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Volume 8 - Opinions of Counsel SBEA No. 97

Opinions of Counsel index

Municipal corporations exemption (generally) (payments in lieu of taxes) - N.Y. Constitution, Article 8, § 1; Real Property Tax Law, §  06:

Unless authorized by statute, a county may not make payments in lieu of taxes with respect to exempt county property located within towns and villages in that county.

We have received an inquiry as to whether a county may make payments to villages and towns in lieu of taxes on exempt county-owned property in those municipalities.

Under present New York State law, county-owned property, located within the geographic confines of the county and held for a public purpose is exempt from taxation (Real Property Tax Law, §406(1); see generally, 4 Op.State Compt. 20; 24 Op.State Compt. 939; 17 Op.State Compt. 304). There is no general statute which requires or authorizes an owner of tax exempt property to make payments in lieu of taxes. In certain instances, however, the Legislature has authorized and the courts have upheld agreements made by owners of otherwise exempt property to make payments in lieu of taxes (see, e.g., County Law, §233-b; see also Bush Terminal Co. v. City of New York, 282 N.Y. 306, 319, 26 N.E.2d 269 (1940)).

In the absence of statutory authority, however, a tax exempt owner may not be compelled to make such payments. Moreover, because of the limitations imposed by the State Constitution on the expenditure of public moneys (see, Article 8, §1), a municipal corporation (such as a county) may not voluntarily make payments in lieu of taxes. In a series of opinions, the State Comptroller has declared that municipal corporations would be barred from making payments on account of county-owned tax-exempt property (8 Op.State Compt. 120); payments to a village in lieu of taxes for sewer services (9 Op.State Compt. 404); and, payments in lieu of taxes to villages for services rendered to a town park located in a village (10 Op.State Compt. 242).

Thus, there can be no informal arrangements by which a county might make payments in lieu of taxes. Statutory authority would be required.

July 21, 1980

Updated: