December 15, 2005

The Honorable Sheldon Silver
Speaker of the Assembly
Room 932 - Legislative Office Building
Albany, New York 12248

Dear Speaker Silver:

I am pleased to submit the 2005 Annual Report of the Assembly Standing Committee on Real Property Taxation. This was a busy year for the Committee, with a wide range of challenging issues and diverse legislation to consider.

This year, as in the past, the Committee was immersed in the proposed budget negotiations. The two key 2005 budget issues of particular interest to the Real Property Taxation Committee were: STAR Plus and Co-STAR. I am pleased to state that with your leadership and the assistance of Dean Fuleihan, we were successful once again in rejecting both of these budget issues. The STAR Plus and the Co-STAR provisions would have required school districts and municipalities to establish budgets that were subject to strict spending limitations (caps). The cap proposals would compromise the ability of the schools and local municipal leaders to meet the needs of their community and would undermine the authority of school officials to aptly address local educational needs when drafting and implementing the school budget.

In 2005 the Committee met ten times and acted on ninety-seven bills. We reviewed and reported proposed legislation in a variety of areas including, general administration, exemption administration, and jurisdiction specific (local) legislation. In addition to our daily legislative responsibilities, the Committee worked closely with the New York State Office of Real Property Services (NYS ORPS) to promote informed and responsible legislation. Other notable issues that the Committee embarked on this year were in relation to:

• Improving Assessing Practices for Condominiums and Cooperatives
• Reviewing local/district wide assessment and valuation practices
• Assessor Training for Assessing and Appraising Personnel in NYC
• Real Property Tax Incentives to Promote Affordable Housing

In 2006, the Committee will focus on assessment cycles, ascertain a means by which to codify a statewide volunteer fire-fighters/ambulance exemption, and continue to explore viable options to reduce cash-flow problems that are related to real property tax delinquencies and delayed State STAR reimbursement.

I have greatly enjoyed working with the Real Property Tax Committee members. Their knowledge and enthusiasm were instrumental in making this a pleasant and productive year. I look forward to another productive year.

1. PUBLIC HEARING

2. GENERAL ADMINISTRATIVE

   1. Assessment Cycles

      1. Flood Relief Act of 2005

      2. Fulton County Tentative Assessment Date

   2. Assessment Valuation

   3. Base Proportions

   4. School Districts

   5. PILOTS

3. DEPARTMENTAL BILLS

   1. Small Claims Assessment Review

   2. Coordinated Assessments

   3. Special Franchise

   4. STAR

4. ADMINISTRATIVE EXEMPTIONS

   1. Volunteer Firefighter(s) & Ambulance Worker(s)

   2. Residential Investments

   3. First-Time Home Buyers

   4. Non-Profit(s)

   5. Technical Corrections/Clarifications

      1. Persons with Disabilities and Limited Income

      2. Agricultural

5. SPECIAL ASSESSMENT UNITS - NEW YORK CITY & NASSAU COUNTY

   1. New York City

      1. Administrative

         1. Qualification Standards for Assessing & Appraising Personnel

         2. Base Proportions

         3. Class Two Improvements

      2. Exemptions

         1. Greenpoint-Williamsburg Development Zone

         2. J-51

         3. Commercial Expansion Program (CEP)

   2. Nassau County

      1. Administrative

         1. Base Proportions

6. 2006 OUTLOOK

7. APPENDICES

   1. Appendix A: 2005 Summary

   2. Appendix B: Real Property Tax Bills Enacted

   3. Appendix C: Real Property Tax Bills That Passed the Assembly ONLY

On April 7, 2005 the Assembly Standing Committees on Real Property Taxation, Cities, and Housing held a joint public hearing in New York City to investigate the facts surrounding the substantial real property tax assessment increases for property owners in Harlem and Bedford-Stuyvesant neighborhoods in the City.

Our goal was to examine the circumstances surrounding the significant real property assessment increases and to develop and/or review equitable proposals that could be implemented to modify the assessments in order to ease the fiscal hardship that such sudden and significant assessments increases produce on property owners.

Findings at the hearing confirmed that some of the assessment data obtained by the City for the 2005 assessment roll was based on inaccurate and/or incomplete data. Property owners that were negatively affected by such inaccuracies were urged to go through the normal assessment grievance process (a/k/a the appeals process) to have their assessments adjusted to reflect the true value. However, for the majority of property owners that spoke and/or submitted testimony at the hearing, substantial rehabilitative improvements were made to the properties. The improvements were generally significant (most of the home-owners invested well over $50,000 in rehabilitating their homes) which made these homes more marketable, thereby substantially increasing their assessed value. Nonetheless, for many of the homeowners the significant increase in their real property tax liability was not due solely to the renovation/rehabilitation of their real property, it was a combination of improvements that enhanced market values in the neighborhood and classification changes.

The properties with considerable real property tax increases were now being re-classified. They were no longer class one properties (residential units of three or less) but were now considered class two properties (residential units of more than four). In New York City, the percentage of assessed value used to determine the taxable value of property (referred to as class ratio) is significantly lower for class one than tax class two. The 2005 class ratio for class one is 6%, the class ratio for class two is 45%. Clearly, even without major renovations, simply being treated as a class-two property significantly increased the tax liability for many homeowners. Although the improvements and additional rental unit(s) will allow for greater rental income, it was resoundingly clear that such increases in rental income simply would not be sufficient to overcome the sudden and significant tax liability that these homeowners would be obligated to pay in 2005. Many of the homeowners indicated that they would not have the financial means to meet their new real property tax obligations and would ultimately be delinquent in paying their tax bills and/or have to sell their newly renovated homes.

As a result of the April 7, 2005, public hearing and with the support of the City Council, the Department of Finance, the Chairs and Members of the Real Property Taxation Committee, the Cities Committee, and Housing Committee, along with the Assembly members representing New York City, Assembly Bill A. 8723 was developed and enacted (awaiting assignment of a chapter number). This legislation provides a transitional phase-in for improvements/renovations for class two residential dwellings consisting of less than eleven units. Specifically, this legislation limits the initial increase in assessment value attributed to the improvements/renovations to no more than 1/3 and limits future assessment increases on the property to the standard 8% annually and thereafter. [refer to RPTL §1805(6)]

1. Flood Assessment Relief Act of 2005

Chapters 42 and 132 established the "Flood Assessment Relief Act of 2005". This legislation was specifically aimed at providing financial relief to property owners in 21 counties (Broom, Cayuga, Chautauqua, Chenango, Columbia, Cortland, Delaware, Greene, Madison, Montgomery, Niagara, Orange, Otsego, Putnam, Rensselaer, Schenectady, Schoharie, Sullivan, Tioga, Westchester, and Ulster) that were negatively impacted by the enormous rainfall that took place from April 1, 2005 through April 11, 2005.

Chapters 42 and 132 provides the necessary instruments by which municipalities throughout the 21 counties could set aside for assessment purposes the standard taxable status date (generally March first) and reevaluate the current market values of the properties taking into account the damage caused by the April Floods.

Specifically, this legislation authorized the assessment value of properties that were significantly impacted by the floods to be assessed at a value that reflects the property value as of April 15, 2005 for the 2005 assessment rolls. For practical purposes, the assessors within the municipalities that adopted the provisions of Chapter 42 and 132 are permitted to adjust the assessment rolls in the same manner as other clerical error corrections as defined by Section 550 of the Real Property Tax Law and as provided by Title 3 of Article 5 of the Real Property Tax Law.

NOTE: Similar legislation passed through the Governmental Operations Committee. This legislation - referred to as the "North Country Flood Assessment Relief Act of 2005" authorizes taxing jurisdictions within Essex and Warren County to reestablish assessment values for properties that were damaged due to severe weather between June 9, 2005 and June 20, 2005. The assessed property values for these severely damaged properties is to be based on the value of the property as of July 1, 2005 - provided the county adopts said provisions.

