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Volume 3 - Opinions of Counsel SBEA No. 115

Opinions of Counsel index

Nonprofit organizations exemption (educational) (miscellaneous organization) (aerospace and development corporation property used by Civil Air Patrol) - Real Property Tax Law, § 421:

Property owned by an aerospace and development corporation “absolutely devoted to public service” and used by a squadron of the Civil Air Patrol “for the instruction of members in Civil Defense procedures, search and rescue missions for and on behalf of the United States Air Force, disaster relief instruction, and all other associated public benefit purposes” fails to qualify for exemption under section 421 of the Real Property Tax Law.

Our opinion has been requested as to the taxable status of property presently used by a squadron of the Civil Air Patrol and owned by an aerospace and development corporation.

It is our opinion that this property fails to qualify for exemption under section 421 of the Real Property Tax Law.

In order to be entitled to the exemption from taxation and from special ad valorem levies and special assessments, which is provided by section 421 of the Real Property Tax Law, the real property on which exemption is sought must meet the following requirements:

1. The property must be owned by a corporation organized exclusively for purposes specified to be exempt by the statute.

The purposes specified to be exempt are: moral or mental improvement of men and women, or religious, bible, tract, charitable, benevolent, missionary, hospital, infirmary, educational, public playground, scientific, literary, bar association, medical society, library, patriotic, historical or cemetery purposes, or the enforcement of laws relating to children or animals.

2. The property must be used exclusively to carry out such exempt purposes.

3. No officer, member or employee of the corporation may be entitled to receive any pecuniary profit except reasonable compensation for services performed in furtherance of the corporate purposes.

Exemptions relieve one class of persons or property from the obligation to bear its share of governmental expenses and throw a heavier burden on other classes of property. For this reason, exemption statutes are strictly construed against the person or corporation seeking exemption.

Accordingly, a corporation seeking exemption under section 421 of the Real Property Tax Law must bring itself clearly within the provisions of the statute. An exemption will not be established by doubtful implication.

Whether a corporation is organized exclusively for exempt purposes must be determined from the purposes recited in its certificate of incorporation, its bylaws and the laws under which it was incorporated. If the purposes of the corporation are not limited exclusively to the purposes specified by statute to be exempt, the property of such corporation will not qualify for the exemption granted by section 421.

The requirement in this statute that property be used exclusively to carry out the exempt purposes of the corporation means that the property owned by an exempt corporation be used in furtherance of corporate purposes or used as an integral or necessary part of the corporation’s overall program. Whether property is being used exclusively for exempt purposes or purposes necessary thereto is a matter to be determined from the facts as they exist in each given situation.

The organization in question fails to satisfy at least two of the major requirements of section 421. The description of the organization contained in an affidavit of its attorney does not indicate that the corporation is organized exclusively for the exempt purposes specified by the statute, only that it is “absolutely devoted to public service.” As held by the Court of Appeals in Matter of the Association of the Bar of the City of New York v. Lewisohn (34 N.Y.2d 143, 313 N.E.2d 30, 356 N.Y.S.2d 555), “public benefit is not the test of qualification for exemption, as the legislative history of section 421 . . . makes so abundantly clear.”

Furthermore, there is nothing in the affidavit to indicate specifically how the use of the property by the Civil Air Patrol fits within the ambit of those uses sanctioned by section 421. The affidavit indicates that “[t]he purposes for which the Civil Air Patrol are occupying this building are for the instruction of members in Civil Defense procedures, search and rescue missions for and on behalf of the United States Air Force, disaster relief instruction, and all other associated public benefit purposes.” The only category under section 421 that might relate to these purposes is educational. However, in various judicial opinions and opinions of this office it has been held that in order to qualify for exemption as an educational institution, the organization in question must maintain a curriculum, schedule of classes, and a roster of qualified instructors, and otherwise a somewhat formalized system of instruction. Without such restrictions, the exemption might become available to an infinite number of organizations and organized pressure groups which the Legislature never intended to exempt.

Furthermore, another case indicates that an organization which claims an education exemption must be properly registered with the Commissioner of Education or chartered by the Board of Regents (Crusade for Christ, Inc. v. Town of New Lebanon, 36 App.Div.2d 247, 230 N.Y.S.2d 164). There is no indication that such is the case here.

Therefore, we conclude that the facts as contained in the submitted affidavit do not warrant the granting of an exemption to the aerospace and development corporation for the subject property.

June 13, 1974

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