Volume 2 - Opinions of Counsel SBEA No. 81
Nonprofit organizations exemption (religious) (church owned vacant land) - Real Property Tax Law, §§ 421, 422:
Where church-owned vacant land is not being used for religious or charitable purposes and there is no intent to so use it, and a private corporation organized for profit intends to erect private homes for sale or lease in a profit making venture, no exemption will be allowed. Case-by-case analysis is necessary for determining whether or not a particular housing facility is operated for charitable purposes. Vacant lands are not entitled to an exemption under section 422 of the Real Property Tax Law.
We have received an inquiry requesting our opinion as to the taxable status of certain vacant real property owned by a Catholic Diocese.
An intent to put a subdivision of private homes on this property has been filed by an organization which plans to erect 136 homes for private individuals on this property. The assessor plans to list the property on the assessment roll as fully taxable.
While we are unable to offer a definitive opinion on the information set forth above, below are several guidelines which should assist an assessor in reaching a determination in this type of situation.
Assuming that the vacant land in question is not being used for religious purposes, that there is no intent to use the land for religious or charitable purposes, and that the organization planning the development is a private corporation organized for profit and intends to use such property to erect private homes for lease (or sale) in a profit making venture, an exemption may not be allowed since there is no statutory authority for granting an exemption under such circumstances.
Pursuant to the provisions of section 421 (formerly 420) of the Real Property Tax Law, real property owned by a corporation or association organized exclusively for religious, charitable, hospital, educational or cemetery purposes, or for two or more such purposes, and used exclusively for carrying out thereupon one or more such purposes, either by the owning corporation or association, or by another such corporation or association, shall be exempt from taxation.
If the proposed project qualifies under section 421 of the Real Property Tax Law, an exemption may be allowed. This will depend upon whether the proposed housing will be used exclusively for “charitable” purposes. Whether or not a particular housing facility is operated for charity depends upon the facts of each case. For example, if fees charged the tenants are sufficient to cover all or most of the costs, there would be, in our opinion, no “charity”. On the other hand, where substantial deficits are incurred, which are made up by contributions, subsidies from the owning organizations and the like, and most of the tenants are unable to afford regular rental rates charged in comparable properties, a charitable use could probably be found even though some fees are charged (American Russian Aid Ass’n v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123, aff’d 260 N.Y.S.2d 589.)
Attention is called to section 422 of the Real Property Tax Law which grants a tax exemption with respect to the property of certain nonprofit regulated housing companies used to provide housing for certain persons, including handicapped or aged persons of low income. In order that such property qualify for exemption under section 422, it must be owned by a nonprofit corporation organized pursuant to the Not-For-Profit Corporation Law and certain provisions of the Private Housing Finance Law. It should be noted, however, that, in our opinion, vacant lands as such are not entitled to an exemption pursuant to section 422. The real property for which exemption is sought under section 422 must be used exclusively to provide housing for the persons enumerated therein.
May 8, 1972