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Assessor Manuals, Exemption Administration

Exemption Administration Manual—Part 2: Multiple dwellings and urban renewal

Section 4.07 - RPTL Section 422: Not-for-profit housing companies

Exemption code(s)

Exemption codes
Subject Code
Aged (housing development fund company property) 2811_
Aged (limited-profit housing company property) 28120
Child-care institution 28100
Educational institution 28100
Handicapped (housing development fund company property) 2811_
Handicapped (limited-profit housing company property) 28120
Hospital 28100
Hostel for mentally ill or retarded 28540
Medical research institute 28100
Nursing home or other health-related facility 28520
Senior citizen center 28550

Note: See Coding of exemption on assessment roll.

Year originally enacted:

1957

Related statutes:

  • RPTL §490
  • PHFL §33(1)(a)

Summary:

This exemption applies to property owned by certain private housing companies that is used for the following purposes: (1) housing and auxiliary facilities for aged persons of low income, and financed by a federally-aided mortgage as defined in PHFL §572(5), (2) housing and auxiliary facilities for handicapped persons of low income, (3) housing and auxiliary facilities for child-care institution residents or employees, (4) housing and auxiliary facilities for educational institution students, faculty, or staff, (5) housing and auxiliary facilities for medical research institute attendees or employees, (6) housing and auxiliary facilities for hospital patients or staff, (7) a nursing home or other health-related facility for low-income persons, (8) a hostel for the mentally ill or retarded, or (9) a senior citizen center. This exemption applies only if 90% or more of the total property is used for one or more of these purposes, and it applies only to the portion of the property so used. If less than 90% of the property is used for these purposes, the property may be exempt under PHFL §33(1)(a) (see the Exemption Profile for that statute).

In New York City and Nassau County, exemption from taxation under RPTL §422 for certain types of property may, by local option, be disallowed or limited in amount. Otherwise, exemption for eligible projects is mandatory; property qualifying for exemption is wholly exempt from taxation and is exempt, for certain purposes, from special ad valorem levies and special assessments.

Eligibility requirements

Ownership requirements:

Ownership requirements vary according to the special group being served by the housing company project. The owners eligible for exemption are as follows:

Ownership requirements
Special group and type of project Owner
Aged or handicapped of low income (housing) Housing development fund company (not-for-profit)
Aged (senior citizen center) Not-for-profit community senior citizens centers and services company
Aged or handicapped of low income, child-care institution residents or employees, educational institution students, faculty, or staff, hospital patients or staff, and medical research institute attendees or employees (housing and auxiliary facilities) Limited-profit (Mitchell-Lama) housing company (not-for-profit)
Mentally ill or retarded (hostel) Not-for-profit community mental health services and mental retardation services company
Sick (nursing home or other health-related facility) Nursing home company (not-for-profit)

For each type of owner there are specific organizational requirements:

Housing development fund company (not-for-profit):
  • Laws under which incorporation required: PHFL Article 11 & NPCL or PHFL Article 11, PHFL Article 2, & NPCL.
Housing development fund company (not-for-profit):
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation:
    1. Corporation must be organized exclusively to develop a housing project for persons of low income,
    2. all income of corporation must be used exclusively for its corporate purposes, and
    3. none of corporation's net income may inure to the benefit or profit of any private individual or organization.
Limited-profit (Mitchell-Lama) housing company (not-for-profit):
  • Laws under which incorporation required: PHFL Article 2 & NPCL.
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation: 
    1. Company must be organized exclusively to provide (a)housing and auxiliary facilities for staff members, employees, or students of a college, university, hospital, or child-care institution and their immediate families, (b) housing and auxiliary facilities for aged or handicapped persons of low income, or (c) low-income housing financed or aided by a municipality, New York State, or the federal government,
    2. if company is organized for purpose (a) above, its directors or trustees must be officers, directors, or trustees of the college, university, hospital, or child-care institution,
    3. if company is organized for purposes (b) or (c) above, its directors or trustees must be officers, directors, or trustees of a corporation organized under the NPCL, and
    4. none of the net income of the college, university, hospital, child-care institution, or not-for-profit corporation may inure to the benefit of any private individual.
Not-for-profit community senior citizens centers and services company:
  • Laws under which incorporation required: PHFL Article 7-A & NPCL.
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation: 
    1. Company must be organized to plan, construct, acquire, alter, reconstruct, rehabilitate, improve, own, maintain, and operate centers and related facilities for the aging under the supervision of the State Department of Social Services,
    2. all income of company must be used exclusively for its corporate purposes, and
    3. none of company's net income may inure to the benefit or profit of any private individual or organization.
Not-for-profit community mental health services and mental retardation services company:
  • Laws under which incorporation required: Mntl Hyg L Article 75 & NPCL.
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation:
    1. Company must be organized to plan, construct, acquire, alter, reconstruct, rehabilitate, improve, own, maintain, and operate hostels and related facilities for the care, treatment, training, education, and residence of the mentally disabled under the supervision of the State Commissioner of Mental Hygiene,
    2. all income of company must be used exclusively for its corporate purposes, and
    3. none of company's net income may inure to the benefit or profit of any private individual or organization.
Nursing home company (not-for-profit):
  • Laws under which incorporation required: Pub Hel L Article 28-A & NPCL.
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation:
    1. Company must be organized to plan, construct, acquire, alter, reconstruct, rehabilitate, own, maintain, and operate nursing homes and other health-related facilities for persons of low income subject to the supervision of the State Commissioner of Health,
    2. all income of company must be used exclusively for its corporate purposes, and
    3. none of company's net income may inure to the benefit or profit of any private individual or organization.

In all cases, a commitment must be made by the owning corporation providing that, upon dissolution of the of the corporation, title to the property will be assumed by a child-care institution, educational institution, medical research institute, or other not-for-profit corporation, as appropriate, (1) which is exempt under RPTL §420-a or §420-b and (2) which allows no part of its earnings to inure to the benefit of any private individual. If the organization taking title to the property fails to satisfy these two conditions, it may still take title but only upon payment to the municipality of a sum equal to the total of all accrued taxes, levies, and assessment from which the property has been exempt under RPTL §422.

Property location requirements:

None.

Property use requirements:

90% or more of the total property must be used for one or more of the purposes described under Ownership requirements above. In addition, for certain types of projects there are limits on tenant income:

  1. Housing for aged of low income owned by a not-for-profit housing development fund company,
  2. housing and auxiliary facilities for aged of low income owned by a not-for-profit limited-profit (Mitchell-Lama) housing company,
  3. housing for handicapped of low income owned by a not-for-profit housing development fund company, and
  4. housing and auxiliary facilities for handicapped of low income owned by a not-for-profit limited-profit (Mitchell-Lama) housing company. For a description of the income limits, see Chart ID, PHFL Article 2, 31.

Certification by state or local government:

None required.

Required construction start date or other time requirement:

None.

Local option

Yes. For certain types of property, local option is authorized with respect to general municipal and school district taxes, but not special ad valorem levies and special assessments. New York City, in the case of housing accommodations substantially all of which are assisted by rent subsidies made under 8 of the U.S. Housing Act of 1937, 202 of the U.S. Housing Act of 1959, or 811 of the National Affordable Housing Act of 1990, may choose:

  1. Whether or not to allow the exemption for each project, and
  2. whether to allow exemption of all or part of the value of the project.

In Nassau County, in the case of housing for the aged or handicapped of low income owned by a not-for-profit housing development fund company, the county and each city, town, and village may choose:

  1. Whether or not to allow the exemption for each project, and
  2. whether to allow exemption of all or part of the value of the project. Otherwise, local option is not authorized and exemption is mandatory.

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 May be limit for some projects* May be limit for some projects* No limit No limit
2. Duration No limit No limit No limit No limit
3. Taxing jurisdiction
a. County or county special districts Ex** NA L L
b. City Ex** NA NA Tax
c. Town or town special district Ex** NA L L
d. Village Ex** NA NA Tax
e. School district NA Ex** NA NA
Ex-Exempt     Tax-Taxable     NA-Not Applicable
L - Liable only for (1) county and town charges for capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, plus (2) special assessments for indebtedness contracted before 7/1/53.

