Limit Small Business Rent Hikes

Section 1. This act shall be known and may be cited as the "Mom and Pop Rent Increase Exemption".

§ 2. Article 4 of the real property tax law is amended by adding a new title 6 to read as follows:

TITLE 6

TAX ABATEMENT FOR LIMITING RENT INCREASES ON SMALL BUSINESSES

IN A CITY OF ONE MILLION OR MORE PERSONS Section 499-aaaaa. Definitions.

499-bbbbb. Real property tax abatement.

499-ccccc. Eligibility requirements.

499-ddddd. Application for certificate of abatement.

499-eeeee. Enforcement and administration.

499-fffff. Reporting requirements; revocation of abatements.

499-ggggg. Tax lien; interest and penalty.

499-hhhhh. Confidentiality.

§ 499-aaaaa. Definitions. When used in this title, the following terms shall mean or include:

1. "Abatement base." The lesser of (i) two dollars and fifty cents of the tax liability per square foot or (ii) fifty per centum of the tax liability per square foot.

2. "Abatement zone." Any area of a city having a population of one million or more. Any tax lot that is partly located inside an abatement zone shall be deemed to be entirely located inside such zone.

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD02379-01-9

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3. "Aggregate floor area." The sum of the gross areas of the several floors of a building, measured from the exterior faces of exterior walls or from the center lines of walls separating two buildings.

4. "Applicant." The landlord and the tenant.

5. "Benefit period." The period commencing with the first day of the month immediately following the rent commencement date and terminating no later than one hundred twenty months thereafter.

6. "Billable assessed value." The lesser of the taxable transitional or the taxable actual assessed value of the eligible building and the land on which the eligible building is located for the fiscal year in which the benefit period commences.

7. "Commercial activities." The buying, selling or otherwise providing of goods or services by a small business.

8. "Department of finance." The department of finance of any city having a population of one million or more.

9. "Eligible building." With respect to the abatement zone defined in subdivision two of this section, a non-residential or mixed-use building which shall not include any building owned by a governmental agency. Each condominium unit in a building that meets the requirements of this subdivision shall be considered a separate eligible building.

10. "Eligibility period." The period commencing April first, two thousand nineteen and terminating March thirty-first, two thousand twentynine.

11. "Eligible premises." With respect to the abatement zone defined in subdivision two of this section, premises located in an eligible building that (a) are occupied or used for commercial activities and (b) are occupied or used by a tenant under a lease that meets the eligibility requirements of section four hundred ninety-nine-ccccc of this title.

12. "Fiscal year." The fiscal year of any city having a population of one million or more.

13. "Governmental agency." The United States of America or any agency or instrumentality thereof, the state of New York, the city of New York, any public corporation (including a body corporate and politic created pursuant to agreement or compact between the state of New York and any other state), public benefit corporation, public authority or other political subdivision of the state.

14. "Landlord." Any person who (a) controls all non-residential portions of an eligible building, including, without limitation, the record owner, the lessee under a ground lease, any mortgagee in possession or any receiver, and (b) who grants the right to use or occupy eligible premises to any tenant, provided that landlord shall not include any lessee who at any time during the lease term occupied or used or occupies or uses any part of the non-residential portions of such eligible building, other than premises occupied or used by such lessee to provide rental or management services to such building.

15. "Lease commencement date." The date set forth in the lease on which the term of the lease commences.

16. "Mixed-use building." A building used for both residential and commercial activities, provided that more than twenty-five per centum of the aggregate floor area of such building is used or held out for use as commercial, community facility or accessory use space.

17. "Person." An individual, corporation, limited liability company, partnership, association, agency, trust, estate, foreign or domestic government or subdivision thereof, or other entity.

18. "Renewal tenant." A person who (a) occupies premises in an eligible building under a lease which expires during the eligibility period

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and (b) executes a lease for the continued occupancy of all or part of such premises or all or part of such premises and additional premises in such eligible building, provided such premises are eligible premises and such lease meets the eligibility requirements of section four hundred ninety-nine-ccccc of this title.

19. "Rent commencement date." The date set forth in the lease on which the obligation to pay basic fixed rent shall commence.

20. "Small business." A business engaged in commercial activities that employs fifty or fewer persons.

21. "Subtenant." A person whose right to occupy and use the eligible premises is not derived from a lease with the landlord.

22. "Tax commission." The tax commission in any city having a population of one million or more.

23. "Tax liability." The product obtained by multiplying the billable assessed value for the fiscal year in which the benefit period commences by the tax rate applicable to the eligible building for such fiscal year as set by the local legislative body of any city having a population of one million or more.

24. "Tax liability per square foot." The tax liability divided by the total number of square feet in the eligible building, as listed on the records of the department of finance.

25. "Tenant." A person, including any successors in interest, who executes a lease with the landlord for the right to occupy or use the eligible premises and who occupies or uses the eligible premises pursuant to such lease. Tenant shall not include any subtenant. When used in this title, "tenant" includes "renewal tenant."

26. "Tenant's percentage share." The percentage of the eligible building's aggregate floor area allocated to the eligible premises, which shall be presumed to be such percentage as set forth in the lease for the eligible premises.

§ 499-bbbbb. Real property tax abatement. 1. Within a city having a population of one million or more, eligible buildings containing eligible premises shall receive an abatement of real property taxes during the benefit period as follows:

(a) for each of the first five years of the benefit period, the abatement shall be equal to the product obtained by (i) multiplying the tenant's percentage share by the number of square feet in the eligible building, as listed on the records of the department of finance and (ii) multiplying the product obtained in subparagraph (i) of this paragraph by the abatement base;

(b) for the sixth, seventh, and eighth year of the benefit period, the abatement shall be equal to two-thirds of the abatement in the first year of the benefit period; and

(c) for the ninth and tenth year of the benefit period, the abatement shall be equal to one-third of the abatement in the first year of the benefit period.

2. If, as a result of application to the tax commission or a court order or action by the department of finance, the billable assessed value is reduced, the department of finance shall recalculate the abatement utilizing such reduced billable assessed value. The amount equal to the difference between the abatement originally granted and the abatement as so recalculated shall be deducted from any refund otherwise payable or remission otherwise due as a result of such reduction in billable assessed value, and any balance of such amount remaining unpaid after making any such deduction shall be paid to the department of finance within thirty days from the date of mailing by the department of

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finance of a notice of the amount payable. Such amount payable shall constitute a tax lien on the eligible building as of the date of such notice and, if not paid within such thirty-day period, penalty and interest at the rate applicable to delinquent taxes on such eligible building shall be charged and collected on such amount from the date of such notice to the date of payment.

3. In no event shall the abatement for the eligible premises granted pursuant to this title exceed the tax liability allocable to the eligible premises.

4. Notwithstanding the provisions of any lease for occupancy of noneligible premises in an eligible building or for occupancy of eligible premises for which no certificate of abatement has been issued pursuant to this title, a lessee of non-eligible premises or of eligible premises for which no certificate of abatement has been issued pursuant to this title shall not be entitled to receive directly or indirectly a reduction in either the real property taxes or any rent (including additional rent) payable pursuant to such lease where such reduction would result from an abatement of real property taxes granted pursuant to this title. A landlord of an eligible building shall not allocate, credit, assign or disburse any portion of an abatement granted pursuant to this title to a lessee of non-eligible premises or of eligible premises for which no certificate of abatement has been issued pursuant to this title. A landlord shall not be required to reduce the real property taxes or any rent (including additional rent) payable by renewal tenants by an amount that exceeds the full amount of the abatement granted pursuant to this title, but a landlord shall be required to reduce the real property taxes or any rent (including additional rent) payable by renewal tenants by an amount that, in the aggregate, equals the full amount of the abatement granted pursuant to this title. Such reduction shall be allocated in accordance with the abatement granted for the eligible premises occupied by each such tenant.

5. A tenant who occupies or uses eligible premises for which a certificate of abatement is issued pursuant to this title shall not be eligible to receive a second certificate of abatement for the same eligible premises. A tenant who occupies or uses eligible premises for which a certificate of abatement is issued pursuant to this title and who, upon the expiration of the lease for such eligible premises, relocates to otherwise eligible premises, shall not be eligible to receive a certificate of abatement for such otherwise eligible premises, except to the extent that the square footage of such otherwise eligible premises exceeds the square footage of all eligible premises previously occupied or used by such tenant for which such tenant held a certificate of abatement. If the square footage of such otherwise eligible premises exceeds the square footage of all such eligible premises previously occupied or used by such tenant and if there is any variation in the tax liability per square foot of such otherwise eligible premises, then, for purposes of determining which square footage in such otherwise eligible premises is entitled to an abatement pursuant to this title, square footage with the greatest tax liability per square foot, in an amount equal to the square footage of all such eligible premises previously occupied or used by such tenant, shall first be excluded.

§ 499-ccccc. Eligibility requirements. 1. No abatement shall be granted pursuant to this title unless:

(a) the landlord enters into a ten year lease for eligible premises with a tenant and (b) such landlord includes within such lease with a

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tenant a renewal clause that limits a rent increase to no more than three percent annually.

2. No abatement shall be granted pursuant to this title if an applicant shall fail to meet any of the requirements of this title within sixty days of the rent commencement date.

3. For purposes of this title, the expiration date of a lease shall be determined by the expiration date set forth in such lease, without giving effect to any rights of the landlord or the tenant to terminate such lease prior to the expiration date set forth therein.

4. The lease for the eligible premises shall contain the following provisions:

(a) a statement of the tenant's percentage share;

(b) a statement certifying the percentage of eligible premises occupied or used for commercial activities, as defined in subdivision seven of section four hundred ninety-nine-aaaaa of this title; and

(c) a statement informing the tenant in at least twelve-point type that:

(1) an application for abatement of real property taxes pursuant to this title will be made for the premises;

(2) the rent, including amounts payable by the tenant for real property taxes, will accurately reflect any abatement of real property taxes granted pursuant to this title for the premises;