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Assessor's Manual, Volume 4, ExemptionAdministration

Exemption Administration Manual - Part 2
Industrial, Commercial, and Public Service

Section 4.06 - RPTL Section 485-b

Business Investment Property outside New York City

Exemption Code(s):     Initial exemption granted before 8/5/97 4760_
    Initial exemption granted on or after 8/5/97 4761_

Year Originally Enacted:   1976

Related Statutes:     None

SUMMARY: To the extent allowed by local option, commercial and industrial facilities that are constructed, altered, installed or improved after July 1, 1976 (or some later date set by the taxing jurisdiction) at a cost exceeding $10,000 (or some higher minimum chosen by the taxing unit) are partially exempt from taxation and special ad valorem levies, but are liable for special assessments. However, initial exemptions granted on or after 8/5/97 are liable for special ad valorem levies established for fire district, fire protection district, and fire alarm district purposes. The exemption may be granted only after the construction or improvement project has been completed.

State law allows the exemption to be granted to facilities used primarily for the buying, selling, storing, or development of goods or services, the manufacture or assembly of goods, or the processing of raw materials; however, local taxing jurisdictions may restrict exemption to only some types of businesses in any or all of these categories. If they are not excluded from eligibility by the taxing jurisdiction, the exemption also applies to hotels and motels, but not to property used primarily for the furnishing of other types of dwelling accommodations to residents or transients. A taxing jurisdiction that restricts the exemption by type of business may also restrict it to one or more specific geographic areas.

This exemption may not be granted concurrent with or subsequent to any other property tax exemption for the same improvement, except that a subsequent exemption may be granted where, during the period of a previous exemption, payments in lieu of taxes or other payments were made to a local government in an amount equal to or greater than the amount of taxes that would have been paid on the improvements had the property been granted an exemption pursuant to RPTL §485-b. In that case, the property may be eligible for a §485-b exemption for a period of 10 years less the number of years such payments to the local government were made. (Note that, as is the case with other §485-b exemption applications, application for this type of subsequent exemption must be filed within one year of the date of completion of the construction or improvement project.)

  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements: Facility must be owned or operated by a private individual or organization.
       
    2. Property Location Requirements: Property must be located outside New York City. If a taxing jurisdiction has restricted exemption to a specific geographic area, the property must be located in that area.
       
    3. Property Use Requirements: As prescribed by state law, property must be used primarily for buying, selling, storing, or developing goods or services, for the manufacture or assembly of goods, for processing raw materials, or for hotel or motel purposes (but not for any other type of dwelling accommodations for residents or transients). However, local taxing jurisdictions may restrict eligibility for exemption to only some types of businesses in one or more of these categories. The cost of the construction or improvement project must exceed $10,000 or any higher amount, not exceeding $50,000, set by the local taxing unit. (See also Local Option below.)  For purposes of this exemption the terms alteration, construction, improvement or installation all exclude ordinary maintenance and repairs.
       
    4. Certification by State or Local Government: Completion of the construction or improvement project must be demonstrated by a certificate of occupancy or other appropriate document. Changes in the assessing unit's level of assessment must be certified by the NYS Office of Real Property Tax Services.
       
    5. Required Construction Start Date or Other Time Requirement:  Construction or improvement must begin after January 1, 1976, or any later date chosen by the taxing jurisdiction. However, initial exemptions granted on or after 8/5/97 are liable for special ad valorem levies established for fire district purposes.
       
  2. LOCAL OPTION: Yes - Each county, city, town, village, and school district (except the city school districts of Buffalo, Rochester, Syracuse, and Yonkers) has several options under RPTL §485-b.
    1. Advisory Board: Each taxing jurisdiction may, by resolution, establish an Industrial and Commercial Incentive Board (ICIB). The ICIB must present to the appointing local legislative body a plan that addresses the following:
      1. Eligible Business Property: The plan must designate which types of business real property should be eligible for the basic exemption. Such designation of eligible businesses must be according to specific sectors and subsectors, as defined in the North American Industry Classification System published by the U.S. Government.
         
      2. Eligible Areas: The plan must identify the specific geographic areas within which exemption should be available.
         
      3. Extent of Exemption: The plan must recommend whether the exemption to be granted should be the basic exemption or the accelerated strategic exemption (see #2 below).

        In developing its plan, the ICIB must consider the planning objectives of each municipality within which the exemption would be available, the need for the exemption to attract or retain the type of businesses desired, and the economic benefit to the area of granting exemption to various types of business.

    2. Extent of Exemption: Two levels of exemption are authorized by §485-b: (a) a 10-year "basic exemption" beginning in the first year at 50% of the increase in assessed value due to the improvement and declining by 5% each following year and (b) a 10-year "accelerated strategic exemption" at 50% of such value in the first three years and declining from 40% to 5% during the next seven years.

      The basic exemption is available to all taxing jurisdictions, which (a) may choose whether to disallow the exemption or (b) may reduce the percentage of exemption authorized by state law. The option to disallow or reduce the exemption must be exercised by counties, cities, towns, and villages through enactment of a local law and by school districts through adoption of a resolution.

      The accelerated strategic exemption is available only to those taxing jurisdictions which, upon the recommendation of an ICIB, restrict exemption both (a) to only certain types of business property within the categories specified by state law and (b) to such business property only within certain geographic areas. The option to restrict exemption must be exercised by counties, cities, towns, and villages through enactment of a local law and by school districts through adoption of a resolution. This local law or resolution may also permit eligible property to be granted the accelerated strategic exemption, provided that the law or resolution (a) contains findings that the adoption of the accelerated strategic exemption is necessary to encourage targeted economic development or create or retain permanent private-sector jobs and that the value of the exemptions to be provided is justified by the need to provide employment opportunities and broaden the tax base, (b) limits that applicability of the exemption to projects where the cost of construction, alteration, installation, or other improvement exceeds the sum of $50,000, and (c) provides that the exemption is restricted by property type and geographic area as recommended by the ICIB.

      If a county acts to restrict exemption, the restricted exemption applies to the taxes and special ad valorem levies of each city, town, village, and school district located in the area within which the restricted exemption is allowed by the county, unless such city, town, or village, by law, or school district, by resolution, determines that the restricted exemption is not applicable to its taxes and special ad valorem levies. However, initial exemptions granted on or after 8/5/97 are liable for special ad valorem levies established for fire district, fire protection district, and fire alarm district purposes. Upon enactment of its law restricting exemption, the county must notify all affected cities, towns, villages, and school districts of its actions and inform them of their options regarding such restricted exemption.

    3. Construction Start Date: With respect to the basic exemption, the taxing jurisdiction may specify in its local law or resolution any date after July 1, 1976 as the date after which construction must have begun for the property to be eligible for exemption.
       
    4. Construction Cost: For the basic exemption, the taxing jurisdiction may, in its local law or resolution, increase the required minimum cost of construction from any amount in excess of $10,000 to any greater amount not exceeding $50,000.
       
  3. LIMITATION ON EXEMPTION:
      General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Tax
    Special
    Assessments
    1. Amount Yes* Yes* Yes* No
    exemption
    allowed
    2. Duration 10 years** 10 years** 10 years** No
    exemption
    allowed
    3. Taxing Jurisdiction
    a. County or County
    Special Districts
    Ex*** NA Ex**** Tax
    b. City Ex*** NA NA Tax
    c. Town or Town
    Special District
    Ex*** NA Ex*** Tax
    d. Village Ex*** NA NA Tax
    e. School District NA Ex*** NA NA
      Ex-Exempt      Tax-Taxable       NA-Not Applicable

    * Basic Exemption - Amount of exemption is limited, in the first year, to 50% of increase in assessed value attributable to the construction or improvement; in each succeeding year, the amount of exemption is decreased by 5%. Local option may reduce the annual percentage of exemption allowed by state law.

    Accelerated Strategic Exemption - Of the increase in assessed value attributable to the construction or improvement, the amount of exemption is limited to 50% in each of the first three years, 40% in the fourth year, 30% in the fifth year, 20% in the sixth year, 10% in the seventh, eighth, and ninth years, and 5% in the tenth year.

    ** Less than 10 years if, under certain conditions, the exemption is granted subsequent to another exemption (see Summary, paragraph 3).

