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Volume 10 - Opinions of Counsel SBRPS No. 30

Opinions of Counsel index

Not-for-profit housing companies exemption (exclusive use) (cellular telephone tower) - Real Property Tax Law, § 422:

The erection of a cellular telephone tower on a building owned by a not-for-profit housing company, the property of which is exempt from taxation pursuant to section 422 of the Real Property Tax Law, should not result in the loss of the building’s exemption. The tower itself, however, would be taxable.

Our opinion has been requested concerning the exclusive use requirement of the not-for-profit housing companies exemption (Real Property Tax Law, §422). The property of a certain such company [hereafter NPHC], which currently receives an exemption, is financed by a federally aided mortgage and is used to provide housing for the elderly and disabled. A cellular telephone company has asked to place a cellular telephone repeating tower on the roof of NPHC’s building for which it will pay NPHC an up-front payment and annual rental. These anticipated revenues, however, would be but a small percentage of NPHC’s annual income and all of these revenues would be used for NPHC’s purposes. The question is whether the proposed arrangement would adversely affect NPHC’s exemption.

First, we assume that there is no question as to the classification of the cellular tower as real property, which would presumably be used to relay telephone calls to local customers and other relay stations. Clearly, such towers satisfy the definition of real property in section 102(12) of the RPTL (see, paragraphs (i) and (d) thereof).

Since the assessor has previously been exempting NPHC’s property pursuant to section 422, we also assume that there is no question but that it satisfies the ownership requirements of that section (e.g., ownership “by a not-for-profit corporation organized pursuant to the not-for-profit corporation law and the provisions of article two of the private housing finance law” (§422(1)(a)). The issue is as to the use of the property: the statute requires that the property be “used exclusively to provide housing...for [among others] handicapped or aged persons of low income” (ibid.). {1}  The question is whether the cellular telephone company’s use of a portion of NPHC’s property violates this exclusive use requirement.

We are not aware of any judicial decision which considers the question as to whether the relatively minimal nonexempt use contemplated here defeats the exemption, and, if so, on the entire property or just the portion to be used by the cellular telephone company. However, we do note it is well-settled law that “exclusive” use within the meaning of the nonprofit organizations exemption (RPTL, §§420-a, 420-b) means “principal” or “primary” use (Association of the Bar of the City of New York v. Lewisohn, 34 N.Y.2d 143, 313 N.E.2d 30, 356 N.Y.S.2d 555 (1974)). Minimal or incidental use for other purposes does not adversely affect the exemption provided in section 420-a or 420-b, so we doubt whether the erection of a cellular tower on property primarily used for purposes listed in those sections would defeat those exemptions.

Although section 422 is a separate statute with some different criteria (see, 2 Op.Counsel SBEA No. 81), we can think of no reason why a court would construe the phrase “exclusively used” more strictly for purposes of one exemption statute (i.e., §422) than it does for another (i.e., 420-a or 420-b). Moreover, it is a fundamental rule of statutory construction that where the same word or phrase is used in different parts of a statute, it is to be given the same meaning in each (McKinney’s Statutes, §236).

In conclusion, we do not believe that a court would hold that the presence of the antenna would operate to defeat the exemption. Assuming that the antenna itself is taxable real property, the assessor could, of course, assess it separately in the name of its owner, recognizing that collection of any unpaid tax on such antenna could present unique enforcement problems. In the alternative, the property could be moved from the wholly exempt portion to the taxable portion of the assessment roll, where partially exempt property (even property which is mostly exempt) is to be listed (RPTL, §502(5)).

February 18, 1997


{1}  Paragraph (b) of section 422(1) does permit lease or use of up to 10 percent of the property for purposes of Article two of the Private Housing Finance Law, but renders such portion to the limited exemption of such law (see, 4 Op.Counsel SBEA No. 108). The statute does not address use or lease for other purposes.

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