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Volume 5 - Opinions of Counsel SBEA No. 81

Opinions of Counsel index

Business investment exemption (generally) (effective date) (local option) (reduction of percentage) - Real Property Tax Law, § 485-b:

The business investment exemption (Real Property Tax Law, §485-b) as added by chapter 278 of the Laws of 1976 became effective June 8, 1976. Consequently, for towns with a May 1 taxable status date, the first assessment roll to which this exemption will apply will be that prepared based on a taxable status date of May 1, 1977.

Pursuant to subdivision 7 of section 485-b, a municipality has the option to reduce the percentage of exemption, even to zero. A municipal corporation wishing to reduce the percentage of exemption must do so by local law (or resolution in the case of school districts) even if such municipality utilizes an assessment roll prepared by another municipal corporation which has previously enacted such a law.

We have received an inquiry concerning several aspects of chapter 278 of the Laws of 1976 which added a new I had closed section 485-b to the Real Property Tax Law and provides for a partial exemption (declining from 50 percent to zero over a ten year period) of the increase in assessed valuation attributable to construction, alteration, installation or improvement of real property for certain industrial, business and commercial purposes.

The first question is to what assessment roll does this exemption first apply. Section 302 of the Real Property Tax Law requires all real property to be assessed according to its condition and ownership as of taxable status date which is May 1 for most towns (§302(1)). In cities, such date is determined from charter provisions.

The term “taxable status” clearly encompasses a determination of eligibility for exemption from taxation, including exemption from taxation under new section 485-b. Chapter 278 of the Laws of 1976 did not take effect until June 8, 1976 (the day it was signed by the Governor). Thus, since chapter 278 did not take effect until after taxable status date 1976, for most towns the first assessment roll to which this exemption will apply is that prepared in 1977 based on the taxable status date May 1, 1977.

The second question is whether a municipality, pursuant to the local option provision of subdivision 7, may reduce the percentum of exemption to zero. Subdivision 7 provides as follows:

7. A county, city, town or village may, by local law, and a school district which levies school taxes may, by resolution, reduce the percentum of exemption otherwise allowed pursuant to this section. A copy of any such local law or resolution shall be filed with the state board.

While we can find no indication in the sponsor’s memorandum or the chapter itself of what the Legislature intended to encompass in the word “reduce,” we are of the opinion that a reduction of the percentage of exemption to zero would fall within the ambit of subdivision 7. However, the language of subdivision 7 makes it clear that each municipal corporation in which eligible property is located would have to act by local law (or by resolution in the case of school districts) to reduce the percentage of exemption. A local law enacted by the town board would not affect other municipal corporations in which the same property is located, despite the fact that the assessment roll prepared by the town assessor is used by those other municipal corporations.

June 24, 1976

Updated: