Sets a 7 year limit to the real property tax exemption for unimproved property of mandatory class nonprofit organizations

1 Co-sponsor

• George Latimer

Title of bill

An act to amend the real property tax law, in relation to the duration of the exemption for property of mandatory class nonprofit organizations by reason of the absence of suitable buildings or improvements thereon if construction of such buildings or improvements is in progress or is in good faith contemplated

Purpose

To establish stricter standards for non-profit organizations that purchase land and file an application for municipal real property exemption. The purpose of this bill is to ensure that properties exempt from real property taxes are being used in a manner that supports the specific exemption granted.

Summary of provisions

Section 1: Amends Real Property Law section 420-a (3) to permit a non-profit organizations that purchase real property that is on the tax rolls to obtain a real property exemption if such organization within 7 years after such property is acquired constructs buildings or other capital improvements or is in good faith contemplating such construction to further its charitable purposes.

Existing law

Under current law, if a non-profit organization purchases property that is on the tax rolls, such organization can obtain an exemption from real property taxes if the construction of buildings or other improvements are in progress or are in "good faith" contemplated. This bill tightens qualifications for obtaining tax exempt status by requiring that buildings or improvements must be constructed to further the organization's charitable purpose within 7 years of purchasing such property.

Justification

Under current law, non-profit charitable organizations can purchase land as an investment vehicle and then obtain the real property's tax exempt status (to the detriment of the local taxing authority) without realistically contemplating the satisfaction of the requirement that the property is used in the furtherance of the organizations' charitable mission. This bill amends the law so that only properties that are truly acquired to further an organization's charitable purpose are granted tax exempt status. If 7 years after the acquisition of the parcel, the charitable organization has not commenced activities to further the charitable purpose, then such land will be placed back on the tax rolls.

Legislative history

2013-2014: S.3993-A Referred to Local Governments/A1711-A Referred to Real Property Taxation 2011-2012: A499 Held in Real Property Taxation 2009-2010: A981 Referred to Real Property Taxation/S670 Referred to Local Government 2007-2008: A1259 Referred to Real Property Taxation/S529 Referred to Local Government 200--2006: A9020 Referred to Real Property Taxation/S4714 Referred to Local Government

Fiscal implications

None.

Local fiscal implications

Would place certain parcels back on the tax rolls that were in fact not used for a bona fide exempt use.

Effective date

January 1st of the year next succeeding the date on which it shall have become law.