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Volume 2 - Opinions of Counsel SBEA No. 47

Opinions of Counsel index

Special districts exemption (buildings owned or used by special district) - County Law, § 272; Real Property Tax Law, § 410:

A “temporary” steel building constructed by a private contractor on property owned by the Irondequoit Bay Pure Waters District for the contractor’s use, would be entitled to a real property tax exemption if it is owned by the special district and if it is located within the boundaries of the district. If owned by the contractor, the property would be entitled to exemption if it is used exclusively for the contractor’s activities relating to the construction of the district facilities.

Our opinion has been requested as to the taxable status of certain real property located on property owned by the Irondequoit Bay Pure Waters District. The property in question, which was constructed by a private contractor, consists of a 60' x 100' two-story “temporary” steel building containing showers, lavatories, office and storage space. The building is used exclusively for the contractor’s purposes in constructing a sewer tunnel, and it is estimated that such use will continue for at least two years.

          Section 410 of the Real Property Tax Law and section 272 of the County Law provide exemptions for certain types of real property owned or used by special districts. The Irondequoit Bay Pure Waters District would constitute a special district for purposes of these exemption statutes, and the question is whether the property described is exempt pursuant to one or both of these statutes.

It is not clear whether the improvement in question is owned by the special district or by the contractor. If it is owned by the special district and if it is located within the boundaries of that district, then it is clear that the improvement is exempt from taxation pursuant to section 272 of the County Law which provides, in part, as follows:

“§ 272. Taxation of district property

“All real property acquired for the purpose of the county district shall be acquired in the name of such county district. Real property acquired in the name of the county district shall be assessed for the purposes of taxation at the value thereof exclusive of improvements erected or installed by or on behalf of such county district. . . .” (emphasis supplied)

In the case of Onondaga County Water District v. Board of Assessors of the Town of Oswego, etc. (55 Misc.2d 481, 285 N.Y.S.2d 738, aff’d 30 App. Div.2d 643, 291 N.Y.S.2d 779, motion for leave to appeal denied, 22 N.Y.2d 645, 242 N.E.2d 492, 295 N.Y.S.2d 1026), the court held that the exemption provided by section 272 of the County Law extends to those improvements installed by a county water district when the improvements are located within the boundaries of the district. Therefore, if the steel building herein described is owned by the special district and is located within the boundaries of that district, then it is exempt from taxation. (The courts have likewise held that improvements located outside of the boundaries of the water district are properly subject to local taxation pursuant to section 300 of the Real Property Tax Law. There is no exemption from taxation for such property under section 272 of the County Law. Niagara County Water District v. Board of Assessors of the City of Lockport, 36 App. Div.2d 236, 319 N.Y.S.2d 858, aff’d 29 N.Y.2d 705, 275 N.E.2d 330, 325 N.Y.S.2d 746).

If, however, the property is owned by the contractor, there is a further issue upon which the taxable status of the property depends. From the above quoted provision of section 272 of the County Law, it will be noted that the exemption for improvements is also applicable to those which are installed on behalf of the special district. Thus, the ultimate question is whether the building (if owned by the contractor) was installed on behalf of the Irondequoit Bay Pure Waters District.

In our opinion, the value of the building described above is exempt from taxation if it is used exclusively for the contractor’s activities relating to the construction of the district facilities. From the language of section 272, it would appear that the purpose of the statute was to maintain a status quo of the taxable status of real property acquired by the county special district within its boundaries so that no one locality in the district would suffer a loss in taxable assessed valuation by reason of acquisition of the real property by the district, while on the other hand, no one locality would derive the benefit of taxing the improvements added to the land. If the building in question were taxable then the cost of construction of the district would increase; likewise, if the contractor were forced to rent other facilities for this purpose, then again the cost of construction of the district would increase.

Of course, if the contractor is using the building for purposes which are not related to the construction of district facilities, then the building has not been installed on behalf of the district, and it should be subject to taxation.

In addition, however, it should be noted that the exemption mandated by section 272 applies only to improvements which are installed by or on behalf of the special district. Therefore if the district acquired real property upon which improvements existed at the time of acquisition, then these improvements remain taxable.

In conclusion we are of the opinion that, in the absence of the latter two circumstances described above, the building described herein should be exempt from taxation.

October 2, 1972

Updated: