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Assessor Manuals, Exemption Administration

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

Section 4.07 - Pub Hsng L Section 58(3): Municipal Housing Authorities (Project sold or leased to limited-profit mutual (co-op) housing company)

Exemption code(s)

Exemption code(s)
Leased project 3850_
Sold project 4840_

Year originally enacted:

1960

Related statutes:

None.

Summary:

To the extent allowed by local option, real property that:

  1. is owned by a municipal housing authority (MHA),
  2. was originally intended to be used for middle-income housing,
  3. is leased or sold to a limited-profit (Mitchell-Lama) mutual (co-op) housing company, and
  4. is used primarily for middle-income housing is exempt from general municipal and school district taxes (subject to minimum limits on taxes payable as described under Limitations on Exemption below). No exemption is allowed for special ad valorem levies or special assessments. The duration of the exemption is limited.

Eligibility requirements

Ownership requirements:

Property must be owned by or leased to a limited- profit (Mitchell-Lama) mutual (co-op) housing company. In addition to the below-listed organizational requirements, such housing companies may not pay dividends on any of its stock or pay interest on any of its income debentures. The specific organizational requirements are as follows: 

  • Laws under which incorporation required: PHFL Article 2.
  • Restrictions on corporate purposes or activities as stated in certificate of incorporation:
    1. Company must be organized to plan, acquire, construct, own, maintain, and operate housing projects subject to the supervision of the State Commissioner of Housing or other appropriate agency,
    2. no director or subscriber of the company may receive, in repayment of his investment in the company's stock, any sum in excess of the par value of the stock, together with such dividends or other compensation permitted under PHFL Article 2, and
    3. company's housing projects must, to the extent of at least 80%, be occupied by persons or families entitled to occupancy through ownership of shares in the company.

Property location requirements:

None.

Property use requirements:

Property must be used primarily for housing for middle-income persons or families. The statute sets no limits on the income of such tenants. Portions of the property may be used for non-housing purposes if they are incidental or appurtenant to the housing project.

Certification by state or local government:

None required.

Required construction start date or other time requirement:

None.

Local option

Yes. Each county, city, town, and village may choose:

  1. Whether or not to allow the exemption for each project, and
  2. whether to allow partial or total exemption of the assessed value of the project. The option may or may not be exercised through a written agreement by the governing board of the taxing jurisdiction.

An existing exemption may be extended for an additional period following the expiration of the initial tax exemption period (see Limitations on exemption below).

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 Local option may limit* Local option may limit* No exemption allowed No exemption allowed
2. Duration Yes** Yes** No exemption allowed No exemption allowed
3. Taxing jurisdiction
a. County or county special districts Ex*** NA Tax Tax
b. City Ex*** NA NA Tax
c. Town or town special district Ex*** NA Tax Tax
d. Village Ex*** NA NA Tax
e. School district NA Ex*** NA NA
Ex-Exempt     Tax-Taxable     NA-Not Applicable

*Taxes paid must not be less than the amount which the MHA had contracted to pay in lieu of taxes with respect to the housing project.

**Duration of the exemption is limited to the period during which the capital loans of the housing company are outstanding, but in any event, except in the case of New York City, to a period of no more than 30 years.

After the tax exemption period has expired, any project that received this exemption may be granted an additional tax exemption period of up to 50 years, or until such time as the project no longer complies with the operating requirements of the Mitchell-Lama Program, whichever is sooner.

***If allowed by local option.

Payments in lieu of taxes

None required, but see Limitations on exemption above.

Calculation of exemption

General municipal and school district taxes:

% of assessed value allowed by local option (subject to minimum limits on taxes payable as described under Limitations on Exemption above).

Special ad valorem levies and special assessments:

No exemption allowed.

Coding of exemption on assessment roll

Coding of exemption on assessment roll
Code Description of alternative codes possible
3850_ Leased projects 
4840_ Sold projects

Assessment roll section(s):

Taxable (ARLM Section 1).

Note: These codes should not be used to identify property that is exempt under any of the statutes listed under Similar exemptions below.

Filing requirements (owner or occupant of property)

None.

Reporting requirements (assessor)

None.

Similar exemptions

See Chart IA and Chart IB.

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