Volume 9 - Opinions of Counsel SBEA No. 86
Economic development zone exemption (removal) (decertification) - General Municipal Law, § 959-a; Real Property Tax Law, § 485-e:
The economic development zone exemption may not be 9 denied to an otherwise eligible business simply because the business is no longer “certified” for purposes of the Economic Development Zone Program.
We have been asked whether section 959-a of the General Municipal Law (GML) authorizes a city containing an economic development zone (EDZ) to enact a local law providing that businesses which have been decertified shall be ineligible for the real property tax exemption authorized by section 485-e of the Real Property Tax Law (RPTL).
The Economic Development Zones program (General Municipal Law, Art. 18-B) provides for the certification of businesses which meet certain criteria. This certification is a prerequisite for many of the benefits of the EDZ program, particularly certain State tax credits. Certification, however, is not relevant to the eligibility of businesses for the real property tax exemption. There is no requirement in section 485-e that property be owned by a certified business, or even that the property be used for business purposes. All that is required is that real property located within an EDZ can be constructed, altered, installed or improved and that the exemption be locally authorized.
Chapter 624 of the Laws of 1990 amended the EDZ program in several respects, one of which was the establishment of a procedure for the decertification of certified businesses (GML, § 959(a), as amended by L.1990, c.624, § 5). In conjunction with this new decertification concept, a new section 959-a was added to the GML stating:
Should a certified business enterprise in an economic development zone be decertified, any local incentive provided by such municipality may be rescinded by local law or resolution by the governing body of such municipality, notwithstanding [RPTL, § 485-e(5)].
Chapter 624 made no changes to RPTL, § 485-e.
The reference in the new GML, § 959-a to RPTL, § 485-e(5) is confusing, since subdivision 5 of section 485-e pertains solely to the consequences arising when the designation of an area as an Economic Development Zone has been revoked. {*} Nothing in that subdivision is at all germane to the decertification of an individual business. Thus, the fact that section 959-a of the GML nominally supersedes the provisions of RPTL, § 485-e(5) is of no real significance.
When construed in the context of the entire EDZ program, it is apparent that the “local incentives” referred to in section 959-a of the GML are necessarily those that are contingent upon certification (and, as previously noted, the real property tax exemption is not so contingent). It would be irrational to revoke a benefit due to decertification when the business did not have to be certified to receive the benefit in the first instance. In fact, if benefits were available to uncertified businesses (i.e., those which have never been certified), but not to decertified businesses, it would have the effect of deterring businesses from seeking certification, which would clearly be inconsistent with the EDZ program. There is certainly nothing in the legislative history of chapter 624 indicating that such a result was intended.
Thus, in our opinion, there is nothing in section 959-a of the GML or any other law which permits a municipality to remove the EDZ exemption from an otherwise eligible business simply because the business has been decertified for other (non-property tax) purposes pursuant to GML, section 959-a.
December 10, 1991
{*} Where an EDZ is terminated, no new exemptions may be granted pursuant to section 485-e, but previously granted exemptions remain in effect (§ 485-e(5)).
