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Volume 7 - Opinions of Counsel SBEA No. 88

Opinions of Counsel index

Exemptions generally (special ad valorem levies and special assessments) (tax exempt property within cities and villages) - Real Property Tax Law, §§ 490, 2002; Westchester County Administrative Code, § 237.91:

Real property which is exempt from taxation pursuant to one of the sections enumerated in section 490 of the Real Property Tax Law, is also exempt from special ad valorem levies and special assessments of a county special district (other than capital costs of water, sewer, drainage and highway improvements), whether the property is located in a city, a village, or the unincorporated area of a town.

The provisions of the Westchester County Administrative Code which limit the scope of the exemption from County sewer district charges, have no application to other types of County special district charges.

We are asked whether tax exempt real property located in Westchester County is liable for special ad valorem levies imposed on behalf of a County garbage district. It has been suggested that only those tax exempt properties located within cities and villages are liable for the special district charge.

A statute which confers an exemption from “taxation” does not thereby confer exemption from a “special ad valorem levy” or a “special assessment”. For example, section 462 of the Real Property Tax Law (RPTL) exempts from “taxation” real property owned by a religious corporation while actually used by the officiating clergyman for residential purposes. Such an exemption does not include exemption from either special ad valorem levies or special assessments (5 Op.Counsel SBEA No. 122; see also, 1 id. No. 23).

In contrast, many sections of the RPTL grant exemption from taxation and from “special ad valorem levies” and “special assessments” (see, e.g., §§ 420-a(8), 408, 406). Inclusion of reference to the latter two types of charges is almost always followed by the limiting phrase “to the extent provided in [§ 490]”. (One exception to this rule is the exemption granted to real property used for cemetery purposes. See, RPTL, § 446(1), as amended by L.1981, c.920.)

Section 490 provides that real property, exempt from taxation pursuant to specified sections of the RPTL, is also exempt from certain special ad valorem levies and special assessments but liable for others. Those types of charges to which the exemption provisions do not apply (i.e., charges for which all such properties are liable) are the so-called “capital costs” (costs for acquisition, construction, etc.) of the following types of improvements:

(a) water supply and distribution systems;
(b) sewer systems;
(c) waterways and drainage improvements; and
(d) street, highways, road and parkway improvements. {*}

Since a garbage district does not fall within one of these four categories, we must consider the exemption language of section 490 to determine the liability of properties for the district’s charges.

Historical analysis of section 490 of the RPTL and its predecessor statute (Tax Law, § 4) is essential to our answer. This is so because of a “Saving Clause” included with the enactment of the RPTL (L.1958, c.959). That “Saving Clause”, set forth in subdivision 6 of section 2002 {**}, provides as follows:

6. The repeal by this chapter of [§ 4] of the tax law . . . and the re-enactment . . . thereof in article four of this chapter . . . [is] 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 re-enactment. (Emphasis added).

Chapter 876 of the Laws of 1953 amended section 4 of the Tax Law, by adding a definition of the word “taxation”, for the purpose of clarifying what charges could be imposed upon “tax-exempt” real property. From a series of memoranda in the Governor’s Bill Jacket for Chapter 876, we find that the definition of “taxation” was added in response to requests from owners of tax exempt real property, for legislation to clarify their liability for “district” charges. Two contradictory judicial opinions construing the liability of such properties for those charges had apparently prompted the owners of those properties to seek a legislative resolution (compare, People ex rel. New York School for the Deaf v. Townsend, 173 Misc. 906, 18 N.Y.S.2d 865 (S.Ct., Westchester Co., 1940), aff’d, 261 App.Div. 841, 25 N.Y.S.2d 1002 (2d Dept., 1941), aff’d, 298 N.Y. 645, 82 N.E.2d 37 (1948) [holding tax exempt property liable for district charges]; and Rector v. Town of Eastchester, 197 Misc. 943, 99 N.Y.S.2d 991 (S.Ct., West-Chester Co., 1950) [holding tax exempt property to be exempt from district charges]).

In relevant part, the definition of “taxation”, as added by Chapter 876, included:

3. Assessments . . ., for or in relation to a special or district improvement or a special or district service against real property located outside cities and villages, or such assessments for such purposes against real property in county improvement districts or district corporations . . . (emphasis added).

In our opinion, there is no question that the language just quoted included in the definition of “taxation” a county special district charge against all exempt real property within the district, including that located within a city or village. Thus, property exempt from “taxation” was also to be exempt from county special district charges. The limiting reference in section 4 of the Tax Law to “property located outside cities and villages” was set off by a comma from the succeeding language concerning assessments imposed in county improvement districts or district corporations and was therefore not applicable to county district charges.

Moreover, we see no logic in construing that section of the Tax Law as authorizing county special district charges to be imposed upon “exempt” properties within cities and villages. This would indeed be a twisting of the legislative intent. In a memorandum dated April 8, 1953, from the State Comptroller, and included in the aforementioned Bill Jacket, it was said that the purpose of the bill (which became Chapter 876 of the Laws of 1953) was to ensure that “tax-exempt” properties outside of cities and villages received no less of a benefit from their exempt status than similar properties within those jurisdictions. Since all city and village “ad valorem” charges were included in the general city or village “tax” levy, an exemption from “taxation” carried with it an exemption from charges which, elsewhere, would be “ad valorem” district levies. As an example, the Comptroller compared the imposition of costs for fire protection in cities, villages and the unincorporated areas of towns. He stated (on p.1 of his memo) as follows:

In a city or village all taxable property pays its share of the cost of providing fire protection in proportion to its assessed valuation. Because the charge for fire protection in a city or village is clearly a tax, property used for purposes which are exempt from taxation . . . in cities and villages is exempt from the tax. Hence, in a city or village properties used for such exempt purposes do not pay for the governmental service of fire protection.

However, the Comptroller noted that in the area of towns outside of villages, the situation was very different. There, a fire district service was “financed from charges on real estate imposed on all real property within the district or a zone of the district on an ad valorem basis. Property otherwise exempt from taxation is legally liable for these charges to the same extent . . . as taxable property” (memo, P.2).

Given this legislative history, it is our opinion that Chapter 876 of the Laws of 1953 was not intended to increase the liability of tax exempt properties within cities and villages to include county special district charges generally. That is, the limiting reference to property located outside of cities and villages does not affect the exemption granted from county special district charges. That being the case, section 490 of the RPTL must be similarly construed.

In 1958, Chapter 959 of the Laws of that year enacted the Real Property Tax Law and the relevant provision of section 4 of the Tax Law was included in section 490 of the new Law. Section 490 provides that real property exempt from taxation pursuant to one of the 23 sections enumerated therein is also exempt from “special ad valorem levies and special assessments {***} against real property located outside cities and villages for a special improvement or service or a special district improvement or service and special ad valorem levies and special assessments imposed by a county improvement district or district corporation . . .”. The one significant difference between this language and its predecessor (Tax Law, § 4) is the omission of the comma between the reference to non-county charges and that to county charges. Thus, a cursory reading of this language could lead one to the conclusion that property within cities and villages is not entitled to exemption from any special ad valorem levies or special assessments.

However, upon closer examination we note that while the statute twice refers to “special ad valorem levies and special assessments”, only the first reference is followed by the exclusionary language (i.e., “real property located outside cities and villages”). That is, the Legislature imposed no geographic limitations when defining the scope of exemption from the second category of such charges, namely, county district charges. More simply, section 490 declares that certain properties which are exempt from taxation are also exempt from:

(1) special ad valorem levies and special assessments against real property located outside cities and villages for special improvements or service or a special district improvement or service;

AND

(2) special ad valorem levies and special assessments imposed by a county improvement district or district corporation.

In the first group, we would include town special district charges (whether “ad valorem” or “benefit”) and special assessments imposed by a village or city. {****}  The second category would be special ad valorem levies and special assessments imposed by or on behalf of a county improvement district or district corporation. In regard to these latter exemptions, we note again that there is no limitation as to the location of the property.

Had the Legislature intended the limiting reference regarding property “outside cities and villages” to extend to county special district charges, we believe it would have either: (a) repeated the exclusionary language in the phrase regarding county districts; or (b) excluded the repetition of the phrase “special ad valorem levies and special assessments” preceding the reference to county districts. The Legislature did neither and, thus, in our opinion, intended to distinguish the extent of the exemption afforded in the case of county district or improvement charges from all other special district charges.

Even if there is doubt as to the meaning of section 490 (e.g., because of the omission of the comma between the two phrases), as we have previously noted, section 2002(6) of the Real Property Tax Law requires us to construe section 490 as having the same meaning as section 4 of the Tax Law. Accordingly, it is our opinion that real property which is exempt from taxation pursuant to any of the sections enumerated in section 490 of the RPTL is also exempt from special ad valorem levies and special assessments of this Westchester County garbage district, regardless of the location of such property, i.e., whether within a city, village, or the unincorporated area of a town. To the extent that previous opinions of this office may have expressed or implied a contrary conclusion, they are incorrect (see, 1 Op. Counsel SBEA Nos. 47 and 50; 3 id. No. 56; 5 id. Nos. 105, 108; but see, 1 id. No. 116; 3 id. No. 22; 4 id. No. 76).

Finally, it has been suggested that all exempt parcels “except federal and state properties. County parks and highways and cemeteries”, should be liable for the County garbage district charges. We assume that these types of properties were singled out because they are the same properties made exempt from Westchester County sewer district taxes by a special law applicable only to that County.

Section 237.91 (formerly § 168) of the Westchester County Administrative Code provides, in regard to charges imposed by that County’s sewer districts, that:

Notwithstanding the provisions of any general, special or local law,. . . no lots or parcels of land in any county sewer district shall be exempt from the taxes and assessments to be imposed as provided by this title, except such as may belong to the United States or be used as a cemetery, or property acquired by the state or county for park or parkway purposes.

Although this section supersedes conflicting provisions of the RPTL (see, 6 Op.Counsel SBEA No. 37), it applies only to charges of Westchester County sewer districts. There is no comparable provision governing the liability of exempt properties for County garbage district levies. Accordingly, this section would not affect our conclusion that real property which is exempt from taxation pursuant to one of the sections listed in section 490 is exempt from Westchester County garbage district charges, regardless of the location of the real property.

In summary, we believe a fair reading of section 490 leads to the following conclusions:

A. Properties exempt from “taxation” are liable for capital costs of (1) water supply and distribution systems; (2) sewer systems; (3) waterways and drainage improvements; (4) street, highway, road and parkway improvements. This is so regardless of: (a) the location of the property (within a village, a city or the unincorporated area of a town); (b) the nature of the charge (whether imposed on an ad valorem or benefit basis); and (c) the jurisdiction by or on behalf of which the charge is imposed (a county special district levy, a town special district levy, or a benefit assessment imposed by a village or city);

B. Properties exempt from taxation and located in the unincorporated area of a town are exempt from: (1) special ad valorem levies and special assessments imposed by (or on behalf of) either a town special district or a county special district for capital cost of districts or improvements other than those mentioned in “A”; and (2) operation and maintenance costs of any district or improvement;

C. Properties exempt from taxation and located within a city or village are: (1) exempt from county special district charges (ad valorem or benefit) other than those described in (A) above; but (2) liable for benefit assessments imposed by that city or village.

August 12, 1982


{*}  Section 490 also provides that there is no exemption from “special assessments payable in installments on an indebtedness. . . contracted prior to [July 1, 1953] . . .”. Obviously, this has no application to charges imposed on behalf of a newly formed district.

{**}  Formerly § 1602, renumbered by Chapter 39 of the Laws of 1973.

{***}  The terms “special ad valorem levy” (defined in RPTL, § 102(14)) and “special assessment” (defined in RPTL, § 102(15)) only became formal parts of the property tax vocabulary with the codification of the Real Property Tax Law in 1958.

{****}  The definition of a “special ad valorem levy” excludes city and village charges (see, RPTL, § 102(14)).

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