New York Advisory Opinion TSB-A-13(5)C / (4)I: How is a 'qualifying census tract' for the historic rehabilitation credit determined when the 2010 census lacks median-family-income data?
Plain-English summary
A developer leasing a building complex in the Brooklyn Navy Yard (Census Tract 543) planned to rehabilitate it into a commercial facility expected to be a certified historic structure. It asked whether the tract is a "qualifying census tract" for New York's credit for rehabilitation of historic properties (available under Articles 9-A, 22, 32 and 33; e.g., Tax Law § 210.40(5)).
A qualifying census tract is one identified as at or below 100% of the state median family income in the most recent federal census. The problem: the 2010 census didn't capture median family income that way, relying instead on the American Community Survey (ACS), whose single-year samples have wide error margins. To give taxpayers a clear, determinable standard, the Department concluded the test should use a combination of the 2000 federal census (the most comprehensive data) and the most recent ACS (more current economics). Applying that: in 2000, Tract 543 had zero population, so it was below 100% of the state median family income; and the 2011 ACS reported the tract's median family income at $14,688, far below the statewide $66,852. So Census Tract 543 qualifies.
What this means for you
Developers rehabilitating historic properties
Whether your project sits in a qualifying low-income census tract is gateway eligibility for the historic rehabilitation credit. With the 2010 census lacking the needed income data, the Department uses the 2000 census plus the most recent ACS to make that call — so check both.
Accountants and tax professionals
Pull both the 2000 federal census figures and the latest ACS median-family-income data for the tract, and compare against 100% of the state median family income. The opinion also flags that pending 2013-2014 budget legislation would shift the standard to a five-year ACS estimate measured as of January 1 each year — watch for the statutory update.
Common questions
Q: How is a "qualifying census tract" determined for the historic rehabilitation credit?
A: It must be at or below 100% of the state median family income, determined using the 2000 federal census combined with the most recent American Community Survey.
Q: Why not just use the 2010 census?
A: The 2010 census did not capture median family income the same way; the ACS data fills that gap.
Q: Can my project rely on this opinion?
A: No. It binds the Department only as to this petitioner and these facts, and the governing standard may have since changed by statute.
Citations and references
- Tax Law § 210.40(5) (credit for rehabilitation of historic properties; qualifying census tract at or below 100% of state median family income)
- Credit available under Articles 9-A, 22, 32 and 33 of the Tax Law; IRC § 47 (federal rehabilitation credit)
- U.S. Census Bureau 2000 federal census and American Community Survey (2011 ACS) data
Source
- Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_2013.htm
- Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/multitax/a13_5c_4i.pdf
Original ruling text
New York State Department of Taxation and Finance
Office of Counsel
Advisory Opinion Unit
TSB-A-13(5)C
Corporation Tax
TSB-A-13(4)I
Income Tax
March 27, 2013
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
PETITION NO. Z130211A
The Department of Taxation and Finance received a petition for Advisory Opinion from
name and address redacted. The issue is whether Petitioner is located in a qualifying census tract
for purposes of the credit for the rehabilitation of historic properties allowed under Articles 9-A,
22, 32 and 33 of the Tax Law.
Facts
The City of New York (the “City”) owns a fee simple interest in certain land and
improvements, colloquially referred to as the Brooklyn Navy Yard, located in the City of
New York, County of Kings, and located within Census Tract 543, as defined by the 2000 and
2010 U.S. Censuses.
On July 1, 2012, the City leased certain property located within Census Tract 543 to
Brooklyn Navy Yard Development Corporation (“BNYDC”). On September 6, 2012, BNYDC,
with the express consent of the City, leased a building complex located within Census Tract 543
to Petitioner. Petitioner will renovate the building complex and turn it into a commercial facility.
The building complex is expected to be a certified historic structure that qualifies for a federal
rehabilitation tax credit under Section 47 of the Internal Revenue Code of 1986, as amended.
The 2000 U.S. Census determined that Census Tract 543 had zero population. The 2010 U.S.
Census determined that Census Tract 543 had a population, but did not provide any data on
median family income.
Analysis
One of the requirements for the credit for the rehabilitation of historic properties is that
the rehabilitation project must be located within a census tract that is identified as being at or
below 100% of the State median family income in the most recent federal census (see, e.g., Tax
Law §210.40(5)). For purposes of this Advisory Opinion, a census tract meeting this standard is
referred to as a “qualifying census tract.” Prior to the availability of the 2010 federal census
data, the standard to determine a qualifying census tract involved identifying those census tracts
from the 2000 federal census that were at or below 100% of the State Median Family Income.
Unfortunately, the 2010 census data does not capture this data but relies on the American
Community Survey (ACS) to maintain this information. However, the sample data collected for
ACS for any particular year is limited and does not provide a comprehensive picture of the
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TSB-A-13(5)C
Corporation Tax
TSB-A-13(4)I
Income Tax
March 27, 2013
economics of a specific census tract. As a result, the annual ACS data has wide margins of error
that make the data, by itself, less than ideal for establishing the financial picture of a community.
Due to the lack of comprehensive Median Family Income data in the 2010 census and in
order to provide clear and determinable guidelines to taxpayers regarding their qualifications to
claim this credit under current law, we conclude that the standards to determine whether a census
tract is a qualifying census tract should use a combination of data that includes the 2000 Federal
Census and the most recent ACS. This approach allows for the most comprehensive data (the
2000 Census) to remain in use and adds current data from the ACS that reflects more recent
economic conditions.1
As noted above, in 2000, Census Tract 543 had zero population. Therefore, in the 2000
census, it was a census tract that was below 100% of the State Median family income.
Moreover, the most recently available ACS data, the 2011 ACS issued by the U.S. Census
Bureau on December 6, 2012, reports median family income for Census Tract 543 in the amount
of $14,688, which is significantly below the current New York statewide median family income
of $66,852 (as reported by the ACS). Therefore, based upon the combination of the 2000 federal
census data and the most recent ACS data, we conclude that Census Tract 543 is a qualifying
census tract for purposes of credit for the rehabilitation of historic properties allowed under
Articles 9-A, 22, 32 and 33 of the Tax Law.
DATED: March 27, 2013
NOTE:
1
/S/
DEBORAH R. LIEBMAN
Deputy Counsel
An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.
We note that the State Budget for 2013-2014 currently pending in the State Legislature, in recognition of the fact
that the census data no longer captures median family income, modifies the eligibility standard to be a census tract
which is identified as being at or below 100% of the state median family income as calculated as of January 1 of
each year using the most recent five year estimate from the American Community Survey (S 2609-D/A. 3009-D,
Part F).