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Volume 10 - Opinions of Counsel SBRPS No. 62

Opinions of Counsel index

Agricultural societies exemption (agricultural center) - Real Property Tax Law, § 450:

An agricultural center owned by a county agricultural society and permanently used by it for meeting hall or exhibition grounds purposes is exempt from taxation and most special ad valorem levies and special assessments despite the fact that the center is also used year-round for commercial activities such as concerts and trade shows.

Our opinion has been requested concerning the taxable status of an “agricultural center,” that is, a building owned by a county agricultural society. Although the building is used by the agricultural society for its annual agricultural fair, it is also used year-round for concerts, trade shows and the like. The question is whether the center is exempt despite its regular commercial use.

Section 450 of the Real Property Tax Law provides that real property owned by an agricultural society and permanently used by it for a meeting hall or exhibition grounds, is exempt from taxation, special ad valorem levies and special assessments to the extent provided in section 490 of the RPTL. With respect to the “permanent use” requirement, the Court of Appeals decided, in Erie County Agricultural Society v. Cluchey, 40 N.Y.2d 194, 352 N.E.2d 552, 386 N.Y.S.2d 366 (1976), that the Erie County Agricultural Society was entitled to exemption pursuant to section 450 despite its long-term lease of a portion of its property for harness racing.

The Court indicated that, unlike the nonprofit organizations exemption (now RPTL, §§420-a and 420-b), section 450 contains no “exclusive use” test for exemption purposes. The Court further stated, “As this court views the statute, [to qualify for exemption pursuant to §450] the society need only demonstrate its permanent use of the property as a fairground which it has done by its showing of 105 years of continuous ownership, coupled with its use of the property in each of those years for the site of the annual Erie County Fair and Exhibition” (40 N.Y.2d at 202, 386 N.Y.S.2d at 370). The Court went on to discuss concerns regarding municipal tax bases:

It is possible that on balancing the current needs of such [agricultural] societies as against communities’ needs with respect to broadening tax bases, the Legislature may choose to make such statutory alterations in the exemption as it deems advisable. Until that time, however, we must restrict ourselves to the express wording of the statute (ibid.).

In a later case citing Cluchey, a court said, “we take cognizance of the fact that it was the apparent intent of the Legislature that county agricultural societies be permitted to earn additional income to defray the costs of running their annual fairs by leasing their property to profit-making enterprises during such periods when their fairs are not in progress” (Phillips v. Open Air County Fair, Inc., 71 A.D.2d 882, 419 N.Y.S.2d 647, 648 (2d Dept., 1979)).

Legislation was introduced to overrule Cluchey by requiring “exclusive” agricultural society use in order to qualify for tax exempt status (see 1977: A.3092). This proposal, however, was not approved. To the contrary, the Legislature expanded the scope of section 450 to include meeting halls within the class of properties owned by agricultural societies eligible for tax exempt status (L.1978, c.616, discussed in 6 Op.Counsel SBEA No. 8).

Given the Cluchey decision and the Legislative response thereto, so long as the agricultural center in question is permanently used for the county agricultural society’s fair (or meeting hall) purposes, in our opinion, it is exempt from taxation pursuant to section 450 of the RPTL.

May 19, 1998

Updated: