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Volume 10 - Opinions of Counsel SBRPS No. 65

Opinions of Counsel index

Incorporated volunteer fire company exemption (leased premises) (United States Postal Service) - Real Property Tax Law, § 464:

Real property of an incorporated volunteer fire department leased to the United States Postal Service is not entitled to an exemption pursuant to section 464(2) of the RPTL.

Our opinion has been requested as to the taxable status of real property owned by an incorporated volunteer fire department [VFD] which is claiming tax exempt status pursuant to section 464(2) of the Real Property Tax Law on property which it leases to the United States Postal Service. The VFD’s argument is that, because its property is used by the Postal Service for a public use, it is exempt. The VFD cites in support of its position the Court of Appeals’ decision in Fallica v. Town of Brookhaven, 52 N.Y.2d 794, 417 N.E.2d 1248, 436 N.Y.S.2d 707 (1980), modifying 69 A.D.2d 579, 419 N.Y.S.2d 102 (2d Dep’t, 1979) per Lazer, J. [dissenting] (419 N.Y.S.2d at 114). Reliance on this decision seems misplaced here.

Although (coincidentally) the plaintiffs in Fallica were the local board of fire commissioners and the local fire district, {1} that proceeding concerned real property owned by a town, not, as here, an incorporated volunteer fire company. While the aforementioned section 464 of the RPTL pertains to such fire companies, it is section 406 of the RPTL which governs real property owned by “municipal corporations.” {2}

Section 406(1) of the RPTL exempts municipally-owned real property located within the owning municipality’s boundaries provided that property is “held for a public use.” In Fallica, the court found that town-owned property leased to the Internal Revenue Service satisfied this statutory criterion. The Court of Appeals adopted the reasoning of Justice Lazer, presumably including that portion in which he concluded that section 406(1) is “inten[ded] to permit tax exemption of municipal facilities utilized for the benefit of the broad public at large[,]” not just municipal residents (419 N.Y.S.2d at 116).

While Fallica remains a leading precedent concerning section 406, section 464(2) provides a different test for exemption. In part, it provides exemption to property owned by an incorporated volunteer fire company:

which is (a) actually and exclusively used and occupied by such fire company or fire department for public purposes or (b) leased to the city, town, village or fire district in which the real property is located and is actually and exclusively used and occupied by such city, town, village or fire district for governmental purposes including but not limited to the social and recreational use of the firemen and residents of the city, town, village or fire district provided the rent under any such lease does not exceed the amount of carrying, maintenance and depreciation charges or (c) leased to the school district in which the real property is located and is actually and exclusively used and occupied by such school district for school district purposes, provided the rent under any such lease does not exceed the amount of carrying, maintenance and depreciation charges, shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter (emphasis added).

Unlike section 406, which does not define the phrase “held for a public use,” necessitating its judicial interpretation, section 464(3) specifically defines “public purpose” as:

land and buildings, or portions thereof, used for

(a) housing, storage, repair and testing of fire department vehicles and of equipment, appliances, devices, tools, protective clothing, uniforms and supplies,

(b) receipt and dispatch of alarms,

(c) training, drills and instruction,

(d) generators, lockers, showers, custodial quarters,

(e) offices, company meetings, ready room,

(f) social and recreational use, other than for income producing or business purposes, of both the firemen and residents of the city, town, village or fire district in which the real property is located.

While a post office is obviously a worthy purpose, it is not a “public purpose” as defined in section 464(3), {3}  and while section 464(2) permits a lease from a volunteer fire department to certain local governments, it does not sanction a lease to the Federal (or, for that matter, State) government (5 Op.Counsel SBEA No. 78). Accordingly, in our opinion, where an incorporated volunteer fire department leases its property to the United States Postal Service, that property is not entitled to an exemption pursuant to section 464(2) of the RPTL.

May 14, 1998


{1}  The plaintiffs in Fallica, apparently concerned with erosion of the fire district’s tax base from the granting of the exemption, alleged that the property was not exempt.

{2}  “Municipal corporation” is defined as “a county,city, town, village or school district” (RPTL,§102(10)). Note that if title to this property were in a fire district, the provisions of still another section of the RPTL (§410 or §410-a, depending on the parcel’s location) would need to be considered.

{3}  Based on Fallica, however, it would likely be deemed a “public use” if section 406(1) were indeed an issue.

Updated: