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Volume 7 - Opinions of Counsel SBEA No. 23

Opinions of Counsel index

Special districts exemption (exclusive use requirement) (lease); Separate assessment (partially exempt parcels) (mixed use of building) - Real Property Tax Law, §§ 410, 502:

An incidental or occasional use of fire district property for a non-fire district purpose will not affect its right to an exemption from real property taxation. If a portion of the property is used for a non-fire district purpose and is susceptible to a separate description and assessment, that portion should be so assessed on the taxable portion of the assessment roll and the balance assessed on the exempt portion.

We have been asked whether the taxable status of real property owned by a fire district would be affected if a portion thereof were leased for a non-fire district use. One possibility suggested is a lease to the United States Post Office for post office purposes.

All real property is subject to taxation unless specifically exempted by law (Real Property Tax Law, §300). Real property owned by a special district, located within the boundaries of that district is exempt if “used exclusively for the purpose for which such district was established” (§410).

The State Comptroller has stated that a fire district is a special district for the purpose of this exemption, and we concur in his conclusion based on the rationale set forth in Op.State Compt. 79-854. The question then arises as to the meaning of “used exclusively” in the context of section 410.

The term “exclusively” is nowhere defined in the Real Property Tax Law, although it is found in several exemption statutes other than section 410, such as the exemption for real property of certain non-profit organizations (§420) and that for eligible aged homeowners (§467). In the context of section 420, the term “exclusively” has been judicially construed to connote “principal” or “primary”, and a use merely auxiliary or incidental to the main exempt use will not defeat the right to exemption (Association of the Bar v. Lewishon, 34 N.Y.2d 143, at 153-154, 313 N.E.2d, 356 N.Y.S.2d 555, at 561-562 (1974)). In a case construing the meaning of “exclusive use” within the meaning of section 76 of the Public Service Law, a court applied the same construction as has been used with respect to section 420 of the Real Property Tax Law (Long Island Lighting Co. v. Public Service Comm., 105 Misc.2d 874, 429 N.Y.S.2d 1004 (S.Ct., Albany Co., 1980).)

Administratively, in 7 Op.Counsel SBEA No. 6, we considered the meaning of “exclusively” in section 467. As is true of section 410, no case law had construed the term within the meaning of section 467. However, we noted that, as a general rule of statutory construction, the same words or phrases in different parts of a statute should be given a similar interpretation unless a contrary intent is readily apparent. Accordingly, we stated that the word “exclusively” in section 467 should have the same meaning as that word has been judicially construed in section 420.

It is our opinion that the same rule should be applied with respect to the exemption afforded real property of special districts. Therefore, a use of fire district property incidental or auxiliary to the use of such property for fire district purposes would not affect the property’s exempt status, provided the primary use of such property is for fire district purposes. However, in our judgment, operation of a post office on the premises would not be an “incidental or auxiliary” use such that the property would be entitled to exempt status. (The State Comptroller reached the same conclusion in Op.State Compt. 79-854).

Whether a non-fire district use of a part of the property will cause the entire property to be taxed will depend upon the circumstances of each case. While there is no provision in section 410 similar to subdivision 2 of section 420, mandating an exemption for a portion of real property of a non-profit organization used exclusively for an exempt purpose, we are of the opinion that this would not bar an assessor from determining an exempt and a taxable portion under appropriate circumstances.

For example, in 1 Op.Counsel SBEA No. 101, we considered a similar question relative to municipally owned real property. Notwithstanding the absence of a provision such as section 420(2), but relying on the opinion in Town of Harrison v. Westchester County, 34 Misc.2d 1020, 231 N.Y.S.2d 20 (S.Ct., Westchester Co., 1962), aff’d 18 A.D.2d 1136, 239 N.Y.S.2d 862 (2d Dept. 1963), aff’d 13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593 (1963), we concluded that an assessor might separately assess the portion used for taxable purposes and the portion used for exempt purposes and so enter them on the assessment roll (see, Real Property Tax Law, §502). We see no reason to alter this conclusion relative to real property owned by a special district.

Whether the assessor may exempt a portion of the property which is not susceptible to a separate description is unclear. In Sailors’ Snug Harbor in New York v. Tax Comm. of the City of New York, 26 N.Y.2d 444, 259 N.E.2d 910, 311 N.Y.S.2d 486 (1970), the Court of Appeals held, in a case involving property of a nonprofit organization used only in part for exempt purposes, “there is no need. . . to require the assessors to describe by metes and bounds or other physical factors the portion which is exempt and the portion which is taxable” (26 N.Y.2d at 448) (see also, 3 Op.Counsel SBEA No. 119). In essence, that decision left it to the discretion of the assessor to determine the proper method of describing and assessing such property. However, a distinguishing feature of that case is that it involved section 420, which mandates a partial exemption when less than the entire parcel is used for exempt purposes.

September 18, 1980

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