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Volume 11 - Opinions of Counsel SBRPS No. 108

Opinions of Counsel index

Cooperative, condominium, homesteading and rental projects exemption (applicability to previously constructed improvements) (duration of exemption) - Real Property Tax Law, § 421-e:

An exemption may be granted pursuant to section 421 e of the Real Property Tax Law to a qualifying project which was constructed before the effective date of the local law adopting section 421-e, but the term of such exemption may not extend more than 20 years from completion of the project.

Our opinion has been requested concerning the exemption for cooperative, condominium, homesteading and rental projects (Real Property Tax Law, §421-e). A housing association in a city is seeking the exemption for Phase I of its housing development which was completed on October 29, 1993 and is regulated by the Housing Trust Fund under Article 18 of the Private Housing Finance Law. As of the June 2007 date of the inquiry, the city in question had not adopted the section 421-e exemption.

Two questions are presented. The first is whether the city may now enact a local law that would afford tax exemption to the aforementioned housing development. If yes, we are asked to advise as to the exemption’s duration.

RPTL, section 421-e, provides that:

The local legislative body of any city ... is hereby authorized and empowered to adopt and amend a local law to provide that any cooperative ... or rental project which receives payments, grants or loans pursuant to article eighteen of the private housing finance law ... shall be exempt from taxation as provided in such local law. Such local law may provide that such eligible property shall be exempt from all or any portion of the taxes imposed by a municipality, including those imposed by a school district, other than assessments for local improvements for a period not to exceed twenty years in the aggregate after the taxable status date immediately following the completion thereof....

“[L]egislative acts are always construed as prospective in their operation unless by their plain language it can be seen that it was the legislative intention that they should have retroactive effect” (Sherrill v. Christ Church of Poughkeepsie, 121 N.Y. 701, 703, 25 N.E. 50 (1890); see also, McKinney’s Statutes, §57). Therefore, it is relevant to consider whether a legislative intent to authorize a retroactive, local option exemption is evident in the language of section 421-e.

When originally adopted in 1985 (c.67), section 421-e stated that such a local law adopted by a city “may provide that such eligible property shall be exempt from all or any portion of the taxes imposed by a municipality ... for so long as the ... project is subject to the provisions of article eighteen of the private housing finance law but in no case to exceed twenty years in the aggregate after the taxable status date immediately following the completion thereof....” No portion of chapter 67 states that such a local law may apply only to a residential building whose construction or rehabilitation is commenced or completed on or after a specific date. Nor does chapter 67 provide that such an application for the project must be filed within a certain period after construction or rehabilitation is finished.

Section 421-e was amended in 1985 (c.328) to authorize a local option exemption for “any new construction project which receives payments, grants or loans pursuant to article nineteen of the private housing finance law” (emphasis added). {1}  Chapter 328 similarly does not contain a provision stating that such an Article 19 project must be started or finished on or after a certain date nor does it provide that an exemption application must be filed within a specified period.

The lack of such provisions in section 421-e distinguishes that statute from other local option exemption laws. For example, the City of Jamestown may adopt a local option exemption for certain residential investments, but the exemption may only be afforded to “construction ... commenced on or after [January 2, 2003] or such later date as may be specified by local law” (RPTL, §485-h(2)(b)(i)). {2}  In addition, the owner of such an improved residential parcel must file an exemption application with the assessor “within one year from the date of completion of such construction” (RPTL, §485-h(3)). {3}

Accordingly, in our opinion, it is reasonable to construe RPTL, section 421-e, as permitting the city in question to enact a local law affording tax exemption to qualifying projects such as the aforementioned housing development which was completed in 1993. However, we must caution that this issue is not discussed in the Governor’s Bill Jacket for L.1985, c.67, which added section 421-e, or in the Bill Jacket for L.1985, c.328, which authorized the local option exemption for Article 19 projects.

As to the second question, it is our opinion, should the city approve the section 421-e exemption on or before the city’s March 1, 2008 taxable status date (RPTL, §302), that the housing development would be eligible for exemption only for a period of not more than six years because the project was completed in October, 1993. {4}  We note that section 421-e clearly and unequivocally states that its exemption may be “for a period not to exceed twenty years in the aggregate after the taxable status date immediately following the completion thereof.”

August 9, 2007


{1}  Article 19 of the Private Housing Finance Law is intended to facilitate home ownership through “affordable home ownership development programs” that are defined as “the rehabilitation, improvement, construction or acquisition, singly or in combination, of one or more homes” (Private Housing Finance Law, §1111(8)). Accordingly, it appears that a “new construction project” for purposes of RPTL, section 421-e, may involve the rehabilitation or improvement of an existing structure.

{2}  RPTL, section 485-h, which was added by L.2002, c.470, applies to “cities with a population of not less than [31,000] and not more than [32,000]” (§485-h(1)). The City of Jamestown is the only city in the State whose population was reported as being within the aforementioned range by the 2000 federal census (see, General Construction Law, §37-b).

{3}  Similar provisions are set forth in residential investment exemption statutes that permit other cities to offer exemption (RPTL, §485-j, added by L.2006, c.507, applicable to new homes in the City of Amsterdam; a second RPTL, §485-j, added by L.2006, c.511, applicable to new homes in the City of Dunkirk; and a third RPTL, §485-j, added by L.2006, c.602, applicable to new homes in the City of Utica).

{4}  We note that RPTL, section 421-e, states that “in the event a ... project ceases to be subject to one or more provisions of article eighteen of the private housing finance law pursuant to the provisions of [§1102(6-a)(c)] of such law, any tax exemption authorized pursuant to this section with respect to the eligible property of such project shall terminate.”

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