Volume 6 - Opinions of Counsel SBEA No. 85
Business investment exemption (local option) (school districts) - Real Property Tax Law, § 485-b:
Fiscally independent school districts, including those in Nassau, Suffolk and Westchester Counties, may exercise the option to reduce the percentage of exemption authorized by section 485-b of the Real Property Tax Law.
We have been asked whether school districts in the counties of Suffolk, Westchester and Nassau may exercise the option in subdivision 7 of section 485-b of the Real Property Tax Law to reduce the percentum of the business investment exemption.
Section 485-b provides that real property which has been improved subsequent to July 1, 1976, for the purpose of commercial, business or industrial activity, may receive a partial exemption from taxation and special ad valorem levies for a ten-year period, subject to the option of each of the municipalities within which the property is located to reduce the percentage of exemption otherwise allowed. The measure of the exemption set forth in section 485-b is 50 percent of the increase in assessed value due to the new improvements the first year, decreasing by 5 percentage points each year thereafter for nine years.
Subdivision 7 of section 485-b expressly provides:
7. A county, city, town or village may, by local law, and a school district which levies school taxes may, by resolution, reduce the percentum of exemption otherwise allowed pursuant to this section. . . . A copy of any such local law or resolution shall be filed with the state board.
This provision authorizes each county, city, town, village and school district to act independently to reduce the percentum of exemption otherwise allowed. The power to exercise the option is not limited to assessing units (Real Property Tax Law, § 102(1)), but, rather, is also given to counties and to school districts which levy school taxes. Where no action is taken by a specific municipality, the exemption applies to the taxes to be levied by or on behalf of the respective municipality to the extent set forth in subdivision 2(a) of the statute. Thus, a local law adopted by the governing body of a county reducing the percentum of exemption would apply solely to exemptions from taxation to be imposed for county purposes. Similarly, a local law adopted by a town governing body would apply solely to town taxation and would not, for example, apply to school district taxation.
The question presented here is whether the option to reduce the percentum of exemption is available to school districts in Suffolk, Westchester and Nassau Counties. Clearly, the language of subdivision 7 of section 485-b grants the authority to reduce the percentum of exemption to school districts which levy school taxes. Equally clearly, section 1306 of the Real Property Tax Law provides for the levy of school taxes by the local school authorities.
With the exception of fiscally dependent school districts (i.e., those enumerated in Article 52 of the Education Law – school districts of cities with 125,000 inhabitants or more), all school districts, including those located in the counties mentioned above, are fiscally independent; that is, their budgets are independently determined, and the amounts to be raised by taxation are fixed by the respective school authorities. For purposes of this inquiry the principal distinguishing factor is that in all fiscally independent school districts, except those in the three enumerated counties, the school authorities annex the warrant to the school tax roll for the collection of taxes (Real Property Tax Law, § 1306), whereas in Suffolk, Westchester, and Nassau counties, the warrant for school tax collection is annexed by either the county or, in Westchester, the town.
Each of these three counties is governed to some extent by a special code or tax act which differs from the general provisions of the Real Property Tax Law. And to the extent that the applicable charter or code provisions of the three counties supersede the Real Property Tax Law, the actual levy of school taxes in those counties becomes less clear.
In Suffolk County, town assessors are required to certify to the respective school districts the total amount of taxable property within each school district (Suffolk County Tax Act, § 7). The school district authorities are required to compute and adopt the tax rate necessary to raise the amount required by the district and certify the tax rate and the total amount to be raised to the town supervisor (SCTA, § 8). The town supervisor extends the school tax on the assessment roll, which is then transmitted to the county legislative body for annexation of the warrant for the collection of taxes (SCTA, §§ 10, 12, 13(a)). Section 8 of the Tax Act, entitled “Certification and Levy of School Tax,” provides for action by the board of education or trustees of each school district.
In Westchester County, pursuant to the Westchester County Administrative Code, school districts located in that county determine and fix the amount of their budget to be raised by taxation, certify the same to the supervisor o| the town, who is responsible for extending the school district taxes on the assessment roll and executing a warrant for the collection of taxes (Westchester County Administrative Code, §§ 540, 541, 550). Section 540 of the Code, entitled “Determination and Levy of Tax,” provides for action by the board of education or trustees of each school district.
In Nassau County, the assessment roll used for the collection of school district taxes is prepared by the county board of assessors rather than by the towns located within the county (Nassau County Administrative Code, §§ 6-18.0, 6-19.0) {*}. As provided by the Nassau County Administrative Code, each school district located in that county determines the amount of its budget to be raised by taxation and certifies the budget and tax rate to the board of assessors, which extends the school district taxes on the assessment roll (§§ 6-20.0, 6-21.0). Finally, after the adoption of the budget and extension of the taxes, the Code provides that “the board of supervisors shall levy the taxes so extended for such school district purposes in accordance with such Certificate” (§ 6-22.0).
The word “levy” as applied to taxation is given a variety of meanings. Strictly speaking, a levy is the legislative act which determines that a tax shall be laid and fixes its amount (Cooley, Law of Taxation, Vol. 3, pp. 2043-2044). However, a school district tax levy is a multistep process which includes the filing and delivery of the appropriate assessment roll or rolls, the adoption of the school district budget, the computation of the amount to be raised by real property taxation, the adoption or confirmation of the assessment rolls, the apportionment of the tax, the striking of the tax rate or rates, the extension of taxes and the annexation of the warrant.
Precise statutory definition of what constitutes a real property tax levy is often lacking, particularly with respect to school tax levies. As a result, the courts have often been called upon to rule on the question of which local government entity possesses the tax levying power. Our reading of the relevant case law leads us to the conclusion that the courts look to the entire process in making that determination. For example, in the case of Wister Corp v. Safewy Stores, Inc., 40 Misc.2d 320, 243 N.Y.S.2d 107, the court concluded that
A tax levy includes, and is preceded with an annual assessment or valuation of real property. In People ex rel. Oswego Falls Corp. et al. v. Foster et al; 278 N.Y. 494, 15 N.E.2d 433, affg. 251 App.Div. 65, 68, 295 N.Y.S. 891, 895, the Court of Appeals in effect adopted the following statement: “To levy an assessment implies the doing of whatever is necessary in order to authorize the collector to collect the tax [citation omitted]” (40 Misc.2d 320, 243 N.Y.S.2d 107, 110)
In relation to the school districts in the three counties mentioned above, the annexation of the warrant is a ministerial act done after a specified state of facts are presented to the county or town, which does not exercise judgment or discretion. The budgetary determinations, including the monetary amounts to be raised by real property taxation, are made solely by the school district authorities. Moreover, in both Suffolk and Westchester the applicable provisions of local law impliedly confer the power to levy on the school districts (SCTA, § 8; WCAC, § 540). The basically parallel provisions of the Nassau County Administrative Code produce the same initial sequence of events. However, as noted above, the Nassau Code provisions alter the basic procedures by providing for extension of school taxes by the board of assessors (NCAC, § 6-21.0) and “levy” of school taxes by the board of supervisors (NCAC, § 6-22.0).
In the face of these somewhat ambiguous (and anomalous in the case of Nassau County) provisions, we have reviewed the legislative history of section 485-b.
Evidence of the intent of the Legislature in enacting section 485-b is obtained from the memorandum of the State Executive Department issued when the original bill became law (L.1976, c.278). This memorandum states, in part, “Any local government or school district is empowered to reduce the percentage of exemption allowed pursuant to this bill.” (emphasis supplied) Further, “In order to eliminate the initial possibility of competition among units of local government within the State, the exemption is applicable originally statewide. However, the bill does contain a local option provision which counties, cities, towns, villages and school districts may exercise” (McKinney’s 1976 Session Laws of New York, p. 2310). (emphasis supplied)
Clearly, the intention of the Legislature was to authorize the option to all fiscally independent school districts and exclude only those fiscally dependent city school districts whose costs are met by taxation determined and collected in the same manner and at the same time as other taxes of the city are collected (i.e., those enumerated in Article 52 of the Education Law). In other words, in cities with fiscally dependent school districts, an act of the city legislative body reducing the percentum of exemption would apply uniformly to all city costs to be raised by taxation, including city school district expenses. There is no logical basis or argument for excluding those fiscally independent school districts in the aforementioned counties from exercising this option. And, in fact, our records indicate that 39 school districts in Suffolk County, 20 school districts in Westchester County and 24 school districts in Nassau County have adopted resolutions reducing or eliminating the section 485-b exemption for their tax purposes.
Accordingly, it is our opinion that school districts in Suffolk County, Westchester County and Nassau County may exercise the option in subdivision 7 of section 485-b of the Real Property Tax Law to reduce the percentum of the business investment exemption.
July 24, 1979
NOTE: Superceded by Opinion 8-111.
{*} The city school district in Glen Cove uses the city assessment roll for the levy of school district taxes (L.1953, c.897, § 325; Real Property Tax Law, § 1302), whereas the city school district in Long Beach uses the county assessment roll (L.1958, c.960, § 28; NCAC, §§ 5-2.0(8), 5-6.0).