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Volume 3 - Opinions of Counsel SBEA No. 27

Opinions of Counsel index

Assessment, separate (leased telephone equipment) (limitation on assessment of telephone equipment) - Real Property Tax Law, § 470:

Normally an assessor cannot be forced to assess improvements which are owned by one other than the landowner separate from the land on which it is located. However, section 470, which partially exempts certain telephone equipment, necessitates the separate assessment of such equipment in the name of the owner thereof rather than in the name of the owner of the land and/or building in which the equipment has been installed, in order that the exemption can be administered in future years.

Our opinion has been requested as to the procedure to be used in assessing telephone station apparatus and private branch exchanges installed in and leased by two hotels from a company other than the telephone company which is furnishing telephone service to the hotels.

As we understand it, elaborate and expensive telephone systems consisting of station apparatus (telephone instruments and associated cords) and private branch exchanges have been leased by a company engaged solely in producing and leasing or selling internal telephone systems to two hotels. The hotel owners have requested that this equipment be assessed separately in the name of the company which owns the equipment, rather than include the value in the assessments of the hotels.

Our opinion has been requested as to whether or not this equipment may be separately assessed in the name of the company.

Telephone systems installed on private property (telephone instruments, wires and P.B.X.’s) whether under a lease or under a subscriber’s contract are taxable real property under the language set forth in subdivision 12(d) of section 102 of the Real Property Tax Law. In the leading case holding this type of telephone property to be taxable (Matter of New York Telephone Co. (Canough), 264 App. Div. 937, 36 N.Y.S.2d 263, aff’d, 290 N.Y. 537, 49 N.E.2d 999) the property separately assessed for $700,000 on the assessment roll of the City of Syracuse was described on the roll as follows:

Station apparatus, station installations and private branch exchanges on private property throughout the City of Syracuse now owned or leased by the New York Telephone Co.

Implicit in the Court’s decision in this case is approval of the method of assessment, viz., the assessment of all telephone instruments and P.B.X.’s on the roll without regard to location in the name of the owner.

Under our in rem system of real property assessment and taxation, the assessor cannot be forced to assess improvements which are owned by one other than the landowner separate from the land on which it is located (Doughty v. Loomis, 9 App. Div.2d 574, 189 N.Y.S.2d 413, aff’d, 8 N.Y.2d 722, 167 N.E.2d 643, 201 N.Y.S.2d 100). Thus, in this case, the owning company could not compel the assessor to assess separately the telephone systems leased and installed by it on private property. It is our opinion, therefore, that whether the assessor assesses the telephone systems with the land and buildings in which they are installed in the name of the owner of the land and building or whether he assesses the telephone systems as a separate assessment regardless of location in the name of the owner thereof is normally a matter solely within his discretion.

However, this is an instance in which the new law which partially exempts this equipment (Real Property Tax Law, § 470) necessitates its separate assessment in order that the exemption can be administered in future years.

Section 470 of the Real Property Tax Law provides for the exemption of, among other items, station apparatus and private branch exchanges “to the extent that the assessed valuation of such property exceeds the assessed valuation thereof” appearing on the last assessment roll completed before December 31, 1974. The instructions of the State Board sent to assessors dated February 15, 1974 relating to the treatment of telephone exemptions provides that the station apparatus and P.B.X’s of each property owner should be separately assessed from the assessed value on the remainder of its assessable property as one or more separate items. In order to conform to these instructions and to establish a “ceiling” or “frozen” assessment for use in future years for the telephone property belonging to the owning company, it seems to us the telephone systems installed in the two hotels must be separately assessed from the hotel property in the name of the owning company.

April 15, 1974

NOTE:  But see Opinion 9-16.

Updated: