There have been two recent and favorable changes relating to the popular Industrial and Commercial Abatement Program (ICAP). ICAP can significantly abate property taxes that would otherwise be imposed because of construction, renovation, or expansion work on eligible projects.
ICAP Special Areas Certified: Eligible Projects in These Locations Can Apply for 25-Year ICAP Benefits
Projects located in what are referred to as ICAP Special Areas have historically been eligible to receive up to 25-year ICAP benefits, which is longer than ICAP benefits elsewhere in NYC. On September 25, 2015, the ICAP Statute and NYC Local Law were amended to require that ICAP Special Area benefits would lapse and otherwise eligible projects would receive a shorter ICAP benefit, unless the ICAP Boundary Commission met before January 1, 2016 and certified ICAP Special Area boundaries.
The first piece of good news for developers and owners is that the ICAP Boundary Commission met in the fall of 2015 and certified ICAP Special Area boundaries. The NYC Department of Finance (DOF), which administers the ICAP program, has confirmed this information. Eligible projects located in the recently certified ICAP Special Areas, and which otherwise meet the requirements of the ICAP Statute and Local Law, can apply to receive 25-year ICAP benefits (subject to limitations for excess retail space and to future changes to the ICAP Special Area boundaries).
ICAP Statute Extended from 2017 to 2019
As part of the Rent Act of 2015, the ICAP Statute was extended for two years, from 2017 to 2019. Commercial or other nonresidential projects seeking ICAP benefits must file an ICAP Preliminary Application by March 1, 2019 and perform construction work pursuant to a building permit issued on or before April 1, 2019.
DOF will determine the eligibility and benefit duration of projects applying for ICAP benefits according to the ICAP Statute, local law, and the circumstances of particular ICAP applications.
Reminder: ICAP Continuing Use Certification Filings are Due January 5
Properties that are currently receiving ICAP benefits are required to file a renewal with DOF every other year by January 5 in order to continue receiving benefits. Property owners who are due to file an ICAP Continuing Use Certification by January 5, 2017 should expect to receive a letter from DOF with renewal application information in the fall of 2016.
ICAP is an important part of the NYC real estate toolbox of a developer, owner, or investor. Venable's New York real estate practice advises these entities on leveraging the benefits of the ICAP and various other residential tax exemptions. Please contact the author for questions about your New York City project.