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Volume 2 - Opinions of Counsel SBEA No. 35

Opinions of Counsel index

Nonprofit organizations exemption (educational) (field house) - Real Property Tax Law, § 421:

A university-owned field house which is used for many activities outside the educational purposes of the university, is not entitled to a real property tax exemption. However, if only a portion of the property is used for nonexempt purposes, a partial exemption may be granted, based on the value of the remaining portion.

Our opinion has been requested as to the taxable status of a university-owned field house. For purposes of our reply, it is assumed that the uses to which the field house is put include many activities which are unrelated to education (e.g., productions such as the Ice Capades, personal appearances by entertainers, noncollege sports events and entertainment sponsored by and for the benefit of private organizations). Based upon this assumption, it is our opinion that the field house is not entitled to an exemption from real property taxation.

Real property owned by an educational institution is entitled to a real property tax exemption pursuant to section 421 of the Real Property Tax Law when such property is used exclusively for educational purposes. While the courts have held certain types of activities to be “incidental” to education, and therefore within the scope of the exemption (see, Faculty-Student Association of the State University of New York at Oswego v. Sharkey, 35 App. Div.2d 161, 316 N.Y.S.2d 698, aff’d 29 N.Y.2d 621, 273 N.E.2d 139, 324 N.Y.S.2d 411), we believe that the activities to which we are assuming the field house is put are not within this interpretation of the law.

In construing the exclusive use requirement of section 421, the Court of Appeals in Pratt Institute v. City of New York (99 App. Div. 525, 91 N.Y.S. 136, aff’d 183 N.Y. 151, 75 N.E. 1119) held that lots, owned by an exempt educational institution, and leased to private persons, were not exempt from taxation although the rentals were used exclusively for educational purposes. Likewise, in People ex rel. Ade1phi College v. Wells (97 App. Div. 312, 89 N.Y.S. 957), it was held that an athletic field, principally used by students, which the owning college permitted to be used during vacations by various athletic organizations not connected with the college, was not entitled to exemption.

It thus appears that any use outside the educational purposes of the institution, whether of a permanent nature or only at infrequent intervals, is sufficient to subject the property to taxation. This rule is not varied by the application of the proceeds to the institution’s educational purposes.

Section 421 (2), however, provides for the granting of a partial exemption if only a portion of the property is used for nonexempt purposes.  Accordingly, if only a portion of the field house is used for noncollege sports events and public entertainments, a partial exemption may be granted based on the value of the remaining portion.

August 25, 1972

Updated: