Volume 1 - Opinions of Counsel SBEA No. 47
Scope of exemption (special assessments and ad valorem levies) - Real Property Tax Law, §§ 102, 300, 490:
The granting of an exemption from real property taxation generally does not include an exemption from special assessments and special ad valorem levies unless the property is one of the classes specified in section 490 of the Real Property Tax Law, and unless the property meets certain other requirements.
We have received an inquiry concerning the liability of exempt real property (in both the public and private sector) for “user assessments” for use of local services.
In New York State, all real property is subject to real property taxation, special ad valorem levies and special assessments unless exempted therefrom by law (Real Property Tax Law, section 300).
Many exemption statutes provide that the subject property shall be exempt from “taxation”. In such instances, the subject property would be exempt from county, city, town, village and school district taxes. However, an exemption from “taxation” does not, in and of itself, carry with it an exemption from special ad valorem levies and special assessments.
Some exemption statutes, on the other hand, extend the exemption to include exemption from special ad valorem levies and special assessments to the extent provided in section 490 of the Real Property Tax Law.
Section 102(20) defines taxation as “* * * a charge imposed upon real property by or on behalf of a county, city, town, village or school district for municipal or school district purposes, but does not include a special ad valorem levy or a special assessment.”
Section 102(14) defines a special ad valorem levy as “* * * a charge imposed upon benefited real property in the same manner and at the same time as taxes for municipal purposes to defray the cost, including operation and maintenance, of a special district improvement or service, but not including any charge imposed by or on behalf of a city or village.”
Section 102(15) defines a special assessment as “* * * a charge imposed upon benefited real property in proportion to the benefit received by such property to defray the cost, including operation and maintenance, of a special district improvement or service or of a special improvement or service, but does not include a special ad valorem levy.”
Briefly summarized, section 490 of the Real Property Tax Law provides that property entitled to exemption from taxation pursuant to some twenty-two sections of the Real Property Tax Law, if located outside cities and villages, is exempt from special ad valorem levies and special assessments except those imposed for the capital costs of construction of specified classes of improvements. In cities, there are no special ad valorem levies, and all charges imposed at the same time and in the same manner as taxes for municipal taxes are considered general taxes.
Traditionally, in this State and in other states, the granting of an exemption from taxation has not included an exemption from special assessments and other levies which are imposed on benefited property to finance the various services (such as fire, sewers, water, etc.) which confer special benefits on exempt property. Such special assessments and other levies are considered to constitute an equivalent or compensation for the enhanced value or added benefits which the property derives by virtue of the services rendered to it.
Section 490, exempting certain classes of property outside of cities and villages from all but certain specified special assessment and other levies, is an exception to this traditional approach.
It should be particularly noted that where the exemption from special assessments and special ad valorem levies is granted by the provisions of section 490, the classes of properties included are those where the exemption from taxation is based upon the use of the property for a public or quasi-public purpose or for carrying out a publicly desirable enterprise or activity (for example, churches, colleges, public playgrounds, hospitals, cemeteries, American Legion Posts).
On the other hand, exemptions which are granted to give tax relief to specific classes of persons for performing desirable services (such as veterans, clergymen and volunteer firemen or to needy persons such as persons over 65 with limited income) have always been confined to exemption from taxation.
January 18, 1972