If you intend to develop or renovate an industrial or commercial property in New York City, you may be eligible for a significant tax abatement under the New York State Industrial and Commercial Abatement Program, or ICAP.
Designed to replace the Industrial Commercial Incentive Program (ICIP), which came to an end in 2008, the ICAP is administered by the New York City Department of Finance, which issues Certificates of Eligibility. Qualified projects may receive a real property tax abatement for up to 25 years.
What Project Types are Eligible?
For your project to be eligible, it must involve the building, expansion, modernization, or overall improvement of a commercial or industrial building in certain areas of the city.
What Areas are Covered?
Covered areas include Brooklyn, Queens, Staten Island and the Bronx and certain districts in Manhattan.
- For new commercial construction, projects may be located anywhere in the city of New York except for the area south of 96th Street and north of Murray, Frankfort, and Dover Streets.
- Commercial renovations can be anywhere in the city except the area between 59th and 96th Street. If your project site is somewhere below 59th Street, special additional benefits are available in the Garment Center District, which is bordered by Murray Street, Battery Place, South Street, and West Street.
What are the Benefits?
Benefits under the ICAP vary depending on:
- Whether your project is a new construction or a renovation/improvement
- Whether the property will have a retail purpose
- The project site location
Tax abatements of up to 25 years are available, although most projects qualify for 10 or 12 years. Commercial renovations in lower Manhattan and the Garment District, for example, are eligible for a tax abatement of up to 12 years while the rest of Manhattan below 59th Street faces a benefit schedule of 10 years.
What Criteria Applies to Improvements?
For renovations and other improvements, you must spend a minimum of 30% of the property’s taxable assessed value within four years of receiving the building permit (or the construction date if a permit is unnecessary). Additional benefits are available for industrial projects that spend 40% of the taxable assessed value. In addition, all work must be completed within five years.
What About Retail Projects?
When a construction project in a designated area has a retail portion of over 10%, IACP benefits are calculated separately. For renovation work in covered areas, benefits are available for retail spaces equal to or less than 5% of the project.
What About Residential Projects?
The ICAP is intended to benefit developers of industrial and commercial projects, so no more than 20% of the total square footage can have a residential purpose. If the percentage is higher, apportionment is necessary.
Information regarding ICAP fees and deadlines can be found here.
At Rosen Law, we routinely file applications for commercial and industrial projects under the ICAP. We will meet with you at your convenience, go over your project, and determine the best way for you to benefit from this particular tax abatement program. Our goal is to save you money, so we will also look at other abatement and exemption opportunities. For more information or to schedule an appointment, call Rosen Law today at (516) 437-3400, or contact us.