THE ASSEMBLY
STATE OF NEW YORK
ALBANY

The Honorable Sheldon Silver
Speaker of the Assembly
L.O.B., Room 932
Albany, New York 12248

Dear Speaker Silver:

I am pleased to submit the 2001 Annual Report of the Assembly Standing Committee on Real Property Taxation. This was a busy year for the Committee, with a wide range of challenging issues and legislation considered.

This year, as was the case last year, one of the focuses of the Committee continued to be School Tax Relief (STAR) review and improvements. The Committee reported legislation to the Assembly floor for the 4th annual Assembly STAR day on March 21st, 2001. In all, 11 STAR improvement bills passed the Assembly and two became chapters. The Committee resolved to continue the work of the Assembly STAR Task Force you appointed in 1998, and looks forward to increasing the ease of application and availability of this popular exemption program. Two other important and complex issues the Committee tackled this year were assessment administration reform and local exemption of nuclear power plants. While one particular bill addressing the issue of nuclear power plants was signed into law, the Committee will continue discussion on these issues during the coming 2002 session. Of course, the committee will also review the two World Trade Center relief bills you introduced immediately after the terrorist attacks, and we look forward to working with you to alleviate the suffering of the victims and that area of NY City in general.

In addition, the Committee met thirteen times having acted on over 250 bills. It reviewed and reported proposed legislation in a variety of areas including general administration, exemption administration, tax collection and enforcement, and many bills of a local nature. The Committee also worked with ideas put forth by the Office of Real Property Services, and was closely involved in Budget negotiations particularly with regard to STAR proposals.

I have greatly enjoyed working with the Real Property Tax committee members this year. Their knowledge and enthusiasm made my working with this Committee pleasant and productive, and they were also critical to the Committee's success.

Sincerely,

Peter M. Rivera,
Chairman
Committee on Real Property Taxation

MAJORITY

James F. Brennan
Jacob E. Gunther, III
Adriano Espaillat
Alexander J. Gromack
Joan K. Christensen
Steve Levy

MINORITY

Sandra Lee Wirth,
Ranking Minority Member
Nancy Calhoun

COMMITTEE STAFF

Bernard H. Bryan, Legislative Coordinator
Anthony S. Cantore, Legislative Counsel
Andrea K. Nasrallah, Legislative Associate
Tsvi J. Gold, Committee Clerk
Mona Carter, Program and Counsel Secretary

1. SCHOOL TAX RELIEF (STAR) PROGRAM
   1. Third Party Notices
   2. Manufactured Homes
   3. STAR Bills that passed Assembly Only

2. EXEMPTION ADMINISTRATION
   1. First-time Homebuyers
   2. Multiple Dwellings
   3. Fire and Ambulance Volunteers
   4. Livestock Breeding and Boarding
   5. Not for Profit Exemptions

3. ASSESSMENT ADMINISTRATION
   1. Annual Reassessment Aid
   2. Nuclear Power Plants
   3. Current Use Standard
   4. Special Franchises
   5. Tax Collection

4. SPECIAL ASSESSING UNITS
   1. Tonawanda PILOTS
   2. Nassau County Special Districts
   3. New York City ABP Limitations
   4. New York City Co-op/Condo Abatement Program

5. WORLD TRADE CENTER LEGISLATION
   1. Extension of Time for Payment of Property Taxes
   2. Property Tax Exemption for Victims

6. OUTLOOK FOR 2002

7. APPENDICES

   Appendix A: 2001 Summary
   Appendix B: RPT Bills That Became Law In 2001
   Appendix C: RPT Bills That Passed The Assembly Only

1. SCHOOL TAX RELIEF (STAR) PROGRAM

   Three new laws were enacted this year relating to the School Tax Relief (STAR) exemption authorized by section 425 of the Real Property Tax Law. These laws address specific issues that have arisen as a result of local administration of this important state tax benefit for homeowners. As has been the case in the past, the Governor proposed a budget that contains provisions which revise the STAR program prospectively effective with applications for the 2001-02 school year, and is a direct result of recommendations made by the Assembly to ease administration of the program and ensure qualifying homeowners receive the exemption benefit.

   1. Third Party Notices

      Chapters 233 and 555 authorize a taxpayer who is eligible for the enhanced STAR exemption to designate an adult third party to receive from the school district an annual notice regarding the application requirement. The taxpayer's request must be made on a form prescribed by the State Board, and must be submitted to the school district no later than 60 days before the first taxable status date to which it is to apply. When such a request has been filed, the designated third party must be sent a notice at least 30 days before each ensuing taxable status date, reading substantially as follows; "On behalf of (identify senior citizen or citizens), you are advised that his, her or their renewal application for the enhanced STAR exemption must be filed with the assessor no later than (enter) date. You are encouraged to remind him, her, or them of that fact, and to offer assistance if needed, although you are under no legal obligation to do so. Your cooperation and assistance are greatly appreciated." [A.6760-A, Schimminger; A.9427, Rules (Schimminger)].

   2. Manufactured Homes

      Chapter 405 specifies the timing and procedure for crediting owners of manufactured homes (sometimes referred to as mobile homes) located in manufactured home parks with rental credits on account of real property tax exemptions granted to the manufactured homes. The reduction in monthly rent would normally be paid in 12 parts, beginning with the first monthly rental payment due 60 days after the penalty-free period for the payment of taxes and continuing for 11 months [Real Property Law, §233(w)]. In lieu of providing a monthly rent reduction, the park owner (operator or agent) has two options: (1) to credit the total reduction against the first month's rent, with any balance credited against the following month(s)' rent(s) until exhausted, or (2) to pay the total reduction to the manufactured home owner within 60 days of the interest-free collection period. (A.2989-A, Tokasz).

   3. STAR Bills that Passed Assembly Only

      In addition to the Assembly bill numbers mentioned above, there are a series of STAR initiatives that passed the Assembly this year.

      Special Situations - This bill provides for the application of the STAR exemption in cases of parcels with two or more separated residences, residences split by municipal boundaries, and mixed-use property in certain assessing units. (A.39, Cahill).

      Farm Dwellings - This bill makes provisions with respect to eligibility of farm dwellings held by a corporation or partnership provided the dwelling serves as the primary residence of the partner or shareholder. (A.865, Magee).

      Proof of Age - This bill sets forth the documentation acceptable to establish proof of age for application to the enhanced STAR exemption. (A.1506, Colman).

      Hardship - This bill provides extension of applications for homeowners who fail to meet a STAR deadline because of a death or illness in the family, or other extenuating circumstances. (A.1768-A, Christensen).

      Reapplication for Enhanced STAR - This bill sets forth criteria for senior citizens to continue to receive the enhanced STAR exemption through a "statement of continued eligibility" and provides for giving notice thereof. It also authorizes the Department of Tax and Finance to provide verification of income. (A.2425, Morelle).

      Receipt for Applications - This bill requires local assessors to provide a receipt upon request to applicants who submit a STAR application. The assessor is also required to send a receipt when the request is made other than in person and the applicant has provided a self-addressed stamped envelop. (A.2503, Morelle).

      Notification of STAR- This bill requires school districts to give property owners annual notice of the availability of the STAR exemption and modifies the text of the notice. (A.4351, Higgins).

      Retrospective Application - This bill provides for a retrospective application for STAR where a person purchases property after the applicable taxable status date. (A.4352, Higgins).

      Additional Entities - This bill extends the STAR program to additional entities; provides that in cases where a cooperative corporation is incorporated pursuant to the private housing finance law, and where the real property of such corporation is totally exempt from local and municipal real property taxes for any fiscal year, a reduction in the portion of shelter rent payments or payments in lieu of taxes to be made to a municipality shall be provided. (A.7142, Silver).

      Cost of Living Adjustment - This bill provides for a cost of living increase in the income standard for eligibility for the enhanced STAR exemption commencing with the 2002-2003 school year. (A.7539-A, Eddington).

2. EXEMPTION ADMINISTRATION
   1. First-time Homebuyers

      Chapter 529 authorizes municipalities to offer, at local option, a partial exemption for newly constructed homes purchased by "first-time homebuyers" (RPTL, §457). For this purpose, a "first-time homebuyers" is any person who has not owned -- and whose spouse has not owned -- a home during the previous three years, and who does not own a vacation or investment home. The exemption does not generally apply to purchases of existing homes. However, if a first-time homebuyer purchases and renovates or remodels an existing home, any increase in assessed value due to the renovation or remodeling would be eligible for the exemption, as long as the cost exceeded $3,000 and the contract for the work was executed within 90 days from the date of purchase. (A.5992, Sweeney).

   2. Multiple Dwellings

      Chapter 427 extends until December 31, 2003 the date by which construction for certain new multiple dwellings in the City of New York must begin in order to qualify for exemption (RPTL §421-a). Under prior law, those dwellings had to be completed by December 31, 2003 in order to qualify for the exemption. (A.9040, Rivera, P).

   3. Fire and Ambulance Volunteers in Certain Counties

      Chapter 319 makes a technical amendment to a recent enactment which allows a county with a population of between 133,000 and 141,000 inhabitants, and the towns and villages therein, to provide a partial exemption for members of volunteer fire companies, fire departments and incorporated volunteer ambulance services (RPTL, §466-b, as added by l.2000, c.609). The amendment extends this option to the cities within such a county as well. The only county which currently falls within the specific population bracket is Chautauqua County, which contains two cities. (A.7545, Parment).

   4. Livestock Breeding and Boarding

      Chapter 411 expands the Agriculture Buildings exemption (RPTL, §483) to encompass structures and buildings used for the "breeding and boarding of livestock, including commercial horse boarding operations." previously, property was eligible for the exemption if it was used to breed horses, but not if it was used primarily to board horses, or to breed and/or board other livestock. since the statute requires an agricultural nexus between the buildings and the land, a non-farmer who boards animals would not qualify for the exemption. (A.4621, Magee).

   5. Not for Profit Exemptions

      Assessors in several jurisdictions were authorized to accept exemption applications after the applicable taxable status date for specific properties (30 in all) owned by named nonprofit organizations and certain other entities. In most cases, the entity acquired the property after taxable status date, though in some cases the entity had title but simply failed to file the exemption application by the taxable status date. The chapters providing relief to nonprofit organizations are as follows:

3. ASSESSMENT ADMINISTRATION

   1. Annual Reassessment Aid

      Chapter 530 promotes more current and equitable property tax assessments, by extending the duration of the levels of State aid payable under the annual reassessment aid and maintenance aid programs, and by providing counties with State aid for providing certain types of assistance to assessing units.

      The annual reassessment program [RPTL §1573(2)] originally authorized state aid of up to $5 per parcel on each assessment roll through 2004, and up to $2 per parcel on each assessment roll thereafter, for assessing units which satisfied the applicable criteria. To encourage the fullest possible participation in this program, the new law (1) extends the $5 payment to apply to each qualifying assessment roll completed during an assessing unit's first five years in the program and (2) increases the maximum annual payment thereafter to $3 per parcel. The authorization for these payments is scheduled to sunset after the completion of 2009 assessment rolls.

      The legislation also extends until 2004 the authorization for payments of up to $2 per parcel for assessing units which continue to satisfy the requirements of the pre-existing maintenance aid program, provided that they applied for aid in either 1999 or 2000. Under prior law, the authorization for this payment was to expire after 2000. Finally, the legislation authorizes a one-time payment of aid of up to $1 per parcel to counties which enter into agreements with assessing units pursuant to §1537 of the RPTL to provide exemption services, appraisal services or assessment services to the assessing unit. [A.8408-A, Rules (Christensen)].

   2. Nuclear Power Plants

      Chapter 87 authorizes a temporary local-option real property tax exemption for nuclear power plants (RPTL, §485). The option may only be exercised by local law or resolution adopted after conducting a public hearing. Each level of local government - i.e., the county, town and school district - is empowered to decide whether to offer the exemption for its own purposes. Thus, for example, if the county opts to offer the exemption but the town and school district do not, the plant would be exempt from county taxes but subject to town and school district taxes.

      In a locality that chooses to offer the exemption, a nuclear power plant will remain exempt until 2016, unless the locality provides for an earlier termination. During the term of the exemption, the owner or owners of the facility must make payments in lieu of taxes (PILOTs). If the parties cannot negotiate a mutually satisfactory PILOT arrangement, a compulsory PILOT will be imposed pursuant to a statutory formula that essentially equates to the taxes that would have been paid if the plant had been taxable. Assessment disputes may be reviewed in the usual manner though the plant is wholly exempt from taxation; any court-ordered reduction would result in an appropriate reduction in the PILOT obligation.

      A nuclear power plant which is exempt for all purposes will not be considered when calculating the `regular' State equalization rate. If the plant is exempt for school district and/or county purposes - but not all purposes - and the `regular' rate would result in a tax shift of at least two percent, the State Board must establish a "special apportionment rate" to be used to apportion school district and/or county taxes, as the case may be. The State Board may establish "full value adjustments" at the request of an affected county or school district to phase in over a five year period any apportionment impact resulting from the special apportionment rate. (A.6639, Galef).

   3. Current Use Standard

      Chapter 515 requires real property that is owned or leased for "non-residential water dependent activities" to be assessed based upon its current use, rather than its highest and best use (RPTL §582-a). The structures covered by this new law include those that are (1) within a "marine district as provided in the coastal zone management local waterfront revitalization program" or a "state approved comprehensive harbor management plan" pursuant to the Executive Law; (2) located on lands leased from the State or the Thruway Authority for non-residential purposes considered to support water dependent activities; (3) used for the purpose of berthing and mooring of recreational vessels, and the storage thereof, or a boatyard, marine service facility, charter or sports fishing station, bait and fuel operations, marine towing; or (4) used for any other non-residential purpose that requires the use of waterfront lands in order to function or provide marine services. Since current use had already been the standard of assessment for purposes of real property taxation. This legislation essentially codifies pre-existing law, as interpreted by the courts, for this type of property. (A.7245, DiNapoli).

   4. Special Franchises

      Chapter 322 allows the State Board to adjust current special franchise assessments when the special franchise assessments for the preceding year were based upon incorrect physical inventories [RPTL §608(2)and (3)]. A separate assessment will be created when there was omitted property. A deduction will be taken from the current assessment when physical property was incorrectly included when valuing the special franchise for the preceding assessment roll. The legislation also allows a special franchise owner or assessing unit to submit material at a hearing when the other party is challenging a special franchise assessment [RPTL §610(3)]. [A.8410, Rules (Gunther)].

   5. Tax Collection

      Chapter 367 extends by three years the effectiveness of local laws which various eligible villages adopted to continue enforcing delinquent taxes pursuant to former Title 3 of Article 14 of the RPTL, rather than Article 11. Prior to this enactment, such local laws only applied to taxes becoming liens from 1995 through 2000 (see, L.1994, c.532, §9; L.1998, c.466).

4. SPECIAL ASSESSING UNITS

   1. Tonawanda PILOTs

      Chapter 201 allows the Town of Tonawanda to apply some or all of certain payments in lieu of taxes (PILOTs) entirely to the credit of the non-homestead class, rather than to all property, when allocating taxes between the homestead and non-homestead classes [RPTL §1903 (4-a)]. The only PILOTs subject to this option are those payable by lessees of Industrial Development Agency property. This legislation remains in effect for three years from the date it became effective (August 20, 2001) and then is deemed repealed. (A.4693-A, Schimminger).

   2. Nassau County Special Districts

      Chapter 191 preserves the class tax shares that will exist when taxes are levied in most special districts in Nassau County on the 2001 assessment roll [RPTL, §§1803, 1803-a(8), 1803-b(1)(a)]. In the future, the class tax shares would be adjusted annually to keep pace with `physical changes' (e.g., new construction or demolition). The County may also make an annual five percent discretionary adjustment, as long as the adjustment is not inconsistent with any changes in the value of the class as indicated by the assessed value of the class and the most relevant class equalization rate. [A.9322-A, Rules (DiNapoli)].

   3. New York City ABP Limitations

      Chapter 344 provides that for purposes of the New York City fiscal year ending in 2002, the current base proportion of any class may not exceed the adjusted base proportion of that class in the prior fiscal year by more than two percent [RPTL, §1803-a(k)]. Any excess over this limit is to be distributed to the other classes, as long as the distribution does not cause and other class to exceed its own two percent limit. Without this legislation, an increase of up to five percent would have been allowable. [A.9136, Rules (Carrozza)].

   4. NYC Co-op/Condo Abatement Program

      Chapter 294 extends for three years (through fiscal year ending in 2003) the temporary partial tax abatement program for residential cooperatives and condominiums in class 2 in New York City (RPTL, §467-a). Class 2 is basically comprised of residential structures of more than three units other than hotels or motels [RPTL, §1802(1)(b)]. The abatement is a tax reduction of 25% in structures with an average unit assessed value of $15,000 or less and 17.5% in structures with a greater average unit assessed value. [A.9182, Rules (Grannis)].

5. WORLD TRADE CENTER LEGISLATION

   In Response to the tragedy suffered by New York City on September 11, 2001, the Assembly immediately introduced several bills in an attempt to alleviate the burden of the victims of the terrorist attack and their families. Two such bills are currently being considered in the Real Property Tax Committee and will continue to be reviewed during the 2002 legislative session.

   1. Extension of Time for Payment of Property Taxes

      This bill would extend until January 2, 2002 the deadline for the payment of any real property tax, including installment payments, due during the period from September 11, 2001 through January 2, 2002 if the property is owned by victims of the hijacked airplanes (including those on the plane as well as those on the ground), by relief workers assisting in the disaster and by those whose property or employment was in the area of the terrorist attack on the World Trade Center. The State would provide aid to each municipal corporation to compensate it for the loss of income and interest resulting from the delayed real property tax payments. [A.9469, Rules (Silver)].

   2. Property Tax Exemption for WTC Victims

      This bill allows localities to grant a fifteen percent exemption from real property taxation up to $12,000 of the assessed value of the residence. In addition, local municipalities will have the option to either decrease or increase the maximum allowable exemption to specified levels. This exemption would apply to county, city, town and village taxation but would not apply to school property taxes. [A.9470">A.9470, Rules (Silver)].

6. OUTLOOK FOR 2002

   The Real Property Tax Committee will deal with many diverse and demanding issues in the 2002 Legislative Session. Initially, the Committee will be actively involved in the budget process as it pertains to Office of Real Property Services and real property tax administration.

   Other areas that will involve the Committee include:

   1. STAR Revisions: As has been the case in recent years, there are number of issues related to the administration of the STAR program which remain to be addressed. This includes the facilitation of the reapplication process for seniors; improved verification systems for enhanced applications; determination of qualifying properties; and clarification of refund policies, among others.

   2. NYC Multiple Dwellings: Another issue to be addressed is that of extending abatements and enacting assessment relief to Class two condos and cooperatives in New York City.

   3. Assessment Administration: It has come to the attention of the committee in recent years that there are serious problems with the assessment administration of certain counties in the State. One particular area is Suffolk county where one of the Committee members held a town meeting to hear the concerns of his constituents on this issue. The committee will look into these issues further and attempt to help these areas reach more equitable assessment practices.

   4. Not-for-Profit Exemption Reforms: This year the committee had to deal with another substantial number of individual retroactive not-for-profit exemptions that have become very controversial among the members of the committee. The Committee will be assessing alternative methods to retroactively confer this tax benefit on not-for-profit property owners without the need for individual legislation.

   5. Railroads: The 2000 legislative session brought to light the need to establish appropriate railroad assessment ceilings and methodology. This is an issue that impacts State transportation and property tax policy as well as affecting local revenues for 700 local governments. We worked on this issue during the 2001 session and remain hopeful that there will be resolution to this problem achieved during the 2002 session.

   6. Volunteer Firefighters and Ambulance Workers: There have been ongoing attempts to expand tax exemptions for volunteer firefighters and enacting similar exemptions for volunteer ambulance service workers. The committee has been evaluating all individual proposals and will continue to work on getting just one bill to address every area of concern.

APPENDICES

APPENDIX A