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Volume 6 - Opinions of Counsel SBEA No. 47

Opinions of Counsel index

Business investment exemption (ownership) (leased property) (lease to State or other governmental entity) - Real Property Tax Law, § 485-b:

A recently constructed privately owned improvement, constructed with the intention of leasing the same to the State for providing a governmental service (police substation) and now so used, may qualify for the partial exemption authorized by section 485-b of the Real Property Tax Law.

Our opinion has been requested as to whether a recently constructed privately owned improvement, constructed with the intention of leasing same to the State for providing a governmental service (police substation) and now so used, may qualify for the partial exemption authorized by section 485-b of the Real Property Tax Law.

At the outset it is observed that were the property owned outright by the State or other governmental entity, the property would be totally exempt from taxation (see, Real Property Tax Law, §§ 404, 406). At issue here is eligibility for a partial exemption for a limited period of time. The relevant provisions of section 485-b relating to this inquiry are contained in subdivisions 1 and 5. Subdivision 1 reads:

Real property constructed, altered, installed or improved subsequent to the first day of July, nineteen hundred seventy-six for the purpose of commercial, business or industrial activity shall be exempt from taxation, special ad valorem levies and service charges to the extent hereinafter provided.

Subdivision 5 reads:

The provisions of this section shall apply to real property used primarily for the buying, selling, storing or developing goods or services, the manufacture or assembly of goods or the processing of raw materials. This section shall not apply to property used primarily for the furnishing of dwelling space or accommodations to either residents or transients other than hotels or motels.

As pertinent to the inquiry, the above quoted provisions, when read together, provide that the exemption authorized by that section may apply to real property recently constructed for the purpose of commercial or business activity and used primarily for providing services. It appears evident that the subject property was constructed for the purpose of commercial or business activity and that the property is being used to provide a service. We have previously stated that otherwise qualified real property may be eligible for this exemption despite the existence of a lease (5 Op.Counsel SBEA No. 98) since the statute contains no requirement that an owner-applicant must himself use or occupy the property for its intended purpose, We note, in addition, that the statute contains no prohibition against leasing real property to the State or any other governmental entity.

Accordingly, as to the subject property, both the construction activity and Use requirements of section 485-b would appear to be satisfied, and the fact that the property may be leased to the State or any political subdivision thereof would not, of itself, disqualify the property from the benefit contemplated by this statute.

April 6, 1979

Updated: