Volume 1 - Opinions of Counsel SBEA No. 11
Educational organizations (housing rented by faculty) - Real Property Tax Law, § 421:
Housing owned by an educational institution and rented to the faculty of such institution is not exempt from taxation unless a direct and essential relationship of such housing to the institution can be shown.
A question has been raised as to the relationship of the case of Application of Thomas G. Clarkson Memorial College of Technology v. Haggett (191 Misc. 621, 77 N.Y.S.2d 182, aff’d 300 N.Y. 595, 89 N.E.2d 882) to certain real property owned by a tax exempt educational institution and used to house faculty of that institution.
In our opinion the holding in the Clarkson College case cited above should be limited to that particular fact situation. The situation arose in the years immediately following World War II, and the court takes particular note of the problem as follows:
“As has been the common experience of educational institutions, its faculty, staff and student body have multiplied several times since the end of the war. To meet the demand for additional accommodations it has purchased and used several former residential properties in Potsdam and has also opened a branch at Malone in Franklin County. . . . Relator does not have a separate and integrated campus.”
It is this factor which we believe should be determinative in an analysis of the holding. Likewise in an analogous situation in which hospital-owned housing was held to be exempt when rented to hospital personnel (St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769, 237 N.Y.S.2d 308), it is the general unavailability of housing for essential personnel which provides the direct relationship to the exempt organization which we believe to be the crucial factor in granting the exemption.
There are two competing policies involved in the determination of these problems. On the one hand, there is a strong state policy to foster education, and exemption statutes should not be interpreted so strictly as to defeat this purpose (Plattsburg College Benevolent Educational Association v. Board of Assessors of Peru, 43 Misc.2d 741, 252 N.Y.S.2d 229). This is the basic consideration in the holdings discussed above. On the other hand, there is an obvious necessity for tax revenue, and the depletion of taxable land will obviously increase the private taxpayers’ tax burden. Therefore, exemptions are to be construed strictly against the party claiming them (Pace College v. Boyland, 11 Misc.2d 387, 179 N.Y.S.2d 38). These considerations are basic to the reasoning of an opinion of the State Comptroller in which it is stated that university-owned residences not located on or contiguous to the campus are not exempt from taxation when rented to or provided for faculty administrators (1 Op.State Compt. 106).
It is our opinion that if this real property is to be exempt pursuant section 421 of the Real Property Tax Law, there must be a more direct relationship to the exempt institution than is present in the situation in which the real property is used to house faculty. The court in the Clarkson College case notes that “essentially we here have for determination the question whether dwellings or apartments owned and maintained by a college but assigned to its teachers or administrators as private dwellings at a stated periodic rental. but without requirement that the same be open for public or semi-public educational or administrative activities, constitute such a part of the articulated educational system of the college as to permit their exemption from taxation.”
In our opinion such real property is essentially a private residence under the dominion and control of its occupant; it is equivalent to any other private residence in the municipality, such residences being private homes in which the family unit carries on typical familiar activities. In addition, the lessee is in as good or better a position to pay taxes as any other property owner in the municipality.
It is the opinion of this office that an exemption for such school-owned housing is available only when the property is clearly an integral part of the educational process. Within this category would be included property occupied by officials and personnel who must be readily available for the supervision of students and maintenance of school buildings. Also includable within this category would be the homes of school officials who are required to entertain or lodge guests on behalf of the school on a regular basis. The average faculty member would not come within these categories.
November 20, 1970