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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-e

Property Improvements in Empire Zones

Exemption Code(s): 4767_ Year Originally Enacted:     1986

Related Statutes:     Gen Mun L § §955-969; Tax L § §15, 187(j)

SUMMARY:     If allowed by local option, real property that (1) is located in a designated empire zone (formerly known as an economic development zone) and (2) is constructed or improved after the zone is designated is partially exempt from taxation and special ad valorem levies for up to 10 years, but is liable for special assessments.

The amount of exemption is limited to a percentage of the increase in assessed value attributable to the construction or improvement as determined in the first year of exemption. The increase in assessed value ("base amount") used to calculate the amount of exemption remains constant throughout the term of exemption, except (1) where there is subsequent construction or improvement during the term of exemption or (2) where there occurs in the assessing unit an overall change in the level of assessment of 15% or more; in either case the base amount must be adjusted.

The amount and duration of the exemption depends upon whether the taxing jurisdiction has adopted a fixed 10-year term for the exemption (see Local Option below). If the taxing jurisdiction has adopted a fixed 10-year term, then 100% of the base amount is exempt during the first 7 years of the exemption, 75% is exempt in the 8th year, 50% is exempt in the 9th year, and 25% is exempt in the 10th year. If the taxing jurisdiction has not adopted a fixed 10-year term, then the exemption will end in the 10th year of the zone's life, and the exemption percentages will likewise be tied to the zone's life (see Calculation of Exemption below).

This exemption may not be granted concurrent with or subsequent to any other property tax exemption with respect to the same improvements, 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-e. In that case, the property may be eligible for a §485-e exemption for a period of up to 10 years less the number of years such payments to the local government were made. (Note that, as is the case with other §485-e 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.)

NOTE: As a result of Chapter 57, Part S-1 of the Laws of 2009, General Municipal Law §969(1)(a) has been amended to provide that the designation of all Empire Zones must terminate on June 30, 2010. Accordingly no new Empire Zone exemptions may be granted on any assessment roll with a taxable status date of June 30, 2010 or later.

  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements:     None.
       
    2. Property Location Requirements: Property must be located in an empire zone identified as such by the State Empire Zones Designation Board (administered by the New York State Department of Economic Development).

      Once it is designated, an empire zone continues to be so designated until June 30, 2010, unless the designation is terminated by the NYS Commissioner of Economic Development. Designation may be terminated if it is found that (1) the local area has failed substantially to implement the empire zone plan within the time required, (2) there has been no substantial business development or job creation in the zone within 5 years after the designation, (3) there has been inadequate management and evaluation of the zone at the local level, or (4) the local area has repeatedly failed to comply with program reporting requirements.

      The governing body of a county, city, town, or village may, by resolution, submit to the Commissioner of Economic Development a request to revise the boundaries of an existing empire zone as provided by law.

      Revision of the borders of an empire zone has no effect on the duration of the designation of the zone.

      No property tax exemption may be granted for an improvement project in an area added to an empire zone if that project was begun prior to addition of the area. If an improvement project is located in an area removed from the zone, the project remains eligible for exemption.

    3. Property Use Requirements:     None.
       
    4. Certification by State or Local Government: Each empire zone must be designated by the state Empire Zones Designation Board. Upon designation of a zone, termination of a zone, or revision of a zone's borders, the Commissioner of Economic Development must file notice of such action with the NYS Office of Real Property Tax Services and with officials of the municipalities and school districts in which the empire zone is located. This notice must contain a description sufficient to identify the zone, including the names of abutting streets, roads, highways, bodies of water, or other identifying physical features.
       
    5. Required Construction Start Date or Other Time Requirement: The construction, alteration, installation, or other improvement must have commenced on or after the date that the empire zone was designated. Furthermore, the Commissioner of Economic Development must have filed notice of the designation of the zone with the clerk of the assessing unit on or before the applicable taxable status date.
       
  2. LOCAL OPTION: Yes -- Each county, city, town, village, and school district may choose whether or not to allow the exemption. The option to exempt must be exercised through adoption of a local law, ordinance, or resolution after a public hearing.

    In addition, in the local law, ordinance, or resolution authorizing exemption, the taxing jurisdiction may provide that exemption will be for a term of 10 years even though designation of the empire zone may expire before the end of the 10-year period. Such a provision applies only to exemptions commencing on assessment rolls with taxable status dates on or after the effective date of the local law, ordinance, or resolution containing the provision.

  3. LIMITATION ON EXEMPTION:
      General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Levies
    Special
    Assessments
    1. Amount Yes* Yes* Yes* No
    exemption
    allowed
    2. Duration Up to
    10 years**
    Up to
    10 years**
    Up to
    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

    * See Calculation of Exemption below.

    ** Less than the exemption period allowed in the empire zone if, under certain conditions, the exemption is granted subsequent to another exemption (see Summary, paragraph 4).

    *** If allowed by local option.

  4. PAYMENTS IN LIEU OF TAXES: None required.
     
  5. CALCULATION OF EXEMPTION:
     
     
    1. General Municipal and School District Taxes: % of base amount as shown below. The base amount is the increase in assessed value attributable to new construction or improvements as determined in the first year of exemption. The base amount remains constant throughout the term of exemption unless (a) there is subsequent construction or improvement during the term of exemption or (b) there occurs in the assessing unit an overall change in the level of assessment of 15% or more, in which case the base amount must be adjusted.

      The percentage of the base amount that is exempt varies as follows:

      1. If the taxing jurisdiction (by local law, ordinance, or resolution)allows a 10-year exemption regardless of the expiration date of the economic development zone:
        Year of Exemption Percentage of
        Exemption
        1-7
        8
        9
        10
        100
        75
        50
        25

         
      2. If the taxing jurisdiction has not taken the above action and, instead, the term of exemption is tied to the life of the empire zone:
        First Year of Eligibility
        for Exemption =
        Following Year of
        Existence of Empire Zone
        Percentage of
        Exemption
        1
        2
        3
        4
        5
        6
        7
        8
        9
        10
        100
        100
        100
        100
        100
        100
        100
        75
        50
        25

        Thus the maximum exemption would be 10 years at the above percentages and the minimum would be 1 year at 25%.

      If the designation of an empire zone is terminated, an exemption in effect prior to the termination continues for its original term; however, any further increase in assessed value attributable to new construction or improvements after the date of termination is not eligible for exemption.

    2. Special Ad Valorem Levies and Special Assessments:

      Special Ad Valorem Levies: See General Municipal and School District Taxes above.

      Special Assessments: No exemption allowed.

  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:

    Code    Description of Alternative Codes Possible

    4767

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

    NOTE: This code 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):

    Applications for this exemption closed on June 30, 2010

  8. REPORTING REQUIREMENTS (Assessor): None.  
     
  9. SIMILAR EXEMPTIONS:
    Subject Statute
    Branch banks in banking development districts RPTL §485-f
    Business investment property outside New York City RPTL §485-b
    Commercial properties in designated areas of
          Manhattan (New York City)
    RPTL §499-b
    Economic transformation areas RPTL §485-p
    Commercial properties in New York City outside
          designated areas of Manhattan
    RPTL §499-bb
    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
    Residential-commercial properties in certain counties RPTL §485-n

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