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Volume 4 - Opinions of Counsel SBEA No. 37

Opinions of Counsel index

Housing exemption (taxable status date) (incomplete project) - Private Housing Finance Law, § 125; Real Property Tax Law, § 302:

Where a resolution adopted by a city pursuant to section 125 of the Private Housing Finance Law provides that a housing project constructed by a redevelopment company shall be exempt from taxation upon completion of such project, no exemption may be allowed where the project is incomplete on the city’s taxable status date.

We have received an inquiry requesting our opinion as to the taxable status of a housing project located in the City of Yonkers belonging to a redevelopment company.

The company is incorporated under the Redevelopment Companies Law (Private Housing Finance Law, Article V). On July 6, 1971, the Yonkers City Council adopted a resolution pursuant to section 125 of the Private Housing Finance Law granting a partial tax exemption to a federally-aided housing project which the company was going to construct.

The exemption granted reads as follows:

That upon completion of the construction of the project on the premises hereinbefore described under and pursuant to the provisions of Section 236 of the National Housing Act and Regulations thereunder now or hereafter in effect, the aforesaid premises in the redevelopment project to be constructed at [address] as aforesaid (specifically excepting from this resolution that portion of the project allocated for commercial use or occupancy), be exempt from local and municipal taxes, other than assessments for local improvements to the extent of 100% of the value of the property included in such project (except as aforesaid) which represents an increase over the assessed valuation of the aforesaid real property, both land and improvements, acquired for the aforesaid project at the time of its acquisition by the Redevelopment Company, pursuant to Section 125 of Article V of the Private Housing Finance Law of the State of New York as amended, and pursuant to the terms and conditions of this resolution, . . . In lieu of such taxes the Redevelopment Company shall pay ten (10%) percent of the gross shelter rents as defined in Section 33.1(a) of Article II of the Private Housing Finance law of the State of New York, as amended.

However, construction of the project had not been completed on January 31, 1974, the taxable status date of the City of Yonkers.

The question is whether or not the project is entitled to the tax exemption given by the City Council’s resolution, namely, a tax exemption of 100 percent of the value of the residential portion of the project which represents an increase over the assessed value at the time the parcel was acquired by the Company.

In our opinion, it does not. Whether or not this project is entitled to the exemption for taxes levied on the 1974 assessment roll depends upon whether or not the exemption was operative and effective on January 31, 1974, the City’s taxable status date for that roll (Real Property Tax Law, § 302; 225 West Park Avenue Housing Development Fund Co., Inc. v. Feuerstein, 169 N.Y.L.J., No. 33, p. 19, col. 5 (2-16-73)).

The resolution expressly provides that “upon completion of the construction of the project”, the property “be exempt from local and municipal taxes.” The language could not be clearer – the exemption becomes effective only upon completion of the project. This requirement seems sensible moreover since the resolution also requires the payment of in lieu taxes equal to ten percent of the shelter rents. Obviously rents are paid only upon occupation of a completed project. Therefore, it should be expected that taxes would attach and be payable until such time as completion and renting of the project.

The aforementioned decision in the Feuerstein case also supports this conclusion – namely, that the project had to be completed on taxable status date in order to be exempt.

August 23, 1974

Updated: