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Volume 1 - Opinions of Counsel SBEA No. 26

Opinions of Counsel index

Housing development fund company (exemption) - Private Housing Finance Law, § 577:

The grant of an exemption by a city to the property of a housing development fund company has the effect of exempting the property from school taxes as well as county and city taxes.

Subdivision 1(a) of section 577 of the Private Housing Finance Law authorizes the local legislative body of any municipality in which a housing development fund company project is located or is to be located to exempt the real property in such project from local and municipal taxes including school taxes, other than assessments for local improvements, to the extent of all or part of the value of the property included in the completed project.

Subdivision 1(b) of that section provides as follows:

“Where a municipality acts on behalf of another taxing jurisdiction in assessing real property for the purpose of taxation, or in levying taxes therefor, the action of the local legislative body of such municipality in granting such tax exemption shall have the effect of exempting the real property in such project from local and municipal taxes including school taxes, other than assessments for local improvements, levied by or in behalf of both such taxing jurisdictions”.

The term “taxing jurisdiction” is defined in subdivision 12 of section 572 of the Private Housing Finance Law as follows:

“Any municipal corporation or district corporation, including any school district or any special district, having the power to levy or collect taxes and benefit assessments upon real property, or in whose behalf such taxes or benefit assessments may be levied or collected”.

And finally, the terms “municipal corporation” or “municipality” are defined in subdivision 16 of section 2 of such law to mean a

“city, town or village, or a. . .county department of assessment with the power to assess real property”.

          In our opinion the application of the various definitions to the exemption language of subdivision 1(b) of section 577 clearly shows that the legislature intended that a grant of an exemption by a city to the property of a housing development fund company has the effect of exempting the property from school taxes as well as county and city taxes. That is, the prerequisites set forth in subdivision 1(b) necessary for effecting an exemption from school district taxes are present. The particular city involved is a “municipality” as defined in section 2, and acts on behalf of a school district (a “taxing jurisdiction” as that term is defined in section 572) in assessing real property for school taxation purposes (Real Property Tax Law, section 1302). Therefore, according to the literal wording of the law, (section 577 1(b)), the action of the city in granting the exemption shall have the effect of exempting the real property in such project from local and municipal taxes including school taxes. . .” levied by such taxing jurisdiction (the school district). (Emphasis supplied.)

That this is the intent as regards school taxes is supported by the fact that a school district is not a “municipality” as that term is defined in the Private Housing Finance Law. The provision in subdivision 1(a) of section 577 empowering “the local legislative body of any municipality” to grant an exemption “from local and municipal taxes including school taxes” would be meaningless under any other construction. (Emphasis supplied.) In other words, school districts are not authorized to exempt these projects from school taxes; therefore, subdivision 1(b) must give this power to “municipalities” (cities, towns, villages and some counties).

In 1968, language identical to that contained in subdivision 1(b) of section 577 was added to the Redevelopment Companies Law (Private Housing Finance Law, section 125, subdivision 1(c) as added b y L.1968 c. 717). The legislative memorandum of the sponsor indicates the amendment was designed to make an exemption given by a municipality under that law effective in also exempting a project from school taxes (New York State Legislative Annual, 1968, p.301).

The State Comptroller is also of the opinion that section 577 permits a municipality to grant a school tax exemption (68 Op.State Compt. 911).

In conclusion, it is our opinion that an exemption granted a project of a housing development fund company by a city pursuant to section 577 of the Private Housing Finance Law also effects an exemption from school district taxes.

May 18, 1970

Updated: