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Volume 4 - Opinions of Counsel SBEA No. 54

Opinions of Counsel index

Forest and reforested lands exemption (ceiling provision) (change in level of assessment) - Real Property Tax Law, § 480:

The assessment of property classified under the Fisher Act (Real Property Tax Law, § 480) prior to its amendment by Chapter 713 of the Laws of 1973 may be changed on assessment rolls completed subsequent to October 1, 1973, the effective date of the amendment, to reflect any change in level of assessment of all other property on an assessment roll occurring after application for classification was made.

We have received an inquiry requesting our comments regarding the assessment for taxation purposes of eligible tracts of forest land under section 480 of the Real Property Tax Law (the Fisher Act).

The facts indicate that on December 21, 1972 the landowners filed application with the town assessor for classification of certain lands under the Fisher Act and subsequently, in April, 1973 the applications were approved and the lands certified as eligible tracts by the Department of Environmental Conservation. The assessments of the subject properties appearing on the town assessment roll completed and filed on or about August 1, 1973 were unchanged from those appearing on the 1972 assessment roll while assessments on other properties appearing on the 1973 roll were adjusted to reflect new values as a result of a revaluation program and an increase in the level of assessment on the 1973 roll. In preparing the 1974 assessment roll, the assessor at first assigned higher values to the eligible tracts based upon the 1973 revaluation program, and later, reduced the assessments in accordance with a formula provided by this Board. The reduced valuations exceed the assessments existing on December 21, 1972 (on the assessment roll completed and filed in final form on or about August 1, 1972). The apparent authority for the latter action is an amendment to section 480 enacted in 1973, effective October 1, 1973 (L.1973, c.713).

The question is, may tracts of forest land, certified prior to October 1, 1973 by the Department of Environmental Conservation as eligible for exemption pursuant to section 480 of the Real Property Tax Law, have the assessments existing at the time application for such exemption is filed with the town assessor changed on assessment rolls prepared in subsequent years to reflect a change in level of assessment of all other properties appearing on assessment rolls prepared subsequent to the date of the application. A recent Supreme Court decision answers this question in the affirmative (In re Cash Plantations, Inc. v. Board of Assessors of Town of Franklinville, Supreme Court, Cattaraugus County; Decided February 3, 1975, Judge Nevins).

The Real Property Tax Law provides that all real property is subject to real property taxation unless specifically exempt therefrom by law (§ 300). The standard of assessment is that “[a]ll real property in each assessing unit shall be assessed at the full value thereof” (§ 306). The courts have held that this statutory standard of assessment is met if the assessments of real property are at a uniform level or percentage of full value for all property in the assessing unit (Nicolette v. Village of Clyde, 34 App. Div.2d 202, 310 N.Y.S.2d 896; 700 Shore Road Associates v. Board of Assessment Review, 70 Misc.2d 822, 335 N.Y.S.2d 114).

Real property in towns must be assessed annually according to its ownership and condition, which includes exempt status, as of May 1, taxable status date (§ 302). Town assessors are required to complete a tentative assessment roll by June 1 (§ 506), listing thereon the condition, ownership and exempt status of real property existing on taxable status date. Following the hearing of complaints, and on or before August 1 annually, town assessors are required to complete the assessment roll in final form and file a certified copy in the office of the town clerk (§ 516).

Subdivision 1 of section 480 provides that certain eligible tracts of land may be granted an exemption from taxation. Subdivision 3 of section 480 reads, in part, “[t]he assessment of an eligible tract shall be no higher than the valuation of similar lands without substantial forest growth situated in the same town and at no time shall it exceed the valuation fixed at the time the application for classification is filed as hereinafter provided.” Filing requirements are contained in subdivision 4 of that section which provides, in substance, that the landowner is to file application with the town assessors who are required to transmit a copy to the Department of Environmental Conservation for its approval or disapproval. Should the application be approved, the assessor in assessing the property must then take into consideration the eligibility for exemption of such property with the assessment to be “fixed at the time the application for exemption is filed.”

The question of what was the assessed valuation of the lands for which classification is sought at the time application was made for classification has been answered by the Court of Appeals in People ex rel. Luther v. McDermott, 265 N.Y. 47, 191 N.E. 770. In that case a landowner applied for classification of his property in 1932 after taxable status date but before the date the tentative assessment roll was completed and filed. The landowner’s application was approved by the Department of Conservation some three months after the final assessment roll was completed and filed. The Court of Appeals in construing section 13 of the Tax Law from which section 480 of the Real Property Tax Law was derived, held that the assessment that was controlling was the figure appearing on the 1931 assessment roll since the 1932 assessment roll had not been completed on the filing date.

The effect of this ruling of the Court of Appeals was to freeze the assessment on such lands at the assessment at the time the application was filed notwithstanding the fact that a locality may have gone through a revaluation program in which the level of assessment on all other property has been raised (see, 3 Op.Counsel SBEA No. 72). To illustrate the general effect of this ruling, should a locality set its level of assessment at 80 percent where it formerly had been 20 percent of full value whereas all other property would be assessed at 80 percent of full value. Thus, lands classified under the Fisher Act benefited from the original exemption and, where the level of assessment on all other property was increased, from an increased exemption resulting from the freeze.

In 1973, recognizing that other taxpayers in the locality must bear the burden of not only subsidizing the original exemption but also the increased exemption which results from the freeze, the Legislature amended section 480 effective October 1, 1973 (L.1973, c.713) to permit localities in which Fisher Act property is located to assess such property at the same level of assessment as other property in the locality and permitting the original exemption on the forest growth to continue. Pursuant to this amendment, subdivision 3 continues to provide that the assessed valuation is to be “fixed at the time the application for classification is filed,” and, in addition, provides further that the assessed valuation on Fisher Act property may be increased or decreased in any town where there has been a material change in the level of assessment. Thus, it is clear that on subsequent town assessment rolls such changes in level as have occurred or may occur in the future are to be reflected for property classified under the Fisher Act. The amendment also provides that any such changes are to be computed by the Board either upon application of the assessor or by action of the State Board. Therefore, the effect of the amendment is to deny on assessment rolls prepared subsequent to October 1, 1973 any increased exemption which may result from a change in level. In other words, property classified under the Fisher Act prior to (or after) October 1, 1973 can no longer enjoy an increased exemption from a change in level of assessment which occurred prior to or after the October 1, 1973 effective date of the amendment.

It should also be noted in passing that following certification by the Department of Environmental Conservation, an exemption may nonetheless be denied by the assessor upon removal of the forest growth (§ 480(3) (c) ). The point being made is that certification, once granted, does not forever bind the assessing unit to allow a continuing exemption.

In enacting the amendment to section 480, the action of the Legislature was consistent with authority contained in Article 16, section 1 of the New York Constitution which provides that exemptions may be granted, altered or repealed by the Legislature. The procedure set forth in the amendment is not new. It conforms to the procedure in other current statutes relating to analogous conditions with respect to the railroad ceilings exemption law and special franchise assessments (see, Real Property Tax Law, §§ 489-l and 606), as well as the establishment of special equalization rates for the apportionment of school district taxes (Real Property Tax Law, § 1314).

Therefore, the controlling assessments for the lands in question are those appearing on the 1972 town assessment roll subject to adjustment for the change in level reflected on the 1973 assessment roll. On June 19, 1974 this office established change in level of assessment factors reflecting the change in level of assessment occurring on the 1973 assessment roll for the town in question. The indicated assessments for the lands in question were adjusted to reflect the values of the controlling assessments appearing on the 1972 town assessment roll.

The assessment of property classified under the Fisher Act may be changed on assessment rolls completed subsequent to October 1, 1973 to reflect any change in level of assessment of all other property on the assessment roll occurring after application for classification was made.

Accordingly, it is the opinion of this office that the change in level of assessment factors established by this Board on June 19, 1974 reflecting the change in level of assessment of all other properties on the 1973 town assessment roll were properly established in accordance with law and must be applied with respect to the assessments of the subject properties on the 1974 town assessment roll.

October 8, 1974
Revised June, 1975

Updated: