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A05050 Summary:

BILL NOA05050
 
SAME ASSAME AS S00943-A
 
SPONSORBraunstein
 
COSPNSRDinowitz, Colton, Dickens, Aubry, Berger, Bichotte Hermelyn, Seawright, Lucas, Simon, Pheffer Amato, Hyndman, Eichenstein, Bores, Zaccaro, Septimo, Fall, Cunningham, Vanel, Jackson, Hevesi, Weprin, Cruz, Kim, Rajkumar, Levenberg, Benedetto, Simone, Rozic, Tapia, Burgos, Novakhov
 
MLTSPNSR
 
Add 488-b, RPT L
 
Relates to establishing an abatement and exemption from real property taxes for capital improvements to reduce carbon emissions; establishes an energy efficiency improvement board to approve the abatements and exemptions.
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A05050 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5050
 
SPONSOR: Braunstein
  PURPOSE:: Relates to establishing an abatement and exemption from real property taxes for capital improvements to reduce carbon emissions   SUMMARY OF PROVISIONS:: Section 1. Establishes the legislative intent. Section 2. Creates a new section 488-b of the Real Property Tax Law. That legislation: 1. Provides definitions for eligible real property, eligible improve- ments, the Energy Efficiency Board, and permanent resident. 2. Establishes that the bill provides an abatement and exemption from all taxes including ad valorem levies after the effective date of this act: 3. Establishes an Energy Efficiency Board to administer the program, which shall be located within the Office of Real Property Services. The Board shall consist of four members appointed by the Governor, and two non-voting members appointed by the Mayor. The Board shall establish rules and regulations to administer the program. 4. Creates a tax exemption equal to any assessed value increase for the eligible improvement for a period of twenty years provided that such improvements are commenced on or after December 31, 2021 and completed within 60 months of issuance of a permit. The act requires that all taxes are current on property eligible, and that no tenant be evicted in order to complete eligible improvements. 5. Creates a tax abatement equal to a share of the cost of the eligible improvement, with the value of the benefit increasing for projects that realize larger greenhouse gas emissions. Such abatement shall generally be in effect for 10 years with a value as follows: 5 percent for a greenhouse gas emission reduction of between 2-5% 6.5 percent for a greenhouse gas emission reduction of between 5-10% 7 percent for a greenhouse gas emission reduction of between 10-12% 7.5 percent for a greenhouse gas emission reduction of between 12-15% 8 percent for a greenhouse gas emission reduction of between 15-17% 8.5 percent for a greenhouse gas emission reduction of between 17-20% 9 percent for a greenhouse gas emission reduction of between 20-25% 9.5 percent for a greenhouse gas emission reduction of between 25-30% and 10 percent for a greenhouse gas emission reduction of in excess of 30% with these projects being eligible for a 20 year abatement. While the abatement cannot exceed the amount of taxes owed for any year these projects could carry forward additional benefits through the 20 year period. 6. Requires an annual certification by the recipient of an abatement. 7. Requires that for continued receipt of the abatement all provisions of housing maintenance code, building code, and the multiple dwelling law shall be complied with. 8. Permits revocation or reduction of benefits where a misstatement of any material matter, or false statements in the application is deter- mined by the Board. 9. Allows for local agencies to enact rules and regulations to adminis- ter aspects of the program. Section 3. Provides an immediate effective date.   JUSTIFICATION:: New York State has an urgent need to reduce emissions from the building stock through energy efficiency measures and efficient electrification in order to meets the greenhouse gas emission goals established by the CLCPA. The Climate Action Council (CAC) has noted that electrification without the widespread adoption of efficiency measures will not realize the goals as it will overburden the electricity system and fail to achieve emissions reduction at the speed required by the CLCPA. There are proposed building code changes coming from the CAC that will create some reductions, which will be primarily related only to new construction or those properties which are substantially renovated. Those proposed changes will not have the rapid measurable impact on building emissions. At the same time, New York City has adopted local legislation, Local Law 97 of 2019, that also seeks to reduce greenhouse gas emissions from buildings. As with the CLCPA, realizing these goals will require buildings to both reduce their total energy use and move to lower carbon energy sources. This legislation is intended to realize the goals of the CLCPA and Local Law 97 by creating an incentive for a prop- erty owner to create real meaningful reductions in the emissions profile of the building. To do so, the legislation creates a tax benefit to help offset the cost associated with work that reduces building emissions. This type of tool is needed to ensure that buildings make the kinds of investments that will be needed to combine energy efficiency with elec- trification as those investments may not make financial sense in the absence of an incentive. The legislation proposes a two-fold approach. First, it provides an exemption for any increased assessment for a period of twenty years, to the extent that the improvement would otherwise increase the value of the building. Many of these improvements would improve the property value, but some do not. For that reason, the legislation includes a second approach by also providing an abatement that provides a reduction in taxes owed. This relates not to the cost of the work, e.g. a smart thermostat, which is not costly, but can have a beneficial impact which greatly reduces emissions. The abatement corresponds to the reduction in greenhouse gas amount of the emissions. Based on the social costs of carbon avoided by virtue of financial bene- fits to the state and the City of New York, the need for this bill cannot be overstated.   LEGISLATIVE HISTORY:: 2021-2022: S9603 - REFERRED TO RULES   FISCAL IMPLICATIONS:: None to the State.   EFFECTIVE DATE:: Immediately, provided that any tax benefits shall be delayed until July 1 next succeeding enactment.
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A05050 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5050
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 27, 2023
                                       ___________
 
        Introduced  by  M.  of  A.  BRAUNSTEIN  -- read once and referred to the
          Committee on Real Property Taxation
 
        AN ACT to amend the real property tax law, in relation  to  establishing
          an  abatement  and  exemption  from  real  property  taxes for capital
          improvements to reduce carbon emissions; and to repeal such provisions
          upon the expiration thereof
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Legislative intent. New York's nation leading climate law,
     2  the climate leadership and community protection  act  of  2019  (CLCPA),
     3  requires  the state to reduce its greenhouse gas emissions to 40 percent
     4  below 1990 levels by 2030, and 85 percent below  1990  levels  by  2050,
     5  among other goals. At the same time, New York city's local law number 97
     6  for  the  year 2019 requires buildings over 25,000 square feet to reduce
     7  their carbon emissions to comply with increasingly  stringent  emissions
     8  limits.  While  New  York's  building  stock  accounts  for more than 25
     9  percent of statewide greenhouse gas emissions and  transportation  is  a
    10  top  emitter,  in  New  York city that ratio is reversed, with buildings
    11  accounting for approximately 70 percent of greenhouse gas emissions.  As
    12  such,  reaching  the state and city's climate goals will require signif-
    13  icant investment to decarbonize buildings including through electrifica-
    14  tion, energy efficiency, and the use  of  new  technologies  and  energy
    15  sources. The use of this targeted abatement, which would be available to
    16  support  all  property  owners that are meaningfully engaged in reducing
    17  carbon emissions will ensure the success of the CLCPA and local law  97.
    18  This  legislation  will  benefit  all  New  Yorkers by ensuring that our
    19  buildings can play a vital role in decarbonization.
    20    § 2. The real property tax law is amended  by  adding  a  new  section
    21  488-b to read as follows:
    22    §  488-b. Abatement and exemption from real property taxes for capital
    23  improvements to reduce carbon emissions. 1. For  the  purposes  of  this
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01352-04-3

        A. 5050                             2
 
     1  section,  the  following terms shall have the meanings specified in this
     2  subdivision:
     3    a.  "Eligible  real  property"  shall mean a property located within a
     4  city of one million or more that is:
     5    (i) any class B multiple dwelling as defined in the multiple  dwelling
     6  law;
     7    (ii) any class A multiple dwelling as defined in the multiple dwelling
     8  law;
     9    Notwithstanding  the  foregoing,  eligible  real  property  shall  not
    10  include college and school dormitories, club houses, or residences whose
    11  occupancy is restricted to an institutional use such as housing intended
    12  for use primarily or exclusively by the employees of a single company or
    13  institution. A building is an eligible real property only if  it  quali-
    14  fies as such after completion of the eligible improvements, but need not
    15  have been an eligible real property prior to the eligible improvements;
    16    (iii)  any non-residential, commercial property used primarily for the
    17  buying, selling or otherwise providing of goods or services inclusive of
    18  manufacturing and office space;
    19    (iv) any single family private dwelling; or
    20    (v) any two-family private dwelling.
    21    b. "Eligible improvements" shall be limited to categories of work that
    22  result in a reduction of greenhouse  gas  emissions  for  the  building,
    23  provided further that such work shall be in conformity with all applica-
    24  ble  laws.  Eligible  improvements shall include, but not be limited to,
    25  any of the following types of improvements:
    26    (i) design, permitting, and technical analysis work required to  iden-
    27  tify,  measure,  and complete eligible work including the development of
    28  carbon emissions reduction strategies and plans;
    29    (ii) cleaning, resurfacing or repair of adjacent  surfaces,  inclusive
    30  of  the replacement or installation of windows, walls, ceilings, floors,
    31  doors or trim where necessary;
    32    (iii) pointing, waterproofing and repair of building envelope, includ-
    33  ing cleaning of entire building exterior surface  to  prepare  for  such
    34  work,  in  the  course  of the replacement, installation or upgrading of
    35  eligible systems or equipment;
    36    (iv) replacement, repair or installation of new systems for heating or
    37  cooling, including domestic hot water;
    38    (v) installation of solar, green roofs or other mechanisms  to  offset
    39  use of energy from the electricity grid;
    40    (vi)  replacement,  or  installation  of  insulation  in walls, roofs,
    41  flooring, eaves, and around pipes;
    42    (vii) replacement or installation of thermostats  to  control  temper-
    43  ature and building management systems;
    44    (viii)  installation  of  energy  efficient  appliances,  fixtures, or
    45  lighting;
    46    (ix) repair,  replacement  and  modification  of  electrical  systems,
    47  and/or wiring associated therewith;
    48    (x) appurtenant labor, equipment and supplies; and
    49    (xi)  any  other  categories of work established by the board in regu-
    50  lations that results in a net reduction in greenhouse gas emissions  for
    51  the building.
    52    c.  "Board"  shall mean the energy efficiency improvement board estab-
    53  lished by this section.
    54    d. "Department of buildings" shall mean the department of buildings in
    55  the city of New York.

        A. 5050                             3
 
     1    2. Eligible property reconstructed, altered or improved subsequent  to
     2  the  effective  date  of  this section shall be exempt from taxation and
     3  special ad valorem levies to the extent provided in  this  section.  Any
     4  exemption  or  abatement  permitted  pursuant to this section shall take
     5  effect  no  sooner than July first next succeeding the effective date of
     6  this section.
     7    3. There is hereby established an energy efficiency improvement  board
     8  within the office of real property services, which shall consist of four
     9  members appointed by the governor, one of whom shall be the commissioner
    10  of  taxation and finance, ex-officio, one of whom shall be the president
    11  of the New York state energy research and development authority,  ex-of-
    12  ficio,  one  of  whom  shall  be the commissioner of homes and community
    13  renewal, ex-officio, and a fourth member who shall  have  experience  in
    14  the  construction  of  multiple  dwellings. The board shall additionally
    15  have two, non-voting members appointed by the mayor of the city  of  New
    16  York.    The  board  shall be responsible for administering the benefits
    17  conferred by this section. The board shall appoint staff, within amounts
    18  appropriated therefor, to assist it in the execution of its duties.  The
    19  board  members  shall  be  entitled to reimbursement of their actual and
    20  necessary expenses in the discharge  of  their  duties,  but  shall  not
    21  otherwise  be  entitled to any compensation for their service. The board
    22  shall promulgate a regulation to establish a  methodology  to  determine
    23  the  greenhouse gas emissions of a building, and by regulation establish
    24  a formula that applicants can utilize  to  determine  the  reduction  in
    25  emissions  created  by  any  improvements permitted by this section. The
    26  improvements described in subparagraphs (i), (ii) and (x) of paragraph b
    27  of subdivision one of this section which do not inherently reduce  emis-
    28  sions,  may  only  be  approved if they are part of an application which
    29  includes other projects which have the net effect of  reducing  the  net
    30  greenhouse  gas  emissions of the building if the building is character-
    31  ized as an eligible real property pursuant to subparagraph (i), (ii)  or
    32  (iii) of paragraph a of subdivision one of this section. For an eligible
    33  real  property  defined  in  subparagraph  (iv) or (v) of paragraph a of
    34  subdivision one of this section, the benefits  of  subparagraph  (i)  of
    35  paragraph  b of subdivision one of this section may be claimed independ-
    36  ently at a reduced benefit of fifty percent of actual costs as  provided
    37  further  in  this section. The board shall promulgate an application for
    38  benefits afforded to owners under this section, and  shall  establish  a
    39  process  to review applications for the benefits under this section. The
    40  board may promulgate regulations to  allow  for  additional  classes  or
    41  categories of work that should entitle an individual to an exemption and
    42  abatement  under this section, upon a finding that such work has a bene-
    43  ficial impact on greenhouse  gas  emissions.  The  board  shall  approve
    44  reasonable  costs  associated  with  the  work proposed and may use as a
    45  guide the typical costs of such improvements, and update  such  informa-
    46  tion  annually. Any application for benefits shall be approved or denied
    47  within one year of submission, or if an affirmative approval  or  denial
    48  has  not been given, then such application shall be deemed approved. The
    49  board shall establish a process to communicate with  the  department  of
    50  finance in the city of New York as to their determinations, such that it
    51  may promptly update the tax rolls.
    52    4.  Any  increase  in  assessed  valuation  of  eligible real property
    53  resulting from eligible improvements shall be exempt from  taxation  for
    54  local purposes for a period of twenty years, provided that:

        A. 5050                             4
 
     1    a.  the  eligible  improvements  are  commenced after December thirty-
     2  first, two thousand twenty-one, and are completed within sixty months of
     3  the issuance of a permit by the department of buildings;
     4    b. the eligible improvements are approved by the board with respect to
     5  their costs and their qualifications for the benefits of this section;
     6    c.  the exemption may commence no sooner than the July first following
     7  the filing with the local  agency  responsible  for  real  property  tax
     8  assessment  an  application  for  such  assessment, provided that if the
     9  board has not established the amount of such assessment  prior  to  such
    10  filing,  that  no  such  increase in assessment shall be permitted until
    11  such time as the board determines that the cost or work is otherwise not
    12  qualified for such exemption; provided, however, that  no  abatement  of
    13  existing  taxes  shall be permitted until such time as an application is
    14  approved, or deemed approved as applicable.  If  the  rehabilitation  is
    15  carried  out with substantial government assistance as part of a program
    16  for affordable housing, the exemption may commence no  sooner  than  the
    17  July  first  following  the  commencement  of  construction  of eligible
    18  improvements;
    19    d. there shall be no outstanding real estate taxes,  water  and  sewer
    20  charges,  payments  in  lieu of taxes or other municipal charges due and
    21  owing as of the tax quarter prior to commencement of  tax  exemption  to
    22  this section;
    23    e. no person who lives in the eligible real property shall be required
    24  by  the  owner to permanently vacate the eligible real property in order
    25  to perform the eligible improvements or any related work;
    26    f. notwithstanding the provisions of any state or local law,  rule  or
    27  regulation  to  the  contrary, the exemption shall be available notwith-
    28  standing the receipt of any other benefit under state, local or  federal
    29  law.
    30    5.  Eligible real property which qualifies for exemption from taxation
    31  for local purposes for eligible improvements shall also be eligible  for
    32  a  ten or twenty year abatement of real property taxes not to exceed the
    33  cost of eligible improvements certified by the  board,  which  abatement
    34  may  commence  on  the  first day of the first tax quarter following the
    35  filing with the local agency responsible for real property  tax  assess-
    36  ment  of  a  certification  of  eligibility issued by the board for such
    37  abatement; provided, however that if the rehabilitation is  carried  out
    38  with substantial government assistance as part of a program for afforda-
    39  ble  housing  the abatement may commence no sooner than the first day of
    40  the first tax quarter following  the  commencement  of  construction  of
    41  eligible improvements, provided that:
    42    a. the annual abatement shall not exceed the amount of taxes otherwise
    43  payable  in the corresponding tax year, provided that excess costs which
    44  are not applied in any tax year may be carried forward for the remainder
    45  of the period of the abatement applicable to such improvement;
    46    b. the amount of such abatement shall not exceed the following amounts
    47  and durations, which shall be determined by regulations establishing   a
    48  methodology  to calculate the annual abatement for such applicable work.
    49  Such methodology  shall  establish  a  base  year  for  calculating  the
    50  percentage  on  the  building's  prior  calendar year building emissions
    51  report as required by article three hundred twenty of chapter  three  of
    52  title  twenty-eight  of the administrative code of the city of New York,
    53  or if not required to file a building emissions report,  then  a  bench-
    54  marking  report  required by article three hundred nine of chapter three
    55  of title twenty-eight of the administrative code  of  the  city  of  New
    56  York:

        A. 5050                             5
 
     1    (i)  a ten year abatement shall apply for projects which have a green-
     2  house gas emission reduction of  between  two  percent  and  twenty-nine
     3  percent as follows:
     4    (1)  five  percent  of  the  costs  of such improvement annually for a
     5  greenhouse gas emission reduction of between two to five percent;
     6    (2) six and one-half percent of the costs of such improvement annually
     7  for a greenhouse gas emission reduction of between five to ten percent;
     8    (3) seven percent of the costs of  such  improvement  annually  for  a
     9  greenhouse gas emission reduction of between ten to twelve percent;
    10    (4)  seven and one-half percent of the costs of such improvement annu-
    11  ally for a greenhouse  gas  emission  reduction  of  between  twelve  to
    12  fifteen percent;
    13    (5)  eight  percent  of  the  costs of such improvement annually for a
    14  greenhouse gas  emission  reduction  of  between  fifteen  to  seventeen
    15  percent;
    16    (6)  eight and one-half percent of the costs of such improvement annu-
    17  ally for a greenhouse gas emission reduction  of  between  seventeen  to
    18  twenty percent;
    19    (7)  nine  percent  of  the  costs  of such improvement annually for a
    20  greenhouse gas emission  reduction  of  between  twenty  to  twenty-five
    21  percent;
    22    (8) nine and one-half percent of the costs of such improvement annual-
    23  ly  for  a  greenhouse  gas emission reduction of between twenty-five to
    24  twenty-nine percent; and
    25    (ii) up to a twenty year abatement shall apply for projects which have
    26  a greenhouse gas  emission  reduction  of  thirty  percent  or  more  as
    27  follows: ten percent of the costs of such improvement annually, provided
    28  that  in any year in which such ten percent exceeds the tax owed, excess
    29  amounts shall carry forward until the earlier of years  is  reached,  or
    30  one hundred percent of the costs of such improvement are expended.
    31    c.  the  abatement  shall  be available for consecutive years from the
    32  date such abatement first becomes effective;
    33    d. the total abatement shall be the lesser of two hundred  percent  of
    34  the  certified  reasonable  costs of eligible improvements or the actual
    35  costs as determined by the board pursuant to its rules and  regulations;
    36  and
    37    e.  notwithstanding  the provisions of any state or local law, rule or
    38  regulation to the contrary, the abatement shall  be  available  notwith-
    39  standing  the receipt of any other benefit under state, local or federal
    40  law.
    41    6. During the period of tax exemption or abatement  pursuant  to  this
    42  section,  the  owner  shall submit an annual certification to the board.
    43  Failure to submit such certification may result in revocation  of  bene-
    44  fits. Such certification shall include the following:
    45    a.  the  annual  greenhouse  gas emissions and usage of energy for the
    46  building;
    47    b. a statement that the property currently complies with all  building
    48  and housing codes and that no tax required to be paid is in arrears; and
    49    c. all such other information required by the board.
    50    7.  During  the  period of tax exemption or abatement pursuant to this
    51  section, the exemption and abatement may be revoked upon a violation  of
    52  applicable  oversight laws, where an agency with jurisdiction to enforce
    53  such laws has requested a suspension of  abatement  or  exemption  based
    54  upon  violations  of  the multiple dwelling law, the local building code
    55  and the local housing maintenance code, or other applicable law or regu-
    56  lation.

        A. 5050                             6
 
     1    8. The benefits of this section may be revoked or reduced upon a find-
     2  ing by the board that:
     3    a.  the application for benefits hereunder or the annual certification
     4  required hereunder contains a false statement or false information as to
     5  a material matter or omits a material matter;
     6    b. real estate taxes, water and sewer charges,  payments  in  lieu  of
     7  taxes  or  other  municipal  charges are due and owing for more than one
     8  year; or
     9    c. the eligible real property fails  to  provide  the  annual  certif-
    10  ication required by this section; and
    11    d.  after  receiving  notice  of  such  a failure, that such owner has
    12  failed to cure the deficiency within ninety days.
    13    9. The local agencies of government charged with the administration of
    14  this section may promulgate rules  and  regulations  to  carry  out  the
    15  provisions of this section.
    16    §  3.  This  act shall take effect immediately and shall expire and be
    17  deemed repealed December 31, 2030.
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