Relates to applications for tax abatements for industrial construction work on peaking units in a city of one million or more

Section 1 of the bill amends Title 2-F of Article 4 of the RPTL to extend the application deadline for peaking units from March 1, 2015 to July 1, 2017. Other property would continue to be subject to the March 1, 2015 application deadline. Section 2 of the bill amends Title 2-F to extend the date by which a building permit for construction work on a peaking unit must be issued from April 1, 2015 to August 1, 2017 and extends the date by which construction work on a peaking unit must commence (in the case where no building permit is required) from April 1, 2015 to August 1, 2018. Sections 3 and 4 make corresponding changes to parallel provisions of the New York City Administrative Code. Section 5 provides that the act takes effect immediately.

Reasons for support

New York City previously granted property tax benefits as-of-right to electric generating facilities pursuant to the Industrial and Commercial Incentive Program (ICIP), which is contained in Title 2-D of Article 4 of the Real Property Tax Law. In 2008, ICIP was allowed to sunset, and chapter 119 of the laws of 2008 was enacted to create the Industrial and Commercial Abatement Program (ICAP). Chapter 119 excluded peaking units from eligibility.

In early 2011, the Federal Energy Regulatory Commission (FERC) issued a ruling that would have increased the wholesale electricity price customers would have to pay in New York on the grounds that the price had to incorporate hypothetical property taxes that a power generator entering the market could face under a discretionary property tax abatement program (a discretionary program was available through the New York City Industrial Development Agency). Such price increases would have simultaneously resulted in a windfall for certain owners of existing generating facilities that were still receiving an ICIP tax benefit. At the time, the impact of those higher prices on the residents and businesses in New York City could have been $500 million to as much as $1 billion over the three year period 2011-2014.

Chapter 2B of the laws of 2011 amended ICAP to provide an as-of-right property tax abatement for developers of peaking units. Following, and based on, the enactment of Chapter 28, the FERC modified its eirlierl thus preventing a material increase in electric prices for that three-year period.

This bill would extend the application deadline for peaking units for as-of-right ICAP benefits to July 1, 2017. It is needed now to provide certainty because the New York Independent System Operator, which is New York State's wholesale electricity market operator, is presently going through the same process for the years 2014-2017 that led to the FERC rulings described above. Without an extension of ICAP for peaking units, consumers could again face hundreds of millions of dollars in artificially high electricity costs.

That is, while owners of electric generating facilities are generally eligible to apply for tax benefits through a discretionary process, this bill would remove uncertainty with respect to property tax assessments on peaking units by extending the application deadline for the existing as-of-right property tax abatement available under ICAP for such units, leaving the City of New York with no discretion to deny the abatement if the peaking unit satisfies the objective eligibility criteria established in the law. Extending the March 1, 2015 application deadline will ensure that electricity prices borne by consumers will not be increased by any ambiguity related to the discretionary process, and thereby ensure that New York City consumers are not subject to unwarranted price increases, as almost occurred in 2011.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.

Legislative History:

2014: Referred to Cities

Effective date

Immediately.