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Volume 3 - Opinions of Counsel SBEA No. 20

Opinions of Counsel index

Nonprofit organizations exemption (generally) (local option to tax) - Real Property Tax Law, § 421:

Paragraph (c) of subdivision 1 of section 421 provides that municipalities are authorized to specify the class or classes of exempt property which they wish to make subject to taxation. The limitation provided by said paragraph (c) is that any local law, ordinance or resolution must apply alike to all real property owned by an organization specified in such local law, ordinance or resolution making the class of property subject to taxation.

We have received an inquiry concerning the municipalities which may specify classes of exempt property which they wish to make subject to taxation under section 421 of the Real Property Tax Law.

Paragraph (c) of subdivision 1 of section 421 provides that municipalities (including school districts) are authorized to specify the class or classes of exempt property which they wish to make subject to taxation. The limitation provided by said paragraph (c) is that any local law, ordinance or resolution must apply alike to all property owned by any organization specified in such local law, ordinance or resolution making the class of property subject to taxation. Thus, it would be perfectly proper for the municipality to pick out “scientific” property, for example, and a municipality may certainly determine that all real property owned by all organizations listed in paragraph (b) of subdivision 1 shall be subject to taxation.

Paragraph (b) of subdivision 1 requires that any local law, ordinance or resolution must be adopted after a public hearing. A school board is included in this requirement, and any public hearing held by any municipal corporation must be pursuant to the notice requirements contained in our statutory or judicial law. A specific notice requirement exists for the adoption of local laws, namely, the three or five day requirements set forth in section 20 of the General Municipal Law.

The adoption of ordinances presents a slightly more difficult problem. Town ordinances require a public hearing upon at least ten days’ notice (Town Law, § 130), and village ordinances required a public hearing upon at least seven days’ notice (former Village Law, § 90 (see note)). However, there appear to be no general statutory provisions relating to the adoption of ordinances by counties and cities. It would seem that in most cases the applicable county code or city charter will contain notice provisions, but in the absence of such provision, we believe that a public hearing should be preceded by at least five days’ notice (see, Stanford v. Summers, 157 Misc. 698, 284 N.Y.S. 840, aff’d, 247 App.Div. 627, 288 N.Y.S. 921).

Finally, as to the adoption of resolutions (which is the sole legislative authority available to boards of education), there appears to be no notice requirements relating thereto. Our analysis of the Education Law leads to a conclusion that at least five days’ notice is a general requirement, and since such conclusion is also consistent with the Stanford case (supra), we recommend such minimum period prior to a public hearing on a proposed resolution.

We should also point out that because this local legislation relates to the assessment of real property it is subject to the permissive referendum requirements set forth in section 24 of the Municipal Home Rule Law. Specifically, this means that any local law enacted pursuant to paragraph (b) of subdivision 1 of section 421 will not become effective for at least 45 days subsequent to its passage.

Finally, in regard to questions concerning the existence of any judicial or administrative decisions under Chapter 414, of the Laws of 1971, it would probably be best to begin with a study of the following decisions:

Matter of the Association of the Bar v. Lewisohn, 71 Misc.2d 401, 336 N.Y.S.2d 338, aff’d, 41 App.Div. 2d 1026, 344 N.Y.S.2d 972, rev’d, 34 N.Y.2d 143, 313 N.E.2d 30, 356 N.Y.S.2d 555;

Matter of the Explorers Club v. Tax Commission, 168 N.Y.L.J., No. 115, p. 2, col. 4 (12-18-72), rev’d, 42 App.Div.2d 537, 344 N.Y.S.2d 723, rev’d, 34 N.Y.2d 143, 313 N.E.2d 30, 356 N.Y.S.2d 555;

In re New York County Lawyers Association, 169 N.Y.L.J., No. 5, p. 2, col. 3 (1-8-73); Watchtower Bible and Tract Society of New York v. Lewisohn, 169 N.Y.L.J., No. 21, p. 16, col. 1 (1-3073), aff’d, 43 App.Div.2d 666, 349 N.Y.S.2d 633, aff’d, 35 N.Y.2d 92, 315 N.E.2d 801, 358 N.Y.S.2d 757;

Matter of Domestic and Foreign Missionary Society of the Protestant Episcopal Church in the United States of America, 169 N.Y.L.J., No. 21, p. 16, col. 4 (1- 30-73).

It is our position that the statute necessarily requires that a judgment be made as to the primary purpose and activity of the organization, and that such determination may certainly result in the categorization of the organization as being among those listed in paragraph (b) of subdivision 1, rather than within the protected group listed in paragraph (a) of subdivision 1. We believe that almost all organizations listed in section 421 have incidences of one or more of the activities set forth in paragraph (a), but that any such organization may be excluded from paragraph (a) upon determination of its primary purpose and activity. In the absence of such determination, paragraph (b), in our opinion, would be rendered, for all intents and purposes, meaningless.

June 15, 1973

NOTE: Chapters 1028 and 1029 of the Laws of 1974 amended the Village Law to remove the ordinance making power of villages.

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