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Volume 3 - Opinions of Counsel SBEA No. 119

Opinions of Counsel index

Nonprofit organizations exemption (generally) (partially exempt parcels); Separate assessment (partially exempt parcels) - Real Property Tax Law, §§ 421, 502:

The requirements of the Real Property Tax Law are satisfied if the assessment of partially exempt property is listed on the taxable portion of the assessment roll and there is no requirement that the exempt and taxable portions be geographically located with exactness. Nonexempt and exempt portions of such property should be described separately where possible.

We have received an inquiry requesting our opinion as to the taxable status of a parcel of land owned by a church. Although some of the buildings located on the parcel in question are presently being used for religious purposes, others are leased to individuals and groups for various private activities and hunting. Also, logging operations have been conducted on the parcel.

It is our opinion, from the facts provided, that at least a portion of the land in question is not being used for religious purposes at present, and there are no existing plans to use the property for such purposes in the near future. Such land is not entitled to an exemption under section 421 of the Real Property Tax Law, despite the fact that all income derived therefrom is used by the exempt religious organization (See, 1 Op.Counsel SBEA Nos. 12, 16; 2 Op.Counsel SBEA Nos. 19, 22).

The Court of Appeals has dealt with the issue of the valuation of such property in the case of Sailors’ Snug Harbor in New York v. Tax Commission of the City of New York (26 N.Y.2d 444, 259 N.E.2d 910, 311 N.Y.S.2d 486), which thoroughly analyzes the problem of placing exempt properties on the assessment roll. In Sailors Snug Harbor, the court was asked to annul an assessment by the City of New York on the ground that the City had “intermingled on the assessment rolls property which concededly is exempt with property deemed by it (the Commission) to be taxable without identification as to each.” After declaring that portions of the Sailors’ Snug Harbor were indeed taxable due to the existence of a “long-term lease by the petitioner of portions of the property for commercial purposes,” the court went on to examine the proper form of entry of the exempt and nonexempt portions of the property on the assessment rolls.

The court noted that section 502(5) of the Real Property Tax Law provides that “[i]f a parcel of real property is partially exempt, it shall be entered with the taxable property with the amount of the exemption shown in a separate column” (emphasis supplied). The court noted further that the assessments involved in the case followed the statute literally. “The assessment was listed in a part of the roll with the taxable property. The total value of the land and improvements was shown; the value of the land and improvements ‘exempt from tax’ was stated; and the value of the land and improvements ‘subject to tax’ was stated. These were set forth in separate columns.” Sailors’ Snug Harbor argued that the assessors must physically identify and locate the exempt and non-exempt portions of the assessment and enter each separately on the assessment roll. The argument was based on the language of section 502, subdivision 2, which requires that an assessment contain a “description sufficient to identify the same.” The court concluded, however, that this language applied only to the “whole parcel as an entity separately assessed” and that it did not require that portions of the property which are exempt be geographically located.

A partial exemption of “a parcel” of real property under subdivision five is not a “separately assessed parcel” under subdivision two. The whole parcel is the unit separately assessed. The exemption apportions a tax responsibility within the whole parcel which has been separately assessed. There is no need, then, on a fair reading of the statute, to require the assessors to describe by metes and bounds or other physical factors the portion which is exempt and the portion which is taxable. The statute requires that the “amount of the exemption” be stated. This means a sum in money and not a physical description.

The court took cognizance of the fact that it would be “an obstacle of almost insurmountable difficulty for assessors . . . to make an accurate physical allocation of space” of properties such as those in question which are partially exempt. “The reasonable thing for assessors to do in this situation, following the words of the statute, is to fix what they deem the ‘amount’ of the exemption.”

The Court of Appeals has stated conclusively, therefore, that the requirements of the Real Property Tax Law are satisfied if the assessment of partially exempt property is listed on the taxable portion of the assessment roll (i.e., the total value of the land and improvements “exempt from tax” and a value of the land and improvements “subject to tax”). There is no requirement, however, that the exempt and taxable portions be geographically located with exactness.

Nonexempt and exempt portions of such property should, however, be described separately where possible. This does not require a precise metes and bounds description, but rather an indication of the general location and character of the taxable as opposed to exempt portions of the subject property.

In conclusion, the subject property may be characterized as partially exempt property and, as such, listed on the taxable portion of the assessment roll.

July 9, 1974

Updated: