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Volume 9 - Opinions of Counsel SBEA No. 71

Opinions of Counsel index

Nonprofit organizations exemption (religious) (residence) - Real Property Tax Law, § 420-a:

Real property used by a qualifying religious organization as a residence for religious students and an instructor may be eligible for the nonprofit organizations exemption (RPTL, §420-a).

We have received an inquiry concerning the eligibility of an Islamic Center, a not-for-profit corporation, for the nonprofit organizations exemption (RPTL, §420-a). Apparently, the Islamic Center, presumably a religious/educational institution, has been receiving the benefit of this exemption on certain of its real property. At issue is a portion of Islamic Center property which is used as a seminary wherein only students and their religious instructor live.

Section 420-a of the RPTL provides an exemption for the real property of a nonprofit corporation or association organized or conducted for certain specified exempt purposes (e.g., religious, educational) and used exclusively to carry out such purposes, so long as no officer, member or employee of the corporation or association is eligible to receive pecuniary profit in excess of reasonable compensation for services. To ascertain whether the subject property or a portion is entitled to an exemption, therefore, it must first be determined whether the Islamic Center is organized or conducted for one or more of the exempt purposes enumerated in section 420-a.

Islamic Center’s Certificate of Incorporation states that it is organized, among other things, “[t]o organize, promote, and disseminate the religious views of the Islamic religion, [and] to assist and promote the view and practice of the Islamic religion....” These organizational purposes appear to be within the ambit of the religious and educational exempt purposes of section 420-a. Thus, if the Islamic Center actually provides religious instruction, the question is whether the property in question is used exclusively for such purposes.

The taxable status of housing has been construed in the context of residential facilities for students, faculty, and staff of education and medical institutes. For example, college dormitories have traditionally been held to be tax exempt “based upon the theory that education contemplates not only the mental and moral” aspects of student development, but also their physical well being and maintenance (University of Rochester v. Wagner, 63 A.D.2d 341, 408 N.Y.S.2d 157, 161 (4th Dept. 1978), aff’d, 47 N.Y.2d 833, 392 N.E.2d 569, 418 N.Y.S.2d 583 (1979); In Re Syracuse University, 214 A.D. 375, 212 N.Y.S. 253 (4th Dept. 1925)). This exemption has been extended to buildings containing apartments for married students and their families (Application of Syracuse University, 59 Misc.2d 634, 200 N.Y.S.2d 129 (Sup.Ct., 1969)).

The issue of the taxable status of housing owned by an educational institution and rented to faculty and staff was first encountered in the context of the post-World War II housing shortage (Clarkson Memorial College v. Haggett, 300 N.Y. 595, 89 N.E.2d 882 (1949)). Citing the shortage of housing and its negative consequences for an institution, its faculty and student body, the Court of Appeals ruled in favor of exemption. The entitlement to exemption for faculty and staff housing has since become firmly entrenched in decisional law. That is, faculty housing is deemed “reasonably incident” to the major purpose of the owning organization (St. Joseph’s Health Center Properties, Inc. v. Srogi, 51 N.Y.2d 127, 412 N.E.2d 921, 432 N.Y.S.2d 865 (1980); St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769, 237 N.Y.S.2d 308 (1962); Matter of Yeshivath Shearith Hepletah v. Assessor of the Town of Fallsburg, 79 N.Y.2d 244, 590 N.E.2d 1182, 582 N.Y.S.2d 54 (1992); Matter of Faculty-Student Assn. of State Univ. Coll. at Oswego v. Sharkey, 35 A.D.2d 161, 316 N.Y.S.2d 698 (4th Dept. 1970)), aff’d, 29 N.Y.2d 621, 273 N.E.2d 139, 324 N.Y.S.2d 411 (1971); Pratt Institute v. Boyland, 16 Misc.2d 58, 174 N.Y.S.2d 112 (Sup.Ct., 1958), aff’d, 8 A.D.2d 625, 185 N.Y.S.2d 753 (2nd Dept. 1959)).

Thus, assuming Islamic Center’s provision of religious instruction, it would appear that the seminary is entitled to exemption.

March 6, 1991
Revised August 1992

Updated: