THE COUNCIL OF THE CITY OF NEW YORK
RESOLUTION NO. 437
Resolution approving a new real property tax exemption pursuant to Section 577 of Article XI of the Private Housing Finance Law (PHFL), the termination of a prior exemption pursuant to PHFL Section 125, and consent to the voluntary dissolution of the prior owner pursuant to PHFL Section 123(4) for property located at Block 392, Lots 17 and 27, and Block 393, Lots 14 and 56, Community District 3, Borough of Manhattan, (Preconsidered L.U. No. 126; Non-ULURP No. 20185417 HAM).
By Council Members Salamanca and Kallos
WHEREAS, the New York City Department of Housing Preservation and Development ("HPD") submitted to the Council on June 5, 2018 its request dated June 5, 2018 that the Council take the following actions regarding a new real property tax exemption for an area located at Block 392, Lots 17 and 27, and Block 393, Lots 14 and 56, Community District 3, Borough of Manhattan, (the “Exemption Area”);
Approve an exemption of the Exemption Area from real property taxes pursuant to the Private Housing Finance Law (PHFL) Section 577 (the “Tax Exemption”);
Approve the termination of a prior tax exemption for the Exemption Area pursuant to PHFL Section 125 (the “Termination”);
Consent to the voluntary dissolution of the current owner pursuant to PHFL Section 123(4) (the “Dissolution”);
WHEREAS, HPD’s request for the Tax Exemption is related to a previously approved real property tax exemption by the Board of Estimate on December 15, 1977 (Cal. No. 3);
WHEREAS, upon due notice, the Council held a public hearing on the Tax Exemption, Termination and Dissolution on June 19, 2018; and
WHEREAS, the Council has considered the land use and financial implications and other policy issues relating to the Tax Exemption, Termination and Dissolution;
RESOLVED:
The Council approves the Tax Exemption for the Exemption Area pursuant to Section 577 of the Private Housing Finance Law as follows:
1. Approve the exemption from real property taxation pursuant to Section 577 of the Private Housing Finance Law as follows:
a. For the purposes hereof, the following terms shall have the following meanings:
(1) “Contract Rent Differential” shall mean, for the year ending upon any anniversary of the Effective Date, the amount by which the total contract rents applicable to the Exemption Area for such year (as adjusted and established pursuant to Section 8 of the United States Housing Act of 1937, as amended) exceed the total contract rents which were authorized as of the Effective Date.
(2) “Conveyance Area” shall mean the real property located in the Borough of Manhattan, City and State of New York, identified as Block 392, Lot 40 on the Tax Map of the City of New York.
(3) “Current Owner” shall mean Lower East Side I Associates, L.P.
(4) “Effective Date” shall mean the later of (i) the date of conveyance of the Exemption Area to the HDFC, or (ii) the date that HPD and the New Owner enter into the Regulatory Agreement.
(5) “Exemption Area” shall mean the real property located in the Borough of Manhattan, City and State of New York, identified as Block 392, Lots 17 and 27 and Block 393, Lots 14 and 56 on the Tax Map of the City of New York.
(6) “Expiration Date” shall mean the earlier to occur of (i) a date which is forty (40) years from the Effective Date, (ii) the date of the expiration or termination of the Regulatory Agreement, or (iii) the date upon which the Exemption Area ceases to be owned by either a housing development fund company or an entity wholly controlled by a housing development fund company.
(7) “Full Taxes” shall mean, for the year ending upon any anniversary of the Effective Date, the full amount of real property taxes that would have been due and owing in such year in the absence of any form of real property tax exemption, abatement, or other reduction.
(8) “HDFC” shall mean East Village I Housing Development Fund Corporation or a housing development fund company that acquires the Exemption Area with the prior written consent of HPD.
(9) “HPD” shall mean the Department of Housing Preservation and Development of the City of New York.
(10) “J-51 Benefits” shall mean any tax benefits pursuant to Section 489 of the Real Property Tax Law which are in effect on the Effective Date.
(11) “New Exemption” shall mean the exemption from real property taxation provided hereunder with respect to the Exemption Area.
(12) “New Owner” shall mean, collectively, the HDFC and the Partnership.
(13) “New Project” shall mean the new multiple dwelling to be constructed on the Conveyance Area which will contain approximately 11 units of rental housing and which will be subject to a restrictive covenant requiring, inter alia, that 10% of the dwelling units in the New Project shall be affordable to persons at or below 70% of Area Median Income and that an additional 20% of the dwelling units in the New Project shall be affordable to persons at or below 130% of Area Median Income.
(14) “Partial Tax Payment” shall mean
(i) for the year ending upon the first anniversary of the Effective Date, $383,985;
(ii) for the year ending upon the second anniversary of the Effective Date, five and one-fourth percent (5.25%) of the total contract rents applicable to the Exemption Area for such year (as adjusted and established pursuant to Section 8 of the United States Housing Act of 1937, as amended);
(iii) for the year ending upon the third anniversary of the Effective Date, and the years ending upon each anniversary of the Effective Date thereafter until the Expiration Date, (A) the Partial Tax Payment due for the year ending upon the second anniversary of the Effective Date, plus (B) twenty-five percent (25%) of the Contract Rent Differential;
provided, however, that if the Department of Buildings does not issue a new certificate of occupancy or temporary certificate of occupancy for all residential areas of the New Project on or before the fifth anniversary of the Effective Date, then “Partial Tax Payment” shall thereafter mean
(a) for the year ending upon the sixth anniversary of the Effective Date, (i) $383,985, plus (ii) twenty-five percent (25%) of the Contract Rent Differential, plus (iii) twenty percent (20%) of Full Taxes;
(b) for the year ending upon the seventh anniversary of the Effective Date, (i) $383,985, plus (ii) twenty-five percent (25%) of the Contract Rent Differential, plus (iii) ten percent (10%) of Full Taxes; and
(c) for the year ending upon the eighth anniversary of the Effective Date and the years ending upon each anniversary of the Effective Date thereafter until the Expiration Date, (i) ten percent (10%) of the total contract rents for the year ending upon the sixth anniversary of the Effective Date, plus (ii) twenty-five percent (25%) of the Contract Rent Differential.
(15) “Partnership” shall mean Lower East Side I Associates, L.P. or another entity that acquires the beneficial interest in the Exemption Area with the prior written consent of HPD.
(16) “PHFL” shall mean the Private Housing Finance Law.
(17) “Prior Exemption” shall mean the exemption from real property taxation for the Exemption Area pursuant to Section 125 of the PHFL approved by the Board of Estimate on December 15, 1977 (Cal No. 3).
(18) “Regulatory Agreement” shall mean the regulatory agreement between HPD and the New Owner establishing certain controls upon the operation of the Exemption Area during the term of the New Exemption.
b. All of the value of the property in the Exemption Area, including both the land and any improvements (excluding those portions, if any, devoted to business, commercial, or community facility use), shall be exempt from real property taxation, other than assessments for local improvements, for a period commencing upon the Effective Date and terminating upon the Expiration Date.
c. Commencing upon the Effective Date, and during each year thereafter until the Expiration Date, the New Owner shall make real property tax payments in the sum of the Partial Tax Payment. Notwithstanding the foregoing, the total annual real property tax payment by the New Owner shall not at any time exceed the lesser of either (a) the amount of real property taxes that would otherwise be due in the absence of any form of exemption from or abatement of real property taxation provided by an existing or future local, state, or federal law, rule, or regulation, or (b) seventeen percent (17%) of the contract rents in the applicable year.
d. Notwithstanding any provision hereof to the contrary:
(1) The New Exemption shall terminate if HPD determines at any time that (i) the Exemption Area is not being operated in accordance with the requirements of Article XI of the PHFL, (ii) the Exemption Area is not being operated in accordance with the requirements of the Regulatory Agreement, (iii) the Exemption Area is not being operated in accordance with the requirements of any other agreement with, or for the benefit of, the City of New York, (iv) any interest in the Exemption Area is conveyed or transferred to a new owner without the prior written approval of HPD, or (v) the construction or demolition of any private or multiple dwelling on the Exemption Area has commenced without the prior written consent of HPD. HPD shall deliver written notice of any such determination to the New Owner and all mortgagees of record, which notice shall provide for an opportunity to cure of not less than sixty (60) days. If the noncompliance specified in such notice is not cured within the time period specified therein, the New Exemption shall prospectively terminate.
(2) The New Exemption shall apply to all land in the Exemption Area, but shall only apply to buildings on the Exemption Area that exist on the Effective Date.
(3) Nothing herein shall entitle the HDFC, the New Owner, or any other person or entity to a refund of any real property taxes which accrued and were paid with respect to the Exemption Area prior to the Effective Date.
e. In consideration of the New Exemption, the owner of the Exemption Area, for so long as the New Exemption shall remain in effect, shall waive the benefits, if any, of any additional or concurrent exemption from or abatement of real property taxation which may be authorized under any existing or future local, state, or federal law, rule, or regulation. Notwithstanding the foregoing, the J-51 Benefits shall remain in effect, but (i) the New Exemption shall be reduced by the amount of such J-51 Benefits, and (ii) the Partial Tax Payment shall not be reduced by such J-51 Benefits.
2. Approve, pursuant to Section 125 of the PHFL, the termination of the Prior Exemption, which termination shall become effective one day preceding the conveyance of the Exemption Area from the Current Owner to the New Owner.
3. Consent, pursuant to Section 123(4) of the PHFL, to the voluntary dissolution of the Current Owner.
4. If the conveyance of the Exemption Area from the Current Owner to the New Owner does not occur either (i) within one day following the termination of the Prior Exemption, or (ii) on the same day as the voluntary dissolution of the Current Owner, then all of the approvals and consents set forth above shall be null and void, the dissolution of the Current Owner shall be rescinded, and both the obligations of the Current Owner to remain an Article V redevelopment company and the Prior Exemption shall be reinstated as though they had never been terminated or interrupted.
Adopted.
Office of the City Clerk, }
The City of New York, } ss.:
I hereby certify that the foregoing is a true copy of a Resolution passed by The Council of The City of New York on June 28, 2018, on file in this office.
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City Clerk, Clerk of The Council