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Volume 8 - Opinions of Counsel SBEA No. 111

Opinions of Counsel index

Business investment exemption (local option) (school district) - Real Property Tax Law, § 485-b:

Prior to the 1985 amendment of §485-b(7), school districts in Suffolk and Nassau Counties, other than the Glen Cove City School District in Nassau County, were not eligible to exercise the opt-out election of this section. [6 Op. Counsel SBEA No. 85 superseded.]

Section 485-b of the Real Property Tax Law provides an exemption from taxation of “real property constructed, altered, installed or improved ... for the purpose of commercial, business or industrial activity” (subdivision (1)). Subdivision 7 of section 485-b, as amended by chapter 512 of the Laws of 1985, provides that “a school district, except a city school district to which article fifty-two of the education law applies, may, by resolution, reduce the percentum of exemption otherwise allowed pursuant to this section.” Thus, a school district other than a school district in the Cities of New York, Buffalo, Rochester, Syracuse and Yonkers (the districts to which Article 52 of the Education Law applies), may now “opt out” of the exemption.

Prior to the enactment of chapter 512, subdivision 7 of section 485-b authorized “a school district which levies school taxes” to opt out of the exemption. In Walker v. Board of Assessors of Nassau County, 66 N.Y.2d 702, 48 N.E.2d 276, 496 N.Y.S.2d 419 (1985), rearg. den., 66 N.Y.2d 1036, 489 N.E.2d 1304, 499 N.Y.S.2d 1031 (1985), the Court of Appeals held that school districts in Nassau County did not “levy taxes” and, consequently, could not take advantage of the opt-out provision. In reaching this conclusion, the Court relied upon the case of People ex rel. Oswego Falls Corp. v. Foster, 251 A.D.2d 65, aff’d 278 N.Y. 494, which held that to “levy” taxes is to do that which is necessary to authorize the collector to collect the tax, to extend them against the taxable property (id. at 68). Pursuant to the Nassau County Administrative Code (NCAC), school districts in towns and in the City of Long Beach adopt their budgets, fix the amount of taxes to be raised (prior to 1982, school districts also determined the tax rate per $100 of assessed valuation) and certify those items to the Board of Assessors (NCAC, §§ 6-1.0(2) and 16-19.0 to 16-21.0). The NCAC then provides for the School Board to extend the taxes, certify the extension to the Nassau County Board of Supervisors and deliver those portions of the school district assessment rolls to which the warrants for the collection of taxes are to be annexed (id., §§ 6-21.0, 6-22.0). Thus, in Walker, the Court found that “[a]lthough petitioner school districts independently determine their budgets and the sums to be raised by real property taxes to meet those budgets, they do not levy taxes . . .” (Walker v. Board of Assessors of Nassau County, 66 N.Y.2d at 705).

The relevant language found in the Suffolk County Tax Act (SCTA) which prescribes the process of levying the school tax is much the same as that in the Nassau County Administrative Code. The SCTA provides that each school district compute, ascertain and adopt the tax rate per hundred dollars of assessed valuation necessary to raise the amount required for the amount of the school district budget and for all other necessary amounts to be raised by taxation as provided by law, and shall certify the tax rate and the total amounts to be raised to the Supervisor of the town (SCTA, §8). With the exception of the provision allowing the districts in Suffolk to adopt the tax rate per hundred dollars of assessed valuation, the Codes are virtually the same. Accordingly, we believe that based upon the Walker decision, Suffolk County levies school district taxes, and that prior to the 1985 amendment to section 485-b, the school districts in Suffolk County were not authorized to exercise the opt-out election of section 485-b(7).

The procedure of levying taxes for the Long Beach City School District is the same as for the towns in Nassau County (NCAC, §6-1.0(2); see also, L.1951, c.741, §11). Thus, the same result that was reached in Matter of Walker (school districts do not levy, therefore, may not opt-out) would presumably be reached in the case of the City of Long Beach.

However, the procedure of levying taxes in the Glen Cove City School District is not prescribed by the Nassau County Administrative Code. Instead, the Glen Cove City School District actually levies its own taxes, pursuant to section 1306 of the Real Property Tax Law. Therefore, the Glen Cove City School District was entitled to opt-out of the section 485-b program.

April 30, 1986

Updated: