abatement shall decrease by twenty percent each

year. The abatement shall be adjusted for inflation protection as

provided in subparagraph (ii) of this paragraph. The following table

illustrates the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 11 100% of abatement base

12 80% of abatement base

13 60% of abatement base

14 40% of abatement base

15 20% of abatement base

(ii) Inflation protection. (A) Industrial construction work. (I)

Effect of assessed valuation increases. For years two through thirteen

of the benefit period, except as provided in item (II) of this clause,

if there is any increase in tax in that year that is based on an

increase of taxable assessed valuation since the immediately prior tax

year, such excess tax liability shall be added to the amount of the

abatement base. Such addition to the amount of the abatement shall be

determined using the initial tax rate.

(II) Physical increases. Notwithstanding the provisions of item (I) of

this clause, if in any of years two through thirteen of the benefit

period, a physical change to the property results in an increase in the

taxable assessed value of the property of more than five percent for

that year, then any increase in taxes for that year shall not be added

to the amount of the abatement base in any year.

(III) If the taxable assessed value upon which an adjustment to the

abatement under this paragraph is based is later reduced by a court

order or application to the tax commission, then the appropriate

adjustment to the abatement base shall be made in accordance with the

reduced taxable assessed value.

(B) Commercial construction work in special commercial abatement areas

on buildings where more than ten percent of the building or structure is

used for retail purposes. (I) Effect of assessed valuation increases.

For years two through thirteen of the benefit period, except as provided

in item (II) of this clause, if there is any increase in tax in that

year that is based on an increase of taxable assessed valuation since

the immediately prior tax year that exceeds five percent, such excess

tax liability shall be added to the amount of the abatement base. Such

addition to the amount of the abatement base shall be determined using

the initial tax rate.

(II) Physical increases. Notwithstanding the provisions of item (I) of

this clause, if in any of years two through thirteen of the benefit

period, a physical change to the property results in an increase in the

taxable assessed value of the property of more than five percent for

that year, then any increase in taxes for that year shall not be added

to the amount of the abatement base in any year.

(III) If the taxable assessed value upon which an adjustment to the

abatement under this paragraph is based is later reduced by a court

order or application to the tax commission, then the appropriate

adjustment to the abatement base shall be made in accordance with the

reduced taxable assessed value.

(C) Mixed-use property. For a property as to which benefits are given

for both industrial and commercial construction, the inflation

protection provided under this subparagraph shall be based on the

predominant use of the property as determined by the department.

(iii) Minimum required expenditure. For industrial construction work

or commercial construction work in a special commercial abatement area,

the minimum required expenditure is thirty percent of the property's

taxable assessed value in the tax year with a taxable status date

immediately preceding the issuance of the first building permit, or if

no permit was required, the commencement of construction. Expenditures

for residential construction work or construction work on portions of

property to be used for restricted activities shall not be included in

the minimum required expenditure.

(d) Abatement for renovation construction work in renovation areas.

Subject to the provisions of subparagraph (iii) of this paragraph, upon

approval by the department of a final application for benefits, an

applicant who has performed renovation construction work in a renovation

area, as defined by subdivision three of section four hundred

eighty-nine-gggggg of this title, shall be eligible for an abatement of

real property taxes, as follows:

(i) Amount of abatement. For the renovation areas defined in

paragraphs (a) and (b) of subdivision three of section four hundred

eighty-nine-gggggg of this title, the first year of the abatement shall

be the tax year with the first taxable status date that follows the

sooner of (A) completion of construction; or (B) four years from the

date the first building permit was issued, or if no permit was required,

the commencement of construction. For years one through eight, the

abatement shall be the amount of the abatement base. For years nine

through twelve, the abatement shall decrease by twenty percent each

year. The following table illustrates the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 8 100% of abatement base

9 80% of abatement base

10 60% of abatement base

11 40% of abatement base

12 20% of abatement base

(ii) Amount of abatement. For the renovation area defined in paragraph

(c) of subdivision three of section four hundred eighty-nine-gggggg of

this title, the first year of the abatement shall be the tax year with

the first taxable status date that follows the sooner of (A) completion

of construction; or (B) four years from the date the first building

permit was issued, or if no permit was required, the commencement of

construction. For years one through five, the abatement shall be the

amount of the abatement base. For years six through nine, the abatement

shall decrease by twenty percent each year. In year ten, the abatement

shall be twenty percent of the abatement base. The following table

illustrates the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 5 100% of abatement base

