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Assessor's Manual, Volume 4, Exemption Administration

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

Section 4.06 - RPTL Section 485-p

Economic Transformation Areas

Exemption Code(s):  4450_ 

Year Originally Enacted:  2011 

Related Statutes:  COM §§ 400(10), (11); §402(3) 

SUMMARY:  If allowed by local option, real property constructed, altered, installed or improved within an economic transformation area (as designated by the Empire State Development (ESD)) and used for a business, commercial or industrial purpose and also owned by a business entity that has been issued a certificate of eligibility is partially exempt from taxation and special ad valorem levies for 5 years, but is liable for special assessments.  The option to exempt must be adopted in local law or ordinance (or by a resolution for a school district) within three years of the date of closure of a closed facility (see Property Use Requirements below) located in the economic transformation area.  Construction of the eligible project must begin within one year after a certificate of eligibility is issued to the project owner.

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

If the eligible project is on or at the site of a closed facility, the exemption benefit starts at 50 percent of the added value in the first year of the five-year term, declining by 10 percentage points in each succeeding year.  If the project is located outside a closed facility but inside an economic transformation zone, the exemption benefit starts at 25 percent of the value added in the first year of the five-year term, declining by 5 percentage points in each succeeding year.

This exemption may not be granted concurrently with or subsequent to any other property tax exemption with respect to the same project, 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-p.  In that case, the property may be eligible for a §485-p exemption for a period of 5 years less the number of years such payments to the local government were made.  (Note that, as is the case with other §485-p exemption applications, application for this type of subsequent exemption must be filed within one year of the date of completion of the eligible project).

 NOTE: This exemption expires on December 31, 2021. 

A.        ELIGIBILITY REQUIREMENTS: 

1.         Ownership Requirements:  Property must be owned by a business entity which has received a certificate of eligibility.

2.         Property Location Requirements: Property eligible for the exemption in which benefits start in the initial year at the 50% level must be located on or at the site of a closed state-owned facility (see Property Use requirements below) and within an economic transformation area, as designated by ESD.   Property eligible for the exemption may be located outside a closed facility, but must be located within an economic transformation area.  

3.         Property Use Requirements: Eligibility for this exemption applies only to closed state-owned facilities.  For purposes of this exemption closed state-owned facilities include correctional facilities slated for closure by the governor between April 1, 2011 and March 31, 2012, along with certain facilities operated by the Office of Children and Family Services but subsequently closed by that office, and also as reported to ESD.  Benefits under this exemption are reserved exclusively on such real property that is constructed, altered, installed or improved and used for a business, commercial or industrial purpose.  Costs attributable to ordinary maintenance or repairs are not eligible for the exemption.

 4.        Certification by State or Local Government: The business entity must first receive a certificate of eligibility from ESD.  Completion of the project must be demonstrated by a certificate of occupancy. 

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 on the project must commence within one year of the date of issuance of the certificate of eligibility to the property owner.  

 

B.        LOCAL OPTION:   Yes - Each county, city, town, village and school district (except the city school districts of Buffalo, New York City, Rochester, Syracuse and Yonkers) which contains an Economic Transformation Area 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.  furthermore, the taxing jurisdiction must exercise this local option within three years of the closure of a closed state-owned facility.  

 

C.        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

 

5 years*

 

5 years*

 

5 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 

  *     Amount limited to the "base amount," or a proportion thereof (see Calculation of Exemption below).

**     If allowed by local option.

D.        PAYMENTS IN LIEU OF TAXES: None required. 

E.        CALCULATION OF EXEMPTION:

 1.    General Municipal and School District Taxes: Percentages of the base amount as shown.  The base amount is the increase in assessed value attributable to eligible construction, alteration, installation or improvement as determined in the initial year of exemption.  The base amount remains constant throughout the term of each exemption schedule below unless there is (a)  subsequent construction, alteration, improvement or improvement during the exemption term (where the assessor will revise the base amount to include the increase in assessed value attributable to these subsequent projects); or (b) a change in the level of assessment of 15 percent or more, as certified by ORPTS (where the assessor will adjust the base amount by such change in the level of assessment). 

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

(a) Project located within a closed facility, and which in turn is located in an economic transformation area:

                                                                                                      Percentage of
                                         Year of Exemption                                Exemption
                                                            1                                              50
                                                            2                                              40
                                                            3                                              30
                                                            4                                              20
                                                            5                                              10

(b) Project located outside of a closed facility but within an economic transformation area:

                                                                                                     Percentage of
                                         Year of Exemption                               Exemption 
                                                           
1                                              25
                                                            2                                              20
                                                            3                                              15
                                                            4                                              10
                                                            5                                                5

 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.

F.        CODING OF EXEMPTION ON ASSESSMENT ROLL: 

               Code                       Description of Alternative Codes Possible
              4450_ 

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. 

G.        FILING REQUIREMENTS (Owner or Occupant of Property):   

Form RP-485-p   -   Application for Real Property Tax Exemption for Real Property  in Economic Transformation Areas.
Application required in first year only.  Application must be filed within one year of the date of completion of the construction, alteration, installation or improvement project.

         Form may be downloaded and printed.                                                  

H.        REPORTING REQUIREMENTS (Assessor):  None.

I.         SIMILAR EXEMPTIONS:

            Subject                                                                                           Statute

Business investment property outside New York City                                       RPTL §485-b

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