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Volume 5 - Opinions of Counsel SBEA No. 53

Opinions of Counsel index

Nonprofit organizations exemption (free public library) (vacant land) - Real Property Tax Law, § 421:

Vacant land located outside a city, which is owned by a free public library and leased as a hunting reserve, is not entitled to an exemption pursuant to subdivision 6 of section 421 of the Real Property Tax Law.

We have received an inquiry concerning the taxable status of a parcel of real property located outside a city and belonging to a free public library. The land is not occupied or used for library purposes and is leased as a hunting reserve. It is agreed that the property is not exempt pursuant to subdivision 1 of section 421 of the Real Property Tax Law because it is not being exclusively used for library purposes. The question is the construction to be given to subdivision 6 of such section.

Section 421 (i.e., § 420) was enacted as part of the recodification of the Real Property Tax Law (L.1958, c.959). Subdivision 6 of said section provides as follows:

6. Such real property outside a city owned by a free public library or held in trust by an educational corporation for free library purposes shall be so exempt from taxation although a portion thereof is leased or otherwise used for purposes of income, if such income is necessary for and is actually applied to the maintenance and support of such library.

In our opinion, it is clear that the phrase “such real property” refers to real property owned by corporations listed in subdivision 1 (e.g., libraries).

Subdivision 6 of section 421 is derived from former subdivision 6 of section 4 of the Tax Law. That section provided, in part, as follows:

§ 4. Exemption from taxation
The following property shall be exempt from taxation:
***
6. The real property of a corporation or association organized exclusively for . . . library . . . purposes. . . . [P]rovided also that the real estate owned by a library free to the public, or held in trust by an educational corporation for free library purposes, if such library or corporation is situate outside of a city, shall not be taxed as to that portion thereof leased or otherwise used for purposes of income, when such income is necessary for and actually applied to the maintenance and support of such library. . . .

It is to be noted that the recodification of the Real Property Tax Law was not intended to substantively change then existing law. In fact, subdivision 6 of section 2002 [formerly §1602] of such law provides, in part, as follows:

6. The repeal by this chapter of section four of the tax law . . . and the reenactment of the provisions thereof in article four of this chapter are intended to effectuate a continuation and restatement, without change in substance or effect, of the provisions of such law and no exemption heretofore granted shall be broadened, increased, discontinued, diminished or impaired, or new exemption granted or authorized by reason of such reenactment.

In construing the prior law (Tax Law § 4(6)), the State Comptroller stated that:

[E]xclusive use of the property for library purposes is a condition precedent to the exemption and that its leasing or use for other purposes offends the statute and subjects the property or portions thereof so leased or otherwise used to taxation as in the case of taxable property generally. . . . It follows therefore that real estate owned by a library and not used exclusively for such purposes is subject to taxation. If the entire building is used exclusively for library purposes, then the same is not taxable; if a portion only of the building is used exclusively for library purposes, then such building shall be so exempt only to the extent of the value of the portion so used, and the remaining or other portion, to the extent of the value of such remaining or other portion, shall be subject to taxation. However, there is an exception in the case of libraries located outside of cities. The real estate of such libraries shall not be taxed as to that portion thereof leased or otherwise used for purposes of income, when such income is necessary for and actually applied to the maintenance and support of such library (7 Op.State Compt. 153).

It seems clear from this opinion of the State Comptroller that the exemption for leased library property is limited to property actually used in part for library purposes and is not applicable to vacant lands owned by the libraries.

In an opinion written after the recodification of the Real Property Tax Law, the Comptroller again construed subdivision 6 (24 Op.State Compt. 387). After discussing the exemption available to libraries pursuant to subdivision 1, the Comptroller goes on to state:

However, subdivision (6) goes a step further and allows a library association or corporation to make a profit from the lease (or other use) of a portion of tax exempt property, if such profit is necessary for and is actually applied to the maintenance and support of the library.

The Comptroller then reached the conclusion that:
A town may grant a total exemption to real estate owned by a free association library, where a building thereon contains not only the library but also an income-producing apartment, provided that the income therefrom is necessary for and applied to the support and maintenance of the said library. (emphasis added)

Based on our reading of the relevant statutes and the administrative opinions construing such statutes, it is our conclusion that vacant land located outside a city, which is owned by a free public library and leased as a hunting reserve, is not entitled to an exemption pursuant to subdivision 6 of section 421 of the Real Property Tax Law.

October 20, 1975

Updated: