Relates to not-for-profit lease of real property; provides that when real property not used exclusively to carry out one or more exempt purposes is leased or otherwise used for commercial for-profit purposes, such property shall be subject to taxation and no portion shall be exempt.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4534
SPONSOR: O'Donnell TITLE OF BILL:
An act to amend the real property tax law, in relation to not-for-profit
lease of real property
PURPOSE OR GENERAL IDEA OF BILL:
Under this bill, not-for-profits would lose their real property
exemptions when they act like for-profit real estate businesses by leas-
ing land to commercial developers to construct for-profit buildings that
are unrelated to the not-for-profits' core purposes, and that have a
significant effect on the neighboring community's population density or
character.
SUMMARY OF PROVISIONS:
Section one of the bill amends Real Property Tax Law section 420-a by
adding language at the end of the subdivision 2. The new language
provides that if a not-for-profit entity leases a portion of its real
property purposes other than the not-for-profit's religious, charitable,
educational, etc. purposes, then it will lose its real property tax
exemption for the entire parcel if the following are true: 1) the prop-
erty is leased for commercial for-profit purposes, 'and 2) the use of
the property will have a significant effect on existing patterns of
population concentration, or will have a significant effect on the
existing or neighborhood character. The second determination will be
made by the local governing body after a public hearing.
JUSTIFICATION:
Current law grants certain not-for-profit entities a real property tax
exemption, and also provides that any portion of the real property that
is leased or used for purposes other than those served by the not-for-
profit will lose the tax exemption. Existing law is inadequate to
address circumstances in which not-for-Profit entities in essence become
for-profit developers by leasing land for massive real estate develop-
ments that negatively affect the surrounding communities without any
opportunity for meaningful input from those affected by overzealous
development. When not-for-profits act in this manner, is appropriate for
the law to treat them as though they have indeed become for-profit enti-
ties. This bill would therefore remove the real property tax exemption
from the entire parcel rather than simply the leased portion, thus
creating an incentive for more responsible behavior, as well as a mech-
anism for public review of overdevelopment that involves land owned by
not-for-profit entities.
PRIOR LEGISLATIVE HISTORY:
A.8753 (2019-20)
A.4751 (2017-2018)
A.4235 (2015-16);
A.9794 (2014)
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined. Possible revenue enhancement for local governments.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
4534
2021-2022 Regular Sessions
IN ASSEMBLY
February 4, 2021
___________
Introduced by M. of A. O'DONNELL -- read once and referred to the
Committee on Real Property Taxation
AN ACT to amend the real property tax law, in relation to not-for-profit
lease of real property
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 2 of section 420-a of the real property tax
2 law, as amended by section 17 of part A of chapter 68 of the laws of
3 2013, is amended to read as follows:
4 2. If any portion of such real property is not so used exclusively to
5 carry out thereupon one or more of such purposes but is leased or other-
6 wise used for other purposes, such portion shall be subject to taxation
7 and the remaining portion only shall be exempt; provided, however, that
8 such real property shall be fully exempt from taxation although it or a
9 portion thereof is used (a) for purposes which are exempt pursuant to
10 this section or sections four hundred twenty-b, four hundred twenty-two,
11 four hundred twenty-four, four hundred twenty-six, four hundred twenty-
12 eight, four hundred thirty or four hundred fifty of this chapter by
13 another corporation which owns real property exempt from taxation pursu-
14 ant to such sections or whose real property if it owned any would be
15 exempt from taxation pursuant to such sections, (b) for purposes which
16 are exempt pursuant to section four hundred six or section four hundred
17 eight of this chapter by a corporation which owns real property exempt
18 from taxation pursuant to such section or if it owned any would be
19 exempt from taxation pursuant to such section, (c) for purposes which
20 are exempt pursuant to section four hundred sixteen of this chapter by
21 an organization which owns real property exempt from taxation pursuant
22 to such section or whose real property if it owned any would be exempt
23 from taxation pursuant to such section, (d) for purposes relating to
24 civil defense pursuant to the New York state defense emergency act,
25 including but not limited to activities in preparation for anticipated
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08895-01-1
A. 4534 2
1 attack, during attack, or following attack or false warning thereof, or
2 in connection with drill or test ordered or directed by civil defense
3 authorities, or (e) for purposes of a tax-free NY area that has been
4 approved pursuant to article twenty-one of the economic development law,
5 subject to the conditions that the real property must have been owned by
6 the corporation or association organized exclusively for educational
7 purposes and exempt pursuant to this section on June first, two thousand
8 thirteen, and that the exemption shall apply only to the portion of such
9 real property that is used for purposes of the START-UP NY program; and
10 provided further that such real property shall be exempt from taxation
11 only so long as it or a portion thereof, as the case may be, is devoted
12 to such exempt purposes and so long as any moneys paid for such use do
13 not exceed the amount of the carrying, maintenance and depreciation
14 charges of the property or portion thereof, as the case may be[.]; and
15 provided further that if the portion of such real property not used
16 exclusively to carry out thereupon one or more of such purposes is
17 leased or otherwise used for commercial for-profit purposes and will
18 have a significant effect on existing patterns of population concen-
19 tration, distribution or growth, or on the existing community or neigh-
20 borhood character, as determined by the local governing body after a
21 public hearing, then the entire parcel of such real property shall be
22 subject to taxation and no portion shall be exempt.
23 § 2. This act shall take effect immediately.
