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Volume 1 - Opinions of Counsel SBEA No. 61

Opinions of Counsel index

Nonprofit organizations, exemption (community centers) - Real Property Tax Law, § 421:

A community center which is primarily used for social and recreational purposes of members of the community would not qualify for exemption from real property taxation under section 421 of the Real Property Tax Law.

Our opinion has been requested as to the taxable status of property owned by an incorporated community center whose main purposes are set forth in its certificate of incorporation as follows:

“To exercise, promote and protect the privileges and interests of the residents of the community; to foster a healthy interest in civic affairs of the community; to develop good citizenship; and to inquire into civic abuses and to seek reformation thereof.”

“To organize, operate and maintain without profit to the corporation, a youth center of boys and girls who for various reasons would not be privileged to have the use of facilities intended to be provided for entertainment, instruction, recreational athletics, sport and other wholesome activities in their spare hours from school and where adequate supervision and guidance may be proffered to them in order to aid and maintain the physical health and mental condition of such children as a basic and preventive means of combating possible delinquency.”

The subject property is an old two room school house together with a playground located in a growing residential area which has no recreational or meeting facilities within three miles. The property is used primarily for monthly supper meetings of neighborhood residents, meetings of local adult clubs (i.e., neighborhood garden club), youth clubs (i.e., 4-H and scout clubs) and church groups. In addition, a summer softball program is carried on.

The principal issues determinative of whether the school building owned by this organization is entitled to exemption under section 421 of the Real Property Tax Law are (1) whether the community center is “organized exclusively” for an enumerated exempt purpose or purposes and (2) whether the building will be “used exclusively” for an exempt purpose or purposes.

Our experience in regard to community centers is that although they may seek to foster a highly laudable, long range ideal state of community relations, their immediate purposes and activities are primarily social and recreational in nature. They exist in order to provide facilities for the social and recreational activities which their members may desire, and, in general, such purposes and activities are not within the scope of section 421. The use being made of the school house bears this out.

There can be exceptions to this general rule. In National Navy Club of New York, Inc. v. City of New York (122 Misc. 89, 203 N.Y.S. 114, the Court held as exempt the real property of a similar type of organization whose primary and immediate purpose was to provide a haven for the young sailors of World War I who were landed in New York City for leave. This protective or benevolent activity was held to be within the scope of section 421, and the social and recreational activities of the club were deemed essential to this purpose. Likewise, a youth center which is open to all “youths” (as defined by age) of a locality, and whose purpose is to provide supervision and guidance for them during their free hours, would appear to be includable within section 421. In other words, the organization would qualify if it limited its activities exclusively to the second purpose enumerated in its certificate.

However, the factor which is the crux of the matter in these situations is that case law has established that if any of the powers in the corporation’s articles of incorporation are not among those enumerated in section 421, and if the articles do not limit the activities to those enumerated in the law, then the property of the corporation is not entitled to an exemption (Great Neck Section, National Council of Jewish Women v. Board of Assessors, 189 N.Y.S.2d 623; Good Will Club of Amsterdam, N.Y., Inc. v. City of Amsterdam, 31 Misc.2d 1096, 222 N.Y.S.2d 896; and American-Russian Aid Ass’n. v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123.

These cases and others (In re Kennedy’s Estate, 240 App.Div. 20, 269 N.Y.S. 136, and National Navy Club v. City of New York, 122 Misc. 89, 203 N.Y.S. 114) also clearly establish that corporations organized for social, fraternal or recreational purposes are not organized for any of the purposes enumerated in section 421. However, these same cases support a rule of construction that the fact that one or more of the powers or objects set out in the certificate is not an enumerated one does not automatically disqualify the corporation. If, from a reasonable construction of the articles of incorporation, primary or ultimate purposes can be found which are statutory purposes, and if the nonstatutory purposes are identical or subsidiary to the primary purposes and are merely the means or methods of carrying out the primary purposes, then the corporation can be considered to be “organized exclusively” for the purposes set out in the statute.

We do not think that under a strict, but reasonable, construction of the purposes of this organization these nonexempt purposes (the first purpose clause) are incidental to or merely a means of carrying out primary exempt purposes, i.e., education or moral or mental improvement of men and women. For example, in the National Navy Club case, supra, the recreational activities provided Navy men at the Clubhouse were deemed to be the necessary means of attracting navy men into the navy club and “by accommodating them under proper auspices they are forestalled from finding their way into accommodations with indecent surroundings.” Here, all of the citizens of the community are the beneficiaries of the cultural and recreational activities and none could argue, we suggest, that the citizens of a community need supervised recreation to forestall them from finding deleterious entertainment. The same observation pertains to any charitable or benevolent purpose. Those who will benefit - the residents of a particular community - are not necessarily worthy objects of charity for purposes of the exemption statute.

Finally, we believe that the purpose of “the moral or mental improvement of men and women” also listed in section 421 should be limited to the YMCA and analogous organizations. A predecessor statute of section 421 was amended to include this purpose subsequent to a decision holding the YMCA to be outside the scope of such predecessor statute. The term “moral or mental improvement of men and women” was taken directly from the YMCA purpose clause, and it was clearly the intent of the Legislature to include that organization within the exemption statute. We believe that organizations such as the YMCA are distinguished by their combination of benevolent, religious and charitable aspects. It is this type of organization to which the term “moral or mental improvement of men and women” was meant to apply, and the term should not be extended to include community centers.

April 20, 1972

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