What's happening
This bill amends the real property tax law to prevent for-profit entities from establishing or controlling organizations that receive property tax exemptions for low-income housing in New York City.
Why it matters
Closes a significant loophole. by explicitly preventing for-profit companies from creating or controlling nonprofits that receive property tax exemptions for low-income housing, aiming to ensure these tax breaks truly benefit the intended populations and not private investors.
Strengthens the definition of eligibility. by requiring that "charitable organizations" and related entities benefiting from the exemption must not be established or controlled by for-profit entities, thereby increasing oversight and accountability in affordable housing programs.
Raises the threshold of nonprofit control. in joint ventures: now, a "charitable organization" must hold at least 51% (up from 50%) of the controlling interest in any eligible entity seeking the exemption, making it harder for for-profit partners to dominate decision-making.
Applies new standards prospectively. , impacting all future low-income housing projects in New York City approved after the law's enactment, which could affect the structure and financing of upcoming affordable housing developments.
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Who cares
Headline styles
No Property Tax for Low-Income Housing
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to cities
- Referred to cities
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
End Property Taxes for Low-Income Housing
In Assembly Committee · Real Property Taxation · Sponsor Rodneyse Bichotte Hermelyn
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5630
2019-2020 Regular Sessions
IN SENATE
May 9, 2019
Introduced by Sen. JACKSON -- read twice and ordered printed, and when printed to be committed to the Committee on Cities
AN ACT to amend the real property tax law, in relation to exemptions from local real property taxation of certain low income housing accommodations in a city with a population of one million or more
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 420-c of the real property tax law, as amended by chapter 104 of the laws of 1999, is amended to read as follows:
1. In a city having a population of one million or more, real property owned by a corporation, partnership or limited liability company formed for the purpose of providing housing accommodations for persons and families of low income as defined in section two of the private housing finance law and used for such purpose, shall be exempt from local real property taxation, provided that such corporation, partnership or limited liability company: (a) is organized as a non-profit housing development fund company pursuant to article eleven of the private housing finance law and is not established or controlled by a for-profit entity, or is a non-profit housing corporation as defined in article eleven of the private housing finance law which is not incorporated as a housing development fund company as defined in article eleven of the private housing finance law and is not established or controlled by a for-profit entity, or is a wholly-owned subsidiary of such a company or is a partnership or limited liability company the controlling interest of which is held by such a company or corporation or by a wholly owned subsidiary of such a company or by a corporation sponsored or formed by such a company or corporation; and (b) has received a loan from a municipality, the state or the housing trust fund corporation established pursuant to section forty-five-a of the private housing finance law or any successor corporation; and (c) enters into a regulatory agreement with the munici-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00426-01-9
S. 5630 2
pality, the state or the housing trust fund corporation established pursuant to section forty-five-a of the private housing finance law or any successor corporation guaranteeing the provision of housing accommodations for persons and families of low income; and (d) is a participant in the federal low income housing tax credit program established pursuant to section forty-two of the internal revenue code of nineteen hundred eighty-six, as amended. Any exemption pursuant to this section shall expire upon the expiration or termination of the regulatory agreement.
§ 2. Subparagraphs 4 and 5 of paragraph (a) of subdivision 4 of section 420-c of the real property tax law, subparagraph 4 as added by chapter 522 of the laws of 2004 and subparagraph 5 as amended by chapter 526 of the laws of 2004, are amended to read as follows:
(4) The term "charitable organization" shall mean (i) an entity, not established or controlled by a for-profit entity, formed for purposes that include providing housing accommodations for persons and families of low income and that has received written recognition of exemption pursuant to section 501(c)(3) or section 501(c)(4) of the internal revenue code of nineteen hundred eighty-six, as amended, or any successor statute, from the United States Internal Revenue Service, or any successor agency, or (ii) a corporation, partnership or limited liability company wholly owned and wholly controlled by an entity, not established or controlled by a for-profit entity, formed for purposes that include providing housing accommodations for persons and families of low income and that has received written recognition of exemption pursuant to section 501(c)(3) or section 501(c)(4) of the internal revenue code of nineteen hundred eighty-six, as amended, or any successor statute, from the United States Internal Revenue Service, or any successor agency.
(5) The term "eligible entity" shall mean a corporation, partnership or limited liability company at least [fifty] fifty-one percent of the controlling interest of which is held by a charitable organization.
§ 3. This act shall take effect immediately and shall apply to all projects approved on or after the date on which this act shall have become a law.
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 exemptions from local real property taxation of certain low income housing accommodations in a city with a population of one million or more
Purpose
This bill amends the New York State Real Property Tax Law Section 420-c to (1) allow tax exemptions for only those entities where the non-profit has 51% control, instead of 50% control as is written in current law and (2) limit the entities eligible for real property tax exemption to exclude those that are established by a for-profit entity or are a subsidiary of a for-profit corporation, partnerships or limited liabil- ity company.
Summary of provisions
Section 1 amends Section 420-c of the New York State Real Property Tax Law to limit the entities eligible for real property tax exemption to exclude those that are established by a for-profit entity or are a subsidiary of a for-profit corporation, partnerships or limited liabil- ity company.
Section 2 amends Section 420-c of the New York State Real Property Tax Law by defining a charitable entity as one not established or controlled by a for-profit entity, and by allowing tax exemptions for only those entities where the non-profit has at least 51% controlling interest in the corporation, partnership, or limited liability company.
Section 3 is the effective date.
Justification
The current real property tax law specifies four criteria for tax the real property tax exemption: (1) the entity must be organized to provide housing to low-income people, and hold a 501c(3) or 501c(4) exemption; (2) the project must receive Low-Income Housing Tax-Credits; (3) the project must have a regulatory agreement with a government entity, and the agreement must indicate that at least 70% of the units are restricted to 60% AMI or lower, and (4) the project must have taken out a loan from a government entity.
Under the current statute, for-profit developers are able to set up non-profits that are owned and controlled by the for-profit for the purpose of qualifying for the 420-c benefit. Further, under existing law, a non-profit must only have 50% of control of an entity in order to qualify for the abatement, often leaving the non-profit with no over- sight control of the Joint Venture Agreements.
The property tax abatement, when limited only to non-profit development corporations, allows for Community Development Corporations (CDCs) to submit more competitive bids and lower operating costs, providing great- er benefits to the community. When limited only to non-profit develop- ers, CDCs are better able to compete, greatly improving the overall quality of low-income housing in the city.
Legislative history
2017-2018: S.1420 - Referred to Cities/A.3789 - Referred to Real Proper- ty Taxation 2015-2016: S.7856 - Referred to Cities/A.4314 - Referred to Real Proper- ty Taxation 2013-2014: A.6256 - Referred to Real Property Taxation 2011-2012: A.10660 - Referred to Real Property Taxation
State and local fiscal implications
To be determined.
Effective date
This act shall take effect immediately and shall apply to all projects approved on or after the date on which this act shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.