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Volume 4 - Opinions of Counsel SBEA No. 33

Opinions of Counsel index

Special franchise assessment (tax credit) (annual fees) - Real Property Tax Law, § 626:

Pursuant to the Real Property Tax Law, section 626, an annual payment made to an assessing unit under a franchise must be credited against the tax based on the special franchise assessment made by the State Board for purposes of the assessing unit, including villages.

We have received an inquiry as to whether certain annual fees paid by a cable television company to a village, pursuant to an agreement between the company and the village, must be credited against taxes payable on the corporation’s special franchise assessment under section 626 of the Real Property Tax Law.

Subdivision 1 of section 626 provides, inter alia, as follows:

1. When a tax levied on a special franchise is due in any assessing unit, if the special franchise owner has paid such assessing unit for its exclusive use during the past year under any agreement or statute requiring the same, a sum based upon a percentage of gross earnings or other income, a license fee or other sum of money on account of such special franchise possessed by such special franchise owner, which payment was in the nature of a tax, all amounts so paid for the exclusive use of such assessing unit, . . . shall be deducted from the tax based on the assessment made by the state board for purposes of the assessing unit, but not otherwise, and the remainder shall be the tax on such special franchise payable for such purposes.

There is no question that an annual fee payable under an ordinance or agreement for the right to use public places or streets is a payment made “on account of special franchise” and is “in the nature of a tax” as that phrase is used in section 626 (Heerwagen v. Crosstown Street R.R. Co., 179 N.Y. 99, 71 N.E. 729; 18 Op.State Compt. 371; and N.Y. and Queens Electric Light and Power Co. v. Delaney, 229 N.Y. 184, 128 N.E. 131). Therefore, it is our opinion that the annual payment made to a village under a franchise (whether under agreement or pursuant to an ordinance) must be credited against village taxes levied on the special franchise assessment made by the State Board. The specific reference in subdivision 2 of section 626 to village officers and to taxes levied for “village purposes” precludes any construction that the statute was not intended to apply to villages.

August 19, 1974

Updated: