What's happening
This bill amends New York's real property tax law to update tax exemption programs for new and affordable housing, add labor protections, and create new exemptions for certain private homes.
Why it matters
Labor Protections Expanded to Construction Workers. The bill extends prevailing wage requirements—previously only for building service employees—to construction workers on large housing projects. This means contractors must pay construction workers union-level wages and benefits, raising labor standards and potentially increasing project costs.
Changes to Tax Exemptions for New and Affordable Housing. By redefining the “initial” and “extended” construction periods, the bill clarifies and potentially lengthens the time during which new housing developments can receive tax exemptions. This could make development timelines more predictable but may also affect when tax revenues begin to flow to the city.
New Tax Exemptions for Private Homes with Strict Limits. The creation of a new Section 421-p offers phased property tax exemptions for newly built private homes (up to three units or certain condos), but only if the purchase price is below specific thresholds. This aims to encourage new homeownership while capping benefits to prevent luxury development from qualifying.
Affordable Housing Set-Aside Increased in Zoning Bonuses. The bill requires that at least 30% of any additional floor area (granted as a zoning incentive for affordable housing) must actually be used for affordable units. This raises the bar for developers seeking to build larger projects via density bonuses, likely increasing the supply of affordable housing in exchange for allowing bigger buildings.
These changes affect both developers and residents by linking tax benefits more closely to affordable housing creation and labor standards, and by tightening oversight on who qualifies for new tax exemptions.
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Who cares
Headline styles
Change Housing Tax Exemptions
Plain English, a few words. Used as the page title.
Sponsors
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History
- Referred to housing, construction and community development
- Referred to housing, construction and community development
Full text
12 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3226
2019-2020 Regular Sessions
IN SENATE
February 4, 2019
Introduced by Sen. SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
AN ACT to amend the real property tax law, the administrative code of the city of New York and the New York city charter, in relation to changing tax exemption programs for the development of new and affordable housing
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 421-a of the real property tax law is amended by adding two new paragraphs e and f to read as follows:
e. "Initial Construction Period." The period of time needed for the construction of a new multiple dwelling or the period of three years immediately following commencement of construction, whichever expires sooner, provided that construction must be completed upon the expiration of this period in order for such multiple dwelling to remain eligible for the exemption provided in this section.
f. "Extended Construction Period." The period of time immediately following the initial construction period needed to complete the construction of a new multiple dwelling or the period of three years, whichever expires sooner.
§ 2. Paragraph (a) of subdivision 2 of section 421-a of the real property tax law, as amended by chapter 288 of the laws of 1985, subparagraph (i), clause (A) of subparagraph (ii) and clause (A) of subparagraph (iii) as amended by chapter 4 of the laws of 2013, clause (E) of subparagraph (iii) as added by chapter 618 of the laws of 2007, subparagraph (iv) as added by chapter 832 of the laws of 1992, clause (A) of subparagraph (iv) as amended by section 63-a of part A of chapter 20 of the laws of 2015, is amended to read as follows:
(a) (i) (A) Within a city having a population of one million or more, new multiple dwellings, except hotels, shall be exempt from taxation for
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09171-01-9
S. 3226 2
local purposes, other than assessments for local improvements, for the tax year or years immediately following taxable status dates occurring subsequent to the commencement and prior to the completion of the initial construction period, but not to exceed three such tax years, and shall continue to be exempt from such taxation in tax years immediately following the taxable status date first occurring after the expiration of the exemption herein conferred during the initial construction [so long as used at the completion of construction for dwelling purposes] period for a period not to exceed ten years in the aggregate after the taxable status date immediately following the completion [thereof] of the initial construction period and during the extended construction period if such period is needed, as follows:
[(A)] a. except as otherwise provided herein there shall be full exemption from taxation during the [period of construction or the period of three years immediately following commencement of construction, whichever expires sooner] initial construction period, and for two years following such period;
[(B)] b. followed by two years of exemption from eighty [per cent] percent of such taxation;
[(C)] c. followed by two years of exemption from sixty [per cent] percent of such taxation;
[(D)] d. followed by two years of exemption from forty [per cent] percent of such taxation;
[(E)] e. followed by two years of exemption from twenty [per cent] percent of such taxation;
(B) Upon the completion of the initial construction period or extended construction period, if needed, the new multiple dwelling must be used for dwelling purposes.
The following table shall illustrate the computation of the tax exemption:
CONSTRUCTION OF CERTAIN MULTIPLE DWELLINGS
Exemption During Initial Construction 100% Period (maximum three years) Following completion of [work] the initial construction period Year: 1 100% 2 100 3 80 4 80 5 60 6 60 7 40 8 40 9 20 10 20
(ii) (A) Within a city having a population of one million or more the local housing agency may adopt rules and regulations providing that except in areas excluded by local law new multiple dwellings, except hotels, shall be exempt from taxation for local purposes, other than assessments for local improvements, for the tax year or years immediately following taxable status dates occurring subsequent to the commence-
S. 3226 3
ment and prior to the completion of the initial construction period, but not to exceed three such tax years, and shall continue to be exempt from such taxation in tax years immediately following the taxable status date first occurring after the expiration of the exemption herein conferred during [such] the initial construction [so long as used at the completion of construction for dwelling purposes] period, and during the extended construction period if such period is needed, for a period not to exceed fifteen years in the aggregate, as follows:
a. except as otherwise provided herein there shall be full exemption from taxation during the period of construction or the [period of three years immediately following commencement of construction, whichever expires sooner] initial construction period, and for eleven years following such period;
b. followed by one year of exemption from eighty percent of such taxation;
c. followed by one year of exemption from sixty percent of such taxation;
d. followed by one year of exemption from forty percent of such taxation;
e. followed by one year of exemption from twenty percent of such taxation.
(B) The benefits of this subparagraph shall not be available in areas made ineligible for the benefits of this section by a local law enacted pursuant to paragraph (i) of this subdivision [two of this section], notwithstanding any exceptions to ineligibility contained in such local law for certain types of projects in such areas.
(C) Unless excluded by local law, in the city of New York the benefits of this subparagraph shall be available in the borough of Manhattan for tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street only if:
a. the construction is carried out with the substantial assistance of grants, loans or subsidies from any federal, state or local agency or instrumentality, or
b. the local housing agency has imposed a requirement or has certified that twenty percent of the units be affordable to families of low and moderate income.
(D) Upon the completion of the initial construction period or extended construction period, if needed, the new multiple dwelling must be used for dwelling purposes.
The following table shall illustrate the computation of the exemption:
CONSTRUCTION OF CERTAIN MULTIPLE DWELLINGS
Exemption During Initial Construction 100% Period (maximum three years) Following completion of [work] the initial construction period Year: 1 through 11 100% 12 80 13 60 14 40 15 20
S. 3226 4
(iii) (A) Within a city having a population of one million or more the local housing agency may adopt rules and regulations providing that new multiple dwellings, except hotels, shall be exempt from taxation for local purposes, other than assessments for local improvements, for the tax year or years immediately following taxable status dates occurring subsequent to the commencement and prior to the completion of the initial construction period, but not to exceed three such tax years, and shall continue to be exempt from such taxation in tax years immediately following the taxable status date first occurring after the expiration of the exemption herein conferred during [such] the initial construction [so long as used at the completion of construction for dwelling purposes] period, and during the extended construction period if such period is needed, for a period not to exceed twenty-five years in the aggregate, provided that the area in which the project is situated is a neighborhood preservation program area as determined by the local housing agency as of June first, nineteen hundred eighty-five, or is a neighborhood preservation area as determined by the New York city planning commission as of June first, nineteen hundred eighty-five, or is an area that was eligible for mortgage insurance provided by the rehabilitation mortgage insurance corporation as of May first, nineteen hundred ninety-two or is an area receiving funding for a neighborhood preservation project pursuant to the neighborhood reinvestment corporation act (42 U.S.C. §§180 et seq.) as of June first, nineteen hundred eightyfive, as follows:
a. except as otherwise provided herein there shall be full exemption from taxation during the [period of construction or the period of three years immediately following commencement of construction, whichever expires sooner] initial construction period, and for twenty-one years following such period;
b. followed by one year of exemption from eighty percent of such taxation;
c. followed by one year of exemption from sixty percent of such taxation;
d. followed by one year of exemption from forty percent of such taxation;
e. followed by one year of exemption from twenty percent of such taxation.
(B) The benefits of this subparagraph shall not be available in areas made ineligible for the benefits of this section by a local law enacted pursuant to paragraph (i) of this subdivision [two of this section], notwithstanding any exceptions to ineligibility contained in such local law for certain types of projects.
(C) Notwithstanding the provisions of item (A) or (D) of this subparagraph, in the city of New York the benefits of this subparagraph shall not be available in the borough of Manhattan for tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street.
(D) In addition to being available in the areas described in item (A) of this subparagraph, the benefits made available pursuant to this subparagraph shall be available where:
a. the construction is carried out with the substantial assistance of grants, loans or subsidies from any federal, state or local agency or instrumentality, or
b. the local housing agency has imposed a requirement or has certified that twenty percent of the units be affordable to families of low and moderate income.
S. 3226 5
(E) Upon the completion of the initial construction period or extended construction period, if needed, the new multiple dwelling must be used for dwelling purposes.
The following table shall illustrate the computation of the exemption:
CONSTRUCTION OF CERTAIN
MULTIPLE DWELLINGS
Exemption During Initial Construction Period 100% (maximum three years) Following completion of [work] the initial construction period Year: 1 through 21 100% 22 80 23 60 24 40 25 20
[(E)] (F) A new multiple dwelling that is situated in (1) a neighborhood preservation program area as determined by the department of housing preservation and development as of June first, nineteen hundred eighty-five, (2) a neighborhood preservation area as determined by the New York city planning commission as of June first, nineteen hundred eighty-five, (3) an area that was eligible for mortgage insurance provided by the rehabilitation mortgage insurance corporation as of May first, nineteen hundred ninety-two, or (4) an area receiving funding for a neighborhood preservation project pursuant to the neighborhood reinvestment corporation act (42 U.S.C. §§ 8101 et seq.) as of June first, nineteen hundred eighty-five, shall not be eligible for the benefits available pursuant to this subparagraph unless it complies with the provisions of subdivision seven of this section.
(iv) (A) Unless excluded by local law, in the city of New York, the benefits of this subparagraph shall be available in the borough of Manhattan for new multiple dwellings on tax lots now existing or hereafter created south of or adjacent to either side of one hundred tenth street that commence construction after July first, nineteen hundred ninety-two and on or before December thirty-first, two thousand fifteen provided, however, that such a multiple dwelling receives its first temporary or permanent certificate of occupancy covering all residential areas on or before December thirty-first, two thousand nineteen, and solely for purposes of determining whether this clause applies and notwithstanding any local law to the contrary, "commence" shall mean the date upon which excavation and construction of initial footings and foundations lawfully begins in good faith or, for an eligible conversion, the date upon which the actual construction of the conversion, alteration or improvement of the pre-existing building or structure lawfully begins in good faith, only if:
a. the construction is carried out with the substantial assistance of grants, loans or subsidies from any federal, state or local agency or instrumentality, or
b. the local housing agency has imposed a requirement or has certified that twenty percent of the units are affordable to families of low and moderate income.
S. 3226 6
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, the administrative code of the city of New York and the New York city charter, in relation to changing tax exemption programs for the development of new and afforda- ble housing
Purpose
This bill makes several amendments to the 421-a tax abatement program. The goals of these amendments are: to extend the program for an addi- tional three years; adjust definitions to more accurately reflect current construction practices; provide additional incentives for the continued construction of new and affordable housing Units; and correct current statutory inaccuracies. Additionally, the bill would provide a tax exemption for new multiple dwellings with three or fewer units to further incentivize the construction of new housing.
Summary of provisions
This bill amends provisions of section 421-a of the Real Property Tax Law and the Administrative Code of New York City. Additionally, new sections are added to the Real Property Tax Law and to the Charter of the City of New York.
Read the full memo (1,066 words)
Firstly, two new definitions for construction time periods are created.
Developers would be granted up to an additional three years for construction. During this time period they would receive the tax exemptions as outlined in the program. However, any exemption they receive-during this extended construction period would count towards the total tax exemption the multiple dwelling is eligible to receive and would be in an amount and timeframe consistent with a building that had finished construction during the initial construction period. After the end of the initial or extended Construction period, if needed, the multiple dwelling would have to be used for dwelling purposes.
It would extend the benefits of the program for projects commencing before December 28, 2010, to projects commending before December 28, 2013.
The bill would also amend the definition of Commencement of construction to more accurately reflect current building practices.
The bill would direct the local housing agency to collect the filing fee for participating in the 421-a tax, exemption program.
An incorrect reference to the local zoning resolution would be corrected.
The bill would allow for new developments to participate in the 421-a program that are currently located within a district in Manhattan that allows a maximum base floor area ratio of 15 or greater.
A definition of construction employee would be created. Prevailing wage requirements would be added for construction employees. However, an exemption would be create that removes the prevailing wage requirements for construction employees that work for projects containing less than eighty dwelling units and projects that make at least fifty percent of the new housing affordable to individuals and families with an area median income at or below 125 percent. The bill would amend the New York City Charter to add a new section that would require any program that grants additional floor area in exchange for the construction of afford- able housing must also require that 30 percent of the new floor area, granted by the program, also be used to provide affordable housing.
This bill would add a new section 421-1 to the Real Property Tax Law that would exempt newly constructed private homes containing not more than three dwelling units in cities with a population of one million or more from all local and municipal taxes, other than assessments for local improvements. For private homes containing less than four dwelling units, there would be two years of one hundred percent exemption followed by a six year phase-out. Such projects would continue to pay taxes on the value of the land appearing on the assessment roll in the first year after completion of construction. The maximum exemption amount, which is based on purchase price, for a home containing one dwelling unit is $671,000, a home containing two dwelling units is $755,540, or a home containing three dwelling units is $914,750.
Existing law
None
Justification
Section 421-a of the Real property Tax Law provides tax benefits for construction of new residential buildings in the City of New York.
Section 421-a benefits are available for-up to twenty-five years, depending upon the location of the Multiple dwelling. It provides a period of full exemption from local taxes followed by a, phase-out peri- od during which a partial exemption is issued. The continuing shortage of affordable housing in the City of New York necessitates, the exten- sion of this essential tax exemption program that serves as an incentive for the development of new housing.
In addition, the proposed legislation eliminates the requirement that applicants for 421-a benefits, file a separate application with the City of New York's Department of Finance. This will streamline the applica- tion process and eliminate unnecessary paperwork. The proposed legis- lation also makes the current application fee provisions mandatory so that that the local housing agency need not promulgate rules to imple- ment them.
Real property Tax Law Section 421-b provides an eight-year tax exemption for certain one and two-unit multiple dwellings, but that exemption is only available to projects that commenced construction before July 1, 2006, and completed construction no later than July 1, 2009.
Similarly, Real Property Tax Law Section 421-a formerly provided a simi- lar fifteen-year tax exemption for three-unit multiple dwellings, but Local Law 58 of 2006 of the City of New York, which took effect on December 28, 2007, will limit such benefits for such multiple dwellings to those projects that receive substantial governmental assistance pursuant to an affordable housing program. This amendment would enable certain one, two, and three-unit newly constructed private homes that are owner-occupied to continue to receive a tax exemption for eight years.
Legislative history
02/17/15 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT 04/22/15 RECOMMIT, ENACTING CLAUSE STRICKEN
Fiscal implications
None
Local fiscal implications
None
Effective date
This act shall take effect immediately, provided, however, that the amendments made to subdivision (c) of section 11-245 of the administra- tive code of the city of New York shall be deemed to have been in full force and effect as of December thirty-first two thousand seven, and the amendments made to subparagraph (ii) of paragraph (c) of subdivision 2 a of the real property tax law and clause (A) of subparagraph (iv) of paragraph (a) of subdivision 2 of section 421-a of the real property tax law shall be deemed to have been in full force and effect as of December twenty-eighth two thousand ten.
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