Senate Bill S3834

                                BILL NUMBER:S3834

TITLE OF BILL:

An act to amend the real property tax law and the administrative code
of the city of New York, in relation to applications for tax
abatements for industrial construction work on peaking units in a city
of one million or more persons

SUMMARY OF PROVISIONS:

Under Title 2-F of Article 4 of the Real Property Tax Law (RPTL),
industrial and commercial properties in the City of New York that meet
certain eligibility criteria are entitled to an abatement of real
property taxes. Title 2-F is commonly known as the Industrial and
Commercial Abatement Program (ICAP). The application deadline for
abatement benefits pursuant to Title 2-F is July 1, 2018. However, as
explained in more detail below, it is necessary now to extend the
application deadline for "peaking units," a type of electric
generating facility first made eligible for benefits under Title 2-F
by chapter 28 of the laws of 2011, in order to avoid dramatic price
increases for electricity for customers in New York City.

Section 1 of the bill amends Title 2-F of Article 4 of the RPTL to
extend the application deadline for peaking units from March 1, 2015
to July 1, 2017. Other property would continue to be subject to the
              

March 1, 2015 application deadline. Section 2 of the bill amends Title
2-F to extend the date by which a building permit for construction
work on a peaking unit must be issued from April 1, 2015 to August 1,
2017 and extends the date by which construction work on a peaking unit
must commence (in the case where no building permit is required) from
April 1, 2015 to August 1, 2018. Sections 3 and 4 make corresponding
changes to parallel provisions of the New York City Administrative
Code. Section 5 provides that the act takes effect immediately.

REASONS FOR SUPPORT:

New York City previously granted property tax benefits as-of-right to
electric generating facilities pursuant to the Industrial and
Commercial Incentive Program (ICIP), which is contained in Title 2-D
of Article 4 of the Real Property Tax Law. In 2008, ICIP was allowed
to sunset, and chapter 119 of the laws of 2008 was enacted to create
the Industrial and Commercial Abatement Program (ICAP). Chapter 119
excluded peaking units from eligibility.

In early 2011, the Federal Energy Regulatory Commission (FERC) issued
a ruling that would have increased the wholesale electricity price
customers would have to pay in New York on the grounds that the price
had to incorporate hypothetical property taxes that a power generator
entering the market could face under a discretionary property tax
abatement program (a discretionary program was available through the
New York City Industrial Development Agency). Such price increases
would have simultaneously resulted in a windfall for certain owners of
existing generating facilities that were still receiving an ICIP tax
benefit.  At the time, the impact of those higher prices on the
residents and businesses in New York City could have been $500 million
to as much as $1 billion over the three year period 2011-2014.


Chapter 2B of the laws of 2011 amended ICAP to provide an as-of-right
property tax abatement for developers of peaking units. Following, and
based on, the enactment of Chapter 28, the FERC modified its eirlierl
thus preventing a material increase in electric prices for that
three-year period.

This bill would extend the application deadline for peaking units for
as-of-right ICAP benefits to July 1, 2017. It is needed now to provide
certainty because the New York Independent System Operator, which is
New York State's wholesale electricity market operator, is presently
going through the same process for the years 2014-2017 that led to the
FERC rulings described above. Without an extension of ICAP for peaking
units, consumers could again face hundreds of millions of dollars in
artificially high electricity costs.

That is, while owners of electric generating facilities are generally
eligible to apply for tax benefits through a discretionary process,
this bill would remove uncertainty with respect to property tax
assessments on peaking units by extending the application deadline for
the existing as-of-right property tax abatement available under ICAP
for such units, leaving the City of New York with no discretion to
deny the abatement if the peaking unit satisfies the objective
eligibility criteria established in the law. Extending the March 1,
2015 application deadline will ensure that electricity prices borne by
consumers will not be increased by any ambiguity related to the
discretionary process, and thereby ensure that New York City consumers
are not subject to unwarranted price increases, as almost occurred in
2011.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.

Legislative History:

2014: Referred to Cities

EFFECTIVE DATE:

Immediately.