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Volume 11 - Opinions of Counsel SBRPS No. 5

Opinions of Counsel index

Nonprofit organizations exemption (generally) (liability for special ad valorem levies on behalf of special library districts); Exemptions generally (special ad valorem levies and special assessments) (special library districts) - Real Property Tax Law, §§ 420-a, 420-b, 490:

Property which is exempt pursuant to any of the sections listed in section 490 of the Real Property Tax Law (including sections 420-a and 420-b of the RPTL) is exempt from special ad valorem levies of a special library district in which the property is located.

Our opinion has been requested concerning the liability of nonprofit organizations and certain otherwise tax exempt entities for special ad valorem levies charged to support a special library district within a town.

In this case, a special act of the State Legislature includes a provision entitled “Finances,” which provides that the library's board of trustees is to file an estimate of its proposed budget with the town clerk, and the town board is to levy against the real property lying within the town for the total expenditures approved by the district's voters. Another bill section, entitled “ad valorem levy,” provides that the lots and parcels of land within the area of the special library district are determined to be benefited by the library facilities and services, and that the town board is authorized to assess, levy and collect necessary expenses of operation, maintenance and repair of such facilities and services from those lots and parcels of land in the same manner and at the same time as other town charges. Finally, another bill section provides that, except as otherwise provided, the library district constitutes an improvement district within the meaning of the Town Law, the provisions of which govern, unless inconsistent with the special act.

As the Court of Appeals has stated:

The general statutes do not provide for the creation of library districts -- libraries are generally created and funded by municipal corporations under the Education Law (Education Law §§ 255, 256). In recent decades, however, several special library districts have been created, either to limit support of a library to one part of a town or school district (see, e.g., L.1975, ch. 593), or to expand support to more than one municipality (see, e.g., L.1992, ch. 456). There are currently 26 such districts, including the one at issue. None of the special library districts -- except for the one before us -- has been delegated the power to tax (Greater Poughkeepsie Library District v. Town of Poughkeepsie, 81 N.Y.2d 574, 582, 618 N.E.2d 127, 131, 601 N.Y.S.2d 94, 98 (1993)).

The special library district herein was established subsequent to this decision and does not include those taxing provisions found to be constitutionally defective in Greater Poughkeepsie, but instead includes the provisions referred to above. The statutory language conforms to that in the first sentence of section 202(3) of the Town Law which authorizes special ad valorem levies for certain enumerated types of town improvement districts. {1}  Taken in conjunction with the section heading “ad valorem levy,” it seems clear that the library district in issue is indeed funded by a special ad valorem levy.

Organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code (26 USCS) are generally exempt from real property taxation pursuant to section 420-a or 420-b of the Real Property Tax Law (10 Op.Counsel SBRPS No. 43). {2}  Section 420-a(8) and section 420-b(6) provide that property exempt pursuant to either section is also exempt from special ad valorem levies (and special assessments) to the extent provided in section 490 of the RPTL. {3}

Section 490 of the RPTL provides that property exempt pursuant to any of the sections listed within that section (the list includes §§420-a and 420-b) is also exempt from most special district charges. That is, such property is exempt from special ad valorem levies and special assessments other than those representing the capital costs of water, sewer, drainage and highway improvements (7 Op.Counsel SBEA No. 88). The charges for the library district do not fit within any of these stated exceptions to the purview of section 490. In our opinion, therefore, property which is exempt pursuant to section 420-a or 420-b of the RPTL (or, for that matter, any of the other sections listed in §490) is exempt from special ad valorem levies of the special library district.

March 5, 2001


{1}  Section 202(2) of the Town Law requires special assessments for other types of improvements or improvement districts, and the second sentence of section 202(3) of that law permits special assessments for some of the same types of improvements or improvement districts which are listed in the first sentence of section 202(3). Library districts, as noted by the Greater Poughkeepsie court, are not enumerated anywhere in section 202 (see also, Town Law, §§54(8) and 209-q(8)).

{2}  The exemption for religious, charitable and educational organizations is also guaranteed by the State Constitution (Art. 16, §1).

{3}  Where property is made subject to taxation pursuant to section 420-b, liability also accrues for special district charges. For purposes of this inquiry, we assume the town has not opted to tax any of the nonprofit purposes listed therein.

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