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albany2_120More than 25 percent of real property value in New York is exempt from county, city and town property taxes, according to a report issued today by State Comptroller Thomas P. DiNapoli. The total value of these exempt properties is $680 billion. The value increases to $826 billion for properties exempt from more than one type of local government or school district taxes.

“In an era of limited resources, the impact of property tax exemptions complicates the financial picture of our local governments,” said DiNapoli. “In localities with higher exemptions, taxable property owners are often carrying a much higher burden. Local leaders will need to continue to find creative ways to offset these exemptions and must carefully weigh any decision to offer new exemptions. Syracuse is attempting to tackle this challenge head on and others can learn from its example."

“Property which cannot be taxed is a major driver of the current fiscal crisis facing our cities,” said Syracuse Mayor Stephanie A. Miner. “This is not an isolated problem and represents a major challenge as we deal with the changing economic model of cities. Our nonprofits demand and deserve top-quality public services, such as those provided by police, fire, and DPW, but do not contribute to their high cost. This report by Comptroller DiNapoli helps us better understand where we are today and how we can take action to deal with our changing financial landscape.”

Across New York, DiNapoli’s report noted the percentage of exempt property value ranges from less than 10 percent in several municipalities to more than 60 percent in others.

For cities, the percentage of exempt property value is highest in Rensselaer (65 percent); Ogdensburg (64 percent); Salamanca (63 percent); Ithaca (62 percent) and Troy (59 percent). Other cities with a notable percentage of exemptions: Albany (59 percent); Syracuse (51 percent); Buffalo (37 percent); and Yonkers (36 percent).

Towns have the greatest variation in terms of total exempt property value in the state, ranging from 1 percent in some communities to nearly 90 percent in others. However, many of the towns with a high percentage of exemptions are smaller communities with special circumstances. For example, the town of Alfred in Allegany County has two large universities; the towns of Harrisburg and Martinsburg in Lewis County both provide multiple exemptions for solar and wind projects. Other examples include exemptions provided for state prisons, power plants, Native American reservations and federal military bases.

For counties, the highest percentage of exempt property value is in Tompkins County (40 percent), followed by Seneca (38 percent); St. Lawrence (38 percent); Lewis (37 percent); and Niagara (36 percent).

The report noted that exemptions generally fell into several categories:

  • Government-owned property (federal, state, local and foreign governments) accounts for 41 percent, or $343 billion, of the total value of exempt property in the state;
  • Residential property exemptions are the largest tax exemption in the state (28 percent of total exemptions valued at $224 billion), but the majority of this total includes the state’s School Tax Relief (STAR) program, which exempts a portion of school taxes on a primary residence and puts no direct additional burden on taxable property;
  • Non-profit organizations, which include churches, hospitals and universities, total 14 percent ($112 billion) of New York’s exempted property value;
  • Industrial and commercial exemptions, which includes public authority property and exemptions granted by local Industrial Development Agencies, accounts for 9 percent ($76 billion) of all exempt value; and
  • Agriculture, forest property, public subsidized housing and other exemptions together account for 9 percent of all exempt value ($73 billion).

To offset these tax exemptions, local governments have taken a number of steps to generate revenue from exempt property owners. This includes charging fees for services, developing PILOT (payments in lieu of taxes) arrangements and reaching voluntary payment arrangements with non-profit groups.

For example, in 2012, 51 percent of the property value (nearly $5 billion) in the City of Syracuse was tax-exempt. To help make up for the lost revenue, the city has reached service agreements with Syracuse University and two local hospitals.

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