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Volume 7 - Opinions of Counsel SBEA No. 120

Opinions of Counsel index

Housing exemption (redevelopment companies) (scope - village agreement) - Private Housing Finance Law, § 125; Real Property Tax Law, §§ 102(1), 1402:

An exemption granted by a village assessing unit pursuant to section 125 of the Private Housing Finance Law applies to village taxes only.

Article 18 of the State Constitution, adopted in 1938, empowered the Legislature to provide, in such manner, by such means, and upon such terms and conditions as it may prescribe, for low-rent housing for persons of low income as defined by law, or for the clearance, replanning, reconstruction, and rehabilitation of substandard and insanitary areas, or for both purposes and for recreational and other facilities which may be incidental or appurtenant. This constitutional provision thus has two distinct purposes: (1) low rent housing, and (2) clearance and reconstruction of substandard and insanitary areas (Borek v. Golder, 190 Misc. 366, 74 N.Y.S.2d 675 (S. Ct., Oneida Co., 1947)). Article 5 of the Private Housing Finance Law (PHFL), known as the “Redevelopment Companies Law” (L.1942, c.845), was enacted by the State Legislature pursuant to the power conferred by Article 18 of the State Constitution.

The Redevelopment Companies Law provides incentives for rehabilitation of substandard and insanitary areas and the construction of dwelling accommodations in these areas through the use of the redevelopment company (PHFL, §101). It authorizes the legislative body of a municipality to negotiate and approve contracts by which private capital may be provided for the rehabilitation of substandard areas and the construction of middle income housing (§114). A “municipality” is defined as “a city, town or village, or a county having a county department of assessment with the power to assess real property” (§2(16)), which is the same definition as that of an “assessing unit” in the RPTL (see, RPTL, §102(1)).

The municipality is authorized to grant a partial tax exemption for these projects (PHFL, §125). The contract must regulate the rents to be charged (§114). A limited return of six percent on the total actual final cost is to be allowed to the redevelopment company during the period of the partial tax exemption (Stuyvesant Town Corp. v. Impellitteri, 202 Misc. 661, 114 N.Y.S.2d 639 (S.Ct., New York Co., 1952), aff’d, 281 App.Div. 672, 117 N.Y.S.2d 686 (1st Dept., 1952), aff’d, 306 N.Y. 784, 118 N.E.2d 601 (1954)).

Pursuant to section 125 of the PHFL, the local legislative body of a municipality in which a project of a redevelopment company is located may agree by contract to exempt from local and municipal taxation all or part of the project which represents an increase over the assessed valuation of the real property at the time of its acquisition by the company (§125(l)(a)). (However, if the project was acquired for rehabilitation purposes, the local legislative body may alternatively provide for an annual payment of not less than 10 percent of the annual shelter rent or carrying charges of the project (see, 5 Op.Counsel SBEA No. 95)).

Section 125, subdivision 1, paragraph c further provides that:

Where a municipality acts on behalf of another taxing jurisdiction in assessing real property for the purpose of taxation, or in levying taxes therefor, the said agreement by the local legislative body of such municipality shall have the effect of exempting the real property in a project from local and municipal taxes, other than assessments for local improvements, levied by or in [sic] behalf of both such taxing jurisdictions.

Therefore, where one municipality acts on behalf of another in assessing real property for the purpose of taxation (e.g., towns on behalf of school districts; see, RPTL, §1302(2)), or in levying taxes for that other taxing jurisdiction, any contract entered into by the local legislative body of the assessing unit granting exempt status pursuant to section 125 has the effect of exempting the real property in the project from taxes, other than charges for local improvements, levied by or on behalf of both jurisdictions (PHFL, §125(l)(c), (d); Troy Towers Redevelopment Co. v. City of Troy, 51 A.D.2d 173, 380 N.Y.S.2d 89 (3d Dept., 1976), aff’d, 41 N.Y.2d 816, 361 N.E.2d 1045, 393 N.Y.S.2d 397 (1977)).

A village is a separate assessing unit (Real Property Tax Law, §102(1); 1 Op. Counsel SBEA No. 51). In preparing an assessment roll for village purposes, a village may choose to use the town assessment roll “so far as practicable” (Real Property Tax Law, §1402(2)). However, this does not mean that the town acts “on behalf” of the village in assessing real property for purposes of taxation within the meaning of paragraph c of subdivision 1 section 125 of the Private Housing Finance Law. {*}  Furthermore, the village assessment roll is used by the village board of trustees to levy taxes solely for village purposes (see, Real Property Tax Law, §1420).

Accordingly, should a village assessing unit grant an exemption from taxation pursuant to Private Housing Finance Law, section 125 to a redevelopment company project located within the village, such determination would apply only to taxes to be levied solely for village purposes.

December 31, 1982


{*}  NOTE: Chapter 735 of the Laws of 1983 authorizes villages to relinquish their assessing unit function to the town or county assessing unit in which located. Where a village makes this election, the town or county will be acting “on behalf of” the village, in the sense of PHFL, §125(l)(c).

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