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Volume 4 - Opinions of Counsel SBEA No. 22

Opinions of Counsel index

Nonprofit organizations exemption (generally) (vacant land) - Real Property Tax Law § 421:

Vacant (or open) land owned by certain exempt nonprofit organizations is exempt from taxation pursuant to section 421 of the Real Property Tax Law provided either (a) the construction of buildings or improvements thereon is in progress or in good faith contemplated by the corporation, or (b) the real property is held by such corporation upon condition that title shall revert in case any building not intended and suitable for section 421 purposes shall be erected upon such premises or some part thereof. In the absence of a showing of essential and actual or immediately contemplated use, vacant land is subject to taxation.

We have received an inquiry concerning the taxable status of 10 acres of “open” land owned by a community center.

Section 421 (i.e., § 420) authorizes exemptions from real property taxation for real property owned by certain nonprofit organizations. Subdivision 3 of section 421 provides as follows:

3. Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association or (b) such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more such purposes shall be erected upon such premises or some part thereof.

Thus, the exemption of vacant (or open) land is conditioned on the construction of buildings or improvements now in progress or those in good faith contemplated to be in progress within a reasonable time. The exemption also applies in those cases where vacant land is willed to a charitable organization with conditions limiting the purposes for which the realty may be used. If the vacant land does not fall into either category of section 421, subdivision 3, the property is taxable, unless the land is in actual, exclusive use by the charitable organization for purposes which are enumerated in section 421, subdivision 1, of the Real Property Tax Law (see, 1 Op.Counsel SBEA No. 16 and 2 Op.Counsel SBEA No. 81).

Section 421, subdivision 1 prescribes that property which is owned by a nonprofit association organized for one or more of the purposes specified therein (i.e., religious, charitable, educational, etc.) and used exclusively for carrying out such purposes is exempt from taxation. To determine whether the property is being “used exclusively,” as the statute directs, the courts have held that when the property is used in the furtherance of the exempt purposes so as to constitute an integral or coordinate part in carrying out the overall corporate purposes, it is exempt. It must be made to appear that the use and need of the property by the corporation or institution “. . . is necessary or fairly incidental to the maintenance of the institution for the carrying out of the purposes for which it was organized.” People ex rel. Blackburn v. Barton, 63 App. Div. 581, 71 N.Y.S. 933, 935. (See also, People ex rel. Academy of the Sacred Heart v. Comm. of Taxes and Assessments, 6 Hun 109, aff’d, 64 N.Y. 656; and, St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769, 237 N.Y.S.2d 308). For example, land used for camping and hiking purposes by the Boy Scouts of America has been held to be an integral part of that organization’s corporate purpose and, therefore, entitled to this exemption, even though such land is vacant. However, in the absence of such a showing of essential and actual or immediately contemplated use, vacant land is subject to taxation.

Apparently the Executive Director of the Center has stated that the Center’s plans in regard to the use of the property are indefinite at the moment. Thus, based on the law outlined above as applied to the facts presented, it would appear that the real property in question is not entitled to an exemption and is therefore properly taxable.

April 8, 1974

Updated: