Chapter 36: Rules Relating to the Industrial and Commercial Abatement Program

a. "Applicant" means a person or entity who has applied or applies for benefits under this chapter who is obligated to pay real property tax on the property, either because of ownership or a contract, unless the property is exempt from real property taxation and the record owner or lessee of such property has entered into an agreement to sell or lease such property to another person or entity, in which case both parties to the agreement shall be considered co-applicants and must submit an application jointly.

b. "Commercial activities" means activities that include the following, unless such activities are described as retail purposes in Subdivision y of this section:

(1) Buying, selling, leasing or otherwise providing goods or services.

(2) Operating a transient hotel, except that:

(i) a structure or part of any hotel owned or leased by a not-for-profit corporation to provide governmentally funded emergency housing is not considered a hotel for purposes of the ICAP; and

(ii) a condominium hotel unit or timeshare hotel unit is part of a transient hotel where the property as a whole is operated as a transient hotel. An individual condominium or timeshare unit located in a transient hotel building may qualify for abatement benefits under this chapter if the unit is:

(A) made available to the general public at large for a minimum of 183 days during the calendar year on terms and dates which are consistent with standards in the hotel industry; and

(B) not occupied for more than 183 days in any calendar year by

(I) the owner or any relative of the owner; or

(II) any employee of the owner, or any employee of any corporation, partnership, limited liability corporation or other entity owner or controlled by such owner.

(3) Operating a theater or other entertainment business.

(4) Manufacturing conducted in a building or individual condominium unit where less than 75 percent of the floor area upon completion of construction is used for manufacturing.

(5) Providing information or services to businesses or investors on a nonprofit, limited profit, or cooperative basis, including operating a stock or commodity exchange, insurance rating bureau, testing service, clearinghouse, wire service, buying service, or private label company or the like.

(6) Providing computer software development and services, including:

(i) internet and web related activities;

(ii) computer graphics and designs; or

(iii) desk-top publishing.

(7) Operating any other lawful businesses, including governmental or not-for-profit activities.

(8) Operating repair of equipment and service businesses such as heating, ventilation and air conditioning ("HVAC"), plumbing and refrigeration.

(9) Operating nursing homes or adult care facilities.

c. "Commercial construction work" means the construction of a new building or structure or the modernization, rehabilitation, expansion or improvement of an existing building or structure for use as commercial property.

d. "Commercial property" means non-residential property on which will exist after completion of commercial construction work a building or structure, or portion thereof, used for the buying, selling or otherwise providing of goods or services, including hotel services, or for other lawful business commercial or manufacturing activities, with at least 50 percent of the total net square footage of the property used or immediately available and held out for commercial or manufacturing activity; provided that property or portions of property dedicated to use as utility property shall not be considered commercial property for purposes of this chapter.

e. "Commissioner" means the commissioner of finance of the city of New York.

f. "Completion of construction," or "completion" means:

(1) when relating to the construction of a new building or structure, the earlier of the date on which:

(i) the department of buildings issues a final certificate of occupancy; or

(ii) an architect or engineer certifies to the department of finance that construction is complete.

(2) when relating to modernization, rehabilitation, expansion or improvement of an existing building or structure work, the earlier of the date on which an architect or engineer certifies to the department of finance that construction is complete.

Construction of buildings or structures for which benefits have been approved must be completed no later than five years after the date the first building permit is issued, or if no permit was required, after the completion of construction. Failure to complete construction within such time period will result in the loss of the inflation protection benefits described in 19 RCNY § 36-10(l).

g. "Department" means the department of finance of the City of New York.

h. "Division" means the division of labor services contract compliance unit within the New York City department of small business services, or such successor division.

i. "ICAP" means the Industrial and Commercial Abatement Program.

j. "ICIP" means the Industrial and Commercial Incentive Program.

k. "Industrial construction work" means the construction of a new building or structure or the modernization, rehabilitation, expansion or improvement of an existing building or structure for use as industrial property.

l. "Industrial property" means nonresidential property on which will exist after completion of industrial construction work a building or structure, or portion thereof, with at least 75 percent of the total net square footage of the property used or immediately available and held out for manufacturing activity; however, property or portions of property dedicated to use as utility property will not be considered industrial property, except for peaking units, which will be considered to be industrial property and not utility property.

m. "Initial tax rate" means, for the purposes of the ICAP, the final tax rate on the assessment roll with a taxable status date immediately before the first building permit is issued. If no building permit was required, the initial tax and initial tax rate shall be determined based on the assessment roll with the taxable status date immediately before the start of construction.

n. "Manufacturing activity" means an activity involving the assembly of goods or the fabrication or processing of raw materials, but will not include: (i) such activity when conducted for the purpose of retail sale on the premises; (ii) utility services, except that peaking units are considered manufacturing activity; or (iii) any activity that meets the definition of "retail purposes."

(1) Areas used for manufacturing activities. Areas of a building used for manufacturing activities include, but are not limited to:

(a) space used to house or repair equipment used for assembly, fabrication or processing work;

(b) space used to store raw materials, semi-finished or finished goods for short periods before or after assembly, fabrication or processing in normal quantities for the manufacturing activity involved;

(d) space used to store normal quantities of supplies and spare parts for use in the manufacturing activity;

(e) testing and research laboratories operated in connection with manufacturing activities;

(f) cafeterias, locker rooms and other facilities for the workers engaged in manufacturing activities;

(g) office space, not in excess of 10 percent of the total floor area, used directly in the administration of the manufacturing activity; and

(h) other space used for activities necessarily done at the same site as the manufacturing activity and integrally related to such activity.

(2) Workers engaged in manufacturing activities. Workers engaged in manufacturing activities are workers performing assembly, fabrication or processing or related immediate supervision, equipment repair or maintenance, goods handling, testing or research.

(3) Specific uses. Manufacturing activities include, but are not limited to:

(a) printing, but not including publishing or the service of taking retail orders for material to be printed; printing is characterized by the production of multiple copies of identical, or nearly identical, written material or designs on paper or other tangible material;

(b) reproduction or processing of photographic film, audio or video media, or magnetic or other data storage media, but not including creation of the original image, sound or data;

(d) shipbuilding or repair;

(e) rebuilding or repairing stationary machinery or equipment used in other manufacturing activities;

(f) rebuilding other machinery or equipment;

(g) processing or packaging of food products for wholesale distribution;

(h) packaging of dry goods for a manufacturer or wholesaler, but not including packaging done at an establishment used for retailing, wholesaling or warehousing activities;

(i) pattern-making and cutting cloth for garments, sewing and finishing garments, including custom made garments, except activities done in a retail establishment; and

(j) building theatrical scenery, other than activities done in a theater or on the set of a film or television studio.

(4) Non-manufacturing uses.

(a) Uses which are not permitted in a manufacturing district, as defined by the Zoning Resolution, are not manufacturing activities, including:.

(i) construction, repair, operation or maintenance of real property, including activities performed in a building contractor's shop, or the preassembly of structural elements or service equipment for installation in a building;

(ii) generation, collection, storage, transmission distribution or sale of gas, electricity, steam, water, refrigeration, cable television, telephone, telegraph or other one-way or two-way communication service, delivered through mains, pipes, cables, lines or wires;

(iii) collection, removal, carting, processing or disposal of sewerage, drainage, wastes, garbage or trash;

(iv) broadcasting, transmission or reception of television, radio or other electromagnetic signals;

(v) transportation of passengers or goods;

(vi) operation of a public or private warehouse;

(vii) operation of a showroom;

(viii) operation of a workshop, studio, sound stage, set or other place for creation of original works of art, films or recordings; or

(ix) buying, selling, leasing or providing goods or services.

(b) [Reserved.]

(c) The following activities, except as specifically provided in paragraphs (2) and (3) of this subdivision, are not manufacturing activities:

(i) general management;

(ii) storage, shipping or receiving of materials and finished goods;

(iii) maintenance, repair or construction of real property;

(iv) professional, clerical or information processing activities;

(v) buying, selling, leasing or providing goods or services;

(vi) activity conducted for the purpose of retail sale on the premises; or

(vii) utility services.

o. "Minimum required expenditure" means the amount that an applicant must expend on construction work for a project in order to qualify for benefits under this chapter. The minimum required expenditure must be met no later than four years from the date after the first building permit is issued, or if no permit was required, from the start of construction.

p. "Mixed-Use property" means property on which exists, or will exist upon completion of construction work, a building or structure used for both residential and nonresidential purposes.

q. "M/WBE" means a Minority-Owned or Women-Owned business enterprise certified in accordance with Section 1304 of the Charter.

r. "Peaking Unit" means a generating unit that: (i) is determined by the New York independent system operator or a Federal or New York State energy regulatory commission to constitute a peaking unit as set forth in Section 5.14.1.2 of the New York independent system operator's market administration and control area services tariff, as such term existed as of April 1, 2011; or (ii) has an annual average operation, during the calendar year preceding the taxable status date, of less than 18 hours following each start of the unit; provided that, for purposes of calculating the annual average, operations during any period covered by any major emergency declaration issued by the New York independent system operator, northeast power coordinating council, or other similar entity, shall be excluded.

(1) A "peaking unit" will include all real property used in connection with the generation of electricity and any facilities used to interconnect the peaking unit with the electrical transmission or distribution system, but will not include any facilities that are part of the electric transmission or distribution system; it may be comprised of a single turbine and generator or multiple turbines and generators located at the same site.

(2) Notwithstanding any provision of this title to the contrary, a peaking unit will be considered industrial property. Peaking units will not be considered utility property.

(3) The abatement benefit schedule for peaking units is set forth in 19 RCNY § 36-12(c).

s. "Project" means the work described in the preliminary application as amended by the final application.

t. "Property" means, except where otherwise provided, a separately assessed parcel of real property, or a group of condominium units in a single building that are the subjects of a single application for ICAP benefits. When a parcel of real property includes more than one building, "property" means an individual building on such parcel and an allocable portion of the land.

u. "Renovation construction work" means the modernization, rehabilitation, expansion or improvement of an existing building or structure where such modernization, rehabilitation, expansion or improvement is physically and functionally integrated with the existing building or structure, or portion thereof, does not increase the bulk of the existing building or structure by more than 30 percent, and does not increase the height of the existing building or structure by more than 30 percent. The 30 percent limitation will apply to each building individually which has a separate certificate of occupancy.

v. "Residential construction work" means any construction, modernization, rehabilitation, expansion or improvement of dwelling units other than dwelling units in a hotel.

w. "Residential property" means property primarily used for dwelling purposes except for dwelling units in a hotel.

x. "Restricted activity" means any commercial use of property that is unlawful or a public nuisance as defined in § 7-703 of the Administrative Code.

y. "Retail purposes" means any activity that consists predominately of (i) the final sale of tangible personal property or services by a vendor as defined in Section 1101 of the Tax Law, (ii) the sale of services that generally involve the physical, mental, or spiritual care of individuals or the physical care of the personal property of individuals, including medical offices, (iii) retail banking services, or (iv) the final sale of food or beverage by a vendor as defined in Section 1101 of the Tax Law, including the assembly, processing or packaging of goods, provided that sales of such tangible personal property or services are predominantly to purchasers who personally visit the facilities at which such sales are made or such property or services are provided. "Retail purposes" does not include hotels used to provide lodging and support services for transient guests, except that restaurants, bars and gift shops associated with such hotels are considered "retail purposes."

z. "Square footage" means the following in the following contexts:

(1) "Net square footage" means square footage within a room or area of a building, measured by the inside wall-to-wall dimensions.

(2) "Gross square footage" means the total amount of square footage in a building. It includes below grade space, elevator shafts, vertical penetrations, equipment areas, ductwork shafts, and stairwells, as well as the usable square footage occupied by or available to tenants.

(3) "Rentable square footage" means the net square footage of the building plus a pro-rata share of building common areas.

aa. "Temporary commercial incentive area boundary commission" means the commission described in § 11-274 of the Administrative Code.

bb. "Utility property" means property and equipment as described in Paragraphs (c), (d), (e), (f), and (i) of Subdivision 12 of Section 102 of the Real Property Tax Law that is used in the ordinary course of business by its owner or any other entity, or property as described in Paragraphs (a) and (b) of such Subdivision 12 that is owned by any entity that uses, in the ordinary course of business, property and equipment as described in Paragraphs (c), (d), (e) and (f) and (i) of such Subdivision 12 without regard to the classification of such property and equipment for real property tax purposes pursuant to Section 1802 of such Law, except that any such property and equipment used solely to serve the building to which they are attached will not be deemed to be utility property.

