§ 36-10 Calculation of Abatement.
RCNY § 36-10
a. Abatement amount. The abatement amount is equal to the product of the abatement base times the percentage for the applicable year indicated in the applicable schedule set forth in 19 RCNY § 36-12. b. Abatement base. The abatement base is the amount that the post completion tax liability exceeds 115% of the initial tax liability for each type of abatement except for the additional industrial abatement as defined in 19 RCNY § 36-11. c. The calculation of initial and post completion tax liability is based on the lower of the actual or transitional assessed value of the building. d. The initial tax liability is the liability for the building or structure on the tax roll with a taxable status date preceding the first building permit or commencement of construction if no permit is required. e. Calculation of initial tax liability. The product of the taxable assessed value ("AV") for the building or structure (without regard to any tax exemption that may be applicable to the property) for the assessment roll with a taxable status date preceding the first building permit or commencement of construction if no permit is required is multiplied by the initial tax rate. The initial tax rate is the final tax rate applicable to the assessment roll with a taxable status date immediately preceding the issuance of the first building permit. If no building permit was required, the initial tax rate shall be determined based on the assessment roll with a status date immediately preceding the commencement of construction. f. If the initial tax or the post-completion tax attributable to a mixed-use property must be apportioned to determine the tax attributable to a particular use for any purpose under these rules, the tax will be apportioned using the same method used by the department to value property for tax and assessment. This includes, but is not limited to, determining the abatement base or the minimum required expenditure, or if the tax must be apportioned among newly apportioned tax lots, Methods that may be considered, individually or in combination include: (1) the land area of each portion; (2) the square footage of the building or structure used or dedicated to each purpose; (3) the market value of the building situated on each portion; (4) the location of each portion on the lot; (5) the topography of the lot; (6) zoning and other land use restrictions applicable to the lot or portion thereof; (7) analyses of income factors relating to each portion; (8) analyses of cost factors; and (9) other relevant factors. If any tax lot included in a project that is the subject of a pending or approved final application for ICAP benefits is subdivided, the applicant must file an amendment to the final application designating the tax lots that constitute the property that is the subject of the application. The Department shall allocate the initial and, if applicable, the post construction assessed values based on the allocation of the historical assessments made pursuant to Subdivision 5 of Section 1805 of the real property tax law. g. At no time during the abatement benefit period may the abatement reduce the amount of taxes imposed on the land portion of the assessment, nor may it reduce the initial tax liability imposed on the building or structure, except for the additional industrial abatement as described in 19 RCNY § 36-11. Example: Commercial construction work outside of a special commercial abatement area. Preliminary application filed 7/1/2008; first building permit issued 8/1/2008. Project consists of commercial construction work to renovate and modernize the building. In this case, the initial tax liability is based on the FY2008/09 tax liability (assessment roll with a taxable status date preceding the first building permit) Section 1805 of the real property tax law requires that certain changes to assessed valuation ("AV") be phased in over a number of years rather than one year. This is transitional AV. Actual AVTransitional AVTotal AV$1,100,000$900,000Land AV$400,000$300,000Building AV$700,000*$600,000*Initial Tax Liability$60,000**$600,000 x 0.10 * The initial tax liability will be based on the lower of the building actual AV or building transitional AV. ** FY 2008/09 Tax Rate Assume an initial tax rate of 10% for 2008/09 for illustrative purposes h. The post-completion tax liability is the tax liability for the building or structure on the tax roll with a taxable status date immediately following the earlier of completion of construction, or four years from the date of issuance of the first building permit or commencement of construction, if no building permit was required, multiplied by the initial tax rate. Example: In this case, the construction was completed by November 2011; therefore, the post completion tax is based on the 2012/13 AV roll (taxable status date January 5, 2012). The AV for the building on that assessment roll was: Actual AVTransitional AVBuilding AV$1,100,000$1,000,000FY 2008/09 Tax Rate of 10%.10.10Post Completion Tax$110,000*$100,000* * Post completion tax is based on the lower of the actual AV or transitional AV. The abatement base is equal to the post-completion tax liability less 115% of the initial tax liability. Post Completion Tax Liability$100,000Initial Tax Liability$60,000115% of Initial Tax Liability$69,000Abatement Base$31,000 i. Abatement benefits will not in any year exceed the property taxes imposed on such property. j. If a tax lot has multiple structures with both eligible and non-eligible uses, the initial tax will be apportioned and only the eligible portion will receive the abatement. k.
(1)The availability of ICAP benefits for retail use is limited in the following cases: (i) No more than 10 percent of gross square footage in industrial and commercial buildings in special commercial abatement areas used for retail purposes is eligible to receive a 25 year abatement benefit. If more than 10 percent of the property is used for retail purposes, the portion exceeding the 10 percent retail use will be eligible for a 15 year abatement benefit.
(ii)For renovation areas in Manhattan, any retail use in excess of 5 percent of the building(s) gross square footage will be ineligible for ICAP benefits, except in the Lower Manhattan renovation area, as set forth in 19 RCNY § 36-02(c)(1), where there will be no limit on portion of gross square footage dedicated to retail use.
(2)The determination of the percent of gross square footage used for retail purposes shall be based on the gross square footage of the entire building in all cases, including those where the ICAP application relates to one or more condominium units in the building.
(3)In a building in which at least 10% of the gross square footage is dedicated exclusively to industrial or commercial purposes other than retail purposes, the gross square footage of retail space shall not include space used for common building mechanical equipment, maintenance or circulation. l. Inflation Protection.
(4)A property receiving abatement benefits for both industrial and commercial construction is eligible for the inflation protection provided under this section based upon the predominant use of the property as determined by the department.
(5)Time limit for completion of construction. Construction of buildings or structures must be completed no later than five years from the date of issuance of the first building permit, or if no permit was required, the commencement of construction. Failure to meet this requirement will result in the termination of any inflation protection provided under this subdivision for any tax year that begins following the date by which completion of construction is required. (Added City Record 2/10/2017, eff. 3/12/2017)