2. Fulton County Tentative Assessment Date

Chapter 177 allows taxing jurisdictions within Fulton County to set-aside the March 1, 2005 tentative assessment roll and to re-establish a new tentative assessment roll - no later than July 31, 2005.

This legislation is a direct result of overwhelming concerns by property owners and local government officials - particularly officials in the Towns of Johnstown, Mayfield, and Northville - that believe the recent implementation of new assessment procedures along with the upgrading in software resulted in irregularities in the assessed values of lake front properties.

B.  ASSESSMENT VALUATION

Chapter 714 requires real property assessment values to reflect the actual rents that are received and/or can be obtained for residential rental property that is subject to municipal, state, or federal rent restrictions.

Prior to the enactment of this legislation, developers who created affordable housing often had the disadvantage of having their properties assessed using the market rents despite the fact that the rents in such units were restricted. Often the actual rents that could be obtained due to rent restrictions were significantly less than the comparable market rates.

It is believed that such inequity in the valuation process discourages developers from building affordable residential units. This bill attempts to alleviate this problem by providing for more realistic valuation and assessment rates on rental property that have restrictive rental income clauses.

C.  BASE PROPORTIONS

Chapter 697 limits the base proportional shift to 1% for the 2005/2006 assessment roll in the Town of Islip - a homestead/non-homestead taxing jurisdiction. Capping the shift allows a modest transition of the tax liability between the two classes and should forestall massive swings in tax obligations for the average homeowner.

In addition, this legislation authorizes the Town of Islip to transition in the required 2% tax shift for the 2004/2005 over a five year (2005 through 2009) period (refer to L. 2004, c. 502). This provision will ensure that the homestead class will have an appropriate amount of time to adjust to the base proportional shift that would otherwise result in significant tax obligation for residential property owners

D.  SCHOOL DISTRICTS - Hampton Bays Union Free School District

Chapter 401 permits the New York State Education Department (NYSED) to use the 2004 assessment data when calculating state aid for the Hampton Bays Union Free School District for the 2006/2007 school year. If this legislation were not enacted, the NYSED would not use the 2004 re-evaluation assessment data for an additional year.

NOTE: The Town of Southampton has recently completed a two year town-wide reassessment of all parcels within its jurisdiction and it has shown that properties contained within the Hampton Bays Union Free School District have decreased in value by 8%.

E.  PILOTS

1.  Towns of Haverstraw and Stony Point

Chapter 163 authorizes the Towns of Haverstraw and Stony Point to enter into a "payment in lieu of taxes" (Pilot) agreement with Mirant Corporation for properties commonly known as Bowline Point and Lovett Generating Station.

The PILOT agreement must be approved by the Rockland County Industrial Development Agency and cannot exceed eight years. In addition, the agreement must stipulate a specific payment schedule.

Note: For several years, the former and current owners of the Bowline Point and Lovett Generating Station have litigated the assessed value of the properties in question. In addition, the Mirant Corporation is currently in a financial restructuring phase, which has resulted in the non-payment of property taxes. This legislation will provide a means by which to facilitate an equitable real property tax settlement thereby providing stability and predictability in the tax liability of electric generating facilities.

As a general rule, the New York State Office of Real Property Services (ORPS) will regularly submit legislation (a/k/a departmental bills) that they believe will enhance and/or streamline the assessing process in New York State. This year the Legislature - working closely with the staff at ORPS, passed four departmental bills, they are:

1. Small Claims Assessment Review

   Chapter 215 increases the eligibility limitation - from $150,000 to $450,000 (the $150,000 limit was set in 1986) - for the small claims assessment review process (refer to Real Property Tax Law Section 730).

   The small claims review process (SCAR) - is intended to provide property owners of one, two or three family dwellings that are owner occupied an opportunity to challenge the assessment on their property as determined by the Board of Assessment Review.

   The SCAR provides for review of the facts before a Small Claims Assessment Review Hearing Officer (for a filing fee of $30.00). The setting for the review is informal and greatly reduces the time it would otherwise take to have an assessment grievance settled via a formal tax certiorari proceeding.

2. Coordinated Assessments

   In an effort to continue to encourage efficient and quality assessments throughout New York State, an increase in state-aid to certain eligible municipalities has been approved.

   Specifically, chapter 216 provides an additional incentive, in the form of state-aid, of up to $5.00 per parcel (not to exceed one-hundred thousand dollars) to municipalities that consolidate/coordinate their assessment programs pursuant to Real Property Tax Law Section 1573(3).

   This legislation is only open to newly formed or for the expansion of existing coordinated assessment programs. The window by which the municipality may participate in the one-time enhanced State aid for consolidating/coordinating assessment programs is limited to the 2006, 2007, or 2008 assessment roll. In addition, municipalities will be required to maintain their consolidated/coordinated assessment programs for ten years. If within the ten year period they should dissolve their coordinated efforts, they will be required to repay the State for monies received via this program.

3. Special Franchise

   Chapter 743 establishes that assessing units (excluding NYC and Nassau County) are now required to enter the full level of assessment or uniform percentage of value for all special franchise properties (special franchise property is public utility distribution property located on public streets, highways or other public rights of way) on the roll. In the event that the state equalization rate is different than the stated level of assessment, the assessor is authorized and directed to re-compute the assessments and change the roll to reflect the appropriate equalized value. This legislation also amends Real Property Tax Law Section 550 (Corrections of Rolls - definitions) & Section 553 (Corrections of Final Roll) to correlate with the provisions of this statute.

4. STAR

   Chapter 742 is designed to provide enhanced STAR recipients that have opted to use the Income Verification Program (IVP) greater clarity in relation to their annual renewals. This is done primarily by changing the date by which the notice is sent to the IVP homeowner - the notification would be sent after confirmation of income eligibility has been verified. Upon receipt of the income eligibility data, the assessor will be required to send out the appropriate "information notice". The informational notice will confirm, deny or advise the homeowner that additional information is needed to determine eligibility for enhanced STAR.

   Note: Prior to the enactment of this legislation, the notice must go out 60 days prior to the taxable status date--often before confirmation of eligibility or ineligibility has been determined. The "reminder" merely states the eligibility requirements and the requirement that the property owner must notify the assessor in the event of ownership/status change. This led to confusion.

   In addition to enhancing the IVP notification process, this legislation will also provide greater protection to the homeowner. In the event the enhanced STAR recipient neglects to submit the necessary information or is no longer eligible for enhanced STAR and is being denied the enhanced STAR status, the homeowner will now automatically default to the Basic STAR.

   Note: Prior to the enactment of this legislation if the homeowner failed to provide additional information and/or no longer qualified for enhanced STAR - the homeowner would not receive any STAR savings.

1. VOLUNTEER FIREFIGHTER(S) AND AMBULANCE WORKER(S) EXEMPTION

   1). Chapters 74, 189, 208, 244, 419 and 712 provide, at local option, a partial real property tax exemption for members of incorporated volunteer fire companies, fire departments, and incorporated volunteer ambulance services in Orange, Sullivan, Jefferson, St. Lawrence, Montgomery, Onondaga, and Saratoga Counties. This exemption allows for a 10% reduction on the assessed value of the residence of the volunteers provided that the volunteer meets the following criteria:

   • The property is the primary residence of the volunteer;
   • The property is used exclusively for residential purposes;
   • The applicant resides in the city, town or village served by the volunteer company, and;
   • The applicant has a minimum of five certified years as a volunteer member with the volunteer ambulance/firefighting company.

   With the exception of Montgomery County - the above referenced chapters authorizing a 10% reduction on the assessed value of a volunteer firefighters/ambulance workers primary residence all have a provision that limits said exemption to no more than $3000 times the equalization rate. Taxing jurisdictions in Montgomery County that adopt the provisions of the volunteer firefighters/ambulance workers exemption will realize the full 10% reduction on the assessed value.

   NOTE: With the adoption of the above referenced legislation, taxing jurisdictions in 26 counties are now authorized to adopt local legislation that will provide volunteer firefighters/ambulance workers with a partial real property tax exemption. The 26 counties are: Cattaraugus, Chautauqua, Columbia, Dutchess, Erie, Jefferson, Lewis, Montgomery, Nassau, Niagara, Oneida, Onondaga, Orange, Orleans, Oswego, Putnam, Rockland, Saratoga, Schenectady, Schoharie, Steuben, St. Lawrence, Suffolk, Sullivan, Westchester, and Wyoming

   2). Chapter 261 expands the authorization for the volunteer firefighter/ambulance worker exemption in Nassau County to school districts. Now school districts within Nassau County, after a public hearing, have the option of adopting provisions that will allow for a real property tax exemption related to school taxation.

   Note: With the adoption of the above referenced legislation, of the 26 counties that are authorized to pass local legislation affording a partial real property tax exemption to volunteer firefighters/ambulance workers, 13 counties, also have the option of extending said tax exemption for school taxation purposes, they are: Columbia, Jefferson, Lewis, Montgomery, Nassau, Onondaga, Orange, Orleans, Schenectady, Schoharie, St. Lawrence, Suffolk, and Sullivan.

   3). Chapter 324 authorizes the expansion of the volunteer firefighter/ambulance worker exemption to the surviving un-remarried spouse of a volunteer firefighter/ambulance worker that was killed in the course of performing their volunteer duties.

   Note: This legislation only applies to the nineteen counties (they are: Cattaraugus, Chautauqua, Columbia, Dutchess, Erie, Lewis, Nassau, Niagara, Oneida, Orleans, Oswego, Rockland, Putnam, Schenectady, Schoharie, Steuben, Suffolk, Westchester and Wyoming counties) that were authorized to enact the volunteer firefighters/ambulance workers exemption when this legislation was originally introduced.

2. RESIDENTIAL INVESTMENT EXEMPTIONS:

   Residential investment exemptions can be a useful tool to encourage homeownership, which ultimately can facilitate the maintenance and renewal of wholesome neighborhoods.

   Chapter 397 authorizes the City of Albany to adopt local legislation that will provide a partial real property tax exemption for the conversion of a multiple dwelling that is owner occupied to create a one or two family dwelling.

   The exemption applies only to the added value of the dwelling that was a direct result of the conversion, construction and/or alteration and the exemption is only applicable to the first $100,000. In addition, in order to be eligible for the exemption, the dwelling must have been erected at least five years ago. The cost to convert, construct, or alter the dwelling must exceed $5000 (cannot be ordinary upkeep/maintenance), and the construction must take place after the city has passed a local statute enacting the exemption.

   The exemption is for a total of eight years. In the first year, the exemption will be 100% applicable only to the increase in assessed value associated with said improvements and will decrease annually by twelve and one-half percent.

   Note: The City of Jamestown and the City Rome have had similar legislation enacted that allows for a residential tax exemption within their city limits (refer to L. 2002, c 470 and L. 2004, c. 354)

3. FIRST-TIME HOMEBUYERS EXEMPTION

   Chapter 657 extends the first-time homebuyers exemption until 2010. Prior to the enactment of this legislation the exemption was due to sunset at the end of 2005.

   The first-time homebuyers exemption (refer to RPTL 457) provides a partial real property tax exemption to homeowners that are purchasing a newly constructed home. The exemption is for a maximum of five years - a 50% real property tax exemption is authorized for the first year and decreases by 10% each year for the next four years. The exemption is limited to homeowners who have not purchased a home in at least three years. The homeowner and the dwelling must meet SONYMA qualifications. The home must be the owners primary resident.

   Note: The First-Time Homeowners Exemption is a local option. In 2004 (latest available data), 145 exemptions were authorized, 3 in Chautauqua County, 1 in Oneida County, 1 in Orange County, 2 in Oswego County, 2 in Schenectady County, and 136 in Suffolk County.

4. NONPROFIT EXEMPTION(S):

   Assessors in several jurisdictions were authorized to accept exemption applications after the applicable taxable status date on specific properties (23 in all) owned by religious organization, municipalities, educational institutions, and other nonprofit entities. In most cases, the property was purchased and/or acquired after the taxable status date. In some instances, the property owners were either unaware of the need to file annual exemption applications or simply failed to file by the required taxable status date. The following is a list, by chapter number, organization name, and taxing jurisdiction, of those entities that have been granted legislative authority to grant the retroactive non-profit status and to adjust the tax roll(s) accordingly:

   Chapter No.	Organization Name	Assessment Jurisdiction(s)
   99	Korean Joon Bu Presbyterian Church of New York	Nassau County (Village of Old Westbury & Town of Hempstead)
   270	Kehilat Chovevel Tzion Congregation	City of New Rochelle
   272	Young Israel of Hewlett	Nassau County
   273	Independent Group Home	Town of Brookhaven
   358	Village of Floral Park	Nassau County
   362	Great Neck Park District	Nassau County
   363	New Hyde Park - Garden City Park Union Free School District	Nassau County
   364	Merrick Jewish Center	Nassau County
   370	Bethel Christian Church	Nassau County
   373	Manhasset Union Free School District	Nassau County
   417	Village of East Rockaway	Nassau County
   454	Group Home Living Program (Frowein Rd)	Town of Brookhaven
   455	Group Home Living Program (Old Country Rd)	Town of Brookhaven
   461	North Bellmore Fire District	Nassau County
   500	Muslim American Society	New York City
   668	Touro College	Town of Islip
   670	Gospel Tabernacle Church	Town of Islip
   691	Hands Across Long Island	Town of Islip
   694	Hewlett Bay Fire District	Nassau County
   717	Goldsmith D. & Mary B. Johnes Home	Town of Newburgh
   721	Middle Island Caring for Kids	Town of Brookhaven
   739	Evangelical Lutheran Emanuel Church of Patchogue	Town of Brookhaven
   745	Green-lawn Centerpoint Historical Association	Town of Huntington

5. TECHNICAL CORRECTIONS/CLARIFICATION

   1).  PERSONS WITH DISABILITIES AND LIMITED INCOME EXEMPTION:

   Chapter 72 is best described as a clarification of Chapter 753 of the Law of 2004. Chapter 753 of the Laws of 2004 (became law January 28, 2005) amends the "Persons with disabilities and limited income" exemption (refer to Real Property Tax Law Section 459-c). Prior to Chapter 753, the persons with disabilities and limited income exemption was not applicable to school taxes when a child resided in the home and attended a public school. Chapter 753 authorizes the taxing jurisdiction (after a public hearing) to determine if the exemption is to be permitted in such circumstances. Chapter 72 clarifies that the exemption is not authorized in instances where a child has been deliberately brought into the disabled homeowners dwelling for the purpose of attending the local school(s).

   2).  AGRICULTURAL EXEMPTION

   Chapter 667 clarifies that the provisions afforded within RPTL Section 483 extends to structures or buildings that are used exclusively as indoor exercise or training arenas for horses (to include riding arenas and dude ranches) when such premises are used in connection with a commercial horse boarding operation. The exemption applies to the increase in assessed value associated with the construction or reconstruction of exercise arena and is limited to a 10 year period.

   Note: According to the The Office of Real Property Services the exemption afforded under RPTL Section 483 included horse training and exercise arenas with the 1977 enactment of Chapter 267. (Refer to ORPS - Opinion of Counsel - Volume 9, SBPRS No. 57).

1. NEW YORK CITY
   1. Administrative
      1. Qualification Standards for Assessing and Appraising Personnel

         Chapter 139 sets minimal standards and qualification parameters for assessors and appraisal personnel in New York City. The qualification standards are similar to those that are required for both appointed and elected assessors throughout New York State.

         It is important to point out the initial drafting and push for this legislation was brought about because of the corruption that took place within the City’s Department of Finance which led to the conviction of eighteen assessors. In 2002, the Assembly held a public hearing upon learning of the illegal activity of a group of assessors within the City’s Department of Finance. The hearing had two primary functions; one was to determine the facts surrounding the illegal activity, and the other was to find viable solutions that would detect and deter future wrongdoing. This legislation is a direct result of the testimony received by the committee and its findings after the hearing in 2002. (refer to RPTL - Article 3)

      2. Base Proportions

         Chapter 178 extends the 2% limitation on the base proportional shift for the 2005 assessment roll in New York City. The enactment of this legislation is necessary to ensure that the residential property owners in New York City are not unduly burdened with excessive real property taxation.

         According to the New York City Department of Finance (DOF) this bill provide relief for tax classes one and two. The affect of the 2% maximum base proportional change is estimated to result in a tax rate increase of just over 4% for class one and under 2% for class two properties. DOF estimates in the terms of dollar amounts, the average class one property owner to realize a savings of roughly $77 and for the average class two property owner realizing a savings of approximately $102.

         Note: State law caps the base proportional shift of 5%, however, since 1994, legislation has been enacted that has limited the shift to less than 3%. [refer to RPTL §§1803(1)(c) through (1)(l) and 1803(1)(n)]

      3. Assessments of Improvement - Class Two

         Assembly Bill A. 8723 (awaiting assignment of a chapter number) amends section 1805 of the Real Property Tax Law (RPTL) to allow for the limitation provisions to apply on certain existing building when said property is renovated, improved and/or rehabilitated

         Specifically, properties in class two that are less than eleven units and which have been renovated and/or rehabilitated will not incur the full increase in assessed value due to said renovation. This legislation - allows for a transitional phase-in. The initial increase in value will be limited to a maximum of 30% for said renovation/rehabilitation - the remaining increase in value will be limited to 8% annually not to exceed 30% in a five year period. (refer to Public Hearing in Section I of this report for background on this legislation)

         Note: This bill does not apply to the construction of new buildings.

   2. Exemptions:
      1. Greenpoint - Williamsburg Development Zone

         Chapter 110 establishes the Greenpoint - Williamsburg Development Zone and sets eligibility requirements for real property tax projects eligible for property tax exemptions.

         This legislation would extend the 421-a Real Property Tax Exemption afforded to certain multiple dwellings in NYC. The exemption would be extended to the newly created Greenpoint-Williamsburg Development Zone (Brooklyn/East River). However, in order to qualify for the exemption in this specific geographical area, the project must provide affordable housing. Eligibility is based on the following criteria:

         Rental Units - minimum of 20% of the units must be available for occupancy to individuals/families whose incomes are at or below 50% of the median area income (for a unit to be deemed affordable within the specified income limitations, the rent must not exceed 30% of the household income); or

         Sale of Units - minimum of 20% of the units must be available for ownership to individuals/families whose incomes are at or below 80% of the median area income (for a unit to be deemed affordable within the income limitations, the purchase price cannot exceed the maximum purchase price established by the SONYMA, nor can the mortgage costs (to include insurance, taxes. dues, etc.) exceed 35% of the household income); or

         At least 20% of the completed units must be set aside for the life of the project as rental units for individuals/families whose incomes are at or below 50% of the median area income.

         In addition, the bill requires that the local community residents have priority in renting/purchasing the affordable units and that said units cannot be isolated in a specific area but are interposed throughout the project.

         The municipality has the right to provide additional restrictions to aid in providing additional affordable housing. (refer to RPTL §421-a)

      2. J-51

         With the support and backing of the Mayor’s office, two pieces of legislation were enacted that will amend eligibility requirements for the J-51 exemption program (a/k/a Real Property Tax Law Section 489) as it applies to buildings that have Mitchell/Lama status.

         First, Chapter 275 removes the market value eligibility criteria for the J-51 exemption program. Prior to this legislation, in order for a Mitchell/Lama complex to qualify for this "improvement" exemption - the average value of a unit could not exceed a market value in excess $40,000. Although, Mitchell/Lama’s are classified and do provide affordable housing - the $40,000 limitation is outdated and does not reflect the current housing market in New York City.

         By eliminating this archaic market value figure from the eligibility requirements, it is presumed that more Mitchell/Lamas will apply for apply for the exemption which will require the Mitchell/Lama Housing Program to continue for an additional fifteen years.

         Second, Chapter 279 eliminates another restriction eligibility requirement. With the enactment of this legislation; Mitchell Lamas that receive financial incentives to make improvements and/or alterations to their dwellings may now still qualify for the J-51 program. Prior to this legislation, if public funding was received then the Mitchell/Lama was specifically prohibited from receiving a J-51 real property tax exemption. Again, acknowledging that if the Mitchell/Lama receives the J-51 exemption, they will be required to extend Mitchell/Lama status for an additional fifteen years. (refer to RPTL §489)

      3. Commercial Expansion Program (CEP)

         Assembly Bill 8356 (awaiting assignment of a chapter number) amends eligibility requirements for the real property tax exemption afforded under Real Property Tax Law §§499-aa, 499-bb, 499-cc, and 499-dd known as the Commercial Expansion Program.

         CEP provides a real property tax reduction in New York City for the creation of new, renewal and/or extension of commercial office or industrial leases. The real property tax reduction is limited to specified zones - known collectively as the Expansion Areas which include C4, C5, C6, M1, M2 and M3 zones in the Bronx, Brooklyn, Queens, Staten Island and Upper Manhattan (north of 96th Street).

         The tax exemption benefit is applicable to the value of improvements/investment to the property. A property owner receives a real property tax exemption which they are then required to be pass along to the renters/leasers of the building via reduced rents/leases.

         With the enactment of this legislation, CEP will:

         • include a special Garment District. Currently, the Garment District is specifically excluded;

         • will expand the program to 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 ineligible;

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

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

         • for CEP applications approved on or after July 1, 2005, eliminates the phase out provision. The property owner will realize the full allowable benefit for the term of the lease (minimum of a three year lease is 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. For those eligible for the five year abatement, the maximum allowable exemption is in place for the first three years, with a phase-out in years four and five equal to a reduction of 1/3 each year. For those eligible for a three year CEP abatement, the first year is the maximum allowable deduction, with a phase-out in the second and third year equal to a reduction of 1/3 each year.

2. NASSAU COUNTY
   1. Administrative
      1. Base Proportions

         Chapter 17 extends the 2% limitation on base proportions shifts in Nassau County. Base proportional caps were initially enacted in 2003 as a tool to ease the fiscal impact of the 2002 reassessment values. Capping the shift allows a modest transition of the tax liability of each class. Initially it was believed that a cap would only be needed for the first year; however, due to the unexpected boom in the housing market - which has caused market value of homes to surge upward - the provision was extended in 2004 and again this year as a means to stabilize the tax base and to relieve property owners of sudden and significant tax shifts. (refer to the L. 2003, c. 43; L. 2004, c. 43)

         In addition to extending the 2% limitation on the base proportion on the four classes of properties within Nassau County, Chapter 20 extends the 1% base proportional cap for the three taxing jurisdictions (City of Long Beach, City of Glen Cove, Village of Lake Success) that have opted in on the homestead/non-homestead provisions under Article 19 of Real Property Tax Law. As with the four class system, this extraordinary measure is needed to ensure the tax base shift is controlled in such a manner as not to cause undue fiscal hardships for property owners - especially homeowners.

As the Committee heads into 2006 Legislative Session it will continue to review the plausibility of revising the manner in which municipalities are authorized to handle delinquent real property taxes, search for viable solutions to provide real property tax relief to working families and the elderly and will continue to focus on ways to streamline the real property assessment and taxation process to make it more transparent, especially in the area of favoring a few taxpayers with exemptions at the expense of the many.

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To Ways & Means

2005 REAL PROPERTY TAXATION LEGISLATION

PASSED THE ASSEMBLY ONLY