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Assessor Manuals, Exemption Administration

Exemption Administration Manual—Part 2: Industrial, Commercial, and Public Service

Section 4.06 - RPTL Section 489-bbbb: Industrial and commercial properties in New York City (project certified by NYC Department of Finance)

Exemption code(s):

47660

Year originally enacted:

1984

Related statutes:

RPTL §489-ddd

Summary:

If allowed by local option, newly constructed or improved industrial, commercial, and mixed use facilities that (1) are located in areas designated by the Temporary Commercial Incentive Area Boundary Commission, (2) are certified by the NYC Department of Finance, and (3) meet the requirements relating to minimum expenditures are partially exempt from taxation, but are liable for special assessments. Certain completed industrial construction projects are eligible for tax abatement. Certain other facilities located in designated areas are not exempt from taxation but are eligible for tax deferral. Applications for certificates of eligibility may be made until June 30, 2008 for all projects. No benefits will be granted for construction work performed pursuant to building permits issued after July 31, 2008, except projects in certain areas of Manhattan pertaining to new construction of structures meeting certain technological requirements. Exemption or deferral is not allowed for any project issued a certificate of eligibility for exemption under RPTL §489-ddd.

Note: This program is being replaced by the Industrial and Commercial Abatement Program (ICAP), as authorized in RPTL §489-bbbbbb, under Ch. 119, L. 2008 (see this abatement profile in Section 4.06, p.368.01).

Eligibility requirements:

Ownership requirements:

Facility must be owned or operated by a private individual or organization.

Property location requirements:

Property must be located in New York City in an area designated by the Temporary Commercial Incentive Area Boundary Commission as suitable for tax exemption or tax deferral under this statute.

Property use requirements:

Depending on location, property must be used for

  • Industrial purposes, defined as use of the building, to the extent of at least 75% of the total net square footage, for manufacturing activities involving the assembly of goods or the fabrication or processing of raw materials, or
  • Commercial purposes, defined as use of the building for buying, selling, or otherwise providing goods and services or for other lawful business, commercial, or manufacturing activities: (1) where not more than 15% of the total net square footage was used for manufacturing activities at any time during specified periods immediately preceding the date of application for a certificate of eligibility, as follows: (a) 60 months, if the property is located in Manhattan south of the center line of 96th Street, or (b) 24 months, if the property is located elsewhere; or (2) where application for a certificate of eligibility for industrial construction work is filed on or after July 1, 2000 within a Commercial Revitalization Area (defined as any district zoned C4, C5, C6, M1, M2, or M3 in accordance with the zoning resolution in any area except the area in Manhattan lying south of the center line of 96th Street).

Following the completion of construction of projects receiving a certificate of eligibility that are located in Commercial Revitalization Areas, the total net square footage of the industrial property used or immediately available and held out for use for such manufacturing activity after completion of such industrial work may not be less than the total net square footage used or immediately available and held out for use of such manufacturing activities before the commencement of such construction work For purposes of this subset, the term industrial construction work is defined as the modernization, rehabilitation, expansion, or improvement of an existing building or structure for use as industrial property, and the term industrial property is defined as nonresidential property on which will exist after completion of industrial construction work a building or structure wherein at least 25 percent of the total net square footage is used or immediately available and held out for use for manufacturing activities involving the assembly of goods or the fabrication or processing of raw materials.

No part of the property may be used for "restricted activity, " defined as any entertainment activity that the NYC Department of Finance has determined is an activity that, in the public interest, should not be encouraged through exemption, deferral, or abatement benefits.

Also qualifying for exemption is mixed-use property, defined as property on which exists, or will exist upon completion of construction work, a building or other structure used for both residential and nonresidential purposes.

Conversion of industrial property to commercial property or vice versa after issuance of a certificate of eligibility may affect eligibility for exemption (see Calculation of Exemption below).

Certification by state or local government:

Project must be certified for eligibility by the NYC Department of Finance.

Required construction start date or other time requirement:

Minimum expenditures for commercial, renovation, or industrial construction work must be made on a set schedule. Unless a higher percentage is established by the NYC Department of Finance, the minimum required expenditure is an amount equal to 20% of the property's initial assessed value," defined as the lesser of (1) the taxable assessed value of the property on the effective date of the certificate of eligibility or (2) the assessed value as reduced by the NYC Tax Commission or court order. The following minimum required expenditures are specified for applicants filing after July 1, 1995 for a certificate of eligibility: (1) 10% of the property's initial assessed value for: (a) industrial construction projects in any part of the city, except those projects where an abatement is being sought (see Calculation of Exemption, General Municipal and School District Taxes) and exemption areas; and (2) 25% of the property's initial assessed value for other industrial construction projects. Expenditures for residential construction work may not be included in the minimum required expenditure; however, in the case of mixed-use property, expenditures for construction work related to the common areas and systems of such property may be included to the extent that they are allocated to the nonresidential portion of the property.

No exemption or abatement benefits will be granted for construction work pursuant to building permits issued after July 31, 2008. However, applicants who perform construction work on a building or structure pursuant to building permits issued after July 31, 2008 may receive exemption or abatement benefits for such construction work, provided that any such applicant performing such construction work applied for a certificate of eligibility prior to July 1, 2008 and provided further that any such applicant received one building permit for the construction work as described in such application prior to August 1, 2008.

All projects except certain projects pertaining to new construction of certain technologically advanced structures: All construction work must be completed on or before December 31, 2013. The applicable abatement amount related to such construction work may not exceed the amount as of the taxable status date of January 5, 2014.

Certain projects pertaining to new construction of certain technologically advanced structures: For those projects located in a certain district in lower Manhattan, as defined in §489-cccc(6b) and exclusive of the "Project Area," the schedule is as follows. A recipient with a certificate of eligibility must complete construction of the foundation of the approved structures within 24 months of the effective date of the recipient's certificate of eligibility and the recipient must complete construction of those structures within 42 months of the effective date of the recipient's certificate of eligibility.

For all projects eligible for this exemption or abatement, all construction work will be deemed completed when a temporary or final certificate of occupancy is issued by the City Department of Buildings or, if such work does not require the issuance of a temporary or final certificate of occupancy, at the time the applicant or applicant's engineer submits an affidavit to the City Department of Finance certifying the completion. Also, for purposes of all construction work, a demolition permit will be considered a building permit.

Local option

Yes. The city may choose whether or not to allow the exemption or deferral. The option must be exercised through adoption of a local law.

Limitation on exemption

Limitation on exemption by amount, duration, and taxing jurisdiction
General municipal taxes School district taxes Special ad valorem tax Special assessments
1. Amount Yes* Yes* NA No exemption allowed
2. Duration Yes* Yes* NA No exemption allowed
3. Taxing jurisdiction
a. City Ex** NA NA Tax
b. School district NA Ex** NA NA
Ex-Exempt   Tax-Taxable   NA-Not Applicable

*Limitations on amount and duration vary by type of project - see Calculation of Exemption below.

** If allowed by local option.

Payments in lieu of taxes

None required.

Calculation of exemption

General municipal and school district taxes:

The amount of exemption or deferral is calculated as a percentage of the exemption base," which varies by type of exemption/abatement/deferral program and by effective date of the certificate of eligibility:

For Programs 1 (see also (b) below), 2, 3, 4 and certificate of eligibility with effective date of June 30, 1992 or earlier:

Table
Year following effective date of certificate of eligibility Exemption base
1-3 Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to commercial or industrial construction work described in approved plans
All later years Assessed value of such improvements made before the 4th taxable status date following effective date of the certificate

For Program 1, with respect to industrial property located in Manhattan north of the center line of 96th Street or in the Bronx, Brooklyn, Queens, or Staten Island, and certificate of eligibility with effective date after December 31, 1989 but before July 1, 1992:

Table
Year following effective date of certificate of eligibility Exemption base
1-3 Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to commercial or industrial construction work described in approved plans
All later years Assessed value of such improvements made before the 4th taxable status date following effective date of the certificate, plus any equalization increases or minus any equalization decreases in assessed value occurring subsequent to the 4th taxable status date following issuance of the certificate but before the 14th taxable status date following the effective date of the certificate

For Programs 3, 4, and 5 and certificate of eligibility with effective date of July 1, 1992 or later:

Table
Year following effective date of certificate of eligibility Exemption base
1-5 Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to commercial or industrial construction work described in approved plans
All later years Assessed value of such improvements made before the 6th taxable status date following the effective date of the certificate

For Programs 1 and 2 and certificate of eligibility with effective date of July 1, 1992 or later:

Table
Year following effective date of certificate of eligibility Exemption base
1-5 Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to commercial or industrial construction work described in approved plans, plus any equalization increases or minus any equalization decreases in assessed value occurring subsequent to the effective date of the certificate
All later years

Assessed value of such improvements made before the 6th taxable status date following the effective date of the certificate, plus any equalization increases or minus any equalization decreases in assessed value occurring subsequent to the effective date of the certificate but before the 14th taxable status date following the effective date of the certificate

For Program 5-a and property (1) located south of the center line of 96th Street in Manhattan excluding (a) a certain district in Lower Manhattan (as defined in RPTL §489-cccc(6c)) and (b) the Project Area" (as defined by the Battery Park City Authority), and (2) which has received a certificate of eligibility with an effective date of July 1, 1995 or later:

Table
Year following effective date of certificate of eligibility Exemption base
All following years Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to the construction work of new buildings or structures described in the approved plans, provided these improvements are made within 36 months of the effective date of the certificate or by December 31, 1999, whichever is earlier.

For Program 5-a, and property (1) located in a certain district in Lower Manhattan, (defined in §489-cccc(6b)), but exclusive of the Project Area," and (2) which has received a certificate of eligibility with an effective date of July 1, 1995 or later:

Table
Year following effective date of certificate of eligibility Exemption base
All following years Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to the construction work of new buildings or structures described in the approved plans, provided these improvements are made within 42 months of the effective date of the certificate.

For Program 5-a and property (1) located south of a center line of 34th Street excluding (a) a certain district in Lower Manhattan (as defined in RPTL §489-cccc(6b)) and (b) the "Project Area" (as defined by the Battery Park City Authority), (2) for which an application for a certificate of eligibility has been made on or before December 31, 1996, and (3) for which all other eligibility requirements are met:

Table
Year following effective date of certificate of eligibility Exemption base
All following
years
Assessed value of improvements made since the effective date of the certificate which are attributable exclusively to the construction work of new buildings or structures described in the approved plans, provided these improvements are made by December 31, 2000.

The percentage and duration of the exemption, abatement or deferral vary by type of project, as follows:

Program 1: Industrial project in any area of city. Application for certificate of eligibility filed on or before June 30, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-13 100
14 90
15 80
16 70
17 60
18 50
19 40
20 30
21 20
22 10

Application for certificate of eligibility filed on or after July 1, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1–16 100
17 90
18 80
19 70
20 60
21 50
22 40
23 30
24 20
25 10

Application for certificate of eligibility filed on or after July 1, 1995, and in which recipient of certificate both commenced and completed industrial construction work:

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-4 50
5-6 40
7-8 30
9-10 20
11-12 10

If the real property tax on the property eligible for abatement in the tax year immediately preceding the effective date of such certificate of eligibility is changed because of a determination of the City Department of Finance, the Tax Commission, or of a court, then any abatement granted under this subprogram prior to that reduction must be recalculated. Any abatement granted under these conditions must reflect these changes to the real property taxes for the tax year immediately preceding the effective date of the certificate of eligibility.

No property which is the subject of a certificate of eligibility in this subprogram may receive more than one abatement, nor may this abatement exceed one consecutive 12-year period. Under no circumstances will abatements granted under this subprogram exceed the annual real property taxes imposed on the eligible property.

For computing an abatement of real property taxes in those instances in which a parcel contains more than one building or structure and in which not all buildings and structures comprising the parcel are included in the certificate of eligibility for industrial construction work, the real property taxes imposed on the parcel for the tax year immediately preceding the effective date of such certificate of eligibility is apportioned among the improvements and land comprising the parcel, and only the real property taxes attributable to the property specified in the certificate of eligibility under this subprogram are to be abated according to the above schedule. Procedures for such apportionment are based on rules promulgated by the City Department of Finance.

Program 2: Commercial project in special exemption area:

Application for certificate of eligibility filed on or before June 30, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-13 100
14 90
15 80
16 70
17 60
18 50
19 40
20 30
21 20
22 10

Application for certificate of eligibility filed on or after July 1, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-16 100
17 90
18 80
19 70
20 60
21 50
22 40
23 30
24 20
25 10

Program 3: Commercial project in regular exemption area

Application for certificate of eligibility filed on or after June 30, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-8 100
9 80
10 60
11 40
12 20

Application for certificate of eligibility filed on or after July 1, 1995.

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-11 100
12 80
13 60
14 40
15 20

Program 4: Commercial project in a deferral area

Year and percentage of exemption
Year following effective date of certificate of eligibility Amount of tax payments to be deferred or Paid (percentage of exemption base)
1-3 Deferral of 100%
4 Deferral of 80%
5 Deferral of 60%
6 Deferral of 40%
7 Deferral of 20%
11-20 Payment each year of 10% of total dollar amount of tax payments

Program 5: Commercial renovation project in renovation exemption area

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-8 100
9 80
10 60
11 40
12 20

Program 5-a: Construction of new buildings or structures in designated areas of Manhattan that meet certain technological requirements

Year and percentage of exemption
Year following effective date of certificate of eligibility Percentage of exemption
1-4 100
5 80
6 60
7 40
8 20

If, after a certificate of eligibility is issued, a commercial project is used for industrial purposes, the property is entitled to continuation of exemption or deferral benefits as a commercial project.

If, after a certificate of eligibility is issued, an industrial project is used for commercial purposes, the property becomes taxable, except in the following cases:

  1. If the project is located in a special exemption area and would have been eligible for exemption as a commercial project at the time industrial exemption benefits were applied for, the project is entitled to continuation of exemption as an industrial project.
  2. If the project is located in a regular exemption area and would have been eligible for exemption as a commercial project at the time industrial exemption benefits were applied for, the project is entitled to exemption as a commercial project, beginning on the date of conversion to commercial use.

Program 6: Construction Project in Commercial Revitalization Area

Application for certificate of eligibility filed on or after July 1, 2000

Year and percentage of abatement
Year following completion of industrial work Percentage of abatement
1-4 50
5-6 40
7-8 30
9-10 20
11-12 10

If the total net square footage of the industrial property used or immediately available and held out for use for manufacturing activities involving the assembly of goods or the fabrication of processing of raw materials is less than 75% of the total net square footage of the industrial property, the abatement will be determined by the NYC Department of Finance according to its rules.

Note: In all cases the total net square footage used or immediately available and held out for use for such manufacturing activities after completion of industrial construction work may not be less than the total net square footage used or immediately available and held out for such manufacturing before commencement of such construction work.

Special assessments

No exemption allowed.

Coding of exemption on assessment roll

Coding of exemption on assessment roll
Code Description of alternative codes possible
47660

Assessment roll section(s):

Taxable.

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. Furthermore, since any abatement allowed under this section of law is a reduction in actual taxes levied rather than a reduction in assessed value, no exemption code should be used and no dollar amount should be entered in the "exempt value" section of the assessment roll.

Filing requirements (owner or occupant of property)

None.

Reporting requirements (assessor)

None.

Similar exemptions

Similar exemptions
Subject Statute
Branch banks in banking development districts RPTL §485-f
Business investment property RPTL §485-b
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
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

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