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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-bb

Commercial Properties in New York City
Outside Designated Areas of Manhattan

Exemption Code(s): Not applicable (see Coding of Abatement on Assessment Roll below) Year Originally Enacted: 1995

Related Statutes: None.

Real property which (1) was constructed prior to January 1, 1999, (2) has an aggregate floor area of 25,000 square feet or more, (3) is located in suitable zoned areas of New York City but outside certain designated areas of Manhattan, and (4) contains premises which are occupied or used as offices or other lawful commercial business activities (exclusive of retail, hotel or residential use) by a tenant under a lease executed on or after July 1, 2000 is eligible for a 3-year or 5-year abatement according to the terms of the tenant lease, subject to the amounts and limitations as stated above, but is liable for special assessments. The commencement of this abatement is limited to the period between July 1, 2000 and June 30, 2018, and must expire no later than June 30, 2018.

Real property which (1) is located in suitable zoned areas of New York City but outside certain other designated areas of Manhattan and (2) contains premises which are occupied and used for industrial and manufacturing activities (exclusive of hotel or residential use) by a tenant under a lease executed on or after July 1, 2005 is eligible for a three- to ten-year abatement of taxes according to the terms of the tenant lease, but is liable for special assessments. The tax abatement is limited to the tenant's share of the eligible square footage of the building times the "abatement base," which for the purposes of this abatement only is equal to the tax liability per square foot subject to a maximum of $2.50 per square foot for each year of the abatement. The commencement of this abatement is limited to the period between July 1, 2005 and June 30, 2018, and must expire no later than June 30, 2020.

  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:
      1. Abatement Zone A: Property constructed before January 1, 1999 must be located in an abatement zone, which for this property is defined as any district zoned commercially or industrially (C4, C5, C6, M1, M2, M3) in any area of New York City except the area lying south of the center line of 96th Street in the borough of Manhattan. A tenant may not expand or relocate from anywhere within an abatement zone unless expanding or relocating from an ineligible building. Any parcel which is partly located inside an abatement zone is considered to be entirely located inside this zone.
         
      2. Abatement Zone B: Property including premises that are occupied or used for industrial or manufacturing activity by a tenant under a three- to ten-year lease executed on or after July 1, 2005 must be located in a district zoned commercially or industrially (C4, C5, C6, M1, M2, M3) in any area of New York City, except the area lying south of the center line of 96th Street in the borough of Manhattan but including the Special Garment Center District (as defined in Chapter 1, Article XII of the Zoning Resolution of the City of New York).
         
    3. Property Use Requirements:   To receive this abatement, premises must be used for one of two activities: (a) commercial or (b) industrial and manufacturing
        .
      1. Commercial activities: Premises must be leased and occupied or used as offices (including ancillary uses), or occupied and used for other lawful commercial activities, which may include ancillary uses (but not retail, hotel, or residential uses). Such activities must be located in either a non-residential building or in a mixed-use building. In the case of a mixed-use building, more than 25 percent 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 held out for use as commercial, community facility, or accessory use space. In either case, the building must have an aggregate floor area of 25,000 square feet or more.
         
      2. Industrial and Manufacturing activities: Premises must be leased and occupied or used for industrial and manufacturing activities, which for the purposes of this abatement involves the assembly of goods to create a different article, or the processing, fabrication or packaging of goods not involving waste management or utility services. Eligible premises may also be occupied and used for other uses ancillary to industrial and manufacturing activities or for retail use. Eligible premises devoted to retail use must be occupied solely by the tenant of the eligible premises who has applied for and is receiving this tax abatement, and used for the purpose of selling or servicing the products of the tenant. These premises must be located in a non-residential building, and at least 50 percent of the aggregate floor area of the premises must be occupied or used for industrial and manufacturing activity (exclusive of ancillary and retail uses). Eligible premises may not be occupied or used for hotel or residential purposes.
         
    4. NOTE: The abatement for industrial and manufacturing activity applies to an eligible premise where at least 90 percent of the aggregate floor area is occupied for industrial and manufacturing activities. If at least 50 percent but less than 90 percent of the aggregate floor area of the eligible premise is used for industrial and manufacturing activities, the abatement is limited to the proportion of the eligible premises used only for industrial and manufacturing activities (excluding ancillary or retail use). The lease accompanying the application for the abatement must contain a statement that certifies the percent of eligible premises used for industrial and manufacturing activities, and the percent used for ancillary activities.

    5. 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.
       
    6. 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, 1999 for eligible buildings located in an abatement zone, comprising a district zoned commercially or industrially (C4, C5, C6, M1, M2, or M3). However, no construction start date is required for buildings located in abatement zones A and B (see Property Location Requirements above) that contain premises occupied and used for industrial and manufacturing activities by a tenant.
         
      2. Expenditures on improvements to the premises 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. Except for buildings located in abatement zones A and B (see Property Location Requirements above) that contain premises occupied and used for industrial and manufacturing activities, 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 premises and common areas of the eligible building must be at least $5/square foot; for an eligible building with 125 or fewer employees and a lease term of less than 5 but at least 3 years, or commencing on or after July 1, 2000 for eligible buildings constructed before January 1, 1999, improvement expenditures to the premises and common areas of the eligible building must be at least $2.50/square foot; for an eligible building with more than 125 employees and a lease term of 10 years or more, improvement expenditures to the premises and common areas of the eligible building must be at least $25/square foot. For buildings located in abatement zones A and B (see Property Location Requirements above) and which contain premises occupied and used for industrial and manufacturing activities, improvement expenditures to the eligible premises and common areas of the eligible building must be at least $2.50/square foot if the premises are leased to an new or expansion tenant, and $5.00/square foot if leased to a renewal tenant ($2.50/square foot for that portion of premises not previously occupied by the renewal tenant).

        For eligible buildings located in districts zoned commercially or industrially and which received certificates of occupancy before January 1, 1999, expenditures required for receiving either the 3-year and 5-year abatements must be made during the period between July 1, 2000 and December 31, 2010. The benefit period for both of these abatements must expire no later than June 30, 2018. For eligible buildings located in abatement zones A and B (see Property Location Requirements above) which received certificates of occupancy before January 1, 1999 and which contain premises occupied and used for industrial and manufacturing activities, expenditures required for receiving the abatement must be made during the period between July 1, 2005 and December 31, 2018. The benefit period for this abatement must expire no later than June 30, 2020.

        NOTE:  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.

  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 5-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 eligible eligiblesquare footage of the tax liability, as follows:
       
      Year Following Issuance of
      Certificate of Eligibility
      Amount of Abatement
      1 - 3
      4
      5
      100% of abatement base
      2/3 of first-year abatement
      1/3 of first-year abatement

      The amount of the 3-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
      2
      3
      100% of abatement base
      2/3 of first-year abatement
      1/3 of first-year abatement

      For eligible buildings located in abatement zones A and B (see Property Location Requirements above) and which contain premises leased for industrial and manufacturing activity the amount of the three- to ten-year abatement (the length depending on the lease term) is the abatement base, which for the purposes of this abatement only, is equal to the tax liability per eligible square foot subject to a maximum of $2.50/square foot for each eligible year following issuance of a certificate of eligibility. If during the benefit period the aggregate floor area devoted to industrial and manufacturing activities is reduced, the abatement must be reduced. Furthermore, this abatement is not available to premises currently receiving the 3- or 5-year abatements, as defined above.

      In no event may an abatement for the premises granted under this program exceed the tax liability allocable to the premises. Furthermore, a tenant who occupies or uses the 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 premises.

      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 and Industrial/Manufacturing Expansion Program (CEP).
     
  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 designated areas
    of Manhattan (New York City)
    RPTL §499-b
    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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