NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5497
SPONSOR: Brook-Krasny TITLE OF BILL:
An act to amend the tax law, in relation to clarifying the exemption for
cooperative housing corporations where there is no change in beneficial
ownership
PURPOSE:
This bill would clarify the exemption in the tax law for cooperative
housing corporations when there is no change in beneficial ownership.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 seeks a clarification of exemptions in the tax law for cooper-
ative housing corporations wherein there is no change in beneficial,
ownership and shares are conveyed to the participating shareholders as
part of a voluntary dissolution in which the only changes made are the
identity or form of ownership of the corporation.
Section 2 This act takes effect immediately and is retroactive for
applicable conveyances
JUSTIFICATION:
The intent of the Mitchell-Lama, when enacted, was to create much needed
affordable housing through the use of low interest loans and reduced
real estate taxes for fixed periods in order to create needed housing.
Once a cooperative had repaid its government loans, it would cease to be
a regulated cooperative and become standard cooperative. The law
intended for coops to evolve out of regulation.
Over the last several years, a number of cooperatives have met their
obligations, and have exited the Mitchell-Lama program. This process
includes approval of both the NYS Division of Housing and Community
ReneWal and the New York State Attorney's General's office. The Mitc-
hell-Lama program is seen as one of the most cost-effective and success-
ful housing programs ever created.
Following the issuance of an advisory opinion in 2008, the NYS Depart-
ment of Taxation and Finance has opened audits of the many former Mitc-
hell-Lama buildings that have come out of the program in recent years,
and concluded that in a number of cases State tax was due as a result of
this conversion. This increase in audit .activity prompted additional
examination by the Department on this retroactive application of the
tax. In April 2010, they issued an advisory opinion which concludes that
the conversion of a not for profit housing company to a private cooper-
ative housing corporation constitutes a conveyance by the plan sponsor
of the real property comprising the cooperative dwelling, and would be
subject to the real estate transfer tax. This advisory opinion provides'
limited guidance regarding the exemption provided if there is no change
in the beneficial ownership.
This bill would clarify that for certain conversions, in which there is
no change in the beneficial ownership of the property, would qualify for
this exemption.
LEGISLATIVE HISTORY:
2023-2024, A.6301, HELD in Ways and Means
2015-2016: A 4111 - Referred to Ways and Means
2013-2014: A 5866 - Referred to Ways and Means/ Held for Consideration
in Way and Means,
2011-2012: A 3916- Referred to Ways and Means
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
Immediately.
