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Volume 6 - Opinions of Counsel SBEA No. 74

Opinions of Counsel index

Job incentive exemption (generally) (local authorization) - Real Property Tax Law, § 485:

To be eligible for the real property tax exemption authorized by section 485 of the Real Property Tax Law, an otherwise qualified business facility must be located in an eligible area, the expenditures relating thereto must have been made on or after the date upon which the area became an eligible area, and one or more of the municipalities within which the facility is located must have acted affirmatively under the provisions of section 485. Should a municipality act affirmatively after capital expenditures are made, the facility may qualify for exemption with respect to that municipality’s taxes upon the issuance of a new certificate of eligibility.

Our opinion has been requested as to whether a facility may be considered for exempt status pursuant to the provisions of a local law or resolution, as provided in Real Property Tax Law, section 485, where expenditures for the facility were made prior to the adoption of the local law or resolution.

Real Property Tax Law, section 485, authorizes counties, cities, towns and villages to adopt a local law, and school districts to adopt a resolution, exempting certain business facilities from taxation and special ad valorem levies for a stated period of time (not to exceed 10 years) to the extent provided by such local law or resolution. Section 485 is a permissive (or local option) statute and its provisions authorize each ‘municipality to act independently. When a municipality takes such affirmative act, an exemption will apply solely with respect to taxes to be levied by or on behalf of the acting municipality.

Subdivision 3 of section 485 states, in part,

If a local law or resolution authorized by this section is adopted, then an eligible business facility, as certified by the New York State job incentive board, pursuant to section one hundred twenty of the commerce law shall be exempt from taxes and special ad valorem levies imposed to the extent authorized in such local law or resolution of any increase in the value thereof which is attributable to expenditures certified by said board to have been paid or incurred by the owner or operator for capital improvements, commenced on or after the date upon which the area in which the eligible business facility is located became an eligible area pursuant to section one hundred fifteen of the commerce law . . . (emphasis supplied)

Section 120 of the Commerce Law requires the issuance of “a separate certificate of eligibility for real property tax exemption” provided “a local law or resolution has been adopted” pursuant to Real Property Tax Law, section 485. The certificate of eligibility, when issued, is to specify the taxable status date to which it relates; thus it has application solely to that municipality (or municipalities) within which the subject facility is located that have taken affirmative action under section 485.

Commerce Law, section 115, subdivision (c), sets forth certain criteria and time periods for an area to be an “Eligible area,” and subdivision (d) thereof provides that an “Eligible business facility” is “A place of business located in an eligible area, which meets the requirements set forth in section one hundred eighteen of [the Commerce Law].” That section sets forth certain requirements for a business facility to be an eligible business facility.

The above cited statutory references, considered as a whole, require that a business facility may be an eligible business facility only if capital improvements relating thereto are commenced at a time when the area in which the facility is located is an eligible area. To quality for a real property tax exemption with respect to such facility, one or more of the authorized municipalities (i.e., county, city, town, village, or school district) within which the facility is located must have acted affirmatively to adopt a local law or resolution granting an exemption which can only apply with respect to taxes to be levied by or on behalf of the acting municipality.

If capital expenditures were made prior to the time the area within which the facility is located was designated an eligible area, then to that extent, the facility cannot become an eligible business facility. If, however, capital expenditures were made after the area was designated an eligible area, the facility could become an eligible business facility in the event that a local law or resolution was adopted by one or more of the municipalities within which the facility is located and such local act was accomplished at the time the area was designated an eligible area or at a later date during which the eligible area designation is in effect.

If a facility was issued a certificate of eligibility for real property tax exemption on the basis of a local act of one municipality within which the facility is located, an exemption can apply only with respect to taxes to be levied by or on behalf of the acting municipality. If subsequent to the issuance of such certificate of eligibility another municipality within which the facility is located acted affirmatively to adopt the provisions of section 485 of the Real Property Tax Law, an exemption could apply only upon the issuance of a new certificate of eligibility for exemption from taxes to be levied by or on behalf of the acting municipality.

May 8, 1979

Updated: