Expands the definition of "public utility mass real property" for the purposes of assessment ceilings for local public utility mass real property

BILL NUMBER:S5822

Title of bill

An act to amend the real property tax law, in relation to the definition of "public utility mass real property" for purposes of assessment ceilings for local public utility mass real property

Summary of specific provisions

This bill amends subdivision 3 of § 499-hhhh of Real Property Tax Law to include gas, steam, and electric utility real property in the definition of "Public Utility Mass Real Property".

Justification

The State Department of Taxation and Finance (the Department) provides assessments on special franchise properties (utility and telecommunications) on public rights of way. However, assessments on similar properties located on private lands are performed locally.

In almost every other state, the responsibility for assessing utility property, both in the public way and on private property, is assigned to a state agency. This is largely due to the complexity of valuing such properties and the lack of technical training that oftentimes exists in many localities. As a result, assessments of transmission and distribution property by local assessors varies greatly, with little apparent pattern.

In November 2013, Governor Cuomo approved legislation that consolidates the assessment function of all telecommunications utility real property under the Department because it will result in significant savings to localities, taxpayers, and customers. Because the utility is required to pay an assessment to the Department to support the Department's newly-expanded role, the savings can be achieved at no additional cost to the State. The New York State Tax Reform and Fairness Commission also recently recommended that the State assess complex real property, including all utilities, for the same reason.

The benefits recognized in consolidating assessments for telecommunications real property would also be realized for real property owned and operated by gas, steam, and electric utilities. This proposal would provide significant relief to localities and result in savings to utility customers at no cost to the State.

The Department is already well qualified to assess complex properties since it currently values similar properties located in the public rights of way and conducts advisory appraisals of transmission and distribution property on private land for assessing units throughout the State. Allowing the Department to provide assessments on real property owned and operated by gas, steam, and electric utilities would provide financial relief to local governments who must expend scarce resources to secure the expertise the Department already possesses.

This proposal would also help local governments avoid expensive litigation to defend the assessments in court and pay costly refunds, thereby further saving taxpayers money. According to a March 2012 preliminary report issued by the Governor's Mandate Relief Redesign Team, transferring this assessment responsibility from local assessors to the State will save local governments up to $2million per year.

Centralized assessments would also provide assessment certainty to utilities which must deal with multiple independent, individual assessing units and reduce the need to challenge assessments in court. The administrative and litigation-related savings would be passed on to utility customers.

Prior legislative history

Chapter 475 of the Laws of 2013

Fiscal implications

Undetermined.

Effective date

Immediately; provided that the amendments to subdivision 3 section 499-hhhh of the real property tax law made be section one of this act shall not affect the repeal of such section and shall be deemed repealed therewith.