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Volume 5 - Opinions of Counsel SBEA No. 107

Opinions of Counsel index

Incorporated volunteer fire company exemption (public purpose use) (leased premises) (vacant land); Municipal corporations exemption (property leased to volunteer fire department) - Real Property Tax Law, §§ 406, 464:

Where a fire company or department, created for the purpose of furnishing fire protection owns a recreation hall, that building is totally exempt from taxation pursuant to section 464(2) of the Real Property Tax Law if it is used solely for fire company or department purposes and none of the revenue derived from the operation of the building inures to the benefit of the members of the company or department.

Fire protection service supplied by a village fire department is a public purpose within the meaning of section 406 of such law, and accordingly, village-owned land leased to the fire department and used by the department for the provision of fire protection services is exempt from taxation pursuant to section 406.

Vacant land owned by a fire department is not exempt by virtue of its being owned by a fire department unless it is used for public purposes or is leased to other municipalities in accordance with the provisions of section 464 of such law.

Our opinion has been requested concerning the taxable status of real property in a village. The village fire department has constructed a large building on land owned by the village, primarily for use as a recreation hall. It is used for a variety of fire department functions, i.e., meetings, training, bingo games, and is also rented out to groups and individuals for their functions. The assessor granted the fire department a $20,000 exemption on the property in accordance with subdivision 1 of section 464 of the Real Property Tax Law. The Board of Assessment Review thereafter totally exempted the property and our opinion on this matter has now been requested. There are several issues involved in this inquiry.

Assuming that the building owned by the fire department is exempt, a determination must be made as to whether it is exempt pursuant to subdivision 1 of section 464, which provides a maximum exemption of $20,000, or pursuant to subdivision 2 which provides for a total exemption. That is, real property, which is owned by a fire company or department (or an incorporated association of present or former volunteer firemen), and which is actually and exclusively used and occupied by it, is exempt from taxation to the extent of $20,000. However, if the real property is owned by a fire company or department, which was created for the purpose of furnishing fire protection, and is actually and exclusively used and occupied by it for public purposes, then the property is totally exempt from real property taxation (24 Op.State Compt. 526).

That is, the provisions of subdivision 2 are not applicable to all incorporated associations of volunteer firemen, but only to incorporated volunteer fire companies or fire departments. In determining the applicability of subdivision 2, however, it is not the name of the applicant which is important, but the manner in which the company was incorporated (5 Op.Counsel SBEA No. 45).

Apparently, much of the testimony at the hearing of the board of assessment review, which was held to review the assessor’s determination to partially tax the fire department’s property, was concerned with the nonprofit status of the organization. This is especially relevant in the event the organization would qualify pursuant to subdivision 2 of section 464 which, as previously indicated, grants a total real property tax exemption to “real property owned by an incorporated volunteer fire company or fire department created for the purpose of furnishing fire protection which is (a) actually and exclusively used and occupied by such fire company or fire department for public purposes. . . .” Paragraph (f) of subdivision 3 of section 464 defines public purpose to include “social and recreational use, other than for income producing or business purposes, of both the firemen and residents of the city, town, village or fire district in which the real property is located.” It is our opinion that, if the revenues derived from the fire company building (e.g., recreational hall) are used solely for fire company purposes, and none of the revenue inures to the benefit of the members of the department, then the operation of the recreational hall is a public purpose within the meaning of paragraph (f) of subdivision 3.

Due to the unusual circumstance in this case, viz., that the village owns the land which has been leased to the fire department, the taxable status of the land must also be determined. Pursuant to subdivision 1 of section 406 of the Real Property Tax Law, real property owned by a municipal corporation within its corporate limits and held for a public use is exempt from taxation. The question here, therefore, is whether the property is being “held for a public use” when it is rented to a private corporation, albeit presumably a nonprofit corporation. The Fourth Department of the Appellate Division in Herkimer County v. Village of Herkimer, 251 App.Div. 126, 295 N.Y.S. 629, aff’d, 279 N.Y. 560, 18 N.E.2d 854, stated that:

The expression “public use” as employed in the statute has never been defined with exactitude. Its meaning must necessarily depend upon the peculiar circumstances of each case . . . “Held for public use,” in this connection, means that the property should be occupied, employed, or availed of, by and for the benefit of the community at large, and implies a possession, occupation and enjoyment by the public, or by public agencies.

The Court of Appeals in Town of Harrison v. Westchester County, 13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593, cited the Herkimer case in holding two hangars located on county-owned airport property to be taxable, where the hangars were occupied by private corporations, either as lessees or sublessees under long-term leases. The court said, “These two factors - the exclusive, long-term control of the premises by private corporations and the use of the premises by them solely for the storage and maintenance of aircraft serving only their own personnel and guests - warrant the conclusion that the hangars, and the land upon which they are located, are not “held for a public use” (13 N.Y.2d at 263).

In another case, a court said:

Section 406, so far as pertinent, provides that real property owned by a municipal corporation and held for a public use shall be exempt from taxation. The leased property involved in this proceeding concededly is owned by the Town of Babylon, a municipal corporation. Is the property utilized for a public purpose? The answer is found in the fact that all of the lands in question are leased for a stipulated rent to a private corporation and sublet to private individuals; for its or their sole and exclusive possession and enjoyment. The town performed not a governmental act, but a proprietary function when it engaged in this business transaction which resulted in the private occupancy of its property. [citations omitted] It is obvious, therefore, that the property is not employed in a public use, and fails of tax exemption under section 406 (Oak Island Beach Assoc., Inc. v. Mascari, 47 Misc.2d 21, 261 N.Y.S.2d 982, aff’d, 25 App.Div.2d 496, 267 N.Y.S.2d 192, aff’d, 18 N.Y.2d 861, 222 N.E.2d 735, 276 N.Y.S. 116).

On the other hand, a supreme court held that realty, leased by a county to a corporation for use as a parking lot, was exempt from taxation because it was held for a public use, where the realty, though used by a shopping center for a parking lot, was available to the public without charge whether members of the public used the shopping center or not (County Dollar Corporation v. City of Yonkers, 47 Misc.2d 627, 263 N.Y.S.2d 33).

Two of the most recent judicial pronouncements regarding the public use requirement of section 406 concern municipally-owned arenas. In exempting the Nassau County Veteran’s Memorial Coliseum, the court in Dubbs v. Board of Assessment Review of the County of Nassau, 81 Misc.2d 591, 367 N.Y.S.2d 898, stated:

What is controlling is that the County which manages the Coliseum, only permits private interests to use the Coliseum for the general benefit of the public to whom the facilities are open. It is that fact which compels the conclusion that it is held for the public use for tax exemption purposes. Stated differently, under the holding in Town of Harrison, it is access to the facilities by the public in order to utilize or enjoy the facilities or functions therein that determines whether or not the property is held for public use.

Similarly, the Fourth Department of the Appellate Division in County of Erie v. Kerr, 49 App.Div.2d 174, 373 N.Y.S.2d 9l3, mot. for lv. to app. den., 38 N.Y.2d 711, 384 N.Y.S.2d 1025, in exempting Rich County Stadium, stated:

The issue is whether the non-qualifying tenant uses the property for a purpose recognized by the Legislature as benefiting the public. If the use is found primarily to benefit the non-qualifying tenant or as only incidentally related to the public purpose, then no tax exemption will be granted. . . .

It should be noted that although the term “public purpose” is defined in subdivision 3 of section 464, that definition is relevant only to the usage of such term within that section, and does not relate to the “public use” requirement contained in section 406. Nevertheless, based on the foregoing decisions, it is our opinion that the fire protection service supplied by the village fire department is a public purpose within the meaning of section 406, and, accordingly, municipally-owned land leased to the company and used by the company for the provision of fire protection services is exempt from taxation pursuant to section 406.

Lastly, it is indicated that the fire department has recently purchased three acres of vacant land adjacent to the village land under discussion, and the question is whether this land is exempt by virtue of its being owned by the fire department. As indicated above, section 464 requires that before real property may receive an exemption pursuant to this section, it must be used by the fire department for public purposes or be leased to other municipalities in accordance with the provisions of section 464. In our opinion, therefore, vacant land owned by a fire department but not utilized in accordance with the above-mentioned provisions is taxable.

December 27, 1976

Updated: