Relates to the exemption from taxation for non-profit organizations.
TITLE OF BILL: An act to amend the real property tax law, in relation to the exemption from taxation for non-profit organizations and to repeal certain provisions of such law relating thereto
PURPOSE: To ensure that exempt properties are being used in the manner which supports the specific exemption granted.
SUMMARY OF PROVISIONS: Repeals subdivision 3 of section 420-a of the real property tax law to add a new subdivision 3 to provide that vacant or otherwise unimproved land shall only be deemed tax exempt if there are definite plans for utilizing and adapting the property for exempt purposes within five years and the full execution of such plans within seven years.
EXISTING LAW: Existing law does not provide a date certain by which real property not in actual use for its exempt purpose(s) must be developed or otherwise improved to facilitate such activity.
JUSTIFICATION: Land-banking occurs when tax exempt organizations purchase land for contemplated use. The problem is that often times contemplated use does not occur or takes years to occur. While that land is tied up, taxes are not being paid, and the land is not being put to productive use. This diminishes the overall tax base of a locality. When the tax base of a locality is diminished, the remaining taxpayers burden increases. This makes home ownership less affordable as property taxes grow.
This proposed measure is one of a series of bills aimed at restructuring the framework for granting real property tax exemptions across the state. Based on year 2000 assessment rolls, there are over five million parcels of property in New York State (valued at a total of 1.3 trillion dollars). Of this number, some three million parcels enjoy at least 1 real property tax exemption. From a taxable status standpoint, about 1/3 of the total value of property in New York State (441 billion dollars) is either wholly or partially exempt from real property taxation.
The lion's share of real property tax exemptions (around 68%) are state mandated, and while the state has provided some reimbursement to relieve local taxing jurisdictions (i.e., through the STAR program), high levels of tax exemptions can present a serious burden to other property Owners who must support the cost of school district, municipal and special district operations.
It is imperative that the State address and limit exemptions to those organizations and purposes which most broadly benefit the public. This specific legislation promotes this thrust by ensuring that organizations seeking tax exemptions truly meet those public purposes, and that lands receiving relief from real property taxation are being fully used in support of such purposes.
LEGISLATIVE HISTORY: S.6838 of 2010: Referred to Local Government S.1126A of 2003: Referred to Local Government
FISCAL IMPLICATIONS: None to the state.
LOCAL FISCAL IMPLICATIONS: None to the state.
Undetermined, however, it is anticipated the bill will offer improved local oversight of exemptions, with a salutary effect on school, municipal and special district (i.e., fire protection) tax rolls.
EFFECTIVE DATE: This act would take effect on the first of January next succeeding the date on which is shall have become a law and would apply to assessment rolls prepared on the basis of taxable status dates occurring on or after such date.
STATE OF NEW YORK ________________________________________________________________________ 2544--A 2011-2012 Regular Sessions IN SENATE January 25, 2011 ___________Introduced by Sens. BONACIC, DeFRANCISCO, LARKIN, LITTLE -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government -- recommitted to the Committee on Local Govern- ment in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the real property tax law, in relation to the exemption from taxation for non-profit organizations and to repeal certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 3 of section 420-a of the real property tax law is REPEALED and a new subdivision 3 is added to read as follows: 3. (A) SUCH REAL PROPERTY WHICH IS NOT ACTUALLY AND EXCLUSIVELY USED FOR EXEMPT PURPOSES SHALL, IF OWNED BY AN ORGANIZATION EXEMPTED FROM TAXATION PURSUANT TO THE INTERNAL REVENUE CODE, BE EXEMPT THOUGH NOT IN ACTUAL USE THEREFOR BY REASON OF THE ABSENCE OF SUITABLE BUILDINGS OR IMPROVEMENTS THEREON IF THE CONSTRUCTION OF SUCH BUILDINGS OR IMPROVE- MENTS IS IN PROGRESS OR IS IN GOOD FAITH CONTEMPLATED BY SUCH ORGANIZA- TION. AS USED IN THIS SUBDIVISION, "IN GOOD FAITH CONTEMPLATED" MEANS DEFINITE PLANS FOR UTILIZING AND ADAPTING THE PROPERTY FOR EXEMPT PURPOSES WITHIN FIVE YEARS AND THE FULL EXECUTION OF SUCH PLANS WITHIN SEVEN YEARS. THE PLANS MUST BE PROVEN BY CLEAR AND CONVINCING EVIDENCE AND MUST BE IN WRITTEN FORM. THE DEPARTMENT SHALL DEVELOP GUIDELINES TO BE UTILIZED BY PROPERTY OWNERS AND ASSESSORS TO DETERMINE WHETHER SUCH EVIDENCE EXISTS IN ADEQUATE FORM. (B) IF NO PART OF THE PHYSICAL IMPROVEMENTS TO THE LAND ARE COMMENCED WITHIN FIVE YEARS AND COMPLETED WITHIN SEVEN YEARS OF TAKING TITLE TO THE PROPERTY, OR IF THE ORGANIZATION DOES NOT MEET THE STANDARDS OTHER- WISE SET FORTH IN THIS SUBDIVISION, THE PROPERTY OWNER WHO RECEIVED THE BENEFIT OF THE EXEMPTION SHALL PAY ALL PROPERTY TAXES THAT WOULD HAVEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01899-02-2 S. 2544--A 2
BEEN OWED; PROVIDED, HOWEVER, THAT FAILURE TO PAY DOES NOT CREATE ANY RIGHT BY ANY GOVERNMENTAL UNIT TO COMMENCE A PROCEEDING TO EFFECTUATE THE TAKING OF THE PROPERTY BUT DOES CREATE A CAUSE OF ACTION IN CONTRACT BY ANY GOVERNMENTAL UNIT NEGATIVELY AFFECTED. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law and shall apply to assessment rolls prepared on the basis of taxable status dates occurring on or after such date and shall apply to property irrespective of the date of the transfer of title.