Skip universal navigation

New York State Universal header

Skip to main content

Volume 7 - Opinions of Counsel SBEA No. 29

Opinions of Counsel index

Special districts exemption (special assessments) (liability of another special district) – County Law, § 272; Real Property Tax Law, §§ 410, 490:

A water treatment plant owned by a county water district and located within the boundaries of both that district and a county sewer district, is liable for a special assessment levied for the capital costs of the sewer district. Where that special assessment is calculated using a formula which includes an ad valorem component, the assessed value of both land and any improvements is subject to the special assessment, notwithstanding section 272 of the County Law.

Our opinion has been requested as to the taxable status of a parcel of real property owned by a county water district, which parcel is located within the boundaries of the water district and within a county sewer district. The property includes both land and improvements (a water treatment plant). The capital costs of the sewer district are financed by a “special assessment” (Real Property Tax Law, §102(15)) which includes an “ad valorem” component. The costs of operation and maintenance are financed by a “user charge”.

In New York State, all real property is subject to real property taxation, special ad valorem levies and special assessments unless exempt therefrom by law (id., §300). Real property owned by a “special district”, which would include the instant county water district (id., §102(16)), which is located within its boundaries and used exclusively for the purposes for which the district was established, is exempt from taxation and from special ad valorem levies and special assessments to the extent provided in section 490 of the Real Property Tax Law “except as otherwise provided in section [272] of the county law” (id., §410). Thus, the general exemption granted by section 410 must be construed in light of both section 490 of the Real Property Tax Law and section 272 of the County Law.

As applicable in this matter, section 490 provides that real property entitled to exemption from “taxation” (i.e., county, city, town, village and school district charges, as defined in §102(20)) pursuant to section 410 is also exempt from special ad valorem levies and special assessments imposed by a county improvement district or district corporation, except those imposed for the capital costs of acquisition and construction of specified classes of improvements, including sewer systems.

As noted, however, the exemption afforded county special district property by section 410 is also affected by County Law, section 272. That section provides for the assessment of real property, acquired in the name of a county district, “for the purposes of taxation”. The assessment may not include the value of improvements erected or installed by or on behalf of such county district.

Laws which are “in pari materia” (i.e., meaning literally “upon the same matter or subject”), must be read together and interpreted consistently if at all possible (see, McKinney’s Consolidated Laws of New York Annotated, Vol. I, Statutes, §§221-223 (1971); People ex rel. Citizens Gaslight Company v. Board of Assessors of the City of Brooklyn, 39 N.Y. 81 at 85 (1868)). In the case of Onondaga County Water District v. Board of Assessors of the Town of Oswego, 55 Misc.2d 481, 285 N.Y.S.2d 738 (S.Ct., Onondaga Co., 1967), aff’d, 30 A.D.2d 643, 291 N.Y.S.2d 779 (4th Dept., 1968), lv. to app.den., 22 N.Y.2d 645, 242 N.E.2d 492, 295 N.Y.S.2d 1026 (1968), the court applied this rule of statutory construction and concluded the County Law, section 272, limits the exemption from “taxation” otherwise afforded county special district property by section 410 of the Real Property Tax law. That is, by specifically providing for the taxation of at least the assessed value of the land prior to acquisition, section 272 restricts the application of the exemption from “taxation” authorized by section 410 of the Real Property Tax Law.

While the question of a county special district’s liability for special ad valorem levies and special assessments did not arise in that case, it is our opinion that section 490 is also “in pari materia” with section 272 of the County Law, both statutes imposing limitations on the general exemption provisions of section 410. However, since section 272 makes reference solely to “taxation”, while its companion statutes (Real Property Tax Law, §§410, 490) refer also to “special ad valorem levies” and “special assessments”, it is our opinion that the limitation imposed by the former has no application to the assessed value of county special district properties made liable for special ad valorem levies and special assessments pursuant to section 490. It is an accepted maxim of statutory construction that a legislature “is presumed to act with deliberation and with knowledge of the existing statutes on the same subject” (McKinney’s Consolidated Laws of New York Annotated, Vol. I, Statutes, §222 (1971)). Had the Legislature intended the provisions of section 272 of the County Law to extend to the assessment of county special district property for purposes of “special ad valorem levies” or “special assessments” imposed by or on behalf of another special district, we believe it would have specifically included those terms in section 272.

Real property of special districts (formerly known as “public” districts; see, L.1926, c.470) was exempted from “taxation” by Chapter 260 of the Laws of 1927, adding a subdivision 3-a to then section 4 of the Tax Law. The term “taxation” was not defined statutorily until 1953 (L.1953, c.876). The latter amendment was drafted in response to requests from owners of otherwise wholly exempt real property to clarify their liability for “district” charges. Apparently, two judicial opinions construing the liability of such properties for those charges had prompted the owners of these properties to seek legislative change (cf., People ex rel. New York School for the Deaf v. Townsend, 173 Misc. 906, 18 N.Y.S.2d 865 (S.Ct., Westchester Co. 1940), aff’d, 261 App.Div. 841, 25 N.Y.S.2d 1002 (2d Dept. 1941), aff’d, 298 N.Y. 645, 82 N.E.2d 37 (1948); and Rector v. Town of Eastchester, 197 Misc. 943, 99 N.Y.S.2d 991 (S.Ct., Westchester Co., 1950)).

To eliminate any confusion, the Legislature added a definition of “taxation” to specifically include “charges whether known as ‘taxes’ or ‘assessments’,” but excluded from the definition “assessments levied to pay for the costs. . .of acquisition, installation. . .of. . .the following improvements. . .”. Included in the list following were (a) water supply and distribution systems, and (b) sewer systems.

This definition of “taxation” became a law on April 20, 1953. On the same day, chapter 868 of the Laws of 1953 took effect. That chapter established authority for the creation of county water districts. Special provision was made for the “taxation” of such district property in section 271 thereof. The language of that section was identical to current section 272 of the County Law, save that the latter is applicable to county special districts of all types while the former applied only to county water districts. (Current section 272 is a generalization of specific provisions added with respect to county sewer (L.1954, c.794) and drainage districts (L.1955, c.429), as well.) We believe the Legislature must be deemed to have had knowledge of its definition of “taxation” in the Tax Law which became law the same day the assessment of county special district property was limited for purposes of “taxation.”

An examination of the Governor’s “Bill Jacket” with respect to chapter 876 of the Laws of 1953 (copy on file with the State Board) indicates that the issues of exemption, taxation and the like were thoroughly reviewed prior to introduction, legislative passage and executive approval. No exception was made with respect to the liability of one special district for capital costs of another special district. It is clear that this possibility had been recognized. In a memorandum dated March 27, 1953, Edward Uthe, Executive Secretary of the Association of Towns of the State of New York objected to the proposed definition of “taxation”, in part, on the ground that “it is difficult to determine. . .the effect of this legislation on properties now covered by Section 4, subdivision. . .3-a. . .” (i.e., the exemption afforded real property of “public districts”). However, we conclude that the Legislature, by its silence on the matter, intended such property, like other wholly exempt property, to bear a share of certain charges of special districts (see, e.g., McKinney’s Statutes, supra, §74, and cases cited therein).

Based on the facts presented, the property of the county water district is liable for town, county and school district taxes on the basis of an assessed valuation for land only (there being no improvements other than those installed by or on behalf of the district). It is liable for the special assessment, which includes an ad valorem component, imposed by or on behalf of the county sewer district for the purpose of capital costs based on assessed valuation. The assessed valuation to be used in calculating the ad valorem component of this special assessment must include both land and improvements, that is, both the value of the land and the value of the water treatment plant. (As noted previously, the county water district would be liable only for the capital costs of acquisition and construction of the sewer system improvements, being exempt from charges for the cost of operation and maintenance (Real Property Tax Law, §§ 410, 490)).

April 10, 1981

Updated: