S879-2013 Actions

• Jan 9, 2013: REFERRED TO LOCAL GOVERNMENT

S879-2013 Memo

BILL NUMBER:S879

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 a manner which
supports the specific exemption granted.

SUMMARY OF PROVISIONS:

Section 1: Amends section 420-a of the Real Property Tax Law by
repealing subdivision 3 and replacing it with a new subdivision 3
which provides 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. 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, the
property owner who received the benefit of the exemption shall pay
all property taxes that would have been owed.

Section 2: Effective date.

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 2010 assessment rolls, there are over
5.6 million parcels of property in New York State (valued at a total
of $2.5 trillion). Of this number, some 3.5 million parcels enjoy at
least 1 real property tax exemption. From a taxable status
standpoint, over 30% of the total value of property in New York State
($789 billion) is either wholly or partially exempt from real
property taxation.

The lion's share of real property tax exemptions 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.

The State must help provide tools which promote greater accountability
from those seeking real property exemptions in order to balance
public needs and benefits. This specific legislation offers such a
tool by seeking to ensure that organizations which seek tax exemption
truly met those public purposes, and that lands receiving relief from
real property taxation are being fully used in support of such
purposes.

LEGISLATIVE HISTORY:
S.2544-A of 2012: Died in Senate Local Government, Died in Assembly
Real Property Taxation
S.2544 of 2011: Passed Senate, Died in
Assembly Real Property Taxation
S.6838 of 2010: Died in Senate Local Government
S.1126-A of 2004: Died in Senate Local Government, Died in Assembly
Real Property Taxation
S.1126-A of 2003: Died on Senate Floor Calendar

FISCAL IMPLICATIONS: None to the state.

LOCAL FISCAL IMPLICATIONS:
Undetermined, however, it is anticipated the bill will offer improved
local oversight of exemptions, with a salutary effect on school,
municipal and special district (ie., fire protection) tax rolls.

EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding 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.

S879-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                     879

                         2013-2014 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 9, 2013
                                 ___________

  Introduced  by  Sens.  BONACIC, LARKIN, LITTLE -- read twice and ordered
    printed, and when printed to be committed to the  Committee  on  Local
    Government

  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 HAVE
  BEEN OWED; PROVIDED, HOWEVER, THAT FAILURE TO PAY DOES  NOT  CREATE  ANY
  RIGHT  BY  ANY  GOVERNMENTAL UNIT TO COMMENCE A PROCEEDING TO EFFECTUATE

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD02666-01-3

 S. 879                              2

  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.