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Volume 11 - Opinions of Counsel SBRPS No. 43

Opinions of Counsel index

Residential-commercial urban exemption (authority to grant) (local options) - Real Property Tax Law, § 485-a:

A city authorized to grant the residential-commercial urban exemption may not require that rehabilitated buildings convert a specified minimum amount of their renovated floor space to residential use to qualify for such exemption program.

We have received an inquiry concerning the residential-commercial urban exemption program (Real Property Tax Law, §485-a as added L.2002, c.328). The question is whether a city authorized to grant the exemption may require that all rehabilitated, non-residential buildings convert a specified minimum percentage of their renovated floor space to residences in order to qualify for the exemption.

“[A]ny city having fifty thousand or more but fewer than one million inhabitants” (see, RPTL, §485-a(1)(a)) may approve the residential-commercial urban exemption program as a local option. As of the 2000 federal census, 11 of the State’s cities are authorized to grant the exemption. {1}  An eligible city “may, by local law, provide for the exemption of real property from taxation as provided in this section” (RPTL, §485-a(2); emphasis added).

RPTL, section 485-a(3), states that “[u]pon adoption of such a local law, non-residential real property, 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” (emphasis added). Subdivision four of section 485-a does not state that a minimum portion of the renovated, non-residential building must be converted to residences in order to qualify a building for exemption. In contrast, eligibility limitations of this type were adopted previously by the Legislature for a similar exemption that applies to certain non-residential buildings in the City of New York that are converted to mixed use (see, subdivisions (7) and (8) of RPTL, §421-g).

Section 485-a(4)(b) authorizes cities to limit eligibility for the exemption in two ways:

No such exemption shall be granted unless
(i) such conversion was commenced subsequent to the date on which the city’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 such local law.

Neither of these delegated, discretionary limitations addresses the minimum amount of space that must be converted to a residential use.

“The power of taxation, being a State function, the delegation of any part of that power to a subdivision of the State must be made in express terms. It cannot be inferred” (County Securities, Inc. v. Seacord, 278 N.Y. 34, 37, 15 N.E.2d 179, 180 (1938)). It therefore is our opinion that a municipal corporation may exercise only those options with respect to a tax exemption that have expressly been made available by the Legislature (8 Op.Counsel SBEA No. 120). Since no such express delegation is set forth in RPTL, section 485-a, it is our opinion that a city authorized to grant such exemption may not require that rehabilitated buildings convert a specified minimum amount of their renovated floor space to residences to qualify for the residential-commercial urban exemption program.

April 30, 2003


{1}  The 11 cities currently eligible to grant the residential-commercial urban exemption program are Albany, Buffalo, Mount Vernon, New Rochelle, Niagara Falls, Rochester, Schenectady, Syracuse, Utica, White Plains, and Yonkers. [Ed. note: Section 485-a was subsequently amended (L.2004, c.632) to make the exemption available at local option in all cities (except New York City), towns, and villages.]

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