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Fact sheet: New York State taxable state-owned land

Why is state-owned land taxable?

  • Real property owned by New York State is generally exempt from taxation pursuant to Section 404 of the Real Property Tax Law. However, statutes have been added to the Real Property Tax Law and Environmental Conservation Law making certain lands owned by the state taxable for specific purposes.
  • In 2000, New York State paid approximately $108 million in local property taxes. By 2007, the total had increased to approximately $173 million.
  • The practice of taxing state land in New York began in 1886, when legislation permitting taxation of state-owned land in the Adirondack and Catskill regions was enacted. Since then, taxable status has been extended sporadically to some other state lands.
  • A major factor generally accepted as having motivated the original extension of taxation to the State Forest Preserve was the realization that, while state ownership conveyed benefits to residents of other areas of the state, costs were largely borne locally. In the late 1800s, the benefit that received the most attention was the protection of watershed areas to supply the heavily populated downstate metropolitan region with a high-quality and reliable water supply. Later on, the statewide benefits in terms of recreational and scenic amenities began to receive more emphasis, and this outlook continues to the present day.
  • At present, New York has a variety of compensation arrangements that have developed in a piecemeal manner over the past century. They include actual property taxes, from which the state would otherwise be immune but has consented to pay, as well as various payments in lieu of taxes (PILOTS) and local fees for services that directly benefit certain state-owned properties.

New York as a taxpayer

  • Taxable state land is assessed by the local assessor for the municipality in which it is located. The state, if it believes it is being over-assessed, has the same rights, and no more, than an individual taxpayer - that is, the state may seek administrative and (if necessary) judicial review of assessments. While any judicial review is being pursued, the state must continue to pay taxes based on the disputed assessments.
  • Each year the New York State Office of Real Property Tax Services (ORPTS) has the responsibility of reviewing local assessments of taxable state-owned lands. By statute, state-owned lands subject to taxation are to be valued by the assessor as if privately owned and assessed at the same percentage of full value as other taxable property in their respective assessing units. ORPTS reviews these assessments to ensure that they accurately reflect the value of the parcels so that the state is paying its fair share of the property taxes. ORPTS also provides a summary of the local assessments by taxing jurisdiction for each assessing unit to the Office of the State Comptroller so they can authorize payment of taxes.

Valuing large parcels of vacant/forest/waterfront property

ORPTS uses a market-based mass appraisal system to estimate the value of state-owned lands. The valuation method considers the value of land, standing timber, and lakeshore. This same methodology is used in ORPTS equalization studies to value forest lands.

It is widely recognized that land with lake frontage is especially valuable and waterfront values have risen dramatically in recent decades.

Whether waterfront or not, large tracts of land tend to have lower per-unit values. It goes without saying that the per-front-foot value of a residential lot with 80 feet of lakeshore may be more than the per-front-foot value of a 2,000-acre tract of forest land that includes thousands of feet of water frontage.

Therefore, the difference in per-acre value is based upon the physical difference between a large tract of vacant property and a small one suitable for one home - or "wholesale" versus "retail."

For instance, if someone were to buy the lakefront home, they would pay the going rate for that type of property in that particular market, all based on the size of the plot, its frontage, the improvements on the parcel, the quality of those improvement and its amenities, etc. All of those ancillary costs are built into the cost of the property just as the ancillary improvements are built into the parcel itself.

On the other hand, a 2,000-acre (or larger) parcel of unimproved vacant land would likely have little or no interior road access, utilities, water, etc. The value of that property would increase as that developer put more investment capital into it: legal filings, land management, risk, engineering, infrastructure, etc. Furthermore, the developer would need to make a return on this investment and a profit, so the eventual per-front-foot price of individual lots would be higher than the price the developer paid for the entire length of lake frontage. At that point the land would have more value than in its current vacant wild state.

Instead of comparing individual homeowners parcels values to larger tracts (in terms of per-acre assessments), a better comparison is the per-acre values of tracts of similar size, such as those owned by a timber company or a private park.