Alters tax exemption programs for the development of new and affordable housing

Summary of provisions

This bill amends provisions Of section 421-a of the Real Property Tax Law and the Administrative Code of New York City. Additionally, new sections are added to the Real Property Tax Law and to the Charter of the City of New York.

Firstly, two new definitions for construction time periods are created.

Developers would be granted up to an additional three years for construction. During this time period they would receive the tax exemptions as outlined in the program. However, any exemption they receive-during this extended construction period would count towards the total tax exemption the multiple dwelling is eligible to receive and would be in an amount and timeframe consistent with a building that had finished construction during the initial construction period. After the end of the initial or extended Construction period, if needed, the multiple dwelling would have to be used for dwelling purposes.

It would extend the benefits of the program for projects commencing before December 28, 2010, to projects commending before December 28, 2013.

The bill would also amend the definition of Commencement of construction to more accurately reflect current building practices.

The bill would direct the local housing agency to collect the filing fee for participating in the 421-a tax, exemption program.

An incorrect reference to the local zoning resolution would be corrected.

The bill would allow for new developments to participate in the 421-a program that are currently located within a district in Manhattan that allows a maximum base floor area ratio of 15 or greater.

A definition of construction employee would be created. Prevailing wage requirements would be added for construction employees. However,

an exemption would be create that removes the prevailing wage requirements for construction employees that work for projects containing less than eighty dwelling units and projects that make at least fifty percent of the new housing affordable to individuals and families with an area median income at or below 125 percent.

The bill would amend the New York City Charter to add a new section that would require any program that grants additional floor area in exchange for the construction of affordable housing must also require that 30 percent of the new floor area, granted by the program, also be used to provide affordable housing.

This bill would add a new section 421-1 to the Real Property Tax Law that would exempt newly constructed private homes containing not more than three dwelling units in cities with a population of one million or more from all local and municipal taxes, other than assessments for local improvements. For private homes containing less than four dwelling units, there would be two years of one hundred percent exemption followed by a six year phase-out. Such projects would continue to pay taxes on the value of the land appearing on the assessment roll in the first year after completion of construction. The maximum exemption amount, which is based on purchase price, for a home containing one dwelling unit is $671,000, a home containing two dwelling units is $755,540, or a home containing three dwelling units is $914,750.

Justification

Section 421-a of the Real property Tax Law provides tax benefits for construction of new residential buildings in the City of New York.

Section 421-a benefits are available for-up to twenty-five years, depending upon the location of the Multiple dwelling. It provides a period of full exemption from local taxes followed by a,phase-out period during which a partial exemption is issued. The continuing shortage of affordable housing in the City of New York necessitates, the extension of this essential tax exemption program that serves as an incentive for the development of new housing.

In addition, the proposed legislation eliminates the requirement that applicants for 421-a benefits, file a separate application with the City of New York's Department of Finance. This will streamline the application process and eliminate unnecessary paperwork. The proposed legislation also makes the current application fee provisions mandatory so that that the local housing agency need not promulgate rules to implement them.

Real property Tax Law Section 421-b provides an eight-year tax exemption for certain one and two-unit multiple dwellings, but that exemption is only available to projects that commenced construction before July 1, 2006, and completed construction no later than July 1, 2009. Similarly, Real Property Tax Law Section 421-a formerly provided a similar fifteen-year tax exemption for three-unit multiple dwellings, but Local Law 58 of 2006 of the City of New York, which took effect on December 28, 2007, will limit such benefits for such multiple dwellings to those projects that receive substantial governmental

assistance pursuant to an affordable housing program. This amendment would enable certain one, two, and three-unit newly constructed private homes that are owner-occupied to continue to receive a tax exemption for eight years.

Legislative history

New legislation.

Fiscal implications

None to the State.

Effective date

This act shall take effect immediately, provided, however, that the amendments made to subdivision (c) of section 11-245 of the administrative code of the city of New York shall be deemed to have been in full force and effect as of December thirty-first two thousand seven, and the amendments made to subparagraph (ii) of paragraph (c) of subdivision 2 a of the real property tax law and clause (A) of subparagraph (iv) of paragraph (a) of subdivision 2 of section 421-a of the real property tax law shall be deemed to have been in full force and effect as of December twenty-eighth two thousand ten.