6 80% of abatement base

7 60% of abatement base

8 40% of abatement base

9 20% of abatement base

10 20% of abatement base

(iii) If more than five percent of any building or structure upon

which renovation construction work is performed is used for retail

purposes, no abatement shall be granted for the retail portions of such

building or structure in excess of five percent, but five percent of

such building or structure used for retail purposes shall be eligible

for an abatement of real property taxes in accordance with subparagraph

(i) or subparagraph (ii) of this paragraph, as applicable; provided,

however, that notwithstanding any other provision of this title, any

building or structure located in the renovation area defined in

paragraph (a) of subdivision three of section four hundred

eighty-nine-gggggg of this title shall be eligible for an abatement in

accordance with subparagraph (i) of this paragraph regardless of the

amount of the building or structure used for retail purposes.

(iv) Minimum required expenditure. For renovation construction work in

renovation areas, the minimum required expenditure is thirty percent of

the property's taxable assessed value in the tax year with a taxable

status date immediately preceding the issuance of the first building

permit, or if no permit was required, the commencement of construction.

Expenditures for construction work on portions of the property to be

used for retail purposes that exceed five percent of the building or

structure in renovation areas defined in paragraphs (b) and (c) of

subdivision three of section four hundred eighty-nine-gggggg of this

title, for residential construction work, or for construction work on

portions of the property to be used for restricted activities, shall not

be included in the minimum required expenditure.

(e) Additional industrial abatement. In addition to the abatement for

industrial construction work provided in paragraph (b) of this

subdivision, an applicant who performs industrial construction work that

meets the eligibility requirements set forth in this title shall be

eligible for an additional abatement, calculated as a percentage of the

initial tax, as follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. The amount of the additional industrial

abatement shall be as follows:

Tax year during benefit period: Amount of additional abatement:

1 through 4 50% of the initial tax amount

5 40% of the initial tax amount

6 40% of the initial tax amount

7 30% of the initial tax amount

8 30% of the initial tax amount

9 20% of the initial tax amount

10 20% of the initial tax amount

11 10% of the initial tax amount

12 10% of the initial tax amount

(ii) Minimum required expenditure. For the additional industrial

abatement, the minimum required expenditure is forty percent of the

property's taxable assessed value in the tax year with a taxable status

date immediately preceding the issuance of the first building permit, or

if no permit was required, the commencement of construction.

Expenditures for residential construction work or construction work on

portions of property to be used for restricted activities shall not be

included in the minimum required expenditure.

(f) Abatement for commercial construction work on new construction in

certain areas of the borough of Manhattan. Notwithstanding any other

provision of law, upon approval by the department of a final application

for benefits, an applicant who has performed commercial construction

work on a new building or structure, in the geographical area as

specified in subparagraph (iv) of this paragraph, shall be eligible for

an abatement of real property taxes, as follows:

(i) Amount of abatement. The first year of the abatement shall be the

tax year with the first taxable status date that follows the sooner of

(A) completion of construction; or (B) four years from the date the

first building permit was issued, or if no permit was required, the

commencement of construction. For years one through four, the abatement

shall be the amount of the abatement base. For years five through eight,

the abatement shall decrease by twenty percent each year. The following

table illustrates the abatement computation:

Tax year during benefit period: Amount of abatement:

Years 1 through 4 100% of abatement base

5 80% of abatement base

6 60% of abatement base

7 40% of abatement base

8 20% of abatement base

(ii) Minimum required expenditure. The minimum required expenditure is

thirty percent of the property's taxable assessed value in the tax year

with a taxable status date immediately preceding the issuance of the

first building permit, or if no permit was required, the commencement of

construction. Expenditures for residential construction work or

construction work on portions of property to be used for restricted

activities shall not be included in the minimum required expenditure.

(iii) Special eligibility requirements. Notwithstanding any other

provision of this title, no benefits shall be granted pursuant to this

paragraph unless the building or structure meets the requirements of

clauses (A) and (B) of this subparagraph, and further meets at least two

of the requirements set forth in clauses (C) through (G) of this

subparagraph:

(A) The height of at least forty percent of the floors in such

building or structure shall be not less than twelve feet, nine inches

measured from the top of the slab comprising the floor to the bottom of

the slab comprising the ceiling;

(B) Such building or structure shall be served by fiber-optic

telecommunications wiring and shall contain vertical penetrations for

the distribution of fiber optic cabling to individual tenants on each

floor;

(C) The total square footage of such building or structure is not less

than five hundred thousand gross square feet;

(D) A minimum of two hundred thousand gross square feet or twenty-five

per centum of such building or structure is comprised of floors of not

less than forty thousand gross square feet;

(E) At least ten per centum of the gross square footage of such

building or structure is comprised of floors that contain no more than

eight structural columns, excluding any columns within the core or on

the periphery of such building or structure;

(F) The electrical capacity of such building or structure is not less

than six watts per net square foot;

(G) Emergency backup power sufficient to accommodate a need of six

watts per net square foot is available in at least two hundred thousand

gross square feet or twenty-five per centum of such building or

structure.

(iv) Geographical area. Abatements will only be granted for new

construction work pursuant to this paragraph in the following

geographical area: the area in the borough of Manhattan bounded by

Murray Street on the north starting at the intersection of West Street

and Murray Street; running easterly along the center line of Murray

Street; connecting through City Hall Park with the center line of

Frankfort Street and running easterly along the center line of Frankfort

and Dover Streets to the intersection of Dover Street and South Street;

running southerly along the center line of South Street to Peter Minuit

Plaza; connecting through Peter Minuit Plaza to the center line of State

Street and running northwesterly along the center line of State Street

to the intersection of State Street and Battery Place; running westerly

along the center line of Battery Place to the intersection of Battery

Place and West Street; and running northerly along the center line of

West Street to the intersection of West Street and Murray Street, except

the area in the borough of Manhattan bounded by Church Street on the

east starting at the intersection of Liberty Street and Church Street;

running northerly along the center line of Church Street to the

intersection of Church Street and Vesey Street; running westerly along

the center line of Vesey Street to the intersection of Vesey Street and

West Broadway; running northerly along the center line of West Broadway

to the intersection of West Broadway and Barclay Street; running

westerly along the center line of Barclay Street to the intersection of

Barclay Street and Washington Street; running southerly along the center

line of Washington Street to the intersection of Washington Street and

Vesey Street; running westerly along the center line of Vesey Street to

the intersection of Vesey Street and West Street; running southerly

along the center line of West Street to the intersection of West Street

and Liberty Street; and running easterly along the center line of

Liberty Street to the intersection of Liberty Street and Church Street.

4. Limitations on abatement. (a) Subsequent abatement. With respect to

any property that has received or is receiving abatement benefits under

this title, an applicant shall not file a preliminary application for

new abatement benefits under this title for an additional construction

project on the same portion of the property for which construction work

is the subject of abatement benefits under this title until at least

four years have elapsed since the first day of the first tax year of

such abatement benefits under the prior abatement, and, in the event

that such new benefits are granted, then notwithstanding any other

provision of this title or any other law, the initial tax for any such

new abatement will be determined without regard to the prior abatement

and any other abatement or exemption granted to the property.

(b) Abatement benefits granted under this title shall not in any year

exceed the real property taxes imposed on such property.

(c) Once an abatement is granted, no additional benefits pursuant to

this title shall be granted for construction work that is substantively

a part of eligible construction work for which benefits have been

approved or granted.

(d) No benefits shall be granted for residential construction work.

(e) Any parcel partly located in an excluded area shall be deemed to

be entirely located in such area.

(f) Where a tax lot contains multiple structures or buildings with

eligible and non-eligible uses, the initial tax shall be apportioned

under rules promulgated by the commissioner and only the tax

attributable to the eligible portion of the property shall be abated.

(g) (i) No benefits under this title may be received by a property

that is concurrently receiving exemption or abatement of real property

taxes under any other law, except for an exemption under (A) section

four hundred twenty-a, four hundred twenty-b or four hundred

fifty-nine-b of this chapter; or (B) any section of this chapter as to

which a city that has enacted a local law pursuant to this title has

also enacted a local law to implement such exemption and as to which

exemption is granted only if the property is the primary or legal

residence of one or more of the owners of the property, including such

sections in which exemption may be granted if an owner is absent from

the residence while receiving medical benefits; or (C) title two-D of

this article for a separate project involving separate parts of the

building or structure that was completed prior to the application for

benefits.

(ii) For purposes of this paragraph, "property" means the real

property contained by an individual tax lot.

(iii) Notwithstanding subparagraph (ii) of this paragraph, where a

property is owned in condominium form, and an application for benefits

under this title includes more than one tax lot in the same condominium,

then for purposes of this paragraph, "property" shall include any or all

such tax lots that are included in the application.