    *** Unless disallowed by local option.

    **** Unless disallowed by local option. However, initial exemptions granted on or after 8/5/97 are liable for special ad valorem levies established for fire district, fire protection district, and fire alarm district purposes.

  4. PAYMENTS IN LIEU OF TAXES: None required.
     
  5. CALCULATION OF EXEMPTION:
    1. General Municipal and School District Taxes: The schedule to be followed in calculating the exemption depends on which of the two types of exemption available the taxing jurisdiction has chosen to grant: the basic exemption or the accelerated strategic exemption.
       
      1. Basic Exemption: Unless reduced by local law or resolution, the following percentages of the increase in assessed value resulting from the construction or improvement should be applied:
        Year of Exemption Percentage of Exemption
        1
        2
        3
        4
        5
        6
        7
        8
        9
        10
        50
        45
        40
        35
        30
        25
        20
        15
        10
        5

         
      2. Accelerated Strategic Exemption: The following percentages of the increase in assessed value attributable to the construction or improvement should be applied:
         
    Year of Exemption Percentage of Exemption
    1 - 3
    4
    5
    6
    7 - 9
    10
    50
    40
    30
    20
    10
    5

    For both of the above types of exemption, the exempt amount for each year is to be calculated on the basis of the exemption base," defined as the increase in assessed value in the first year of the 10-year period, unless there has occurred in any year a change in the assessing unit's level of assessment of 15% or more, for a final assessment roll, in which case the exemption base must be adjusted by the fraction resulting by dividing the total assessed value of the parcel on that final roll (after accounting for any physical or quantity changes since the prior roll) by the total assessed value on the immediately preceding assessment roll. See Reporting Requirements (Assessor) below.
     
    1. Special Ad Valorem Levies and Special Assessments:

      Special Ad Valorem Levies: See General Municipal and School District Taxes above. However, initial exemptions granted on or after 8/5/97 are liable for special ad valorem levies established for fire district, fire protection district, and fire alarm district purposes.
      Special Assessments: No exemption allowed.
       
  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:
    Code Description of Alternative Codes Possible
    4760_ Initial exemption granted before 8/5/97
    4761_ Initial exemption granted on or after 8/5/97

    Assessment Roll Section(s): Taxable (RPS Section 1).

    NOTE: These codes should not be used to identify property that is exempt under any of the statutes listed under Similar Exemptions below. For coding of such property, see the Exemption Profile for the statute that applies.

  7. FILING REQUIREMENTS (Owner or Occupant of Property):
    Form RP-485-b   Application for Real Property Tax Exemption for Commercial, Business or
    Industrial Real Property (see sample form and instructions following
    Exemption Profile)

    Application required first year only. Application must be filed within one year of the date of completion of the construction or improvement project.
     
  8. REPORTING REQUIREMENTS (Assessor): Where the exemption base is adjusted because of a change in the assessing unit's level of assessment of 15% or more (see Calculation of Exemption above), the assessor must provide written notice of such exemption adjustment to the property owner. The owner may apply for a correction as provided under RPTL § §553, 554 or 556, if he or she believes the adjustment was calculated incorrectly.
     
  9. SIMILAR EXEMPTIONS:
    Subject Statute
     
    Branch banks in banking development districts RPTL §485-f
    Commercial properties in designated areas of
         Manhattan (New York City)
    RPTL §499-b
    Commercial properties in New York City except
         designated areas of Manhattan
    RPTL §499-bb
    Economic transformation areas RPTL §485-p
    Industrial and commercial properties in New York City
          (project certified by NYC Department of Finance)
    RPTL §489-bbbb
    Industrial and commercial properties in New York City
          (project certified by NYC Department of Finance
          after June 30, 2008)
    RPTL §489-bbbbbb
    Mixed-use properties in certain municipalities RPTL §485-a
    Mixed-use properties in New York City RPTL §489-bbbbb
    Municipal industrial development agencies RPTL §412-a; Gen Muny L §874
    NYS Urban Development Corporation(industrial project) McK U Con L §6272
    Property improvements in empire zones RPTL §485-e
    Residential-commercial properties in certain counties RPTL §485-n

Exemption Application Forms:

RP-485-b

RP-485-b-Ins

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