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Volume 9 - Opinions of Counsel SBEA No. 103

Opinions of Counsel index

Housing exemption (redevelopment companies) (scope - special assessments, special ad valorem levies) - Private Housing Finance Law, § 125:

The real property of a redevelopment company, which is entitled to an exemption pursuant to section 125 of the Private Housing Finance Law, is liable for county refuse district charges if those charges are a special assessment, a special ad valorem levy or contractual charges based on use.

Our opinion has been requested concerning the scope of the exemption from taxation provided to property of redevelopment companies by section 125 of the Private Housing Finance Law (PHFL). Specifically, we have been asked whether a redevelopment company is required to pay a county refuse district’s charges.

Article 5 of the PHFL, the Redevelopment Companies Law (L.1942, c.845), provides incentives for the rehabilitation of substandard and insanitary areas and the construction of dwellings within those areas through the establishment of redevelopment companies. It authorizes the legislative body of an assessing unit to negotiate and approve contracts by which private capital may be provided for the rehabilitation of substandard areas and the construction of housing. The contract must regulate the rents to be charged.

Section 125 of the PHFL provides for an exemption from real property taxes for redevelopment companies. The local legislative body of a municipality in which a project of a redevelopment company is located may agree, by contract, to “exempt from local and municipal taxes, other than assessments for local improvements, all or part of the value of the property included in such project which represents an increase over the assessed valuation of the real property....”

Our review of the legislative history of section 125 leads us to conclude that the Legislature intended “assessment for local improvements” to include two types of charges: (1) special ad valorem levies imposed on benefitted real property in a special district on the basis of assessed valuation and (2) special assessments imposed on benefitted real property in proportion to the benefit received for the special service or improvement (see RPTL, §102(14), (15); see also, 1 Op.Counsel SBEA No. 23). Thus, an assessing unit is authorized to enter into an agreement with a redevelopment company to exempt the improvements on the redevelopment company’s property from all charges levied by or on behalf of the taxing jurisdiction, other than special valorem levies and special assessments (PHFL, §125(l)(c)).

Moreover, notwithstanding the municipal exemption agreement, a con-tactual charge for service based solely on use of the service may be imposed (Op.State Compt. Nos. 79-307, 75-754). Such charges may be made the subject of a system of rates or charges which will accurately exhibit the service rendered to each property owner (Op.State Compt. No. 77-596).

Therefore, if the charges assessed on behalf of the refuse district represent fee for service based solely on use of the service, the county may collect such user fees from a redevelopment company, regardless of whether the county has entered into a municipal tax exemption agreement pursuant to PHFL, section 125.

November 9, 1992

Updated: