Relates to municipal monitoring of compliance with requirements of local laws granting certain tax exemptions

Title of bill

An act to amend the real property tax law, in relation to municipal monitoring of compliance with requirements of local laws granting certain tax exemptions

Purpose or general idea of bill

This bill mandates that municipalities monitor compliance with Section 421-tax exemptions provided to property owners.

Summary of specific provisions

Section 1 of the bill amends section 421-a of the real property tax law by adding a new subdivision 18 that states that a municipality that has granted tax exemption status to a project under this section shall monitor compliance with the requirements of this section if any local law establishes such exemption. The bill also requires municipalities to retain records documenting such compliance.

Section 2 of the bill sets forth an immediate effective date.

Justification

Real property tax exemptions under Section 421-a are an important incentive to encourage property owners to engage in responsible development such as including affordable housing units within their proposed multi- family residential development plans.

Such incentives are a powerful tool municipalities can use to address housing issues within their communities; however, they are also an incredible windfall to property owners who often stand to save millions of dollars in property taxes for extended periods of time. This is especially the case when certain unscrupulous developers fail to comply with the terms of the agreements under which they were granted such tax exemptions.

In a recent case in the city of New York, a property owner received 421-a tax exemption status based on proposed plans to develop a condominium or rental project but instead was operating an extended stay hotel which violates the terms of the 421-a program. New York State Attorney General Eric Schneiderman uncovered this fraud and reached a settlement with the property owner who will now be forced to pay back more than $4 million in property taxes and convert the building into a rent-stabilized apartment building.

It is likely that there are many more property owners who are failing to comply with the 421-program requirements, yet municipalities have done little to follow through and ensure that these property owners are indeed complying and not simply stealing public money.

Section 421-a does not currently have any mandated provision regarding program compliance and this bill will create that mandate which provide much needed assurance that the public will not be defrauded.

Prior legislative history

New bill.

Fiscal implications

None to the state.

Effective date

This act shall take effect immediately.