Relates to the exemption from taxation for non-profit organizations; repealer

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 to commence 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 reconstructing the framework for granting real property tax exemptions across the state. Based on year 2012 assessment rolls, there are over 5.7 million parcels of property in New York State (valued at a total of over $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 32.4% of the total value of property in New York State ($826 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.879 of 2014:Died in Senate Local Government S.879 of 2013:Died in Senate Local Government 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 and shall apply to property irrespective of the date of the transfer of title.