Senate Bill S5584A

                                 BILL NUMBER:  S5584A

 TITLE OF BILL :  An act to amend the real property tax law, in
relation to municipal monitoring of compliance with requirements of
local laws granting certain tax exemptions

 PURPOSE OR GENERAL IDEA OF BILL :

This bill mandates that municipalities monitor compliance with Section
421-tax exemptions provided to property owners.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 of the bill amends section 421-a of the real property tax
law by adding a new subdivision 18 that states that a municipality
that has granted tax exemption status to a project under this section
shall monitor compliance with the requirements of this section if any
local law establishes such exemption. The bill also requires
municipalities to retain records documenting such compliance.

Section 2 of the bill sets forth an immediate effective date.

 JUSTIFICATION :

Real property tax exemptions under Section 421-a are an important
incentive to encourage property owners to engage in responsible
              

development such as including affordable housing units within their
proposed multi- family residential development plans.

Such incentives are a powerful tool municipalities can use to address
housing issues within their communities; however, they are also an
incredible windfall to property owners who often stand to save
millions of dollars in property taxes for extended periods of time.
This is especially the case when certain unscrupulous developers fail
to comply with the terms of the agreements under which they were
granted such tax exemptions.

In a recent case in the city of New York, a property owner received
421-a tax exemption status based on proposed plans to develop a
condominium or rental project but instead was operating an extended
stay hotel which violates the terms of the 421-a program. New York
State Attorney General Eric Schneiderman uncovered this fraud and
reached a settlement with the property owner who will now be forced to
pay back more than $4 million in property taxes and convert the
building into a rent-stabilized apartment building.

It is likely that there are many more property owners who are failing
to comply with the 421-program requirements, yet municipalities have
done little to follow through and ensure that these property owners
are indeed complying and not simply stealing public money.

Section 421-a does not currently have any mandated provision regarding
program compliance and this bill will create that mandate which
provide much needed assurance that the public will not be defrauded.

 PRIOR LEGISLATIVE HISTORY :

New bill.

 FISCAL IMPLICATIONS :

None to the state.

 EFFECTIVE DATE :
This act shall take effect immediately.