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Department of Taxation and Finance

Volume 5 - Opinions of Counsel SBEA No. 96

Opinions of Counsel index

Public authorities exemption (Metropolitan Transportation Authority) (special assessments, liability) - County Law, § 271; Public Authorities Law, § 1275; Real Property Tax Law, § 102(15):

Real property belonging to the Metropolitan Transportation Authority is not exempt from special assessments imposed pursuant to section 271 of the County Law.

We have received an inquiry concerning the liability of property belonging to the Metropolitan Transit Authority for charges imposed on behalf of a sewer district created to provide sewer services in a part of Suffolk County.

According to the inquiry, the sewer district (hereinafter “District”) elected to finance the costs of the District under section 271 of the County Law. According to the provisions of section 271, the costs “will be assessed in proportion as nearly as may be to the benefit which each lot or parcel of land will derive therefrom.” This section also sets forth the manner in which the assessment roll is prepared together with the hearings required to be held on the assessment roll to consider objections made thereto.

Section 1275 of the Public Authorities Law sets forth the exemption from taxation accorded property of the Metropolitan Transportation Authority (M.T.A.). This section provides, in relevant part that:

Without limiting the generality of the following provisions of this section, property owned by the authority, property leased by the authority and used for transportation purposes, and property used for transportation purposes by or for the benefit of the authority exclusively pursuant to the provisions of a joint service arrangement or of a joint facilities agreement or trackage rights agreement shall all be exempt from taxation and special ad valorem levies. The authority shall be required to pay no fees, taxes or assessments on real estate, franchise taxes, sales taxes or other excise taxes, upon any of its property. . . .

The section further provides that the “terms ‘taxation’ and ‘special ad valorem levy’ shall have the same meanings as defined in section one hundred two of the real property tax law. . . .”

The nature of charges imposed pursuant to section 271 of the County Law was discussed recently by the Court of Appeals. In the case of Y.M.C.A. v. Rochester Pure Waters District, 37 N.Y.2d 371, 334 N.E.2d 586, 372 N.Y.S.2d 633, Judge Gabrielli said as follows (at pp. 376-377):

An analysis of various alternative methods of financing special improvement districts found in article 5-A of the County Law makes clear that the Real Property Tax Law exemptions were not intended to apply to charges levied pursuant to section 266. Under section 270 of the article district assessments must be made in proportion to the assessed valuation of real property and under the section 271 alternative assessments must be made in direct proportion to the benefit conferred on each lot or parcel of land. Thus section 270 imposes a “special ad valorem levy” and section 271 a “special assessment” as those terms are defined in subdivisions 14 and 15 of section 102 of the Real Property Tax Law. (emphasis in original)

Thus, the method authorized by section 271 is clearly that of imposing “special assessments” and not “special ad valorem levies” as those terms are defined in section 102 of the Real Property Tax Law.

In 1 Op.Counsel SBEA No. 23, we stated that where an exemption statute contains both a statement that the agency or authority “shall be required to pay no taxes or assessments upon any of its property” and a statement that the property of the agency or authority “shall be exempt from taxation” the latter statement controls. It then follows, as we said in that opinion, that the use of the word “assessments” in the first quoted statement was not intended to cover “special ad valorem levies” or “special assessments” as the terms are defined in section 102 of the Real Property Tax Law.

If this rationale is applied to this fact situation, the property of M.T.A. is not exempt from “special assessments” since the statute expressly exempts its real property only from “special ad valorem levies” and is silent in regard to “special assessments.” There is also a logical basis for this distinction when taking into consideration the nature of property owned by M .T.A. It is most reasonable to assume that although some of its properties will receive substantial benefit from these local improvements, others will receive little benefit, if any.

For example, it is difficult to imagine how the ad valorem value of a railroad right-of-way or subway tunnel in any way measures the benefit which this right-of-way or tunnel will receive from sewer or water improvements. Formulas available in imposing special assessments to measure the benefit derived from these local improvements are more flexible and can accommodate the degree of benefit received on the one hand by railroad stations and terminals, and on the other hand, by rights-of-way and subway tunnels.

We conclude, therefore, that property of the M.T.A. is not exempt from special assessments imposed pursuant to section 271 of the County Law.

August 31, 1976

NOTE:  Superseded by Opinion 10-16.