(Added City Record 2/10/2017, eff. 3/12/2017)

§ 36-02 Areas Eligible for Abatement Benefits.

a. Commercial construction work outside of a special commercial abatement area. Commercial construction projects anywhere in New York City outside of a special commercial abatement area are eligible for abatement benefits except for such projects in the commercial exclusion area described in Subdivision b.

b. Commercial exclusion area. The commercial exclusion area is the area in Manhattan lying south of the centerline of 96th Street, except for (i) the areas in Manhattan designated for commercial renovation projects as commercial renovation areas that are described in Subdivision c, and (ii) the area designated for new construction as described in Subdivision d.

c. Commercial renovation areas. Commercial renovation projects in any area of New York City, except such projects south of the centerline of 96th Street in Manhattan, will be eligible for abatement benefits, except that abatement benefits will also be available for commercial renovation projects in the following designated areas, with the amount of such benefit dependent of the area in which the project is located, pursuant to 19 RCNY § 36-12(e) and (f):

(1) The area in Manhattan bounded by Murray Street on the north starting at the intersection of West Street and Murray Street, running easterly along the center line of Murray Street; connecting through City Hall Park with the center line of Frankfort Street and running easterly along the center line of Frankfort and Dover Streets to the intersection of Dover Street and South Street; running southerly along the center line of South Street to Peter Minuit Plaza; connection through Peter Minuit Plaza to the center line of State Street and running northwesterly along the center line of State Street to the intersection of State Street and Battery Place; running westerly along the center line of Battery Place to the intersection of Battery Place and West Street; and running northerly along the center line of West Street to the intersection of West Street and Murray Street.

(2) The area in Manhattan defined as the special garment center district by Chapter one of Article XII of the Zoning Resolution of the City, which is the area in Manhattan bounded by the centerline of West 40th Street on the north between 7th and 8th Avenue; running southerly along the centerline of 7th Avenue to the center line of West 38th Street; running easterly along the centerline of West 38th Street to the centerline of Broadway; running southerly along the centerline of Broadway to the centerline of West 35th street to 7th Avenue and running southerly along the centerline of 7th Avenue to the centerline of West 34th Street; running westerly to the centerline of 8th avenue, running northerly to the centerline of West 35th Street to 100 feet east of 9th Avenue, running northerly to the centerline of West 39th Street, running easterly to 8th Avenue and running northerly to the centerline of West 40th Street.

(3) The area in Manhattan south of the center line of 59th Street, other than the areas designated renovation areas by Paragraphs (1) and (2) of this subdivision.

d. New construction in New York City. New construction projects in any area of New York City, except such projects south of the centerline of 96th Street in Manhattan, will be eligible for abatement benefits, except that abatement benefits will also be available for new construction projects as described in Subdivision e of this section.

e. New construction in certain areas of lower Manhattan. The area in Manhattan bounded by Murray Street on the north starting at the intersection of West Street and Murray Street; running easterly along the center line of Murray Street; connecting through City Hall Park with the center line of Frankfort Street and running easterly along the center line of Frankfort and Dover Streets to the intersection of Dover Street and South Street; running southerly along the center line of South Street to Peter Minuit Plaza; connecting through Peter Minuit Plaza to the center line of State Street and running northwesterly along the center line of State Street to the intersection of State Street and Battery Place; running westerly along the center line of Battery Place to the intersection of Battery Place and West Street; and running northerly along the center line of West Street to the intersection of West Street and Murray Street, except that abatement benefits will not be available for projects in the area in the borough of Manhattan bounded by Church Street on the east starting at the intersection of Liberty Street and Church Street; running northerly along the center line of Church Street to the intersection of Church Street and Vesey Street; running westerly along the center line of Vesey Street to the intersection of Vesey Street and West Broadway; running northerly along the center line of West Broadway to the intersection of West Broadway and Barclay Street; running westerly along the center line of Barclay Street to the intersection of Barclay Street and Washington Street; running southerly along the center line of Washington Street to the intersection of Washington Street and Vesey Street; running westerly along the center line of Vesey Street to the intersection of Vesey Street and West Street; running southerly along the center line of West Street to the intersection of West Street and Liberty Street; and running easterly along the center line of Liberty Street to the intersection of Liberty Street and Church Street.

f. Special commercial abatement area.

(1) The boundaries of special commercial abatement areas as designated by the temporary commercial incentive area boundary commission will be described on the department's website.

(2) In accordance with Section 489-gggggg of the Real Property Tax Law and § 11-274 of the Administrative Code, the temporary commercial incentive area boundary commission may designate an area in the City of New York, other than in the area lying south of the centerline of 96th Street in Manhattan, to be a special commercial abatement area if it determines that market conditions in the area are such that the availability of a special abatement is required in order to encourage commercial construction in such area.

g. Industrial construction. Eligible projects may receive industrial construction benefits in any area of New York City.

h. Projects partially in an excluded area. Properties partially located in an excluded area will not be eligible for abatement benefits.

(Added City Record 2/10/2017, eff. 3/12/2017)

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