31% of NY State Land is Tax-Exempt—What Does That Mean?

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October 30, 2016; Democrat and Chronicle (Rochester, NY)

The issue of property tax exemptions for nonprofits remains a key concern across the U.S., especially in those eastern states where local governments rely most heavily on property tax revenues for their budgets.

In New York State, it’s an ongoing source of contention among landowners, so a team of USA Today Network journalists from across the state researched New York’s tax-exemption policy, the results of which were published in Gannett’s papers throughout the state.

Interest in which landowners are exempt from local property taxes is high. After all, as the report says, “for each exemption, the tax burden grows for those who are not exempt.” Some of the findings:

  • Statewide: Thirty-one percent of New York’s land value is tax-exempt. Of its $2.8 trillion in land value, about $866 billion of it never gets billed.
  • Religious groups: The value of religious groups’ land bypassed for taxation has nearly doubled from $14 billion to $26 billion between 1999 and 2015. Rochester (568 properties worth $141 million) and Ramapo (523 properties worth $265 million) are among the top five communities with the highest number of tax-exempt religious nonprofit properties in the state.
  • Hospitals: Nonprofit hospitals’ tax-exempt property increased in value from $13.1 billion to $22.7 billion over the past 16 years. Sixteen hospitals and health systems had $2.6 billion invested in the Caribbean, Central America, and other foreign countries in 2014 alone.
  • State land: New York State pays tax on 90 percent of the 4 million acres it owns. The other 10 percent exposes a patchwork system of ad hoc deals that is dependent, in part, on who had the political juice to forge a deal.
  • Industrial development agencies: More than 4,600 deals granted more than $1 billion in sales and property tax exemptions in 2014, but a state report found “little correlation” between private-sector job growth and IDA projects.
  • Colleges: State University of New York schools own $10 billion worth of land, which would have yielded $316 million annually in tax payments if not exempted. Nonprofit educational organizations, including private colleges and universities, if taxed, would have generated $1 billion last year.

Property tax exemptions benefit those nonprofits that own land, which tend to be larger organizations with considerable assets, such as the churches, hospitals and colleges studied in the report. Most smaller community-based service providers, such as mental health or educational nonprofits, as well as most advocacy nonprofits, rent their facilities from others (primarily for-profit landlords), so are not impacted by exemptions.—Larry Kaplan