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Volume 8 - Opinions of Counsel SBEA No. 45

Opinions of Counsel index

Municipal corporations exemption (property acquired by tax deed) (liability for sewer district charges) - Real Property Tax Law, §§ 302, 406, 490:

Property acquired by a municipality after taxable status date for non-payment of taxes is liable in full for sewer district charges levied after acquisition but prior to the taxable status date next following.

The exemption from special ad valorem levies afforded such property is not limited by the provisions of section 490 of the RPTL.

We are asked whether a county is liable in whole or in part for unpaid sewer taxes levied against property acquired by the county for non-payment of taxes.

The general rule in New York is that the taxable status of real property is determined according to its “condition and ownership” as of taxable status date (Real Property Tax Law, §302; but cf., §520). Thus, if property is owned by a person or corporation not entitled to exemption as of taxable status date, the property is liable for the ensuing school and county tax levies, notwithstanding a transfer of title to an “exempt” organization (see, R.P. Adams Co., Inc. v. Nist, 97 Misc.2d 374, 411 N.Y.S.2d 504 (S.Ct., Erie Co. 1978), rev’d on other grounds, 72 A.D.2d 908, 422 N.Y.S.2d 184 (4th Dept. 1979)).

The primary exceptions to this rule are acquisitions by the State or Federal governments after taxable status date and prior to lien date (see, 2 Op.Counsel SBEA No. 33; cf., 8 id. No. 44). Acquisitions by municipal corporations are not excepted from the general rule of section 302 (see, 2 Op.Counsel SBEA No. 13; cf., Rochester Housing Authority v. Sibley Corp., 77 Misc.2d 205, 351 N.Y.S.2d 934 (S.Ct., Monroe Co. 1974), aff’d 47 A.D.2d 718, 367 N.Y.S.2d 969 (4th Dept. 1975)).

In this case, the county took tax title in October, 1982. That being the case, an exemption from taxation under section 406 would not have been available until May 1, 1983 (the next taxable status date). Accordingly, the property was liable in full for the January 1983 sewer district levy, notwithstanding the county’s acquisition of title prior to lien date.

Note that if municipally owned real property is located within the municipality’s corporate limits and held for a public use, it is exempt from taxation and, “to the extent provided in [RPTL, §490]”, it would also be exempt from special ad valorem levies and special assessments (RPTL, §406(1)). By way of contrast, property acquired by tax deed is “deemed to be held ... for a public use” for three years and exempt from taxes and special ad valorem levies; however, this type of municipally owned property is liable for special assessments and school taxes (RPTL, §406(5); but see, 5 Op.Counsel SBEA No. 114).

The scope of the exemption from special ad valorem levies afforded such tax deed acquisitions is not limited by reference to section 490. This is consistent with the language of section 490 itself which includes in its list of subject sections “subdivisions one and three of section four hundred six”; no reference is made to subdivision 5 of section 406.

Thus, assuming that the county received an exemption for this property on the 1983 assessment roll pursuant to section 406(5), it would be liable in full for all “special assessments” but it would be wholly exempt from “special ad valorem levies”.

The State Comptroller has stated that a sewer district established pursuant to either Article 12 or Article 12-A of the Town Law must be established on a “benefit basis” (i.e., costs must be imposed in the form of a “special assessment”). However, the cost of a “sewer improvement” provided pursuant to Article 12-C of the Town Law need not be a “benefit” based charge (see, 23 Op.State Compt. 833). Thus, if the sewer district in question was established pursuant to Article 12 or Article 12-A of the Town Law, its charges would be “special assessments” for which county property would be liable pursuant to section 406(5) of the RPTL.

March 17, 1983

Updated: