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Volume 5 - Opinions of Counsel SBEA No. 59

Opinions of Counsel index

Real property, definition of (boilers and power generating apparatus) - Real Property Tax Law, § 102(12)(f):

Pursuant to paragraph (f) of subdivision 12of section 102 of the Real Property Tax Law, boilers and power generating equipment are taxable real property even when owned by a corporation taxable under Article 9-A of the Tax Law.

Our opinion has been requested as to whether certain boilers located in a plant are taxable together with pumping and regulating equipment connected or used in connection with the boilers. Also apparently underground conduits carry steam lines in and around the plant as well as electric lines. The boilers are used to heat buildings as well as operate machinery.

The central question is whether these items are exempt from taxation under the provisions of paragraph (f) of subdivision 12 of section 102 of the Real Property Tax Law. Under the provisions of this paragraph, movable machinery or equipment owned by a 9-A corporation (Tax Law, Article 9-A) used for trade or manufacture and not essential for the support of a building, structure or superstructure and removable without material injury thereto is exempt from taxation. However, such machinery or equipment is not exempt if it falls within categories which are set out in the paragraph. These categories are “boilers, ventilating apparatus, elevators, plumbing, heating, lighting and power generating apparatus, shafting other than countershafting and equipment for the distribution of heat, light, power, gases and liquids.” If an item of property is covered by one of these categories, it is taxable real property even though it satisfies the conditions of the exemption.

One of the issues in the case of City of Lackawanna v. State Board of Equalization and Assessment, 16 N.Y.2d 222, 212 N.E.2d 42, 264 N.Y.S.2d 528, was whether pumps and piping in a by-products plant and gas blowing engines and turbo blowers for blast furnaces were properly included as taxable real property in an appraisal made by the State Board.

The evidence in the case showed that the pumps and piping were used to distribute gases and liquids from coke ovens through the various processing plants. The gas blowing engines and turbo blowers compressed air which was fed through pipes to the blast furnace stoves. Obviously, all of these items were used exclusively with a manufacturing process and were not in any way involved with servicing buildings in the steel plant. The State Board contended that the items were taxable real property as “equipment for the distribution of heat, light, power, gases and liquids.” It was conceded that the pumps, gas blowing engines and turbo blowers were exempt unless they fell within the taxable category. The Appellate Division (21 App. Div.2d 318, 250 N.Y.S.2d 369) held that the pumps and piping were not taxable real property because the term “equipment for the distribution of heat, light, power, gases and liquids” encompassed “only such facilities as would be common to all manufacturing structures, i.e., the usual plumbing, sewerage and heating facilities, and not those present exclusively because of the particular manufacturing process involved.” The gas blowing engines and turbo blowers were also held to be exempt property on the ground that “facilities to distribute gas and steam used as an integral part of manufacturing process, do not constitute real property.” The Court of Appeals reversed the Appellate Division’s holding as to these items. In this regard, the Court said:

On the record before us, the items as to which the courts below were in disagreement appear to fall within the taxable category of “equipment for the distribution of heat, light, power, gases and liquids” (Real Property Tax Law, §102, subd. 12, par. [f]).

In our opinion, the Court of Appeals has clearly held that items falling within any of the enumerated categories are taxable real property, irrespective of whether they are present only because of the particular manufacturing process, and are an integral part of the manufacturing process.

March 15, 1976

Updated: