2005 Legislative Report
from the Assembly Committee on

Real Property
Sheldon Silver, Speaker • Brian McLaughlin, Chair • Summer 2005

Message from the Chair
photo Assemblyman Brian McLaughlin
Dear New Yorker:

We have had a very productive session in Albany. On time, for the first time (in 21 years), the Legislature was able to enact a budget which restored vital services as well as job-creating legislation and tax incentives for housing and businesses. As the Chairman of the Real Property Taxation Committee, I am very proud of the many initiatives we have forged, and the inroads made to achieve a real property taxation system which is equitable, efficient, and provides the greatest advantages to the greatest number of New Yorkers.

photo Assembly Speaker Sheldon Silver with Assemblyman Brian McLaughlin.

Throughout this report, you will find information about some of the legislation which my Committee has shepherded. With the leadership of Speaker Sheldon Silver and the Chairman of the Ways and Means Committee, Assemblyman Herman Farrell, we were able to champion such issues as improving tax assessment methods on real property and special franchise property, providing tax relief for home and co-op owners, tax incentives for Mitchell-Lama apartments, assisting seniors with the enhanced STAR application process and promoting the economic vitality of NYC.

photo Assemblyman McLaughlin addresses the Assembly.

As always, I welcome your views on these and other important issues. I urge you to contact my District Office at 718-762-6575, 163-13 Depot Road, Flushing, NY 11358, email at . Please know that I look forward to continue working on behalf of all New Yorkers and, with your support, I will once again lead the fight to meet the challenges before us. Through the Real Property Taxation Committee, we will help make the City and State that we call “home” a source of great pride, accomplishment, and comfort to its residents.

Brian M. McLaughlin
Real Property Taxation Committee

Enhanced STAR Made Simpler

This legislation greatly assists seniors in receiving a benefit that helps them keep their school taxes at an affordable level, enabling them to remain in their homes.

It improves the notification process for seniors who have been eligible to receive the enhanced School Tax Relief (STAR) exemption and who have elected to have their income verified by the State Department of Taxation and Finance for future renewals of their enhanced STAR applications.

In the original legislation permitting automatic verification of income for such seniors, provision was made for a reminder notice to be given to seniors for them to check — before the deadline for submission of their renewal application — whether the verification procedure established their continued eligibility. The notification procedure established by this legislation makes such notice more effective by giving seniors notice of the actual results of the verification process and the implications of their continued receipt of the STAR exemption. It provides a clearer notice and gives better guidelines as to what the senior needs to do to assure continued receipt of their enhanced STAR exemption.

Tax Relief for Home and Co-op Owners

As Chairman of the Assembly Standing Committee on Real Property Taxation, Assemblyman McLaughlin is very supportive of finding ways to reduce taxes on overburdened residential taxpayers in New York City. Toward that end, a law he sponsored which was part of the New York City Budget plan for Fiscal Year 2006, approved by both the Mayor and the City Council, would cap the maximum class growth rate of adjusted base proportions at two percent (2%). This will limit the growth of classes one and two which would otherwise grow at the rate of 29.6 and 5.0 percent, respectively. The effect of this change would be to reduce the amount by which the current base proportions for these classes would be allowed to grow, resulting in an estimated tax rate increase of 4.3 percent for class one and 1.5 percent for class two. This would result in citywide savings of $77 for a typical owner of a class one single family home, and savings of $102 for an owner of a co-operative apartment.


To raise the value of real property to $450,000 from $150,000 so that assessments can be challenged in Small Claims Assessment Review (SCAR) proceedings, Committee Chair McLaughlin introduced a new law, recently signed by the Governor. SCAR proceedings are simplified alternative court hearings to formal tax certiorari proceedings, which enable residential taxpayers to contest determinations of local boards of assessment review. It enables homeowners to receive expedited due process rights of appeal without the expense of hiring attorneys or clogging the Court system with their cases.

photo Assemblyman Brian McLaughlin talks with members of the Broadway-Flushing Homeowners Association.

The limitation of $150,000 was established in 1986 and needed to be updated to reflect growing market values of residential property over approximately 20 years. Because assessed values vary by the uniform percentage of value used by different assessing units, this legislation uses the equalized value of the eligibility amount to assure that full value is the criterion used for entrance into this alternative process.

McLaughlin Convened Hearing on
Property Tax Increases
Prompts Legislation to Hold Line on Increases

Assembly members Keith Wright, Scott Stringer, Brian McLaughlin and Vito Lopez listening to testimony of Councilmen Robert Jackson (7 District) and William Perkins (9 District).
Assemblyman Brian McLaughlin, Chairman of the Real Property Taxation Committee, was joined by Assembly members Vito Lopez (D-53 AD), Chairman of the Committee on Housing; Scott Stringer (D-67 AD), Chairman of the Committee on Cities; and Keith Wright (D-70 AD) at a public hearing he convened to gather facts and review proposals to relieve property owners who have recently renovated or rehabilitated their homes, from sudden and excessive tax increases.

These increases occurred because rehabilitation or new construction was not “transitioned in” under the Real Property Tax Law or because property class changes occurred when properties of 1-3 units were rehabilitated into more than three units, and thereby reclassified into a category where the assessment ratio is much higher. Property owners throughout the entire city are subject to the increase. Harlem and Bedford Stuyvesant home owners were among the first to suffer the tax hike, estimated to be as high as 1000%.

Assemblyman McLaughlin called the hearing into session with the following opening remarks: “This hearing is a necessary step in helping to find ways to protect working families simply trying to improve their homes and thereby improve their neighborhood. We should encourage these citizens, not throw disincentives their way. It’s important to note the irony of their plight: these hard working small home owners are making often uninhabitable buildings inhabitable. They provide housing to other families and add to the city’s tax coffers. For their efforts, they are, in effect, being penalized. While big companies are awarded tax breaks for renovating and rehabilitating their property, the average citizen trying to do the same, but on a scale 1000% less, receives tax increases of a 1000% more! This is outrageous and unacceptable. What we hope to accomplish here today is to begin the process of identifying options for a tax system that is stable, predictable and fair. We need a tax system which, at the very least, encourages the small property owner to make renovations, and not one which places them in jeopardy of losing their property.”

As a result of this hearing, legislation was developed and passed to cushion the tax increases for properties whose values increase because of rehabilitation.

Special Franchise Property Assessment
Methods Upgraded

A law to update the method of determining State equalization rates for special franchise property has been enacted and will apply to assessment rolls with taxable status dates on or after January 1, 2006. Special franchise property is public utility distribution property which lies in the public right-of-way and which is taxed by local governments as real property. Just as with real property owned by private entities, State equalization rates are determined by the State Board of Real Property Services for the purpose of apportioning tax levies among several local assessing jurisdictions.

Except for utility property whose value is “pegged” under the Real Property Tax Law at 1953 levels of assessment, this bill allows equalization rates to be computed using the stated level of assessment by each local assessing unit which has completed a revaluation since such time. The stated level of assessment is the uniform percentage of value prevailing on an assessment roll which is used to determine the accuracy of real property assessments.

For New York City and Nassau County, this equalization rate is calculated for each class of property appearing on their assessment rolls.

Improving Tax Assessment

This law, which Assemblyman McLaughlin sponsored at the request of the State Office of Real Property Services, encourages local governments to establish fair and equitable assessment rolls for the taxation of real property. It provides additional State aid to municipalities that implement new coordinated assessment programs (CAPs) for assessment rolls filed in 2006, 2007 or 2008 and which did not previously participate in a CAP. Maintaining updated assessment rolls takes local resources and this bill attempts to promote good assessment administration by encouraging pooling of available local resources by increased State aid. The legislation limits any one eligible assessing unit from receiving more than $100,000 in State aid and demonstrates an important commitment to improved real property tax administration.

Another important law (A.630) that would improve assessment procedures was introduced by Assemblyman Scott Stringer and would establish training and certification requirements for assessors of real property and other personnel having professional appraisal duties for New York City.

Tax Incentives and Upgrades Aid
Mitchell-Lama Projects

The J-51 exemption program has been primarily responsible for the rehabilitation and upgrading of New York City’s housing stock since 1955. Many Mitchell-Lama projects which were made eligible for J-51 since 1987 are nearing the point where they would be able to dissolve and leave the program because their original subsidized financing is completed. However, because of age, there is a need to rehabilitate many of the major systems in these buildings.

This legislation, (A.7728), amends Section 489 of the Real Property Tax Law to remove the limit on the value of cooperative apartments that are eligible for exemptions and abatements for building-wide improvements through the New York City J-51 program. Such application of unlimited eligibility would be applicable only to Mitchell-Lama projects that have an agreement prohibiting the dissolution of the limited-profit housing company for a period of at least 15 years after the commencement of J-51 benefits.

Along with A.7728, another important bill, (A.8120), was passed to assure the continued viability of the Mitchell-Lama program.

When Mitchell-Lama projects were made eligible for J-51 real property tax benefits for the increased value of major system-wide improvements, such improvements could not be financed by a grant, loan or subsidy from any federal, state or local governmental agency or instrument. This legislation eliminates the restriction, but only if the limited-profit housing company agrees to stay in the Mitchell-Lama program for not less than 15 years from the commencement of J-51 benefits.

Mitchell-Lama subsidies and the meshing of the J-51 tax incentive program have been a significant factor in providing housing to low and moderate income families for over 40 years. Many of these projects require upgrading, but it would be self-defeating to provide governmental loans for this purpose without some assurance that the public benefits of a Mitchell-Lama project would continue. Providing tax benefits under the J-51 program of real property tax abatements serves as an incentive to keep such public funding for building improvements from being used on projects that would leave the Mitchell-Lama program. It also serves as a useful tool in maintaining a successful form of housing.

Promoting the Economic Vitality of NYC

To promote commerce in New York City, while avoiding significant deterioration to existing mixed use and non-residential properties and possibly the exodus of businesses, by providing real property tax abatements for the lease of office, industrial or manufacturing space, Assemblyman McLaughlin sponsored a law, signed by the Governor, which will enhance the City’s Commercial Expansion Program (CEP). This will be accomplished by the following:

  • Expanding the exemption area (a/k/a expansion area) to include the Garment District in Manhattan;

  • Expanding the program to qualified industrial/manufacturing entities to include: a) the assembly of goods to create a different product; b) the processing or fabrication of goods; and c) the packing of goods. Currently, such entities are not eligible;

  • Eliminating the square footage eligibility requirement. Currently, an eligible premises must have an aggregate floor area of at least 25,000 square feet;

  • Allowing a condominium unit to be considered a separate eligible building. Currently, no such provision exists;

  • Providing that for CEP applications approved on or after July 1, 2005, the tax abatement provided under this program would no longer have a phase-out provision. The property owner would realize the full allowable benefit for the term of the lease (minimum of a three year lease required), not to exceed ten years. Currently CEP benefits are for a minimum of three years and a maximum of five years — depending on the lease.

photo Assemblyman McLaughlin advocating for the passage of economic development initiatives.

CEP benefits are provided to property owners through a real property tax exemption which they are then required to pass along to the commercial tenants of the building via reduced rents. These enhancements are targeted toward small businesses who are currently restricted because of their size from taking advantage of the program.

With this law, New York City can achieve its policy goals of : (1) lowering rental costs for industrial and manufacturing tenants; (2) increasing real estate opportunities for the industrial and manufacturing sector; and (3) encouraging the development of and investment in industrial and manufacturing building stock. These are worthy goals and the provisions of this bill are reasonable measures to achieve them.

Assemblyman Brian McLaughlin
Chairman, NYS Assembly Committee on Real Property Taxation
Room 704 LOB • Albany, New York 12248 • 518.455.5172
163-13 Depot Road • Flushing, New York 11358 • 718.762.6575

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