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Volume 3 - Opinions of Counsel SBEA No. 76

Opinions of Counsel index

Industrial development agencies exemption (race track) - General Municipal Law, § 874; Real Property Tax Law, § 412-a:

A race track owned by a county industrial development agency is a commercial enterprise that falls within the scope of activities which such agency is statutorily authorized to pursue. The race track is, therefore, entitled to an exemption from real property taxation.

Our opinion has been requested as to whether a race track owned by a county industrial development agency would qualify for the exemption from real property taxes mandated by sections 412-a of the Real Property Tax Law and 874 of the General Municipal Law. Section 874 provides that such agency “shall be required to pay no taxes or assessments upon any of the property acquired by it or under its jurisdiction or control or supervision or upon its activities.”

The creation of industrial development agencies is authorized by Article 18-A of the General Municipal Law as first enacted by Chapter 1030 of the Laws of 1969. In a statement of legislative policy and intent, section 852 of the General Municipal Law provides that:

It is hereby declared to be the policy of this state to promote the economic welfare of its inhabitants and to actively promote, attract, encourage and develop economically sound commerce and industry through governmental action for the purpose of preventing unemployment and economic deterioration by the creation of industrial development agencies which are hereby declared to be governmental agencies and instrumentalities and to grant to such industrial development agencies the rights and powers provided in this article. It is hereby further declared to be the policy of this state to protect and promote the health of the inhabitants of this state by the conservation, protection and improvement of the natural resources and environment and to control land, sewer, water, air, noise or general environmental pollution derived from the operation of industrial, manufacturing, warehousing, commercial and research facilities and to grant such industrial development agencies the rights and powers provided by this article with respect to industrial pollution control facilities.

Section 856 of the General Municipal Law provides that an industrial development agency may be established on a municipal basis (i.e., county, city, village, town or Indian reservation) by special act of the State Legislature. After this is accomplished, and assuming that the necessary local action has been taken pursuant to section 856 (to appoint the members and to satisfy the filing requirements), then the agency may pursue the activities which are authorized in Title 18-A.

Section 858 of such law restates that “The purposes of the agency shall be to promote, develop, encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing industrial, manufacturing, warehousing, commercial and research facilities including industrial pollution control facilities and thereby advance the job opportunities, health, general prosperity and economic welfare of the people of the state of New York and to improve their standard of living;” and in order to carry out any of these purposes, an industrial development agency may “acquire by purchase, grant, lease, gift, condemnation, or otherwise and to use, real property or rights or easements therein necessary for its corporate purposes, and to sell, convey, mortgage, lease, pledge, exchange or otherwise dispose of any such property in such manner as the agency shall determine.”

Therefore, in our opinion, if a county industrial development agency were to purchase (or construct) and lease a race track, then the only question necessary to consider in regard to the taxable status of the real property is whether a race track is one of the activities which the agency is permitted to pursue and develop.

In our opinion, the ownership and operation of a race track is a commercial enterprise. The primary purpose of the operation is to produce income for the ownership, and, the various related industries associated with a race track (e.g., establishments for lodging, food and entertainment, concessions and tourism) would seem to be consistent with the aims of the statute as discussed above.

It also would seem to be recognized by statute and judicial decision that sports enterprises such as racing are classified as businesses (i.e., commercial) rather than amusements, entertainment or sports. For example statutes such as section 1105 of the Tax Law (sales tax), section 66 of the Alcoholic Beverage Control Law (license fees) and section 292 of the Executive Law (places of public accommodation) classify race tracks among the listing of commercial establishments to which the particular statutes are applicable. Also, the line of decisions concerning the status of interstate professional sports in relation to antitrust law provides a series of judicial opinions which are directed primarily to the commercial nature of contemporary sports enterprises (see, Flood v. Kuhn, 407 U.S. 258, 92 S.Ct. 2099, 32 L.Ed.2d 728). Although race tracks are not strictly analogous to the sophisticated interstate structures of the professional sports leagues, the commercial nature of the operation of the sport would seem to be as equally applicable to a race track as to professional football.

Therefore, it is our opinion that a race track which is located within the municipal boundaries of an industrial development agency and which is owned by such agency would be entitled to an exemption from taxation pursuant to sections 412-a of the Real Property Tax Law and 874 of the General Municipal Law.

January 13, 1973

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