STATE OF NEW YORK ________________________________________________________________________ 221 2017-2018 Regular Sessions IN ASSEMBLY (Prefiled) January 4, 2017 ___________ Introduced by M. of A. GANTT -- read once and referred to the Committee on Housing AN ACT to amend the general municipal law, the public service law, the tax law and the real property tax law, in relation to authorizing the creation of housing opportunity zones in certain cities, towns and villages within the state The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The general municipal law is amended by adding a new arti- 2 cle 19-AA to read as follows: 3 ARTICLE 19-AA 4 NEW YORK STATE HOUSING OPPORTUNITY ZONES 5 Section 981. Short title. 6 982. Legislative findings and declaration. 7 983. Definitions. 8 984. Criteria for housing opportunity zones. 9 985. Powers of the commissioner. 10 986. Property tax relief. 11 987. Business tax credit. 12 988. Reduced electricity and gas rates. 13 989. Exemption from sales tax. 14 989-a. Waiver of permit fees. 15 989-b. Special provisions. 16 989-c. Minimization of displacement. 17 § 981. Short title. This article shall be known and may be cited as 18 the "New York state housing opportunity zones act". 19 § 982. Legislative findings and declaration. The high cost of housing 20 is now a major problem for thousands of New Yorkers. Costs of acquiring 21 or occupying acceptable housing have increased significantly in recent 22 years. For too many households, the high cost of shelter is not merely EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD01430-01-7

A. 221 2 1 serious, it is too often an insurmountable barrier to the achievement of 2 a safe and decent place in which to live. 3 It is hereby found and declared that there exists within the state 4 certain areas characterized by a severe shortage of safe, decent and 5 affordable housing, dilapidated and abandoned residential structures and 6 shrinking tax bases. Moreover, it is found that the lack of housing in 7 these areas threatens employment growth prospects and that without 8 adequate provision of housing and the satisfaction of housing needs, 9 these regions of the state may not retain skilled labor and sustain the 10 growth in employment and output of which they are capable. 11 § 983. Definitions. 1. "Commissioner" shall mean the commissioner of 12 housing and community renewal. 13 2. "Substantial rehabilitation" shall mean the improvement of a resi- 14 dential property with the assistance of any form of public housing 15 monies to a decent, safe and sanitary condition in accordance with stan- 16 dards as shall be promulgated by the commissioner. Substantial rehabili- 17 tation may vary in degree from gutting and extensive reconstruction to 18 the cure of substantial accumulation of deferred maintenance. Cosmetic 19 improvements alone shall not qualify as substantial rehabilitation. 20 § 984. Criteria for housing opportunity zones. To be eligible for 21 designation by the commissioner as a housing opportunity zone, an area 22 must be characterized by a significant amount of deteriorating, 23 substandard, vacant or abandoned residential buildings which are not 24 being adequately repaired, renovated, upgraded, modernized or rehabili- 25 tated under existing programs so as to provide an adequate supply of 26 safe and decent housing at costs which the residents of the area can 27 reasonably afford, a high vacancy rate, a large number of homeless fami- 28 lies or individuals and general economic distress. The lack of any one 29 factor in a particular region shall not be determinative in the desig- 30 nation process. The designation of one housing opportunity zone within a 31 particular region shall not preclude other areas within the region from 32 being so designated as well, as long as the appropriate criteria exist 33 within the area to support such a designation. 34 § 985. Powers of the commissioner. The commissioner shall: 35 1. After consultation with the director of the budget, the chief exec- 36 utive officer of the state of New York mortgage agency, the executive 37 director of the housing finance agency, the secretary of state, the 38 commissioner of taxation and finance and the executive director of the 39 state office of rural affairs, promulgate regulations governing (a) 40 criteria of eligibility for housing opportunity zone designation, (b) 41 the application process, (c) the eligibility of business enterprises for 42 benefits referred to in section nine hundred eighty-seven of this arti- 43 cle and (d) standards defining what comprises substantial rehabilitation 44 as used in this article; 45 2. Receive and review applications for designation of areas as housing 46 opportunity zones; 47 3. Solicit and review the opinions of local officials as to whether 48 particular areas should be designated as housing opportunity zones; and 49 4. Make final determinations of areas as housing opportunity zones, 50 provided, however, that all such zones shall meet the requirements of 51 this article. 52 § 986. Property tax relief. All new residential construction involving 53 the assistance of any form of public housing monies and substantial 54 rehabilitation of residential units with the assistance of any form of 55 public housing monies completed subsequent to the designation of an area 56 as a housing opportunity zone shall be entitled to an exemption from

