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Volume 1 - Opinions of Counsel SBEA No. 100

Opinions of Counsel index

Nonprofit organizations, exemption (drug rehabilitation center) - Real Property Tax Law, § 420:

A drug rehabilitation center operated by the Catholic Charities of the Archdiocese of New York is entitled to an exemption from real property taxes.

Our opinion has been requested as to the taxable status of a drug rehabilitation center owned and operated by the Catholic Charities of the Archdiocese of New York.

An exemption from taxation is available to nonprofit organizations which are exclusively organized for certain enumerated purposes and which exclusively use their real property for one or more of those purposes. These purposes, as set forth in section 420 of the Real Property Tax Law include:

“. . . the moral or mental improvement of men and women, or for religious, bible, tract, charitable, benevolent, missionary, hospital, infirmary, educational, public playground, scientific, literary, bar association, medical society, library, patriotic, historical, or cemetery purposes, [or] for the enforcement of laws relating to children or animals . . .”

“The Catholic Charities of the Archdiocese of New York” satisfies the exclusively organized requirement in that its Charter (enacted by the State Legislature, Chapter 256, Laws of 1917) contains the following statement of purposes:

“2.  A statement of the objects for which the association was formed, which be to aid, support, and advise, and to conduct, by itself or in co-operation with any charitable, benevolent, or educational corporation, association, committee or any other agency, now or hereafter existing which shall be affiliated with the corporation hereby organized, any or all philanthropic work which shall be carried on within the state of New York or elsewhere, and which shall be primarily for the benefit of the Catholics within the respective dioceses, including the sustenance, shelter and relief of the needy and of such Catholics as are dependent and sick, crippled, deformed, chronic invalids, convalescents, infants, orphans, widows, aged, infirm, forsaken, deaf, dumb, blind, defectives or delinquents; the assistance of immigrants and their children; to induce the adoption by the community at large of such measures in the organization and administration of charity as may develop self-respect and increase the power of self-support of the poor; to place destitute, dependent and neglected children in family homes, and for that purpose to receive Catholic children by surrender, commitment or otherwise, the moral, religious and physical training of the young and adolescent; the securing of employment for those in need thereof; the promotion of self-support and other cognate ends; but not excluding any other charitable or benevolent purposes not herein enumerated.”

The listing is consistent with the purposes of section 420.

As to the exclusive use requirement of section 420, it is our opinion that the operation of a nonprofit drug rehabilitation center is a hospital, charitable, and/or benevolent use depending upon the particular circumstances of its operation.

A nonprofit professionally organized and staffed institution which systematically cares for sick and injured people has been held to be exempt both as a hospital and as a charitable and benevolent organization. And such classifications do not necessarily require that treatment be offered free of charge (People ex rel. Doctors Hospital, Inc. v. Sexton, 267 App. Div. 736, 48 N.Y.S.2d 201, aff’d 295 N.Y. 553, 64 N.E.2d 273, Stony Wold Sanitorium v. Keese, 112 App. Div. 738, 98 N.Y.S. 1088).

An organization operating a drug rehabilitation center may also be classified as “charitable” if it accepts any addict, irrespective of his ability to pay. Such organization, would, in our opinion, be operating for the care, custody and treatment of ill people, and the furnishing of such care is of the highest public purpose and should be classified as a charitable activity (Associated YM-YWHA’s of Greater New York, Inc., v. D’Angelo, 38 Misc.2d 1082, 239 N.Y.S. 2d 722, Jewish Mental Health Society v. Village of Hastings-on-Hudson, 255 App. Div. 77, 5 N.Y.S.2d 567, aff’d 279 N.Y. 764, 18 N.E.2d 857, People ex rel. Untermyer v. McGregor, 295 N.Y. 237, 66 N.E.2d 292).

Finally, a drug rehabilitation center can be classified as benevolent in that it is offering its facilities to people in need of assistance who would likely continue unaided were it not for the activities of the organization in question. In discussing the correctness of interpreting benevolent to include such activities which are of benefit to the general public, one court has held that “judges cannot close their eyes to conditions which every member of the community must know exists, nor to considerations which appeal to every right-thinking citizen.” (Webster Apartments v. City of New York, 118 Misc. 91, 193 N.Y.S. 650, aff’d 206 App. Div. 749, 200 N.Y.S. 956). Additional case law supporting this principle includes the following: National Navy Club of New York, Inc. v. City of New York, 122 Misc. 89, 203 N.Y.S. 114, Corporation of Yaddo v. City of Saratoga Springs, 216 App. Div. 1, 214 N.Y.S. 523, People ex rel. Corporation of Yaddo v. Freeman, 259 N.Y. 620, 182 N.E. 207, People ex rel. Alumnae Ass’n. Mt. Sinai Hospital School of Nursing v. Rizzardi, 273 App. Div. 1024, 79 N.Y.S.2d 245).

It is our opinion, therefore, that a bona-fide nonprofit drug rehabilitation center operated by the Catholic Charities is entitled to an exemption from taxation.

Finally, we are aware that there are local regulatory provisions (e.g., building codes) and State regulations (Executive Law, section 747) which may be applicable to the facility in question. Violation of such regulatory provisions has no effect on the tax exemption (Jewish Mental Health Society v. Village of Hastings-on-Hudson, supra.

November 24, 1971

Updated: