Bill S5353-2011

Relates to applications for certain tax abatements for industrial and commercial construction work on properties in certain cities

Relates to applications for certain tax abatements for industrial and commercial construction work on properties in cities of one million or more persons and tax abatements for certain electricity generating facilities in such city.

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Actions

  • May 18, 2011: SUBSTITUTED BY A7511
  • May 18, 2011: ORDERED TO THIRD READING CAL.791
  • May 16, 2011: REPORTED AND COMMITTED TO RULES
  • May 11, 2011: REFERRED TO FINANCE

Meetings

Calendars

Votes

VOTE: COMMITTEE VOTE: - Rules - May 18, 2011
Ayes (22): Skelos, Alesi, Farley, Hannon, Johnson, Larkin, LaValle, Libous, Marcellino, Maziarz, Nozzolio, Saland, Seward, Sampson, Breslin, Dilan, Hassell-Thompson, Krueger, Montgomery, Parker, Smith, Stewart-Cousins
Ayes W/R (1): Duane
Absent (1): Perkins

Memo

BILL NUMBER:S5353

TITLE OF BILL:

An act to amend the real property tax law and the administrative code of the city of New York, in relation to applications for tax abatements for industrial and commercial construction work on properties in a city of one million or more persons and to tax abatements for certain electricity generating facilities in such city

PURPOSE:

This bill would amend the Real Property Tax Law and the Administrative Code of the City of New York to reauthorize the Industrial and Commercial Abatement Program (ICAP) for an additional four years to provide tax abatements pursuant to such program and to further modify such program to provide tax abatements for certain electric generating facilities, reducing the cost of electricity in New York City.

SUMMARY OF PROVISIONS:

Section 1 of the bill sets forth the bill's legislative findings including the need to reduce energy capacity prices in New York City.

Section 2 of the bill amends Real Property Tax Law (RPTL) §489-aaaaaa to amend the definition of "utility property" to exclude peaking units from such definition. Peaking units would be defined as generating units determined by the New York Independent System Operator (NYISO), or other federal or New York State energy regulatory body, that constitutes a peaking unit as set forth in §5.14.1.2 of NYISO's Market Administration and Control Area Services Tariff as such term existed on April 1, 2011, or has an annual average operation of less than 18 hours following each start. Section 2 further exempts from calculations of annual averages, major emergency declarations by NYISO, the Northeast Power Coordinating Council (NPCC) or other similar entity. Peaking units shall include all real property used in connection with the facility, but shall exclude transmission and distribution facilities.

Section 3 of the bill amends RPTL §489-bbbbbb(3) to add a new paragraph (b-1) to provide that the amount of the abatement shall be 100% for 15 years with the first year of the abatement beginning in the tax year that is the sooner of the completion of construction or four years from the issuance of the first building permit, or if no permit is required, the commencement of construction. Section 3 further provides for protection against tax increases for inflation and increases and decreases in the taxable assessed value of the property. Section 3 further provides that the minimum required expenditure is 30% of the property's taxable value, as assessed in the tax year immediately preceding the issuance of the first building permit, or if no permit is required, the commencement of construction.

Section 4 of the bill amends RPTL §489-dddddd(1) to extend the application deadline of the Industrial and Commercial Abatement Program from March 1, 2011 to March 1, 2015.

Section 5 of the bill amends RPTL §489-dddddd to add a new subdivision 3 that would prohibit granting benefits under ICAP for construction work performed pursuant to a building permit issued after April 1, 2015. Section 4 further provides where building permits are not required, no benefits shall be granted for construction work commenced after April 1, 2015.

Section 6 of the bill amends RPTL §489-eeeeee to require that recipients of abatement benefits for peaking units file biannually (rather than biennially) a statement of the continuing use of such property and any changes in use.

Section 7 of the bill amends RPTL §489-ffffff to add a new subdivision 5-a to provide that recipients of abatement benefits who convert the property with the peaking unit to a use that no longer qualifies such facility as a peaking unit, as defined in section two of the bill, or who uses such units in a manner inconsistent with the definition of a peaking unit, shall be ineligible for such tax benefits during such tax year and shall pay, with interest, taxes for which an abatement was claimed during any portion of such tax year. This subdivision will apply the eligibility requirement in an administrative manner.

Section 8 of the bill amends §11-268(q) of the Administrative Code of the City of New York (Administrative Code) to amend the definition of "utility property" to exclude peaking units from such definition, consistent with that established in §2 of the bill.

Section 9 of the bill amends §11-269(c) of the Administrative Code to add a new paragraph (2-a) to provide that the amount of the abatement shall be 100% for 15 years with the first year of the abatement beginning in the tax year that is the sooner of the completion of construction or four years from the issuance of the first building permit, or if no permit is required, the commencement of construction. Section 3 further provides for protection against tax increases for inflation and increases and decreases in the taxable assessed value of the property. Section 3 further provides that the minimum required expenditure is 30% of the property's taxable value, as assessed in the tax year immediately preceding the issuance of the first building permit, or if no permit is required, the commencement of construction.

Section 10 of the bill amends §11-271(1) of the Administrative Code to extend the application date for benefits from March 1, 2011 to March 1, 2015.

Section 11 of the bill amends §11-271 of the Administrative Code to add a new subdivision (c) which would prohibit granting benefits for construction work performed pursuant to a building permit issued after April 1, 2015; where building permits were not required, no benefits shall be granted for construction work commenced after such date.

Section 12 of the bill amends §11-272(a) of the Administrative Code to require that recipients of abatement benefits for peaking units file biannually (rather than biannually) a statement of the continuing use of such property and any changes in use.

Section 13 of the bill amends § 11-273 of the Administrative Code to provide that recipients of abatement benefits who convert the property with the peaking unit to a use that no longer qualifies such facility as a peaking unit, or who,uses such units in a manner inconsistent with the definition of a peaking unit, as defined in section two of the bill, shall be ineligible for such tax benefits during such tax year and shall pay, with interest, taxes for which an abatement was claimed during any portion of such tax year. This subdivision will apply the eligibility requirement in an administrative manner.

Section 14 of the bill provides that the bill shall take effect immediately and shall be deemed to have been in full force and effect on March 1, 2011.

EXISTING LAW:

Currently, there is a tax abatement program, the Industrial and Commercial Abatement Program (ICAP), for eligible industrial or commercial work on properties in New York City established pursuant to Chapter 119 of the Laws of 2008. ICAP currently excludes electric peaking generating facilities from eligibility. Owners of peaking units are eligible to apply for tax abatements from New York City for construction, alterations or improvements. Those tax abatements are awarded through a discretionary process.

JUSTIFICATION:

New York City previously granted property tax abatement as-of-right to electric generating facilities pursuant to the Industrial and Commercial Incentive Program (ICIP) for commercial and industrial properties contained in Title 2-D to Article 4 of the Real Property Tax Law. In 2008, ICIP was allowed to sunset and legislation was enacted that created a new tax abatement program for commercial and industrial properties, which excluded electric generating facilities from eligibility. Owners of electric generating facilities are eligible to apply for tax abatements through a discretionary process.

This bill would remove the uncertainty with respect to property tax assessments on peaking units by returning to an as-of-right property tax abatement program, leaving the City of New York with no discretion in awarding the abatement if the peaking unit satisfies the objective eligibility criteria established in the legislation.

Recently, the Federal Energy Regulatory Commission (FERC) issued a ruling significantly increasing the energy capacity prices for power generators on the grounds that the price now had to incorporate the hypothetical property taxes that a power generator entering the market today could face under a discretionary property tax abatement program. The increased capacity prices will be passed on to the consumers through higher electric rates and will simultaneously result in a windfall for the existing plants that do not pay property

taxes. The precise increase in electric rates cannot be determined today, but it has been estimated that the new capacity price curve could increase the electric bills for residents and businesses in New York City by approximately $500 million to as much as $1 billion over the next three years.

LEGISLATIVE HISTORY:

This is a new bill.

FISCAL IMPLICATIONS:

This bill would have no fiscal impact on the State.

EFFECTIVE DATE:

This bill would take effect immediately and shall be deemed to have been in full force and effect on and after March 1, 2011.


Text

STATE OF NEW YORK ________________________________________________________________________ 5353 2011-2012 Regular Sessions IN SENATE May 11, 2011 ___________
Introduced by Sens. LANZA, GOLDEN -- (at request of the Governor) -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the real property tax law and the administrative code of the city of New York, in relation to applications for tax abatements for industrial and commercial construction work on properties in a city of one million or more persons and to tax abatements for certain electricity generating facilities in such city THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative findings. The legislature hereby finds that the New York city industrial and commercial incentive program granted, as of right, reductions in real property taxes to new industrial and commer- cial projects, including power plants. That program lapsed in 2008 and its successor, the industrial and commercial abatement program, enacted by chapter 119 of the laws of 2008, did not provide for tax abatements for new electricity generating facilities in New York city. In August 2010 the board of directors of the New York city industrial development agency revised its uniform tax exemption policy to provide a discretion- ary tax abatement program, and other benefits, for certain peaking generating facilities. However, the tax benefits of the program were not recognized by the federal energy regulatory commission in setting the installed capacity demand curves for the City of New York for 2011/2012, 2012/2013 and 2013/2014, potentially resulting in a signif- icant increase in the level of the demand curves and corresponding capacity prices paid by customers in the city of New York. The legisla- ture further finds that it is in the best interest of customers to prevent such impacts by amending the real property tax law for the purpose of making peaking units eligible for benefits, as of right, under the industrial and commercial abatement program.
S 2. Subdivision 17 of section 489-aaaaaa of the real property tax law, as added by chapter 119 of the laws of 2008, is amended to read as follows: 17. "Utility property" means property and equipment as described in paragraphs (c), (d), (e), (f) and (i) of subdivision twelve of section one hundred two of this chapter that is used in the ordinary course of business by its owner or any other entity or property as described in paragraphs (a) and (b) of subdivision twelve of section one hundred two of this chapter that is owned by any entity that uses in the ordinary course of business property and equipment as described in paragraphs (c), (d), (e), (f) and (i) of subdivision twelve of section one hundred two of this chapter, without regard to the classification of such prop- erty and equipment for real property tax purposes pursuant to section eighteen hundred two of this chapter, except that any such property and equipment used solely to serve the building to which they are attached shall not be deemed utility property. NOTWITHSTANDING ANY PROVISION OF THIS TITLE TO THE CONTRARY, PEAKING UNITS SHALL NOT BE CONSIDERED UTILI- TY PROPERTY. FOR PURPOSES OF THIS TITLE, "PEAKING UNIT" SHALL MEAN A GENERATING UNIT THAT: (A) IS DETERMINED BY THE NEW YORK INDEPENDENT SYSTEM OPERATOR OR A FEDERAL OR NEW YORK STATE ENERGY REGULATORY COMMIS- SION TO CONSTITUTE A PEAKING UNIT AS SET FORTH IN SECTION 5.14.1.2 OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR'S MARKET ADMINISTRATION AND CONTROL AREA SERVICES TARIFF, AS SUCH TERM EXISTED AS OF APRIL FIRST, TWO THOUSAND ELEVEN; OR (B) HAS AN ANNUAL AVERAGE OPERATION, DURING THE CALENDAR YEAR PRECEDING THE TAXABLE STATUS DATE, OF LESS THAN EIGHTEEN HOURS FOLLOWING EACH START OF THE UNIT; FOR PURPOSES OF CALCULATING THE ANNUAL AVERAGE, OPERATIONS DURING ANY PERIOD COVERED BY ANY MAJOR EMER- GENCY DECLARATION ISSUED BY THE NEW YORK INDEPENDENT SYSTEM OPERATOR, NORTHEAST POWER COORDINATING COUNCIL, OR OTHER SIMILAR ENTITY SHALL BE EXCLUDED. A "PEAKING UNIT" UNDER THIS TITLE SHALL INCLUDE ALL REAL PROP- ERTY USED IN CONNECTION WITH THE GENERATION OF ELECTRICITY, AND ANY FACILITIES USED TO INTERCONNECT THE PEAKING UNIT WITH THE ELECTRIC TRAN- SMISSION OR DISTRIBUTION SYSTEM, BUT SHALL NOT INCLUDE ANY FACILITIES THAT ARE PART OF THE ELECTRIC TRANSMISSION OR DISTRIBUTION SYSTEM; IT MAY BE COMPRISED OF A SINGLE TURBINE AND GENERATOR OR MULTIPLE TURBINES AND GENERATORS LOCATED AT THE SAME SITE. NOTWITHSTANDING ANY PROVISION OF THIS TITLE TO THE CONTRARY, A PEAKING UNIT SHALL BE CONSIDERED INDUS- TRIAL PROPERTY, PROVIDED HOWEVER THAT THE BENEFIT PERIOD FOR A PEAKING UNIT SHALL BE AS SET FORTH IN PARAGRAPH (B-1) OF SUBDIVISION THREE OF SECTION FOUR HUNDRED EIGHTY-NINE-BBBBBB OF THIS TITLE. S 3. Subdivision 3 of section 489-bbbbbb of the real property tax law is amended by adding a new paragraph (b-1) to read as follows: (B-1) ABATEMENT FOR INDUSTRIAL CONSTRUCTION WORK ON A PEAKING UNIT. UPON APPROVAL BY THE DEPARTMENT OF A FINAL APPLICATION FOR BENEFITS, AN APPLICANT WHO HAS PERFORMED INDUSTRIAL CONSTRUCTION WORK IN ANY AREA ON A PEAKING UNIT, SHALL BE ELIGIBLE FOR AN ABATEMENT OF REAL PROPERTY TAXES, AS FOLLOWS: (I) AMOUNT OF ABATEMENT. THE FIRST YEAR OF THE ABATEMENT SHALL BE THE TAX YEAR WITH THE FIRST TAXABLE STATUS DATE THAT FOLLOWS THE SOONER OF (A) COMPLETION OF CONSTRUCTION; OR (B) FOUR YEARS FROM THE DATE THE FIRST BUILDING PERMIT WAS ISSUED, OR IF NO PERMIT WAS REQUIRED, THE COMMENCEMENT OF CONSTRUCTION. FOR YEARS ONE THROUGH FIFTEEN, THE ABATE- MENT SHALL BE THE AMOUNT OF THE ABATEMENT BASE. THE ABATEMENT SHALL BE ADJUSTED FOR INFLATION PROTECTION AS PROVIDED IN SUBPARAGRAPH (II) OF THIS PARAGRAPH. THE FOLLOWING TABLE ILLUSTRATES THE ABATEMENT COMPUTA- TION:
TAX YEAR DURING BENEFIT PERIOD: AMOUNT OF ABATEMENT: YEARS 1 THROUGH 15 100% OF ABATEMENT BASE (II) INFLATION PROTECTION. (A) INDUSTRIAL CONSTRUCTION WORK, EFFECT OF ASSESSED VALUATION INCREASES. FOR YEARS TWO THROUGH THIRTEEN OF THE BENEFIT PERIOD, EXCEPT AS PROVIDED IN CLAUSE (B) OF THIS SUBPARAGRAPH, IF THERE IS ANY INCREASE IN TAX IN THAT YEAR THAT IS BASED ON AN INCREASE OF TAXABLE ASSESSED VALUATION SINCE THE IMMEDIATELY PRIOR TAX YEAR, SUCH EXCESS TAX LIABILITY SHALL BE ADDED TO THE AMOUNT OF THE ABATEMENT BASE. SUCH ADDITION TO THE AMOUNT OF THE ABATEMENT BASE SHALL BE DETERMINED USING THE INITIAL TAX RATE. (B) PHYSICAL INCREASES. NOTWITHSTANDING THE PROVISIONS OF CLAUSE (A) OF THIS SUBPARAGRAPH, IF IN ANY OF YEARS TWO THROUGH THIRTEEN OF THE BENEFIT PERIOD, A PHYSICAL CHANGE TO THE PROPERTY RESULTS IN AN INCREASE IN THE TAXABLE ASSESSED VALUE OF THE PROPERTY OF MORE THAN FIVE PERCENT FOR THAT YEAR, THEN ANY INCREASE IN TAXES FOR THAT YEAR SHALL NOT BE ADDED TO THE AMOUNT OF THE ABATEMENT BASE IN ANY YEAR. (C) IF THE TAXABLE ASSESSED VALUE UPON WHICH AN ADJUSTMENT TO THE ABATEMENT UNDER THIS PARAGRAPH IS BASED IS LATER REDUCED BY A COURT ORDER OR APPLICATION TO THE TAX COMMISSION, THEN THE APPROPRIATE ADJUST- MENT TO THE ABATEMENT BASE SHALL BE MADE IN ACCORDANCE WITH THE REDUCED TAXABLE ASSESSED VALUE. (III) MINIMUM REQUIRED EXPENDITURE. FOR INDUSTRIAL CONSTRUCTION WORK ON A PEAKING UNIT, THE MINIMUM REQUIRED EXPENDITURE IS THIRTY PERCENT OF THE PROPERTY'S TAXABLE ASSESSED VALUE IN THE TAX YEAR WITH A TAXABLE STATUS DATE IMMEDIATELY PRECEDING THE ISSUANCE OF THE FIRST BUILDING PERMIT, OR IF NO PERMIT WAS REQUIRED, THE COMMENCEMENT OF CONSTRUCTION. EXPENDITURES FOR RESIDENTIAL CONSTRUCTION WORK OR CONSTRUCTION WORK ON PORTIONS OF PROPERTY TO BE USED FOR RESTRICTED ACTIVITIES SHALL NOT BE INCLUDED IN THE MINIMUM REQUIRED EXPENDITURE. S 4. Paragraph (a) of subdivision 1 of section 489-dddddd of the real property tax law, as amended by chapter 138 of the laws of 2008, is amended to read as follows: (a) Application for benefits pursuant to this title may be made imme- diately following the effective date of a local law enacted pursuant to this title and continuing until March first, two thousand [eleven] FIFTEEN. S 5. Section 489-dddddd of the real property tax law is amended by adding a new subdivision 3 to read as follows: 3. (A) NO BENEFITS PURSUANT TO THIS TITLE SHALL BE GRANTED FOR CONSTRUCTION WORK PERFORMED PURSUANT TO A BUILDING PERMIT ISSUED AFTER APRIL FIRST, TWO THOUSAND FIFTEEN. (B) IF NO BUILDING PERMIT WAS REQUIRED, THEN NO BENEFITS PURSUANT TO THIS TITLE SHALL BE GRANTED FOR CONSTRUCTION WORK THAT IS COMMENCED AFTER APRIL FIRST, TWO THOUSAND FIFTEEN. S 6. Subdivision 1 of section 489-eeeeee of the real property tax law, as added by chapter 119 of the laws of 2008, is amended to read as follows: 1. Continuing use. For the duration of the benefit period, the recipi- ent of benefits shall file biennially with the department, on or before the appropriate taxable status date, a statement of the continuing use of such property and any changes in use that have occurred, PROVIDED, HOWEVER, THAT ANY RECIPIENT OF BENEFITS RECEIVING BENEFITS FOR PROPERTY DEFINED AS A PEAKING UNIT SHALL FILE SUCH STATEMENT BIANNUALLY. This statement shall be in a form determined by the department and may be in any format the department determines, in its discretion, is appropriate, including electronic format. The department shall have authority to
terminate such benefits upon failure of a recipient to file such state- ment by the appropriate taxable status date. The burden of proof shall be on the recipient to establish continuing eligibility for benefits and the department shall have the authority to require that statements filed under this subdivision be certified. S 7. Section 489-ffffff of the real property tax law is amended by adding a new subdivision 5-a to read as follows: 5-A. CONVERSION OF USE BY PEAKING UNITS. ANY APPLICANT WHOSE PROPERTY HAS BEEN GRANTED BENEFITS UNDER THIS TITLE FOR INDUSTRIAL CONSTRUCTION WORK AS A PEAKING UNIT AND WHO CONVERTS SUCH PROPERTY IN ANY TAX YEAR TO A USE THAT NO LONGER QUALIFIES IT AS A PEAKING UNIT, OR WHO USES SUCH PROPERTY IN A MANNER INCONSISTENT WITH THE DEFINITION OF A PEAKING UNIT, SHALL BE INELIGIBLE FOR ABATEMENT BENEFITS DURING ANY SUCH TAX YEAR. ANY SUCH RECIPIENT OF BENEFITS SHALL PAY WITH INTEREST TAXES FOR WHICH AN ABATEMENT WAS CLAIMED DURING ANY PORTION OF SUCH TAX YEAR. S 8. Subdivision q of section 11-268 of the administrative code of the city of New York, as added by local law number 47 of the city of New York for the year 2008, is amended to read as follows: q. "Utility property" means property and equipment as described in paragraphs (c), (d), (e), (f) and (i) of subdivision twelve of section one hundred two of the real property tax law that is used in the ordi- nary course of business by its owner or any other entity or property as described in paragraphs (a) and (b) of subdivision twelve of section one hundred two of such law that is owned by any entity that uses in the ordinary course of business property and equipment as described in para- graphs (c), (d), (e), (f) and (i) of subdivision twelve of section one hundred two of such law, without regard to the classification of such property and equipment for real property tax purposes pursuant to section eighteen hundred two of such law, except that any such property and equipment used solely to serve the building to which they are attached shall not be deemed utility property. NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE CONTRARY, PEAKING UNITS SHALL NOT BE CONSIDERED UTILITY PROPERTY. FOR PURPOSES OF THIS PART, "PEAKING UNIT" SHALL MEAN A GENERATING UNIT THAT: (A) IS DETERMINED BY THE NEW YORK INDEPENDENT SYSTEM OPERATOR OR A FEDERAL OR NEW YORK STATE ENERGY REGU- LATORY COMMISSION TO CONSTITUTE A PEAKING UNIT AS SET FORTH IN SECTION 5.14.1.2 OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR'S MARKET ADMINIS- TRATION AND CONTROL AREA SERVICES TARIFF, AS SUCH TERM EXISTED AS OF APRIL FIRST, TWO THOUSAND ELEVEN; OR (B) HAS AN ANNUAL AVERAGE OPERA- TION, DURING THE CALENDAR YEAR PRECEDING THE TAXABLE STATUS DATE, OF LESS THAN EIGHTEEN HOURS FOLLOWING EACH START OF THE UNIT; FOR PURPOSES OF CALCULATING THE ANNUAL AVERAGE, OPERATIONS DURING ANY PERIOD COVERED BY ANY MAJOR EMERGENCY DECLARATION ISSUED BY THE NEW YORK INDEPENDENT SYSTEM OPERATOR, NORTHEAST POWER COORDINATING COUNCIL, OR OTHER SIMILAR ENTITY SHALL BE EXCLUDED. A "PEAKING UNIT" UNDER THIS PART SHALL INCLUDE ALL REAL PROPERTY USED IN CONNECTION WITH THE GENERATION OF ELECTRICITY, AND ANY FACILITIES USED TO INTERCONNECT THE PEAKING UNIT WITH THE ELEC- TRIC TRANSMISSION OR DISTRIBUTION SYSTEM, BUT SHALL NOT INCLUDE ANY FACILITIES THAT ARE PART OF THE ELECTRIC TRANSMISSION OR DISTRIBUTION SYSTEM; IT MAY BE COMPRISED OF A SINGLE TURBINE AND GENERATOR OR MULTI- PLE TURBINES AND GENERATORS LOCATED AT THE SAME SITE. NOTWITHSTANDING ANY PROVISION OF THIS PART TO THE CONTRARY, A PEAKING UNIT SHALL BE CONSIDERED INDUSTRIAL PROPERTY, PROVIDED HOWEVER THAT THE BENEFIT PERIOD FOR A PEAKING UNIT SHALL BE AS SET FORTH IN PARAGRAPH TWO-A OF SUBDIVI- SION C OF SECTION 11-269 OF THIS PART.
S 9. Subdivision c of section 11-269 of the administrative code of the city of New York is amended by adding a new paragraph 2-a to read as follows: (2-A) ABATEMENT FOR INDUSTRIAL CONSTRUCTION WORK ON A PEAKING UNIT. UPON APPROVAL BY THE DEPARTMENT OF A FINAL APPLICATION FOR BENEFITS, AN APPLICANT WHO HAS PERFORMED INDUSTRIAL CONSTRUCTION WORK IN ANY AREA ON A PEAKING UNIT, SHALL BE ELIGIBLE FOR AN ABATEMENT OF REAL PROPERTY TAXES, AS FOLLOWS: (A) AMOUNT OF ABATEMENT. THE FIRST YEAR OF THE ABATEMENT SHALL BE THE TAX YEAR WITH THE FIRST TAXABLE STATUS DATE THAT FOLLOWS THE SOONER OF (I) COMPLETION OF CONSTRUCTION; OR (II) FOUR YEARS FROM THE DATE THE FIRST BUILDING PERMIT WAS ISSUED, OR IF NO PERMIT WAS REQUIRED, THE COMMENCEMENT OF CONSTRUCTION. FOR YEARS ONE THROUGH FIFTEEN, THE ABATE- MENT SHALL BE THE AMOUNT OF THE ABATEMENT BASE. THE ABATEMENT SHALL BE ADJUSTED FOR INFLATION PROTECTION AS PROVIDED IN SUBPARAGRAPH (B) OF THIS PARAGRAPH. THE FOLLOWING TABLE ILLUSTRATES THE ABATEMENT COMPUTA- TION: TAX YEAR DURING BENEFIT PERIOD: AMOUNT OF ABATEMENT: YEARS 1 THROUGH 15 100% OF ABATEMENT BASE (B) INFLATION PROTECTION. (I) INDUSTRIAL CONSTRUCTION WORK, EFFECT OF ASSESSED VALUATION INCREASES. FOR YEARS TWO THROUGH THIRTEEN OF THE BENEFIT PERIOD, EXCEPT AS PROVIDED IN CLAUSE (II) OF THIS SUBPARAGRAPH, IF THERE IS ANY INCREASE IN TAX IN THAT YEAR THAT IS BASED ON AN INCREASE OF TAXABLE ASSESSED VALUATION SINCE THE IMMEDIATELY PRIOR TAX YEAR, SUCH EXCESS TAX LIABILITY SHALL BE ADDED TO THE AMOUNT OF THE ABATEMENT BASE. SUCH ADDITION TO THE AMOUNT OF THE ABATEMENT BASE SHALL BE DETERMINED USING THE INITIAL TAX RATE. (II) PHYSICAL INCREASES. NOTWITHSTANDING THE PROVISIONS OF CLAUSE (I) OF THIS SUBPARAGRAPH, IF IN ANY OF YEARS TWO THROUGH THIRTEEN OF THE BENEFIT PERIOD, A PHYSICAL CHANGE TO THE PROPERTY RESULTS IN AN INCREASE IN THE TAXABLE ASSESSED VALUE OF THE PROPERTY OF MORE THAN FIVE PERCENT FOR THAT YEAR, THEN ANY INCREASE IN TAXES FOR THAT YEAR SHALL NOT BE ADDED TO THE AMOUNT OF THE ABATEMENT BASE IN ANY YEAR. (III) IF THE TAXABLE ASSESSED VALUE UPON WHICH AN ADJUSTMENT TO THE ABATEMENT UNDER THIS PARAGRAPH IS BASED IS LATER REDUCED BY A COURT ORDER OR APPLICATION TO THE TAX COMMISSION, THEN THE APPROPRIATE ADJUST- MENT TO THE ABATEMENT BASE SHALL BE MADE IN ACCORDANCE WITH THE REDUCED TAXABLE ASSESSED VALUE. (C) MINIMUM REQUIRED EXPENDITURE. FOR INDUSTRIAL CONSTRUCTION WORK ON A PEAKING UNIT, THE MINIMUM REQUIRED EXPENDITURE IS THIRTY PERCENT OF THE PROPERTY'S TAXABLE ASSESSED VALUE IN THE TAX YEAR WITH A TAXABLE STATUS DATE IMMEDIATELY PRECEDING THE ISSUANCE OF THE FIRST BUILDING PERMIT, OR IF NO PERMIT WAS REQUIRED, THE COMMENCEMENT OF CONSTRUCTION. EXPENDITURES FOR RESIDENTIAL CONSTRUCTION WORK OR CONSTRUCTION WORK ON PORTIONS OF PROPERTY TO BE USED FOR RESTRICTED ACTIVITIES SHALL NOT BE INCLUDED IN THE MINIMUM REQUIRED EXPENDITURE. S 10. Paragraph 1 of subdivision a of section 11-271 of the adminis- trative code of the city of New York, as added by local law number 47 of the city of New York for the year 2008, is amended to read as follows: (1) Application for benefits pursuant to this part may be made imme- diately following the effective date of the local law that added this section and continuing until March first, two thousand [eleven] FIFTEEN. S 11. Section 11-271 of the administrative code of the city of New York is amended by adding a new subdivision c to read as follows:
C. (1) NO BENEFITS PURSUANT TO THIS PART SHALL BE GRANTED FOR CONSTRUCTION WORK PERFORMED PURSUANT TO A BUILDING PERMIT ISSUED AFTER APRIL FIRST, TWO THOUSAND FIFTEEN. (2) IF NO BUILDING PERMIT WAS REQUIRED, THEN NO BENEFITS PURSUANT TO THIS PART SHALL BE GRANTED FOR CONSTRUCTION WORK THAT IS COMMENCED AFTER APRIL FIRST, TWO THOUSAND FIFTEEN. S 12. Subdivision a of section 11-272 of the administrative code of the city of New York, as added by local law number 47 of the city of New York for the year 2008, is amended to read as follows: a. Continuing use. For the duration of the benefit period, the recipi- ent of benefits shall file biennially with the department, on or before the appropriate taxable status date, a statement of the continuing use of such property and any changes in use that have occurred, PROVIDED, HOWEVER, THAT ANY RECIPIENT OF BENEFITS RECEIVING BENEFITS FOR PROPERTY DEFINED AS A PEAKING UNIT SHALL FILE SUCH STATEMENT BIANNUALLY. This statement shall be in a form determined by the department and may be in any format the department determines, in its discretion, is appropriate, including electronic format. The department shall have authority to terminate such benefits upon failure of a recipient to file such state- ment by the appropriate taxable status date. The burden of proof shall be on the recipient to establish continuing eligibility for benefits and the department shall have the authority to require that statements filed under this subdivision be certified. S 13. Section 11-273 of the administrative code of the city of New York is amended by adding a new subdivision e-1 to read as follows: E-1. CONVERSION OF USE BY PEAKING UNITS. ANY APPLICANT WHOSE PROPERTY HAS BEEN GRANTED BENEFITS UNDER THIS PART FOR INDUSTRIAL CONSTRUCTION WORK AS A PEAKING UNIT AND WHO CONVERTS SUCH PROPERTY IN ANY TAX YEAR TO A USE THAT NO LONGER QUALIFIES IT AS A PEAKING UNIT, OR WHO USES SUCH PROPERTY IN A MANNER INCONSISTENT WITH THE DEFINITION OF A PEAKING UNIT, SHALL BE INELIGIBLE FOR ABATEMENT BENEFITS DURING ANY SUCH TAX YEAR. ANY SUCH RECIPIENT OF BENEFITS SHALL PAY WITH INTEREST TAXES FOR WHICH AN ABATEMENT WAS CLAIMED DURING ANY PORTION OF SUCH TAX YEAR. S 14. This act shall take effect immediately and shall be deemed to have been in full force and effect on and after March 1, 2011.

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