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Legislation Was Passed By Senate to Help End Abuse By Non-Profit of Tax Exempt Land Laws

June 22, 2011

State Senator John J. Bonacic accounted today that the full Senate passed legislation (S.2544) to stop land banking by non-profit organizations.

Land banking happens when tax exempt organizations buy land, take it off the tax rolls, and fail to use it. The corporations tend to seize the land and sell it for a profit. Land-banking is a large unfunded mandate on communities in the Catskills and Hudson Valley and add to New York’s high property taxes. The legislation was passed following a debate with bi-partisan support, by a margin of 40-21.

Senator John J. Bonacic who announced the legislation said, "There are many non profits who perform important services and use their land actively. This bill is not aimed at them. It is aimed at the abusers. It is aimed at the non- profit corporation that buys land, and then fails to use it. This is the first shot across the bow against the abusers."

If property is held by a tax exempt group or not used, under current law, non-profit corporations currently only have to show that they have plans and are in “good faith” to use the land for an exempt purpose. Which may mean that the non-profit entities will have the land for decades without actually using it.

With the new legislation, entities will have to prove with evidence – a higher legal standard than normal, their plans of usage of the land. Within five years, the entities would have to physically commence the planned improvements and complete the improvements within seven years.

Under Senator Bonacic’s legislation, local governments and schools will be paid the required taxes by the entities if they do not meet required timelines, for the seven year period they were exempted for, additionally having to pay taxes prospectively too. they will have to pay taxes

“Every time land comes off the tax rolls, that tax burden is shifted to homeowners and small businesses. Land banking is a real problem in the Hudson Valley and the Catskills. This legislation, if enacted by the Assembly, would provide relief to property taxpayers across New York State" Senator Bonacic said.