What's happening
This bill amends property tax law to clarify and limit the exemption for nonprofit-owned property not yet in exempt use, requiring proof of development plans and repayment of taxes if deadlines are not met.
Why it matters
Narrows and clarifies the “good faith” exemption. for nonprofit-owned property not yet in exempt use by requiring written, provable plans to develop the property for qualifying purposes within a set timeframe (5 years to start, 7 years to complete). This could reduce speculative land holdings by nonprofits and ensure tax exemptions are only granted for genuine projects.
Strengthens local government oversight. by directing the Department of Taxation to create clear guidelines for assessing whether a nonprofit’s development plans are adequate, making the exemption process more transparent and less prone to abuse.
Imposes financial accountability on nonprofits. If nonprofits fail to begin or finish development within the specified time, they must repay all property taxes that would have been owed during the exemption period, introducing a concrete financial risk for delays or abandoned projects.
Alters enforcement mechanisms. by allowing local governments to pursue unpaid taxes through contract law rather than property seizure, which could streamline disputes and avoid forcing nonprofits out of ownership, but still ensures governments can recover lost revenue.
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Who cares
Headline styles
Tighten Nonprofit Tax Exemption
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 42
2 Co-sponsors
History
- Referred to local government
- Referred to local government
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
993
2017-2018 Regular Sessions
IN SENATE
January 6, 2017
Introduced by Sens. BONACIC, LARKIN, LITTLE -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government
AN ACT to amend the real property tax law, in relation to the exemption from taxation for non-profit organizations and to repeal certain provisions of such law relating thereto
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 3 of section 420-a of the real property tax law is REPEALED and a new subdivision 3 is added to read as follows:
3. (a) Such real property which is not actually and exclusively used for exempt purposes shall, if owned by an organization exempted from taxation pursuant to the internal revenue code, be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if the construction of such buildings or improvements is in progress or is in good faith contemplated by such organization. As used in this subdivision, "in good faith contemplated" means definite plans for utilizing and adapting the property for exempt purposes within five years and the full execution of such plans within seven years. The plans must be proven and must be in written form. The department shall develop guidelines to be utilized by property owners and assessors to determine whether such evidence exists in adequate form.
(b) 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, or if the organization does not meet the standards otherwise set forth in this subdivision, the property owner who received the benefit of the exemption shall pay all property taxes that would have been owed; provided, however, that failure to pay does not create any right by any governmental unit to commence a proceeding to effectuate
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02948-01-7
S. 993 2
the taking of the property but does create a cause of action in contract by any governmental unit negatively affected.
§ 2. 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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the real property tax law, in relation to the exemption from taxation for non-profit organizations and to repeal certain provisions of such law relating thereto
Purpose
To ensure that exempt properties are being used in a manner which supports the specific exemption granted.
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.
Read the full memo (706 words)
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.1679 of 2016: Died in Senate Local Government, Died in Assembly Real Property Taxation S.1679 of 2015: Died in Senate Local Government, Died in Assembly Real Property Taxation 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 (i.e. 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.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.