Exemption Administration Manual, Part 1: Municipal Governments—Section 4.03 - RPTL Section 412-a & Gen Muny L Section 874: Municipal Industrial Development Agencies

Assessor Manuals

Section 4.03 - RPTL Section 412-a & Gen Muny L Section 874: Municipal Industrial Development Agencies

Exemption code(s):

18020

Year originally enacted:

1969

Related statutes:

• RPTL §412-b,
• Gen Muny L §854

Summary:

As provided in Gen Muny L §874, property that is owned or under the control of a municipal industrial development agency (IDA) and is located and used as required is exempt from taxation. However, such property, except for the type of railroad property described below, is liable for special ad valorem levies and special assessments.

Railroad property that is owned by an IDA or under its jurisdiction, supervision, or control and is leased to a railroad company is exempt from special ad valorem levies and special assessments on 1989 assessment rolls to the extent that the assessed value of such property exceeds the railroad ceiling established for the property for 1989. On subsequent assessment rolls, such property continues to be exempt from special ad valorem levies and special assessments to the extent that the assessed value exceeds the railroad ceiling established for 1989 assessment rolls. The assessed value subject to special ad valorem levies and special assessments may be adjusted to account for physical changes determined locally or a change in the municipality's level of assessment as determined by the NYS Office of Real Property Tax Services. If there is a revaluation or update of all assessments in the municipality, the restrictions on changes in the assessed value of such railroad property do not apply.

Prior to financing any new property improvement project, the IDA must establish a uniform tax exemption policy, with input from affected taxing jurisdictions, that provides guidelines for the claiming of property tax exemptions. In adopting a tax exemption policy, the IDA must consider such issues as: (1) the extent to which the project will create or retain permanent, private sector jobs, (2) the estimated value of any tax exemptions to be provided, (3) whether affected taxing jurisdictions will be reimbursed by the project occupant if the project does not fulfill the purposes for which an exemption was provided, (4) the impact of the proposed project on existing and proposed businesses and economic development projects in the vicinity,(5) the amount of private sector investment generated or likely to be generated by the proposed project, (6) the demonstrated public support for the proposed project, (7) the likelihood of accomplishing the proposed project in a timely fashion, (8) the effect of the proposed project on the environment, (9) the extent to which the proposed project will require the provision of additional services (including, but not limited to, additional educational, transportation, police, emergency medical, or fire services), and (10) the extent to which the proposed project will provide additional sources of revenue for municipalities and school districts. Each IDA must review and re-adopt its uniform tax exemption policy by April 1, 1999 after holding a hearing for the purpose of receiving comments from affected tax jurisdictions. Prior to such hearing, the IDA must provide to each such tax jurisdiction a notice of the hearing and a report containing information specific to each project the IDA has supported during the last five years. In addition, the IDA must establish a procedure for deviation from the uniform tax exemption policy, must set forth in writing the reasons for deviation, and must notify the affected taxing jurisdictions of the proposed deviation and the reasons therefore. Notice must be given at least 30 days before it meets to act on the proposed deviation. The IDA must review and respond to any correspondence received by affected tax jurisdictions on the matter, and must permit any representative of an affected tax jurisdiction present at the meeting to speak about the proposed deviation. For a listing of all IDA's eligible for exemption, see Table 1:

Table 1. IDA's eligible for exemption

Eligibility requirements

Ownership requirements

Property must be owned by the IDA or under its jurisdiction, control, or supervision. Municipal industrial development agencies are perpetual in duration unless (a) if the certificate required (see Certification by State or Local Government below) is not filed with the Secretary of State within six months of the agency's creation or by 7/1/69, whichever is later, (b) if, after 10 years from the effective date of the special act which created it, there have been no bonds or notes issued by the agency and no obligations of the agency are outstanding, or (c) all of the bonds or notes issued by the agency have been redeemed or canceled. In such cases, the IDA's existence will be terminated and any remaining property will be vested in and possessed by the municipality. The exceptions to this requirement are as follows:

1. Hamilton County IDA - Agency will not be terminated before July 21, 2016.
2. Herkimer County IDA - Agency will not be terminated before May 1, 1985.
3. Town of Bethlehem IDA - Agency will not be terminated before June 5, 1993.
4. Town of Brookhaven IDA - Agency will not be terminated before notes or bonds of the agency have been issued and redeemed or canceled.
5. Town of North Hempstead IDA - Agency will be perpetual in duration.
    

Property location requirements:

Although Gen Muny L §854(4) states that projects must be located within the municipality for whose benefit the IDA was created unless prior consent is given by the governing body of the municipality wherein all or any part of the project is or is to be located, 140 of the 175 IDA's must locate their projects solely within the limits of the municipality for whose benefit the IDA was created. Those IDA's which may locate their projects in outlying municipalities if prior consent is given are as follows:

In addition, (1) the Village of Wayland IDA must locate its projects within the Village of Wayland and that portion of the Town of Wayland which is 2,000 feet east, 600 feet south, and contiguous to the Village of Wayland and (2) no property may be condemned on behalf of the New York City IDA which is zoned residential, as defined in the zoning resolution of New York City, or which is occupied in whole or in part as a dwelling or a residence.

Property use requirements:

Property must be used to promote, encourage, develop, or assist in acquiring, constructing, reconstructing, improving, maintaining, equipping, or furnishing industrial, manufacturing, warehousing, commercial, research, civic, or recreation facilities, including industrial pollution control facilities, educational or cultural facilities, civic facilities, continuing care retirement community facilities, railroad facilities, and horse racing facilities.

A civic facility is defined as a facility owned or occupied by a not-for-profit corporation organized under New York State law or authorized to conduct activities in this state. Civic facilities do not include convention centers, housing facilities, dormitories for educational institutions, or roads, buildings, water systems, sewer systems, or any public facility for use by a municipality in the performance of its governmental functions. Also excluded from the definition of civic facilities are medical facilities that are predominantly used for the delivery of medical services, except where such facilities are habilitation centers or hospices. However, a civic facility project may include: (a) dormitories for educational institutions; (b) facilities as defined in Article 28 of the Public Health Law; and (c) housing facilities primarily designed to be occupied by individuals 60 years of age or older provided that the total cost of such projects as provided for in (a), (b), and (c) does not exceed $20 million.

Continuing care retirement community facilities are eligible for exemption only if they occupy property that is owned or under the jurisdiction or control of the New York City IDA or an IDA created for the benefit of a county. A continuing care retirement community is defined as a facility that has been granted a certificate of authority pursuant to Article 46 of the Public Health Law and has been established to provide, pursuant to life care contracts, a comprehensive, cohesive living arrangement for the elderly. The operator of the facility (1) must have been approved for the issuance of IDA bonds by the Life Care Community Council pursuant to Public Health Law §4604-a and (2) must be a not-for-profit corporation as defined in Not-for-Profit Corporation Law §102 that (a) is eligible for tax-exempt financing under Public Health Law §4604-a and the General Municipal Law and (b) is exempt from taxation pursuant to §501(c)(3) of the federal Internal Revenue Code. Excluded from the definition of life care community facilities eligible for property tax exemption are facilities operated by a state or local government entity.

In the case of railroad facilities, an IDA may not itself operate a railroad facility for freight or passenger service. The New York City IDA has the same above-mentioned use requirements, but is specifically prohibited from constructing or reconstructing any residential facility or housing of any nature. In addition, the property of certain IDA's must be used as follows:

1. Jefferson County IDA - To operate and maintain foreign trade zones in accordance with County L §224(24).
2. Suffolk County IDA - To acquire a leasehold interest in, to reconstruct or construct additions to, or to own, maintain, equip, and lease or sell any of its interest in the sewer system or the collection, conveyance, treatment, and disposal of the sewage of the Southwest Sewer District of Suffolk County.
3. Village of Wayland IDA - To acquire, own, rent, lease, convey, or otherwise dispose of any interests in real property, including without limitation streets and roads, sewers, storm drains, lighting, sidewalks, and necessary appurtenances, which in the judgment of the agency will serve to permit or make possible the construction of residential housing units.
    

Certification by state or local government:

The agency must be certified by the municipality for whose benefit the agency was established. The municipality must file the certificate with the Secretary of State within six months of the effective date of the legislation creating the agency.

Required construction start date or other time requirement:

None.

Local option

No.

Limitation on exemption

Property other than railroad property leased to railroad company

Railroad property leased to railroad company:

*Exemption is limited to the amount by which the assessed value of the property exceeds the railroad ceiling established for it on the 1989 assessment roll.

Payments in lieu of taxes:

The County of Rockland IDA is the only IDA that is required by law to make payments in lieu of taxes. The agency must make payments to the appropriate municipality in: (1) an amount equal to the full amount of general municipal and school district taxes for any of its projects and for any projects that are prompted, assisted, or developed by the agency, or (2) a lesser amount specified in a written agreement with the appropriate municipality. Many other IDA's voluntarily make payments in lieu of taxes, which vary in amount and duration by agency and location.

If an IDA agrees to make payments in lieu of taxes, the agreement must be in writing and must specify: (1) the amount due annually to each affected taxing jurisdiction (or a formula by which the amount due can be calculated), (2) the name and address of the person, office, or agency to which payment must be delivered, (3) the date on which payment will be made, and (4) the date on which payment will be considered delinquent if not paid. Unless otherwise agreed to by the affected taxing jurisdictions, the agreement must provide that payments will be allocated among the taxing jurisdictions in proportion to the amount of real property tax and other taxes that would have been received by each jurisdiction had the project not been tax exempt. In the absence of any such written agreement, payments in lieu of taxes must be allocated in the same proportion as they had been prior to January 1, 1993.

Since they are not collected by the tax collector, payments in lieu of taxes should not be entered on the tax roll. Such payments are collected in the same manner as are other payments due the municipality under contract.

Calculation of exemption

General municipal and school district taxes:

100% of assessed value.

Special ad valorem levies and special assessments:

Property other than railroad property leased to railroad company:

No exemption allowed.

Railroad property leased to railroad company:

Amount of assessed value in excess of railroad ceiling value established for property on 1989 assessment roll. 

Coding of exemption on assessment roll

Assessment roll section(s):

Exempt (RPS § 8).

Note: This code should not be used to identify (1) property that is owned by an industrial development authority and is exempt under RPTL §412 and the Pub Auth L or (2) property that is exempt under any of the statutes listed under Similar Exemptions below. For coding of such property, see the Exemption Profile for the statute that applies.

Filing requirements (owner or occupant of property)

Form RP 412-a, Industrial Development Agencies, Application for Real Property Tax Exemption.

Note: At the same time that the application is filed with the assessor, the IDA must mail or deliver a copy of the application, with all attachments, to the chief elected official of each jurisdiction in which the project is located.

Reporting requirements (assessor):

None.

Similar exemptions

Exemption application forms

Forms RP 412-a  |  RP 412-a-Ins

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