Assessor Manuals, Exemption Administration: RPTL Section 421-p

Assessor Manuals

Exemption Administration Manual, Part 2, Section 4.07 - RPTL Section 421-p: Newly constructed or converted rental multiple dwellings 

Exemption code(s)

4427_

Year originally enacted:

2024

Related statutes:

RPTL § 421-pp

Summary:

Where allowed by local option, rental multiple dwellings constructed or converted in a benefit area as designated by local law and where at least 25% percent of the units in the structure meet affordability criteria adopted by the municipality are exempt from taxation and special ad valorem levies (but not special assessments).

Eligible dwellings are wholly exempt while under construction, subject to a maximum of three years. The property shall then be partially exempt for an additional 25 years. However, during the exemption period, taxes must be paid in an amount at least equal to the taxes paid on the land and any improvements it contained during the tax year preceding the start of the exemption.

After a city, town, or village has initially adopted a local law to authorize this exemption, any other municipal corporation in which the designated benefit area is located may likewise authorize the exemption by local law or, in the case of a school district, by resolution.

This exemption is not available in New York City.

Property receiving this exemption may not simultaneously receive any other property tax exemption.

Eligibility requirements

Ownership requirements:

None.

Property location requirements:

The property must be located outside New York City and in a designated benefit area as set forth by local law.

Property use requirements:

For purposes of this exemption, a rental multiple dwelling means a structure, other than a hotel, consisting of 10 or more dwelling units, where all the dwelling units are rented for residential purposes. At least 25% of the units, upon initial rental and upon each subsequent rental following a vacancy during the benefit period, must be affordable and restricted to occupancy by individuals or families whose household income falls within the specified range of the area median income weighted average.

Tenants in an income restricted dwelling unit shall have the right to lease renewals at the income restricted level until the tenants permanently vacate the dwelling unit.

Any new construction must take place on:

• vacant land,
• predominately vacant or underutilized land,
• land improved with a non-conforming use,
• land containing one or more substandard or structurally unsound dwellings, or
• a dwelling that has been certified as unsanitary by the local health agency.

This requirement does not apply to any new conversions.

If a newly constructed or converted property is used partially as a rental multiple dwelling and partially for commercial or other purposes, the portion of the property that is used as a rental multiple dwelling may be eligible for this exemption. For a property that is partially used as a rental multiple dwelling to qualify, the portion used as a rental multiple dwelling must represent at least 50% of the square footage of the entire property, and all other requirements must be meet.

All building services employees (any person who is regularly employed at, and performs work in connection with the care of maintenance of an eligible rental multiple dwelling) employed by the covered building service employer (the applicant or employer of building service employees for the applicant) at the rental multiple dwelling, must be paid the prevailing wage in accordance with Article Nine of the Labor Law for the duration of the benefit period. However, this requirement does not apply if:

• the residential multiple dwelling contains less than 30 dwelling units, or
• the construction or conversion is carried out with the substantial assistance of grants, loans, or subsidies provided by a federal, state, or local governmental agency or instrumentality pursuant to a program for the development of affordable housing.

This requirement applies for the duration of the benefit period, even if the exemption is revoked or terminated.

The prevailing wage paid to building service employees must not be lower than the prevailing wage paid to building service employees for work performed within the same county under the collective bargaining agreement covering the largest amount of hourly building services employees employed at residential buildings within the county in each job classification as established by the Commissioner of Labor.

Income requirements:

At least 25% of the units, upon initial rental and upon each subsequent rental following a vacancy during the benefit period, must be affordable and restricted to occupancy by individuals or families whose household income falls within the specified range of the area median income weighted average as allowed by local law.

Individuals’ and families’ household income must not exceed a weighted average of no less than 60% of the area median income and no more than 80% of the area median income, adjusted for family size, at the time that the households initially occupy such dwelling units.

Furthermore, all of the income restricted units upon initial rental and upon each subsequent rental following a vacancy during the benefit period or extended benefit period, as applicable, shall be affordable to and restricted to occupancy by individuals or families whose household income does not exceed 100% of the area median income, adjusted for family size, at the time that such households initially occupy such dwelling units. 

Certification by state or local government:

The village, town, city, or appropriate municipal agency or entity must annually publish a list of all sites receiving this exemption and the sworn affidavits described below.

The Commissioner of Labor shall determine the prevailing wage rates, prevailing rate of fringe benefits, and supplemental benefit rate paid to business service employees.

When applying, the applicant must also submit a sworn affidavit certifying that it shall comply with the applicable prevailing wage requirement, or that it is exempt from it. If the applicant is not exempt, then once its application has been approved, it shall submit a sworn affidavit annually to the Commissioner of Labor certifying its compliance with the prevailing wage requirement.

The Commissioner of Labor has the power to monitor the applicant’s compliance with the prevailing wage requirement.

Required construction start date or other time requirement:

The construction or conversion must have begun on or after the effective date of the local law, ordinance, or resolution which created the benefit area.

Local option

Yes.

Each city (except for New York City), town, or village may by local law, provide for the exemption of rental multiple dwellings constructed or converted in a benefit area designated in the local law from taxation and special ad valorem levies (but not special assessments).

Each city, town, or village must designate in their local law a benefit area to which the exemption applies.

Subsequent to the adoption of a local law allowing for the exemption by a city, town, or village, any other municipal corporation in which the designated benefit area is located may likewise allow the exemption by local law, or in the case of a school district, a resolution.

The local law authorizing the exemption may provide for the area median income weighted average within the amounts set forth in law, which is to be used to restrict occupancy of at least 25% of the units in the rental multiple dwelling.

Any recipient of the exemption, or its designee, shall certify its compliance with the requirements of this exemption under penalty of perjury, at such time or times and in such manner as the city, town or village may prescribe by local law.

Each city, town, or village may establish procedures as it deems necessary for monitoring and enforcing compliance of an eligible building with the requirements of this exemption.

Limitation on exemption

*If allowed by local option.

*See Calculation of exemption below.

Payments in lieu of taxes

None.

Calculation of exemption

Eligible newly-constructed or converted rental multiple dwellings in a designated benefit area are wholly exempt from taxation while under construction, subject to a maximum of three years. The property will then be exempt for an additional period of 25 years. The exemption percentage during the additional period of 25 years begins at 96% and decreases by four percent each year.

During the exemption period, taxes must be paid in an amount at least equal to the taxes paid on the land and any improvements it contained during the tax year preceding the start of the exemption.

The property may not receive any other exemption at the same time as it is receiving this exemption.

General municipal and school district taxes:

Yes, eligible property may be exempt from general municipal and school district taxes if the exemption is allowed by local option.

Special ad valorem levies and special assessments:

Yes, eligible property may be exempt from special ad valorem levies if the exemption is allowed by local option. No exemption is allowed for special assessments.

Coding of exemption on assessment roll

4427_

Assessment roll section(s):

Taxable (RPS Section 1).

Filing requirements 

Form RP-421-p-rmd, Application for Real Property Tax Exemption for Newly Constructed or Converted Rental Multiple Dwellings

RP-421-p-rmd-I, Instructions for Form RP-421-p-rmd

When submitting its application, the applicant must also submit a sworn affidavit certifying that it shall comply with the applicable prevailing wage requirement or that it is exempt from it. If the applicant is not exempt, then once its application has been approved, it shall submit a sworn affidavit annually to the Commissioner of Labor certifying its compliance with the prevailing wage requirement. Contact the New York State Department of Labor for more information regarding the affidavit.

Reporting requirements (assessor)

The village, town, city, or appropriate municipal agency or entity must annually publish a list of all sites receiving this exemption and the sworn affidavits described above.

Similar exemptions

421-pp

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