Volume 9 - Opinions of Counsel SBEA No. 92

Opinions of Counsel index

Foreign governments exemption (scope) (special assessments) – Real Property Tax Law, §§418, 490:

Parcels exempt from taxation pursuant to Real Property Tax Law, section 418, may be liable for special assessments in certain cases.

Our opinion has been requested concerning 11 parcels currently receiving "diplomatic exemptions" within a village. These exemptions include "sewer and refuse taxes," and the question is whether the exemptions are being correctly administered. It is not clear whether the sewer and refuse charges are village or county charges, so we will address both issues.

The issue of the taxable status of foreign government owned property is a difficult one, because, unlike most exemption issues, the relevant provisions are not limited to those in the RPTL. Federal treaties must also be examined.

Section 418(1) of the RPTL provides, in part:

Real property of a foreign government which is a member of the United Nations...the legal title to which stands in the name of such foreign government or the principal resident representative or resident representative with the rank of ambassador or minister plenipotentiary...used exclusively for the purposes of maintaining offices or quarters, for such representatives, or offices for the staff of such representatives, shall be exempt from taxation...and special ad valorem levies to the extent provided in section [490 of the Real Property Tax Law].

Section 490 of the RPTL provides that property, which is exempt pursuant to any of the sections of law therein listed, including section 418, is also exempt from most special ad valorem levies and special assessments. In 7 Op.Counsel SBEA No. 88, we concluded that properties exempt from taxation and located within a village also exempt from county special district charges (ad valorem or benefit) other than those representing the capital costs of water, sewer, drainage and highway improvements. Such property is liable for benefit assessments imposed by a village.*

It appears that six of the properties in question are occupied by United Nations Ambassadors. Assuming property titles are in the ambassadors or in their countries, the countries are United Nations members, and the properties are the quarters or residences of such ambassadors, then section 418 is determinative of the issue of taxable status.

Accordingly, if the sewer charge in question is for a county sewer district, property exempt pursuant to section 418 will be liable for the capital costs of the sewer charge. If the sewer charge is for a village sewer district, the property will be fully liable for a special assessment. If the refuse charge is for a county district, the property will be fully exempt; if the refuse charge is a special assessment for a village refuse district, the property will be liable. Naturally, if either "charge" is actually part of the general municipal tax, the property will be exempt.

If, however, any of these six properties is not entitled to the section 418 exemption (e.g., because it is not the ambassador's residence), the property may still qualify for exemption under the Vienna Convention on Diplomatic Relations. In 7 Op.Counsel SBEA No. 9, we discussed that treaty's tax exemption provision (Art. 23, §1). The exemption does not apply to "payment for specific services rendered." The quoted phrase would seem to include "special ad valorem levies" and "special assessments."

Three of the 11 subject properties are occupied by Consuls General. These properties are not exempt pursuant to section 418 or the diplomatic treaty (i.e., consuls are not equated with diplomats). They may, however, be exempt pursuant to the Vienna Convention of Consular Relations. As discussed in 5 Op.Counsel SBEA No. 6, real property owned by the career head of a consular post, if used as his or her residence, is exempt from taxation, but not from special ad valorem levies or special assessments.

The remaining two parcels are owned by the country of Finland, but it is unclear who, if anyone, occupies the property. For these properties to be exempt from taxation, the conditions of section 418 or those of a U.S. treaty must be satisfied. If neither the diplomatic nor the consular treaty is relevant, it is possible that a bilateral treaty between the U.S. and Finland may exist. In the absence of such a provision, however, the property may not be entitled to any exemption at all (see, Republic of Argentina v. City of New York, 25 N.Y.2d 252, 250 N.E.2d 698, 303 N.Y.S.2d 644 (1969)).

March 14, 1991

*Villages may not impose special ad valorem levies (RPTL, §102(14)).

Updated: August 31, 2012