IBO: New Property Tax Program Will Cost Less for N.Y.C.

A new commercial property tax break program will not be as costly to New York City as the one it is replacing, the city's Independent Budget Office said in a report yesterday.

The cost of the Industrial and Commercial Incentive Program, which began in 1984, has tripled in the last decade in inflation-adjusted dollars to $512 million from $170 million, the report said. The old program provided an incentive for development by giving a property tax exemption for increases in assessed value resulting from new construction or renovation in commercial and industrial property in most of the city.

The new version, called the Industrial and Commercial Abatement Program, was passed by the New York Legislature in June at the urging of Mayor Michael Bloomberg's administration and has been signed into law by Gov. David Paterson. The New York City Economic Development Corp. last year found that fewer than 25% of projects would have been impeded if they hadn't received the incentive program's benefits.

The abatement program provides an offset against a property tax bill for certain commercial and industrial construction. Eligibility requirements for ICAP are more restrictive than the old program and the benefits are less generous.

The savings to the city from the new program will take years to be realized because the benefits are phased in and those issued under the old law can last up to 25 years.

One impact of the switch to the abatement is that under the old program an exemption reduced a property's assessed value, which affects the city's debt limit, the report said. The new program, which functions more like tax credit, will not affect a property's assessed value.

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