A. 221 3 1 property taxes as provided for in the real property tax law; provided 2 that such new construction or substantial rehabilitation is done to a 3 unit located within such zone. 4 § 987. Business tax credit. Business enterprises which invest in new 5 construction involving the assistance of any form of public housing 6 monies or substantial rehabilitation of residential units with the 7 assistance of any form of public housing monies located within a housing 8 opportunity zone shall be entitled to a tax credit pursuant to subpara- 9 graph (i) of paragraph (b) of subdivision one of section two hundred 10 ten-b and subparagraph (A) of paragraph two of subsection (a) of section 11 six hundred six of the tax law, provided, that said construction or 12 rehabilitation must produce a ratio of at least one unit of housing at 13 an affordable rate for every two units that are to be sold at the 14 prevailing market rate in the housing opportunity zone. Affordable rate 15 shall be defined as the rate described in the housing program used and 16 which has served as the source of the public housing monies applied to 17 the specific projects built or rehabilitated in the housing opportunity 18 zone. 19 § 988. Reduced electricity and gas rates. Each utility providing elec- 20 tric service, gas service or both, other than a utility owned or oper- 21 ated by a municipality, shall be required to provide a reduced rate as 22 provided for in section sixty-five-c of the public service law to resi- 23 dential customers residing in housing opportunity zone residential units 24 which were newly constructed with the assistance of any form of public 25 housing monies or which were substantially rehabilitated with the 26 assistance of any form of public housing monies subsequent to the desig- 27 nation of the area as a housing opportunity zone. 28 § 989. Exemption from sales tax. All materials used in the 29 construction involving the assistance of any form of public housing 30 monies or substantial rehabilitation with the assistance of any form of 31 public housing monies of housing opportunity zone residential units 32 shall be exempt from all state and local sales taxes. 33 § 989-a. Waiver of permit fees. All permit fees required by the state 34 or locality for any phase of the construction or substantial rehabili- 35 tation of housing opportunity zone residential units which have received 36 assistance of any form of public housing monies shall be waived in total 37 by the state or the locality. 38 § 989-b. Special provisions. Each residential unit constructed with 39 the assistance of any form of public housing monies or substantially 40 rehabilitated with the assistance of any form of public housing monies 41 within a housing opportunity zone shall be readily adaptable to a unit 42 which is completely accessible by persons with handicapping conditions. 43 § 989-c. Minimization of displacement. Each locality within a desig- 44 nated housing opportunity zone shall use its best efforts to ensure that 45 new construction and substantial rehabilitation are carried out in such 46 a manner as to minimize the likelihood of any involuntary physical or 47 economic displacement of tenants and owners who reside in dwelling 48 accommodations which are the subject of such new construction or 49 substantial rehabilitation. 50 § 2. The public service law is amended by adding a new section 65-c to 51 read as follows: 52 § 65-c. Reduced electric and gas rates for housing opportunity zone 53 residential units. 1. The term "reduced rate" shall mean a twenty-five 54 percent reduction prior to the imposition of gross receipts taxes pursu- 55 ant to section one hundred eighty-six-a of the tax law and sales taxes

A. 221 4 1 pursuant to article twenty-eight of the tax law, in the monthly amount 2 billed to an eligible customer for electricity, gas or both. 3 2. A utility shall have a credit against the gross receipts tax 4 imposed by section one hundred eighty-six-a of the tax law in the amount 5 of one hundred percent of any loss of revenue it incurs due to the 6 implementation of its reduced rate. 7 § 3. The tax law is amended by adding a new section 4-a to read as 8 follows: 9 § 4-a. Tax credit; reduced electric and gas rates. Notwithstanding 10 any other provision of general, special or local law to the contrary, 11 electric or gas utility liable for a tax assessed or levied by the state 12 pursuant to the provisions of section one hundred eighty-six-a of this 13 chapter shall have a credit against any such tax in the amount of one 14 hundred percent of any loss of revenue any such utility has incurred as 15 to the implementation of a reduced rate pursuant to the provisions of 16 section sixty-five-c of the public service law. The commissioner is 17 hereby authorized to adopt rules and regulations to implement the 18 provisions of this section. 19 § 4. Subparagraph (i) of paragraph (b) of subdivision 1 of section 20 210-b of the tax law, as amended by section 31 of part T of chapter 59 21 of the laws of 2015, is amended to read as follows: 22 (i) A credit shall be allowed under this subdivision with respect to 23 tangible personal property and other tangible property, including build- 24 ings and structural components of buildings, which are: depreciable 25 pursuant to section one hundred sixty-seven of the internal revenue 26 code, have a useful life of four years or more, are acquired by purchase 27 as defined in section one hundred seventy-nine (d) of the internal 28 revenue code, have a situs in this state and are (A) principally used by 29 the taxpayer in the production of goods by manufacturing, processing, 30 assembling, refining, mining, extracting, farming, agriculture, horti- 31 culture, floriculture, viticulture [or], commercial fishing, or eligible 32 business enterprise as determined by the commissioner of housing and 33 community renewal pursuant to section nine hundred eighty-five of the 34 general municipal law, (B) industrial waste treatment facilities or air 35 pollution control facilities, used in the taxpayer's trade or business, 36 (C) research and development property, or (D) principally used in the 37 ordinary course of the taxpayer's trade or business as a broker or deal- 38 er in connection with the purchase or sale (which shall include but not 39 be limited to the issuance, entering into, assumption, offset, assign- 40 ment, termination, or transfer) of stocks, bonds or other securities as 41 defined in section four hundred seventy-five (c)(2) of the Internal 42 Revenue Code, or of commodities as defined in section four hundred 43 seventy-five (e) of the Internal Revenue Code, (E) principally used in 44 the ordinary course of the taxpayer's trade or business of providing 45 investment advisory services for a regulated investment company as 46 defined in section eight hundred fifty-one of the Internal Revenue Code, 47 or lending, loan arrangement or loan origination services to customers 48 in connection with the purchase or sale (which shall include but not be 49 limited to the issuance, entering into, assumption, offset, assignment, 50 termination, or transfer) of securities as defined in section four 51 hundred seventy-five (c)(2) of the Internal Revenue Code, (F) principal- 52 ly used in the ordinary course of the taxpayer's business as an exchange 53 registered as a national securities exchange within the meaning of 54 sections 3(a)(1) and 6(a) of the Securities Exchange Act of 1934 or a 55 board of trade as defined in subparagraph one of paragraph (a) of 56 section fourteen hundred ten of the not-for-profit corporation law or as

A. 221 5 1 an entity that is wholly owned by one or more such national securities 2 exchanges or boards of trade and that provides automation or technical 3 services thereto, or (G) principally used as a qualified film production 4 facility including qualified film production facilities having a situs 5 in an empire zone designated as such pursuant to article eighteen-B of 6 the general municipal law, where the taxpayer is providing three or more 7 services to any qualified film production company using the facility, 8 including such services as a studio lighting grid, lighting and grip 9 equipment, multi-line phone service, broadband information technology 10 access, industrial scale electrical capacity, food services, security 11 services, and heating, ventilation and air conditioning. For purposes of 12 clauses (D), (E) and (F) of this subparagraph, property purchased by a 13 taxpayer affiliated with a regulated broker, dealer, registered invest- 14 ment advisor, national securities exchange or board of trade, is allowed 15 a credit under this subdivision if the property is used by its affil- 16 iated regulated broker, dealer, registered investment advisor, national 17 securities exchange or board of trade in accordance with this subdivi- 18 sion. For purposes of determining if the property is principally used in 19 qualifying uses, the uses by the taxpayer described in clauses (D) and 20 (E) of this subparagraph may be aggregated. In addition, the uses by the 21 taxpayer, its affiliated regulated broker, dealer and registered invest- 22 ment advisor under either or both of those clauses may be aggregated. 23 Provided, however, a taxpayer shall not be allowed the credit provided 24 by clauses (D), (E) and (F) of this subparagraph unless the property is 25 first placed in service before October first, two thousand fifteen and 26 (i) eighty percent or more of the employees performing the administra- 27 tive and support functions resulting from or related to the qualifying 28 uses of such equipment are located in this state or (ii) the average 29 number of employees that perform the administrative and support func- 30 tions resulting from or related to the qualifying uses of such equipment 31 and are located in this state during the taxable year for which the 32 credit is claimed is equal to or greater than ninety-five percent of the 33 average number of employees that perform these functions and are located 34 in this state during the thirty-six months immediately preceding the 35 year for which the credit is claimed, or (iii) the number of employees 36 located in this state during the taxable year for which the credit is 37 claimed is equal to or greater than ninety percent of the number of 38 employees located in this state on December thirty-first, nineteen 39 hundred ninety-eight or, if the taxpayer was not a calendar year taxpay- 40 er in nineteen hundred ninety-eight, the last day of its first taxable 41 year ending after December thirty-first, nineteen hundred ninety-eight. 42 If the taxpayer becomes subject to tax in this state after the taxable 43 year beginning in nineteen hundred ninety-eight, then the taxpayer is 44 not required to satisfy the employment test provided in the preceding 45 sentence of this subparagraph for its first taxable year. For purposes 46 of clause (iii) of this subparagraph the employment test will be based 47 on the number of employees located in this state on the last day of the 48 first taxable year the taxpayer is subject to tax in this state. If the 49 uses of the property must be aggregated to determine whether the proper- 50 ty is principally used in qualifying uses, then either each affiliate 51 using the property must satisfy this employment test or this employment 52 test must be satisfied through the aggregation of the employees of the 53 taxpayer, its affiliated regulated broker, dealer, and registered 54 investment adviser using the property. For purposes of this subdivision, 55 the term "goods" shall not include electricity.

A. 221 6 1 § 5. Subparagraph (A) of paragraph 2 of subsection (a) of section 606 2 of the tax law, as amended by chapter 637 of the laws of 2008, is 3 amended to read as follows: 4 (A) A credit shall be allowed under this subsection with respect to 5 tangible personal property and other tangible property, including build- 6 ings and structural components of buildings, which are: depreciable 7 pursuant to section one hundred sixty-seven of the internal revenue 8 code, have a useful life of four years or more, are acquired by purchase 9 as defined in section one hundred seventy-nine (d) of the internal 10 revenue code, have a situs in this state and are (i) principally used by 11 the taxpayer in the production of goods by manufacturing, processing, 12 assembling, refining, mining, extracting, farming, agriculture, horti- 13 culture, floriculture, viticulture [or], commercial fishing, or eligible 14 business enterprise as determined by the commissioner of housing and 15 community renewal pursuant to section nine hundred eighty-five of the 16 general municipal law, (ii) industrial waste treatment facilities or air 17 pollution control facilities, used in the taxpayer's trade or business, 18 (iii) research and development property, (iv) principally used in the 19 ordinary course of the taxpayer's trade or business as a broker or deal- 20 er in connection with the purchase or sale (which shall include but not 21 be limited to the issuance, entering into, assumption, offset, assign- 22 ment, termination, or transfer) of stocks, bonds or other securities as 23 defined in section four hundred seventy-five (c)(2) of the Internal 24 Revenue Code, or of commodities as defined in section 475(e) of the 25 Internal Revenue Code, (v) principally used in the ordinary course of 26 the taxpayer's trade or business of providing investment advisory 27 services for a regulated investment company as defined in section eight 28 hundred fifty-one of the Internal Revenue Code, or lending, loan 29 arrangement or loan origination services to customers in connection with 30 the purchase or sale (which shall include but not be limited to the 31 issuance, entering into, assumption, offset, assignment, termination, or 32 transfer) of securities as defined in section four hundred seventy-five 33 (c)(2) of the Internal Revenue Code, or (vi) principally used as a qual- 34 ified film production facility including qualified film production 35 facilities having a situs in an empire zone designated as such pursuant 36 to article eighteen-B of the general municipal law, where the taxpayer 37 is providing three or more services to any qualified film production 38 company using the facility, including such services as a studio lighting 39 grid, lighting and grip equipment, multi-line phone service, broadband 40 information technology access, industrial scale electrical capacity, 41 food services, security services, and heating, ventilation and air 42 conditioning. For purposes of clauses (iv) and (v) of this subparagraph, 43 property purchased by a taxpayer affiliated with a regulated broker, 44 dealer, or registered investment adviser is allowed a credit under this 45 subsection if the property is used by its affiliated regulated broker, 46 dealer or registered investment adviser in accordance with this 47 subsection. For purposes of determining if the property is principally 48 used in qualifying uses, the uses by the taxpayer described in clauses 49 (iv) and (v) of this subparagraph may be aggregated. In addition, the 50 uses by the taxpayer, its affiliated regulated broker, dealer and regis- 51 tered investment adviser under either or both of those clauses may be 52 aggregated. Provided, however, a taxpayer shall not be allowed the cred- 53 it provided by clauses (iv) and (v) of this subparagraph unless (I) 54 eighty percent or more of the employees performing the administrative 55 and support functions resulting from or related to the qualifying uses 56 of such equipment are located in this state, or (II) the average number

A. 221 7 1 of employees that perform the administrative and support functions 2 resulting from or related to the qualifying uses of such equipment and 3 are located in this state during the taxable year for which the credit 4 is claimed is equal to or greater than ninety-five percent of the aver- 5 age number of employees that perform these functions and are located in 6 this state during the thirty-six months immediately preceding the year 7 for which the credit is claimed, or (III) the number of employees 8 located in this state during the taxable year for which the credit is 9 claimed is equal to or greater than ninety percent of the number of 10 employees located in this state on December thirty-first, nineteen 11 hundred ninety-eight or, if the taxpayer was not a calendar year taxpay- 12 er in nineteen hundred ninety-eight, the last day of its first taxable 13 year ending after December thirty-first, nineteen hundred ninety-eight. 14 If the taxpayer becomes subject to tax in this state after the taxable 15 year beginning in nineteen hundred ninety-eight, then the taxpayer is 16 not required to satisfy the employment test provided in the preceding 17 sentence of this subparagraph for its first taxable year. For the 18 purposes of clause (III) of this subparagraph the employment test will 19 be based on the number of employees located in this state on the last 20 day of the first taxable year the taxpayer is subject to tax in this 21 state. If the uses of the property must be aggregated to determine 22 whether the property is principally used in qualifying uses, then either 23 each affiliate using the property must satisfy this employment test or 24 this employment test must be satisfied through the aggregation of the 25 employees of the taxpayer, its affiliated regulated broker, dealer, and 26 registered investment adviser using the property. For purposes of this 27 subsection, the term "goods" shall not include electricity. 28 § 6. The real property tax law is amended by adding a new section 29 420-d to read as follows: 30 § 420-d. Real property tax abatements. Newly constructed or substan- 31 tially rehabilitated residential dwellings located within housing oppor- 32 tunity zones designated pursuant to article nineteen-AA of the general 33 municipal law shall be exempt from all taxes imposed by a municipal 34 corporation, including those imposed by a school district, other than 35 assessments for local improvements, during construction or rehabili- 36 tation, so long as such dwelling is used for residential unit purposes 37 for a period not to exceed ten years in the aggregate after the taxable 38 status date immediately following the completion thereof, calculated not 39 to exceed the following exemptions: two years of full exemption followed 40 by two years of exemption from eighty percent of such taxation, followed 41 by three years of exemption from sixty percent of such taxation, 42 followed by two years of exemption from forty percent of such taxation, 43 followed by two years of exemption from twenty percent of such taxation; 44 provided that taxes shall be paid during any such period at least in the 45 amount of the taxes paid on such land and improvements thereon during 46 the tax year preceding the commencement of such construction or rehabil- 47 itation and that the exemption from taxes shall not be availed of 48 concurrently under any other law. 49 § 7. This act shall take effect on the first of October next succeed- 50 ing the date on which it shall have become a law.