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Assessor Manuals, Exemption Administration

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

Section 4.07 - Gen Muny L Section 696: Urban Development Action Area Projects

Exemption code(s)

4810_

Year originally enacted:

1979

Related statutes:

Gen Muny §692.

Summary:

To the extent allowed by local option, improvements in an urban development action area project are exempt from general municipal and school district taxes. The exemption generally applies to property improvements only, but if the project consists of new construction, the land value is restricted to the lesser of the assessed value immediately prior to commencement of the allowable construction or the assessed value on the assessment roll in the first year after the completion of the construction.

Eligibility requirements

Ownership requirements:

None.

Property location requirements:

Project must be located in an urban development action area, defined as an area designated by the local legislative body or other appropriate agency that is appropriate for urban development, at least 60% of which constitutes an eligible area.

Note: Authorization to designate urban development action areas has been extended until June 30, 2015.

Property use requirements:

Project must include the construction of a new structure or the renovation, rehabilitation, or conversion of an existing structure where the cost of such renovation, rehabilitation, or construction is at least equal to 100% of the assessed value of the structure in the tax year immediately preceding the granting of the tax exemption.

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 grant the exemption, and
  2. whether to allow, for each project, total or partial exemption of the amount authorized by state law. The locality may also determine the formula by which the amount of exemption will decrease during the last 10 years.

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* No exemption allowed No exemption allowed
2. Duration 20 years 20 years 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

*Amount generally is limited to value of improvements, but if the project consists of new construction, land value is restricted to the lesser of the assessed value immediately prior to commencement of the allowable construction or the assessed value on the assessment roll in the first year after the completion of the construction. Local option may further limit the amount of exemption.
**If exemption is allowed by local option.

Payments in lieu of taxes

Payments are required if the property is leased. 

If leased for period of not more than 20 years:

Payments must be made in equal annual or biennial escalating amounts over the life of the lease so that the in lieu payments in the final year of the lease are equal to all local taxes. All renewals of any lease must require in lieu payments greater than or equal to those required during the final year of the original lease.

If leased for period of more than 20 years but less than 99 years:

Payments must begin in the 10th year of the lease and increase in equal annual or biennial amounts until the 20th year so that the in lieu payments beginning in the 21st year and continuing until the end of the lease are equal to all local taxes.

Since they are not collected by the tax collector, payments in lieu of taxes should not be entered on the tax roll. Such payments are collected in the same manner as are other payments due the municipality under contract.

Calculation of exemption

General municipal and school district taxes:

% of assessed value of improvements allowed by local option. During the last 10 years the exemption must decrease in equal annual or biennial amounts. Additionally, if the project consists of new construction, the land value is restricted to the lesser of the assessed value immediately prior to commencement of the allowable construction or the assessed value on the assessment roll in the first year after the completion of the construction.

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
4810_

Assessment roll section(s):

Taxable (RPS Section 1).

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.

Filing requirements (owner or occupant of property)

None.

Reporting requirements (assessor)

None.

Similar exemptions

See: Chart IIA and Chart IIB.

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