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Assessor's Manual, Volume 4, ExemptionAdministration

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

Section 4.06 - RPTL §499-b

Commercial Properties in Designated Areas of Manhattan
(New York City)

Exemption Code(s): Not applicable (see Coding of Abatement on Assessment Roll below) Year Originally Enacted: 1995

Related Statutes: None.

SUMMARY: Real property which (1) was constructed prior to January 1, 1975 and (2) contains premises that are occupied or used as offices, retail spaces, or as a private elementary or secondary school under a lease executed between April 1, 1995 and March 31, 2004 which is certified by the NYC Department of Finance, and (3) is located in designated areas of Manhattan is eligible for a 5 year abatement in taxes, but liable for special assessments. The amount of the tax abatement is limited to the tenant's share of the eligible square footage of the building times the "abatement base," defined as the lesser of $2.50 of the tax liability per square foot or 50% of the tax liability per square foot for the first three years of the abatement; two thirds of the first year abatement for the fourth year abatement; and one third of the first year abatement for the fifth year abatement. The commencement of this abatement is limited to the period between April 1, 1995 and March 31, 2018, and must expire no later than March 31, 2024.

Real property which (1) was constructed prior to January 1, 1975 (2) is located in designated areas of Manhattan and (3) contains premises which are occupied or used as offices, retail space, or as a private elementary or secondary school by a tenant under a lease executed on or after April 1, 1997 with an initial lease term of less than five but at least three years is eligible for a 3 year abatement in taxes, but liable for special assessments. This tax abatement is limited to the tenant's share of the eligible square footage times the abatement base, which for purposes of this abatement is equal to the tax liability per square foot subject to a maximum of $2.50 per square foot for the first year of the abatement; two thirds of the first year abatement for the second year abatement; and one third of the first year abatement for the third year abatement. The commencement of this abatement is limited to the period between April 1, 1997 and March 31, 2018, and must expire no later than March 31, 2024.

  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements: Facility must be owned or operated by a private individual or organization. Each condominium unit is considered a separate eligible building.
       
    2. Property Location Requirements: Property must be located in New York City within the designated area of Lower Manhattan defined in RPTL §499-a(2). Any parcel which is partly located inside this designated area is considered to be entirely located inside this area. A tenant may not relocate from any area of the borough of Manhattan north of the center line of 96th Street or from any of the four boroughs of New York City.
       
    3. Property Use Requirements: Benefits under this abatement program are reserved exclusively for non-residential or mixed-use properties. In the case of fixed-use properties, more than 25% of the aggregate floor area of the building or structure (sum of the gross areas of the floors of the building or structure) must be used or held out for use as commercial, community facility or accessory use space.
       
    4. Certification by State or Local Government: Project must be certified for abatement eligibility by the NYC Department of Finance. The NYC Department of Finance will revoke or reduce an abatement if all or part of the premises are vacated prior to the end of the lease termination date or if an applicant fails to comply with the requirements.
       
    5. Required Construction Start Date or Other Time Requirement: 
      1. There must be a certificate of occupancy for the building or other proof which is acceptable to the NYC Department of Finance that construction occurred before January 1, 1975.
         
      2. Expenditures on improvements must be made within sixty days of the lease commencement date for a "new" or "expansion" tenant and within one year for a "renewal" tenant. The amount of improvement expenditures required varies with the number of persons employed within 60 days after rent payment begins and with the length of term of the lease: for an eligible building with 125 or fewer employees and a lease term of 5 years or more, improvement expenditures to the expansion premises and common areas of the eligible building must be at least $10/square foot; for an eligible building with 125 or fewer employees and a lease term of less than 5 but at least 3 years, commencing on or after April 1, 1997, improvement expenditures to the expansion premises and common areas of the eligible building must be at least $5/square foot; for an eligible building with more than 125 employees and a lease term of 10 years or more, improvement expenditures to the expansion premises and common areas of the eligible building must be at least $35/square foot. Expenditures on improvements to common areas of an eligible building made prior to three years before the lease commencement date may not be included in the amount of expenditures required for receiving an abatement. The commencement of the five-year abatement is limited to the period between April 1, 1995 and September 30, 2018; the commencement of the three-year abatement is limited to the period between April 1, 1997 and March 31, 2018. The benefit period for both abatements must expire no later than March 31, 2024.
         
  2. LOCAL OPTION: No.
     
  3. LIMITATION ON EXEMPTION:
        General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Levies
    Special
    Assessments
    1. Amount Yes* Yes* NA No
    abatement
    allowed
    2. Duration Yes* Yes* NA No
    abatement
    allowed
    3. Taxing Jurisdiction
    a. City
    Ex NA NA Tax
    b. School District NA Ex NA NA
        Ex-Exempt   Tax-Taxable   NA-Not Applicable

    * Limitation on amount and duration depends on type of project -- see Calculation of Exemption below.

  4. PAYMENTS IN LIEU OF TAXES: None required.
     
  5. CALCULATION OF EXEMPTION:
    1. General Municipal and School District Taxes: The amount of the five-year abatement is calculated as a percentage of the abatement base," defined as the lesser of $2.50 per eligible square foot or 50 percent of the tax liability of the expansion square footage of the tax liability, as follows:
        
      Year Following Issuance of
      Certificate of Eligibility
      Amount of Abatement
      1 - 3 100% of abatement base
      4 2/3 of first-year abatement
      5 1/3 of first-year abatement

      The amount of the three-year abatement is calculated as a percentage of the abatement base, which for purposes of this abatement only, is equal to the tax liability per square foot subject to a maximum of $2.50/square foot, as follows:

      Year Following Issuance of
      Certificate of Eligibility
      Amount of Abatement
      1 100% of abatement base
      2 2/3 of first-year abatement
      3 1/3 of first-year abatement

      In no event may an abatement for the expansion premises granted under this program exceed the tax liability allocable to the expansion premises. Furthermore, a tenant who occupies or uses the expansion premises for which a certificate of abatement is issued under this program may not be eligible to receive a second certificate of abatement for the same expansion premises. However, such a tenant is eligible to receive a second certificate of abatement if his or her lease is terminated as a result of a taking of the property by eminent domain. To receive this second certificate the tenant must relocate to another eligible premise within 18 months after the lease is terminated because of the taking of the property by eminent domain.

      If, for any reason, there is a reduction of taxable assessed value, the abatement must be recalculated and the difference applied to any future taxes levied against the eligible property.

    2. Special Assessments: No abatement allowed.
       
  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:
    Code Description of Alternative Codes Possible
    Not applicable  

    Assessment Roll Section(s):

    NOTE: Since the abatement allowed here 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.

  7. FILING REQUIREMENTS (Owner or Occupant of Property): Filing requirements may be accessed at the website of the New York City Department of Finance, at www.nyc.gov/dof. The program described on this website is known as the Commercial Revitalization Program (CRP).
     
  8. REPORTING REQUIREMENTS (Assessor): None.
     
  9. SIMILAR EXEMPTIONS:
    Subject Statute
    Branch banks in banking development districts RPTL §485-f
    Business investment property RPTL §485-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)
    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

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