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Volume 11 - Opinions of Counsel SBRPS No. 72

Opinions of Counsel index

Urban Development Corporation exemption (Empire State Development Corporation) - McKinney’s Unconsolidated Laws, § 6272; CLS Unconsolidated Laws, ch. 252, §22:

Real property owned by the Empire State Development Corporation is entitled to the exemption statutorily afforded to the Urban Development Corporation.

Our opinion has been requested concerning the taxable status of real property purportedly owned by the Empire State Development Corporation [ESDC] and leased, on a long-term basis, to a private, for-profit entity. The requester is aware of section 404 of the Real Property Tax Law, the exemption for property owned by the State of New York, and section 564 of such law, which allows for the taxation of privately-owned improvements located on State owned lands, and asks if the substantial improvements made by the lessee may be taxed. This seems unlikely.

In 2 Op.Counsel SBEA No. 45, we expressed the opinion that: “If title to real property is vested in the Urban Development Corporation [UDC], {1} the property is exempt from taxation, including school taxes, pursuant to section 6272 [of McKinney’s Unconsolidated Laws]. If title is in a subsidiary, the exemption may be limited, pursuant to section 6265 [thereof].” As is well explained in the State Ethics Commission’s Advisory Opinion No. 02-2 (available via the Internet on the Commission’s website at ): “In 1995, ESDC was established to streamline the functions of UDC and its subsidiaries and create an ‘identity’ that more accurately reflect the statutory jurisdiction and overall mission of UDC.” Thereafter, the opinion is replete with references to “UDC d/b/a ESDC.” [Ed. note: The State Ethics Commission is now the Commission on Public Integrity; its website is: http://www.nyintegrity.org.] We also note that the Governor’s 2005-06 Executive Budget Appendix I makes reference to the “[ESDC] - formerly the Urban Development Corporation (UDC) - [as] a New York State public benefit corporation” (p.165) and the inclusion of a provision of the UDC law (added L.1996, c.309, §105) with the heading “The empire state economic development fund” (McK. Unconsol., §6266-i; CLS Unconsol., Ch.252, §16-m). Accordingly, in our opinion, property owned by the ESDC is entitled to the exemption statutorily afforded to the UDC.

Like section 404 of the RPTL, the UDC/ESDC exemption includes no statutory “use” requirement. Rather, it provides, in relevant part: “the corporation and its subsidiaries shall not be required to pay any taxes, other than assessments for local improvements, upon or in respect of a project or of any property ... levied by any municipality...” (McK. Unconsol., §6272; CLS Unconsol., ch.252, §22). {2}  Consequently, if the UDC/ESDC itself owns the property in question, it is entitled to the tax exemption set forth in section 6272. If title is in a subsidiary, the exemption may be limited as per section 6265(3) of McKinney’s Unconsolidated Laws (CLS Unconsol., ch.252, §15) which limits the exemption for projects of a subsidiary organized pursuant to Article two, four, or eleven of the Private Housing Finance Law (see, 2 Op.Counsel SBEA No. 45).

March 24, 2005


{1}  The New York State Urban Development Corporation Act was added by section 1 of chapter 174 of the Laws of 1968. That Act, as amended, is set forth as Chapter 24 (§§6251-6287) of McKinney’s Unconsolidated Laws and Chapter 252 (§§1-38) of CLS Unconsolidated Laws.

{2}  Both the State Comptroller and we have discussed the liability imposed on UDC property for “assessments for local improvements” (30 Op.State Compt. 79; 10 Op.Counsel SBRPS No. 86).

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