N.Y. Comp. Codes R. & Regs. tit. 6 § 638.4

Current through Register Vol. 46, No. 50, December 11, 2024

Section 638.4 - Differentiating between base building and tenant space

This Part enumerates and explains the criteria by which systems, equipment and components are classified as belonging to the base building or the tenant spaces.

(a) Tenant improvements to be classified as part of tenant space.

(1) All components and any other item which is a tenant improvement belongs to and is part of tenant space and must be treated as such for the purpose of determining compliance with the requirements of this Part and section 19 of the Tax Law.

(2) All tenant improvements must comply with the requirements applicable to tenant space, and tenant space must be evaluated inclusive of tenant improvements.

(b) Distinction between base building and tenant improvements.

(1) Nonresidential tenant spaces.

(i) The following components located within a nonresidential tenant space are tenant improvements belonging to tenant space:

(a) partitions separating tenant space from base building or other tenant spaces;

(b) partitions within the tenant space;

(c) doors and windows between the tenant space and base building, and within the tenant space;

(d) ceilings;

(e) flooring and carpet systems;

(f) wall finishes;

(g) interior movable louvers and shades;

(h) millwork; and

(i) lighting system.

(ii) The following components located in a nonresidential space are tenant improvements belonging to tenant space if they meet the criteria of paragraph (3) of this subdivision:

(a) pipes, and hydronic or steam terminal devices;

(b) ducts, and air delivery terminal devices;

(c) fans, pumps, primary heating equipment, primary cooling equipment, and other mechanical equipment;

(d) controls for mechanical equipment used for space conditioning;

(e) mechanical rooms and mechanical spaces;

(f) lobbies that serve only the tenant space;

(g) corridors located within the tenant space;

(h) interior stairways, if these stairways only connect areas within a tenant space;

(i) special-purpose interior glazing; and

(j) interior light shelves.

(2) Residential tenant spaces.

(i) The following components located within a residential tenant space are part of the tenant space and must comply with the requirements for tenant space:

(a) movable furniture, and fixed furniture installed by the tenant;

(b) movable lighting fixtures, including the associated lamps;

(c) rugs; and

(d) movable wall coverings.

(ii) Any or all of the following components located within a residential tenant space, if installed and paid for by the base building owner are part of the base building for purposes of the requirements of this Part and section 19 of the Tax Law:

(a) ceiling finishes;

(b) flooring and carpet system;

(c) wall finishes, except movable wall coverings;

(d) bathroom and kitchen cabinetry, and built-in furniture;

(e) molding, wainscoting;

(f) fixed lighting fixtures; and

(g) clothes washers, dishwashers, refrigerators, freezers, refrigerator/freezer combinations;

(3) The components listed in subparagraph (1)(ii) of this subdivision are tenant improvements belonging to and part of the tenant space if all four of the following conditions are met:

(i) the components exclusively serve the tenant space;

(ii) the components were specifically designed for the tenant space;

(iii) the energy-using components, if any, are metered to allow their energy consumption to be billed to the tenant space;

(iv) the tenant or tenants of the tenant space paid for the components. A tenant paid for a component if:

(a) the component was purchased directly by the tenant, either as a unit already in place, or for the cost of the materials and of the labor to have it installed;

(b) the cost of the component was paid for by the owner of the base building, but such cost is to be recovered from the tenant through increased payments under the lease between owner and tenant, provided that the lease agreement explicitly states the amount of the lease payments which are attributable to the cost of the component; or

(c) the cost of the modification of an existing component was paid for by the tenant to make it fit for its own use and to bring it into compliance with requirements of this Part and section 19 of the Tax Law.

(1) the cost of the component that a tenant claims as an allowable cost must only be the cost of the modification for which it paid;

(2) in addition, the entire system that is located in the tenant space (not only the portion for which the tenant paid) must be considered part the tenant space and as such becomes subject to all the requirements of this Part applicable to tenant spaces.

N.Y. Comp. Codes R. & Regs. Tit. 6 § 638.4