Volume 7 - Opinions of Counsel SBEA No. 33
Municipal corporations exemption (property acquired by tax deed) (effect of public purpose use in part) (highway use) – Highway Law, § 189; Real Property Tax Law, § 406:
A permanent easement may result from public use of lands as a highway, but this does not result in a transfer of title to the property. The taxable status of such lands, if owned by a municipal corporation, is determined pursuant to section 406 of the Real Property Tax Law.
A town claims an easement on county property for use as a highway, and questions have been raised as to the ownership and taxable status of the property. The county acquired three parcels of property in January of 1978 by means of foreclosure for non-payment of taxes pursuant to Article 11, title 3 of the Real Property Tax Law. On March 6, 1979, the town superintendent of highways recorded an instrument by which he purported to “ascertain, describe and enter on record as a town highway” some of the subject property. The town claims an easement for highway purposes as to one entire parcel and parts of the two other parcels.
As authority for its action, the town cites section 189 of the Highway Law, which provides that:
All lands which shall have been used by the public as a highway for the period of ten years or more, shall be a highway, with the same force and effect as if it had been duly laid out and recorded as a highway, and the town superintendent shall open all such highways to the width of at least three rods.
The county disputes the applicability of this statute to the situation in question and has initiated a proceeding to invalidate the town’s purported easement.
Notwithstanding the pendency of this litigation, the county should be named as the owner of the property on the assessment roll, as the Court of Appeals has held that section 189 confers only an easement to the public for highway use and does not effect a transfer of title (Heyert v. Orange & Rockland Utilities, Inc., 17 N.Y.2d 352, 218 N.E.2d 263, 271 N.Y.S.2d 201 (1966). Therefore, even if the town’s claim is validated, the county will retain fee title to the property.
As is true of municipal property generally, whether the property in question is taxable or exempt is determined in accordance with the provisions of section 406 of the Real Property Tax Law, which provides an exemption for property owned by a municipal corporation, if located within its boundaries and held for a “public use.” However, except for purposes of school taxes and special assessments, subdivision 5 of that section effectively suspends for three years the requirement that municipally owned property be actually held for a public use where that property has been acquired by reason of delinquent taxes (see, 5 Op.Counsel SBEA No. 114). As noted, the county acquired the subject property pursuant to Title 3 of Article 11 of the Real Property Tax Law, in January of 1978. For three years thereafter, then, the property would be deemed to be held for a public use, regardless of its actual use, and would be exempt from taxation other than school taxes and special assessments.
Whether the property is liable for special assessments and taxes for school purposes depends upon whether it is actually being held for a public use. Subdivision 1 of section 406 provides in relevant part that “real property owned by a municipal corporation within its corporate limits held for a public use...shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.”
There is no question that use of property as a highway has been recognized by the Legislature as a public use. For example, section 274 of the Highway Law authorizes a town to expend funds for the construction or repair of highways. Thus, if, in the judgment of the assessor, the property is being used as a highway, it qualifies for the more comprehensive exemption provided by subdivision 1, notwithstanding the provisions of subdivision 5.
An additional factor for consideration here, however, is that the easement claimed by the town applies to only portions of two of the three parcels involved. Assuming that the balance of these two parcels are held for neither a highway nor any other public use, the provisions of subdivision 1 of section 406 would be inapplicable to the remaining portions. However, given the fact that these properties were acquired by in rem tax foreclosure, the limited exemption of subdivision 5 of section 406 would apply to those parts of the property which concededly are not being used for highway (or any other public) purposes.
Assuming a determination by the assessor that the portions of the parcels subject to the disputed easement are used as a highway, those portions would be exempt pursuant to subdivision 1, and the remainder liable for school taxes and special assessments in accordance with subdivision 5. In 1 Op.Counsel SBEA No. 101, we said that where a part of a municipally owned building is held for public use, the assessor should divide the building into distinct parcels for assessment purposes and treat only those parcels held for a public use as exempt. The same procedure should be followed with regard to a parcel of land, part of which is used as a highway. The assessor should divide it into separate parcels and treat the new parcels included within the highway as exempt and the remaining parcels as taxable to the extent provided by section 406 subdivision 5.
June 20, 1979