Volume 6 - Opinions of Counsel SBEA No. 83
Business investment exemption (local option) (taxable status date) - Real Property Tax Law, § 485-b:
Where a school district adopts a resolution under the provisions of section 485-b of the Real Property Tax Law reducing the percentage of exemption to zero and the resolution is in effect on the current taxable status date, no new exemption may be authorized for school district purposes on the assessment roll to be prepared on the basis of that taxable status date. For properties which had qualified for and were granted an exemption on a prior assessment roll, the exemption continues for the term existing at the time the exemption was first granted.
Our opinion has been requested as to the effect of the local option provision of Real Property Tax Law, section 485-b, on otherwise qualified property in a school district where the resolution (reducing the exemption to zero) is adopted some six weeks prior to the taxable status date for the assessment roll to be used in levying school district taxes.
Section 485-b provides for a ten year exemption on certain new construction, alterations, installations or improvements for the purpose of commercial, business or industrial activity. The measure of the exemption is fifty percent of the increase in assessed value due to such construction the first year, decreasing by five percentage points each year thereafter for nine years (subd. 2(a)). Subdivision 7 of this section authorizes a county, city, town, village or school district, acting independently, to adopt a local law and school districts to adopt a resolution, to reduce the percentum of exemption otherwise allowed pursuant to this section. Where no action is taken by a municipality, the exemption applies for purposes of that municipality to the extent set forth in subdivision 2(a) of section 485-b (5 Op.Counsel SBEA No. 109). Should a municipality act to reduce the exemption, its act will apply only with respect to taxes to be levied by or on behalf of the acting municipality (6 Op.Counsel SBEA No. 27). A municipality has the option to reduce the percentage of exemption to zero (5 Op.Counsel SBEA No. 81; 32 Op.State Compt. 130). However, exemptions existing prior in time to such act are not subject to any reduction (6 Op.Counsel SBEA No. 45).
The act of a municipality taken to reduce the percentage of exemption authorized by section 485-b must be effective on or before the appropriate taxable status date which will be used in determining the taxable status of real property appearing on the assessment roll to be used in levying the municipality’s taxes (5 Op.Counsel SBEA No. 112). This is so because section 302 of the Real Property Tax Law provides that the taxable status of real property is to be determined annually as of taxable status date. The term taxable status encompasses a determination of eligibility for exemption from taxation, including exemption from taxation under section 485-b (5 Op.Counsel SBEA No. 81). Further, of some additional relevance to this discussion is our comment made in 1 Op.Counsel SBEA No. 119 relating to the local option exemption authorized by section 467 of the Real Property Tax Law. In that opinion we stated, “Where an applicant is qualified for exemption on taxable status day the exemption cannot be removed after that day, but if, after acceptance of an application, the facts change between filing date and taxable status day the application may be rejected.”
Accordingly, where a school district adopts a resolution under the provisions of section 485-b reducing the percentage of exemption to zero with such resolution in effect on the current taxable status date, no new exemption may be authorized for school district purposes on the assessment roll to be prepared on the basis of that taxable status date. For properties which had qualified for and were granted an exemption on a prior assessment roll, as indicated above, the exemption continues for the term existing at the time the exemption was first granted.
June 19, 1979
NOTE: On March 18, 1980, in Newsday, Inc. v. Town of Huntington, 103 Misc.2d 406, 426 N.Y.S.2d 409, Supreme Court (Special Term), Suffolk County, held that a corporation is entitled to an exemption pursuant to section 485-b of the Real Property Tax Law, notwithstanding the action of a school board prior to taxable status date to eliminate the exemption. Although the corporation had not yet filed its application for exemption, it had substantially completed its improvement as of the date of the school board’s action. The corporation claimed that it had acted in reliance on prior school board assurances and a board resolution that the section 485-b exemption would be applicable to school taxes. This case is currently on appeal.