Establishes the COVID-19 small business recovery lease act of 2020; authorizes real property tax abatements for certain properties entering into COVID-19 recovery leases in a city having a population of one million or more.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10936
SPONSOR: Rules (Niou) TITLE OF BILL:
An act to amend the real property tax law, in relation to establishing
the COVID-19 small business recovery lease act of 2020
PURPOSE OF BILL:
This bill would authorize the City of New York to enact local legis-
lation to offer property owners an abatement on their real property
taxes if they enter into recovery leases with their commercial small
business tenants.
SUMMARY OF PROVISIONS:
Section one of the bill creates a new Title 6 in 'Article 4 of the real
property tax law authorizing tax abatements to property owners entering
into COVID-19 recovery leases which limit rent increases for certain
commercial tenants.
Section 499-aaaaa of the new Title 6 sets forth definitions for what
constitutes an eligible commercial tenant, a COVID-19 recovery lease,
and the covered period. This section requires recovery leases to be
entered into within two years of the enactment of the law. These leases
must last at least ten years, and the abatement benefit period must be
no longer than ten years.
Section 499-bbbbb of the new Title 6 authorizes the City of New York to
adopt or amend any local law or ordinance to offer property tax abate-
ments when building owners enter into a recovery lease with an eligible
commercial tenant. The local law shall provide for: standards to deter-
mine whether commercial tenants and building owners have suffered finan-
cial hardship, the maximum annual rent increases permitted in recovery
leases, duration of the tax abatement, and the way the abatement shall
be calculated.
Section two of the bill sets forth the effective date.
JUSTIFICATION:
New York's small businesses have been devastated by the COVID-19 pandem-
ic. Commercial rent remains, for many, the biggest single fixed cost,
other than their workforce. Even before the COVID-19 crisis, untenable
commercial rents were causing many storefronts across the city to close.
Meanwhile, spaces sat vacant for years, as some property owners sought
higher rents and higher-credit tenants.
If left unaddressed, the COVID-19 crisis is likely to result in the
shuttering of many beloved small businesses in neighborhoods throughout
the city - businesses that have served as the backbone of our communi-
ties into which owners have poured their hearts, souls, and savings. An
increase in commercial vacancies is sure to follow, undermining retail
strips and the neighborhoods they anchor. While this may lead to a drop
in commercial rents over time, there is no guarantee that this would
help existing tenants, already locked into their leases, especially as
more commercial landlords choose to leave their storefronts empty, wait-
ing to see if a recovery allows them to strike a higher price down the
road.
Giving New York City the authority to encourage property owners to
restructure existing leases and rent commercial spaces at affordable
rates will be a lifeline not only to the small businesses struggling to
survive now, but to the communities across New York who have seen their
Main Streets vacant for too long.
LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS:
None to the state.
EFFECTIVE DATE:
This act shall take effect immediately and shall expire and be deemed
repealed after a period of two years.
STATE OF NEW YORK
________________________________________________________________________
10936
IN ASSEMBLY
August 17, 2020
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Niou) --
read once and referred to the Committee on Real Property Taxation
AN ACT to amend the real property tax law, in relation to establishing
the COVID-19 small business recovery lease act of 2020
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "COVID-19 small business recovery lease act of 2020".
3 § 2. Article 4 of the real property tax law is amended by adding a new
4 title 6 to read as follows:
5 TITLE 6
6 AUTHORIZATION OF REAL PROPERTY TAX ABATEMENT FOR CERTAIN
7 PROPERTIES ENTERING INTO COVID-19 RECOVERY LEASES
8 Section 499-aaaaa. Definitions.
9 499-bbbbb. Real property tax abatement.
10 § 499-aaaaa. Definitions. For the purpose of this title:
11 1. "Eligible commercial tenant" shall mean a small business, as
12 defined by section one hundred thirty-one of the economic development
13 law, that enters into or seeks to enter into a COVID-19 recovery lease
14 for property such tenant currently occupies, or for property that is
15 vacant for reasons other than eviction.
16 2. "COVID-19 recovery lease" shall mean a commercial lease agreement
17 that: (a) is entered into within two years of the effective date of this
18 title between an eligible commercial tenant and a property owner, where
19 either the eligible commercial tenant or the property owner has suffered
20 a financial hardship during the COVID-19 covered period, or both have
21 suffered such a hardship; (b) has a term of not less than ten years; (c)
22 provides for annual rent increases during a term of not less than at
23 least ten years that do not exceed the amounts permitted pursuant to a
24 local law enacted for the purpose of setting such maximum increases; (d)
25 settles any arrears owed by the tenant pursuant to any previous lease
26 agreement for the leased property; and (e) includes any additional
27 provisions that may be required pursuant to local law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD17094-02-0
A. 10936 2
1 3. "Benefit period" shall mean the amount of time established by local
2 law during which an eligible property shall receive an abatement of real
3 property taxes pursuant to section four hundred ninety-nine-bbbbb of
4 this title, provided that in no event shall the benefit period be longer
5 than ten years.
6 4. "COVID-19 covered period" shall mean the period beginning March
7 seventh, two thousand twenty, until the end of the COVID-19 state disas-
8 ter emergency declared by executive order number two hundred two and any
9 further amendments or modifications thereto, and as may be further
10 extended pursuant to section twenty-eight of the executive law, issued
11 in response to the COVID-19 pandemic, continues to apply in a city
12 having a population of one million or more.
13 § 499-bbbbb. Real property tax abatement. 1. Notwithstanding any other
14 provision of law to the contrary, a city having a population of one
15 million or more may, by adopting or amending a local law, offer abate-
16 ments of real property taxes during a prescribed benefit period to prop-
17 erties in which the property owner enters into a recovery lease with an
18 eligible commercial tenant. Such local law shall provide for: (a) the
19 manner in which it shall be determined whether an eligible commercial
20 tenant or a property owner has suffered a financial hardship during the
21 COVID-19 covered period; (b) the maximum annual rent increases permitted
22 during the term of a recovery lease; (c) the duration of the benefit
23 period; (d) the manner in which the amount of the abatement shall be
24 calculated; and (e) any other terms and conditions the city deems neces-
25 sary to effectuate the purposes of this title. Such local law may also
26 provide for a maximum aggregate value of all tax abatements that may be
27 granted under this title.
28 2. In no event shall an abatement granted pursuant to this title
29 exceed the tax liability of the property for which the abatement is
30 granted.
31 § 3. This act shall take effect immediately and shall expire and be
32 deemed repealed 12 years after it shall have become a law.
