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Volume 11 - Opinions of Counsel SBRPS No. 11

Opinions of Counsel index

Agricultural exemption (scope) (special assessments); Correction of errors (clerical error) (special assessment imposed on agricultural land) - Agriculture and Markets Law, § 305; Real Property Tax Law, § 481, 550, 556-b:

Where a town erroneously levies special assessments against agricultural properties exempt from such assessments, this constitutes a clerical error as defined in section 550(2)(e) of the Real Property Tax Law, which is correctable in the manner provided in section 556-b of such law.

Our opinion has been requested concerning the procedure for correcting a levy of special assessments against properties used primarily for agricultural production that are located within a town water district and an agricultural district. The water district in question was established by the town in 1998, and since then, the town has levied special assessments for the water district on the basis of proportionate benefit (see, Town Law, § 202(3)). The benefit formula which the town board has chosen for the water district’s special assessments assigns points to different categories of properties based on the level of benefit each category receives from its inclusion in the water district. The parcels in question were considered to be “vacant” and, like the other parcels in the category of vacant properties, were each assessed one-half of a point. The town only recently learned that these parcels were entitled to receive an exemption from the water district’s special assessments by virtue of Agriculture and Markets Law, section 305(5). {1}

Town Law, section 239, provides the general procedure by which grievances concerning the tentative special assessment roll of an improvement district are to be presented by the property owners and considered by the town board. The town board at the public hearing for the tentative special assessment roll shall “hear and consider any objections to the assessment-roll, and may change or amend the same as originally proposed or as amended or changed, or they may annul the same and order the assessors to proceed anew and to prepare another roll or the town board may prepare such new roll” (Town Law, § 239). {2}  After the town board affirms the special assessment roll for the improvement district, “[n]o action or proceeding shall be maintained to set aside, vacate, cancel, annul, review, reduce or otherwise test or affect the legality or validity of any such assessment unless such action or proceeding shall be commenced within thirty days after the said final assessment-roll shall have been affirmed” (Town Law, § 239; Horowitz v. Board of Assessment Review of the Town of Monroe, 128 A.D.2d 875, 513 N.Y.S.2d 797 (2d Dept., 1987); Kleinberg v. Town of Thompson Town Board, 202 A.D.2d 946, 609 N.Y.S.2d 457 (3d Dept., 1994)). The annual special assessments for the improvement district are levied by the county “at the time and in the manner provided by law for the levy of state and county taxes” (Town Law, § 243; Op.State Compt. No. 85-69).

We believe this situation involves a “clerical error” as defined in Real Property Tax Law, section 550(2)(e): “an entry on an assessment roll or a tax roll which is incorrect by reason of a mistake in the determination . . . of a special assessment . . . based on units of service provided by a special district.” That is, Agriculture and Markets Law, section 305(5), by exempting “land used primarily for agricultural production within an agricultural district” from special assessments for a water district, has expressed the Legislature's intent to preempt a town board’s authority to determine that such land while so used is receiving benefit from the water district. Accordingly, a “clerical error” in the determination of a special assessment “based on units of service provided by a special district” occurred when these properties were considered to have the same level of benefit as the vacant properties within the water district.

The Correction of Errors provisions of the RPTL (§ 550 et seq.) provide a limited remedy separate from the grievance procedures of Town Law, section 239. In Saggolf Corporation v. Town Board of the Town of Bolton, 63 A.D.2d 428, 407 N.Y.S.2d 245 (3d Dept., 1978), the court quoted Special Term with approval:

“It appears that as a result of the recently amended Real Property Tax Law, Town Law § 239 is the proper vehicle for challenging inequalities or improprieties in the basic assessment rate proposal itself; whereas § 556 of the Real Property Tax Law is the proper section to apply when seeking a refund based upon a mere error in computation of the figure on the assessment roll when the town board actually attempts to apply its valid assessment schedule to the particular property in question” (63 A.D.2d at 432, 407 N.Y.S.2d at 247).

Refund applications “where such tax was attributable to a clerical error” are to be “made within three years from the annexation of the warrant for such tax . . .” (RPTL, § 556(1)(a)). Such applications are to be filed with the appropriate county director of real property tax services (RPTL, § 556(2)). Only one refund application need be filed on behalf of all owners of property affected by a “clerical error” as defined in section 550(2)(e) (see, RPTL, § 556-b(2)).

We recognize that it could be argued that the situation herein involves a “clerical error” within the meaning of RPTL, section 550(2)(b): “an entry which is a mathematical error presented in the computation of a partial exemption.” By computing the special assessments without excluding the properties exempted by Agriculture and Markets Law, section 305(5), the town board failed to fulfill the purpose of that statutory provision, which is to ensure “that the original intent of the Agricultural Districts Law to bar the assessment of municipal charges for certain district improvements on agricultural land used in agricultural production within an agricultural district is upheld” (Sponsor's Memorandum in Support for L.1995, c.495 reprinted in McKinney's 1995 Session Laws of New York at 2183). However, the expedited correction process of section 556-b does not apply to section 550(2)(b) errors. Instead, section 556 would need to be used, and that section necessitates the filing of separate refund applications by each affected property owner. [Ed. note: Section 556-b was subsequently amended (L.2004, c.652) to apply to § 550(2)(b) errors.]

May 8, 2001

{1}   Agriculture and Markets Law, § 305(5) provides in pertinent part that “[w]ithin improvement districts . . . including . . . water [districts] . . . no benefit assessments . . . may be imposed on land used primarily for agricultural production within an agricultural district on any basis, except a lot not exceeding one-half acre surrounding any dwelling or non-farm structure located on said land, nor on any farm structure located in an agricultural district unless such structure benefits directly from the service of such improvement district . . .  provided, however, that if such benefit assessments . . . were imposed prior to the formation of the agricultural district, then such benefit assessments . . . shall continue to be imposed on such land or farm structure.”

{2}   The Court of Appeals in Garden Homes Woodlands Company v. Town of Dover, 95 N.Y.2d 516, 742 N.E.2d 593, 720 N.Y.S.2d 79 (2000), invalidated special assessments for a joint street improvement area holding the town’s constructive notice of the public hearing by publication, which complied with Town Law, section 239, to be inadequate under the Due Process Clause of the Fourteenth Amendment of the United States Constitution. The import of Garden Homes Woodlands is that property owners must be given actual notice of public hearings to consider objections to special assessment rolls, e.g., by mailing a notice of the public hearing to the last known owner of each affected property, unless compelling or persuasive reasons can be shown why actual notice cannot be given.