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Volume 1 - Opinions of Counsel SBEA No. 13

Opinions of Counsel index

Miscellaneous organizations (Nonprofit organizations) (Ecological) - Real Property Tax Law, § 420:

Real property owned by a nonprofit corporation which is organized for ecological purposes is exempt from real property taxes if the exclusive use of such property includes a professional or scientific management of the area in conjunction with a specific program of plant and animal development and a planned public use of the area for educational purposes.

A question has been raised as to whether real property owned by the Ashford Hollow Foundation for the Visual and Performing Arts is entitled to exemption from real property taxation.

In determining whether real property satisfies the requirements of section 420 of the Real Property Tax Law, it must be borne in mind that statutes exempting real property from taxation must be strictly construed, and that no exemption will be granted by any doubtful implication. In other words, the right to the exemption must be clearly established according to the statutory provision, and if a doubt exists, then that doubt should be resolved in favor of taxation (Lawrence-Smith School Inc. v. City of New York, 280 N.Y. 805 21 N.E.2d 693).

Whether an organization is organized exclusively for exempt purposes within the meaning of subdivision 1 of section 420 must be determined from the purposes recited in its certificate of incorporation. The copy of the Foundation’s provisional charter (which apparently has become absolute) provides that:

“2. The purposes for which such corporation is to be formed are:

a. To maintain and operate a public museum and center for the visual and performing arts;

b. To acquire, hold, own, lease, exhibit, display, create, promote and sponsor artistic works and performances; and

c. To promote, plan and carry on education and public information in the visual and performing arts.”

These purposes satisfy several of those which are set forth in section 420 including the exclusive use of real property for “the moral or mental improvement of men and women, . . . [and for] charitable, benevolent, . . . educational, public playground, . . . or for two or more such purposes . . . ”. Since these are the exclusive purposes of the Foundation, the requirements of the first portion of the statute are satisfied.

A second requirement of section 420 is that the property must be used exclusively for the exempt purposes of the statute. Compliance with this requirement must in the final instance be a determination by the local assessor based on firsthand knowledge. However, if the description of the use of its land furnished by the Foundation is entirely accurate, we can provide the following opinions as to the actual use of the real property:

1. As to the 60 acres set aside for a school site, subdivision 3 of section 420 of the Real Property Tax Law provides as follows:

     “3. Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association or (b) such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more such purposes shall be erected upon such premises or some part thereof.”

It is our opinion that paragraph (a), above, requires that the nonprofit corporation have specific and concrete plans to use the real property. If such details cannot be provided and if the assessors are not satisfied that such plans exist, then the exemption should be denied.

2. As to the 225 acres used for picnic, festival and exhibit purposes, these seem to clearly satisfy the requirements of section 420 and should therefore be exempt.

3. As to the 120 acres used for a “wild game preserve” there are several additional factors which must be considered. First, it must be determined exactly what form of activity comes within the Foundation’s definition of a “game preserve”. It is our opinion that a parcel of land which is simply isolated from public and private use and which is unmanaged and which, therefore, becomes a totally wild dwelling place for whatever plants and creatures come to inhabit it would not be a use which is set forth in section 420, and, therefore, would be taxable real property.

However, if there is professional or scientific management of the area in conjunction with a specific program of plant and animal development along with planned public use of the area for educational purposes, then it is our opinion that such use would be among those set forth in section 420 and that such property should be exempt.

The use of real property for ecological purposes is a relatively new concept insofar as it relates to the exempt status provided in section 420. However, the very slight legal precedent available would seem to indicate that certain ecological uses of real property do qualify for exempt status under section 420 (People ex rel. Untermeyer v. McGregor, 295 N.Y. 237, 66 N.E.2d 292; Petition of North Manursing Wildlife Sanctuary, 52 Misc.2d 96, 274 N.Y.S.2d 917, rev’d 28 App. Div.2d 891, 282 N.Y.S.2d 18; In re American Museum of Natural History, 17 Misc.2d 855, 187 N.Y.S.2d 390).

The third requirement of section 420 concerning the prohibition against officers, members and employees of the organization receiving any pecuniary profit from its operations is satisfied by subdivision 4 of the provisional charter which states:

“The corporation hereby created shall be a non-stock corporation organized and operated exclusively for educational purposes, and no part of its earnings or net income shall inure to the benefit of any individual, and no officer, member or employee of the corporation shall receive or be entitled to receive any pecuniary profit from the operations thereof, except reasonable compensation for services.”

The final requirement of section 420, that the organization cannot be a guise or pretense for such pecuniary profit, can only be deemed to be satisfied upon an examination by the assessors of the financial statements of the Foundation.

From the information supplied to us, it is our opinion that at least 225 acres of the real property of the Foundation is exempt, and it is possible that the remaining 180 acres may be exempt pending an investigation of the actual use of the property.

January 28, 1971

Updated: