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Volume 2 - Opinions of Counsel SBEA No. 72

Opinions of Counsel index

Housing exemption (redevelopment companies) - Private Housing Finance Law, § 125(1):

The effect of an amendment to Private Housing Finance Law, section 125(L. 1969, c. 1121), whereby a maximum of a forty year exemption was authorized with respect to federally aided housing projects, was prospective only, so that a city which had previously contracted for a twenty-five year exemption was not constrained to grant the longer exemption.

The effect of an amendment to Private Housing Law, section 125 (L. 1968, c. 717), providing that where a municipality acts in behalf of a school district in assessing real property or levying taxes thereon, the contract with the redevelopment company has the effect of exempting the project from school district taxes, was prospective only. Therefore, a city which had previously contracted that in the event of the passage of the amendment to the Private Housing Finance Law, permitting an exemption from school taxes, the amount of the exemption would be paid directly to the city, was not bound by such amendment.

We have received an inquiry concerning the effect of two amendments to section 125 of the Private Housing Finance Law on the tax exemption provisions of a contract which a city entered into with a redevelopment company a few years ago.

The project of the redevelopment company located in the city is financed by a forty year federally-aided mortgage. The contract, dated March 2, 1966, provides for an exemption of the project property from local and municipal taxes for a period of twenty-five years. At the time the contract was executed, section 125 authorized the local legislative body of any municipality to exempt by agreement with, any redevelopment company “for such definite period of years as such contract may provide.” It further provided that the exemption “shall not operate for a period of more than twenty-five years * * *.”

Section 125 was subsequently amended by Chapter 1121 of the Laws of 1969 to provide with respect to federally-aided projects that “the tax exemption shall operate for so long as such mortgage is outstanding, but in no event for a period of more than forty years * * *.” Section 2 of the said chapter provides “This act will take effect immediately.”

With respect to this amendment the questions are whether (a) it binds the city to a forty year exemption though the city contracted for only twenty-five years, and (b) if it does so bind the city, is it constitutional as so applied.

Under the provisions of another amendment of section 125 (chapter 717 of the Laws of 1968), where a municipality acts in behalf of a school district in assessing real property or levying taxes thereon, the contract with the redevelopment company has the effect of exempting the project property from school district taxes. This act also provides “This act shall take effect immediately.”

The contract negotiated by the city in 1966 provides that in the event of an amendment to the Private Housing Finance Law so as to permit exemption from school taxes, the amount as shall be exempt from school taxes is directed to be paid to the city.

The same two questions are asked as to this amendment, namely (a) does it apply to the exemption contract, and (b) if it does, is it constitutional?

It is our opinion that both of these amendments are prospective in operation and apply only to exemption contracts executed on or after the effective date of each amendment.

In New York State, the general rule of construction is that an amendment will have prospective application only, unless its language clearly indicates that it should receive a contrary interpretation. (McKinney’s Statutes, § 52 and cases cited in footnotes.) In Matter of Miller, 110 N.Y. 216, 18 N.E. 139, the Court of Appeals found that the language in an amendatory act “it shall take effect immediately” excludes the idea that it should have any retrospective operation. (Accord: People ex rel. Beckford v. Cheshire, 128 Misc. 10, 217 N.Y.S. 215 and Abelson v. Abelson, 59 Misc.2d 172, 298 N.Y.S.2d 381.)

We also believe that this construction is dictated by the nature of the amendments. Under section 125, localities have the option of exempting all or part of the value of a project and it is a reasonable assumption that both the duration of an exemption and whether or not school taxes are exempt are important factors which the legislative body would consider in determining the amount of exemption it is willing to give. The fact that the contract actually contemplated that the amendment regarding school taxes might be enacted does not in our minds alter this construction. It is the legislative intent, not the intent of the contracting parties, which controls. There could be other exemption contracts which did not consider this possibility.

In view of our conclusion that neither amendment applies to or affects contracts executed prior to the effective date, it is not necessary to consider any possible constitutional problems.

December 22, 1969

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