Volume 1 - Opinions of Counsel SBEA No. 116
State-owned property (liability for water and sewer district charges) - Real Property Tax Law, §§ 404, 490; Public Lands Law, § 19:
Exempt state-owned property located in a town water district is not liable for ad valorem levies imposed by the water district, but special assessments imposed on a benefit basis may be collectible if the requirements of section 19 of the Public Lands Law are met.
Our opinion has been requested regarding the liability of state-owned property for charges imposed on behalf of water and sewer improvement districts.
The specific question concerns an acquisition by the State of property located in a small water district which has outstanding thirty-year bonds issued to pay capital construction costs and amortized on the basis of existing assessed valuation. We have been asked whether or not the property to be acquired will be liable for charges imposed to pay the bonds.
The State of New York, by virtue of its sovereignty, is exempt from taxation unless it expressly consents to be taxed. The term “tax” in this context encompasses special ad valorem levies and special assessments, since these kinds of charges are in the nature of a tax. In any event, whether state-owned lands will be liable for general taxes or for charges imposed on an ad valorem or benefit basis depends on whether the State has consented to such liability.
The Real Property Tax Law contains some provisions with respect to the tax liability of state-owned lands. Section 404 provides that state-owned lands are exempt from taxation, and from special ad valorem levies and special assessments to the extent provided in section 490, except as otherwise provided in Title 2 of Article 5.
Section 490, read alone, seems to provide that exempt state-owned land is liable both for special assessments and special ad valorem levies imposed by town and town districts (where the property is in the unincorporated town area) or county districts for the capital construction costs of sewer and water systems. However, section 490 of the Real Property Tax Law must be read in conjunction with section 19 of the Public Lands Law, which qualifies the application of section 490 with respect to exempt state-owned land.
The purpose of section 19 of the Public Lands Law (and its predecessors) is to recognize that the real property of the State which is not subject to general taxes is liable for special assessments for local improvements where the State consents to the imposition of the charge. This section also provides a procedure to be followed if assessments for local improvements are to be collectible from the State.
In order for exempt state-owned lands to be liable for special assessments imposed on the basis of benefits conferred, the person or body authorized to impose the charge must give notice to the State Comptroller of the contemplated improvement and must give the Comptroller opportunity for a hearing. It is only after the notice is timely served and the proposed assessment is confirmed or uncontested that the assessment becomes collectible.
Generally, the collection of assessments against exempt state-owned lands for local improvements is controlled by section 19 of the Public Lands Law, and any assessment that does not meet the requirements of this section cannot be collected from the State. Special ad valorem levies do not fall within the kind of charges collectible under section 19, since this section contemplates payment of assessments imposed on the basis of benefits conferred, and only after notice and subsequent confirmation. Ad valorem levies, imposed at the same time and in the same manner as general taxes, would not be collectible under section 19 by virtue of the notice and confirmation requirements contained in the Section (1953 Op. Atty. Gen. 133 at 136-137). We understand that the State Comptroller has followed this opinion of the Attorney General since it was rendered in 1953, and does not pay charges imposed on an ad valorem basis.
Title 2 of Article 5 of the Real Property Tax Law does make certain taxable state-owned lands liable for special ad valorem levies, as well as special assessments, by specifically defining “taxation” in that Title to include special ad valorem levies. However, the parcel which the State contemplates acquiring would not come within these provisions.
Accordingly, the specific property in question would not be liable for the water district charges if it is acquired by the State since the charges now imposed by the water district are based on the assessed valuation of the property within the district, and not on the basis of benefits conferred.
November 17, 1970
NOTE: See also Opinion 7-88.