*Amount may, by local option, be limited for some projects in New York City and Nassau County (see Local Option above).
** If allowed by local option where local option is authorized.

Payments in lieu of taxes

None required.

Calculation of exemption

General municipal and school district taxes:

Amount of property value eligible for exemption:

  1. Portion of property used exclusively for eligible purposes described above (must be 90% or more of total property):
    1. Housing accommodations in New York City substantially all of which are assisted by rent subsidies made under U.S. Housing Act §8: % of portion's assessed value allowed by local option.
    2. In Nassau County if property is used for housing for aged or handicapped of low income and is owned by a not-for-profit housing development fund company: % of portion's assessed value allow by local option.
    3. Other property: 100% of portion's assessed value.
  2. Portion of property used for housing for other low-income or middle- income tenants (must be 10% or less of total property): % of portion's assessed value allowed by local option under PHFL §33(1)(a).
    Note: Taxes payable on this portion of the property may not fall below certain limits. See exemption profile for PHFL §33(1)(a).)
  3. Portion of property used for other purposes: no exemption allowed.
Example 1
(a) Location of property (rent-subsidized): New York City
(b) Total assessed value of property = $600,000
(c) % of assessed value allowed by local option for Use (e) below = 80%
(d) % of assessed value allowed by local option as exempt for Use (f) below = 50%
(e) % of property used for housing for low-income aged = 92%
(f) % of property used for housing for other low-income or middle-income tenants = 5%
(g) % of property used for other purposes = 3%

Amount of property value eligible for exemption equals:

(b x c x e) + (b x d x f)
= ($600,000 x 80% x 92%) + ($600,000 x 50% x 5%)
= ($441,600 + $15,000) = $456,600

(Subject to minimum limits on taxes payable specified in PHFL §33(1)(a). See the Limitations on exemption section of the exemption profile for that statute)

Example 2
(a) Location of property: Outside New York City and Nassau County
(b) Total assessed value of property = $600,000
(c) % of assessed value mandated as exempt for Use (e) below = 100%
(d) % of assessed value allowed by local option for Use (f) below = 50%
(e) % of property used for housing for low-income aged = 92%
(f) % of property used for housing for other low-income or middle-income tenants = 5%
(g) % of property used for other purposes = 3%

Amount of property value eligible for exemption equals:

(b x c x e) + (b x d x f)
= ($600,000 x 100% x 92%) + ($600,000 x 50% x 5%)
= ($552,000 + $15,000) = $567,000

(Subject to minimum limits on taxes payable specified in PHFL §33(1)(a). See the Limitations on exemption section of the exemption profile for that statute)

Special ad valorem levies and special assessments:

If the property is used exclusively for one or more of the eligible purposes described above or is used partly for these purposes and partly for housing for other low-income or middle-income tenants, those portions of the property so used are exempt from all levies and assessments except (1) charges levied to pay for the capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, and (2) special assessments for indebtedness contracted before 7/1/53. The exemption does not apply to special assessments imposed by cities or villages.

Coding of exemption on assessment roll

Coding of exemption on assessment roll
Code A: Code B: Subject
Portion of property used for special group Portion of property used for other low-income or middle-income tenants Special Group
28100 4851 Child-care institution residents or employees
28100 4851 Educational institution students, faculty, or staff
28100 4851 Hospital patients or staff
28100 4851 Medical research institute attendees or employees
2811 4851 Aged (housing development fund company property)
2811 4851 Handicapped (housing development fund company property
28120 4851 Aged (limited-profit housing company property)
28120 4851 Handicapped (limited-profit housing company property)
28520 4851 Nursing home or other health-related facility
28540 -- Hostel for mentally ill or retarded
28550 -- Senior citizen center

Assessment roll section(s):

Assessment roll section(s):
Code A Exempt (ARLM Section 8)
Code B Taxable (ARLM Section 1)

Filing requirements (owner or occupant of property)

None.

Reporting requirements (assessor)

None.

Similar exemptions

See Chart IA and Chart IB.

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