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Volume 1 - Opinions of Counsel SBEA No. 21

Opinions of Counsel index

Miscellaneous organizations (Salvation Army) - Real Property Tax Law, § 421:

Real property owned by the Salvation Army and used for religious or charitable purposes is exempt from taxation.

The taxable status of real property owned by the Salvation Army is a deceptively simple issue. There are two factors which require consideration, and each should be discussed in some detail.

First, the Salvation Army was granted a charter pursuant to a special act of the State Legislature (L. 1899, C. 468), and section 11 of that special act provides as follows for a tax exemption for certain real property owned by the Salvation Army:

“§ 11. Exemption from taxation. - The property of the Salvation Army, both real and personal, within this state, shall be exempt from taxation, to the extent that, and so long as, the same shall be used exclusively for places for religious meetings, homes for the training of its officers, homes for the rescue of fallen women, shelters for the poor, hospitals, places of rest and recuperation for the sick and convalescent, children’s homes and homes for the aged poor of its membership or congregation or of the public generally. All the other property of said Salvation Army, both real and personal, in this state, shall be entitled to the exemptions from taxation provided for by subdivision seven of section four of the tax law.”

          Parenthetically, it should be noted that although this exemption was granted pursuant to a special law, it retains its force and effect because it was enacted subsequent to the general revision of the Tax Law in 1896 and prior to the amendment of section 17 of Article III of the State Constitution in 1901. Having been enacted between these two events, the special exemption for the Salvation Army was neither repealed by the Tax Law of 1896 nor was it subject to the constitutional prohibition against special exemptions from real property taxation enacted in 1901 (See In re Montefiore Home, 159 App. Div. 644, 144 N.Y.S. 953; aff’d 211 N.Y. 549; City of Poughkeepsie, 52 Misc. 2d 721, 276 N.Y.S.2d 693).

Therefore, the exemption set forth in Chapter 468 is valid insofar as real property of the Salvation Army falls within its purview. However, the specifically exempted types of properties listed in the first sentence of section 11 do not include the type which is the subject of this inquiry (i.e., the private residence of the local commander). The right to exemption for such property, therefore, depends upon whether that property is the type which is exempt pursuant to current section 421 of the Real Property Tax Law. This is the second of the two factors to be discussed.

The Salvation Army is one of the organizations within the scope of section 421, both because of the direction of the second sentence of the charter exemption in Chapter 468 (which refers to the predecessor to section 421) and because of the status of the Salvation Army as a religious and charitable organization (See L. 1899, c. 468, § § 5, 8, 9; People v. Salvation Army, 33 Misc. 712, 68 N.Y.S. 338, aff’d 68 App. Div. 639, 74 N.Y.S. 1142; Salvation Army in the United States v. American Salvation Army, 62 Misc. 360, 114 N.Y.S. 1039, rev’d 135 App. Div. 268, 120 N.Y.S. 471; People v. Salvation Army, 176 Misc. 755, 29 N.Y.S.2d 70, aff’d 205 N.Y. 619, 98 N.E. 1118).

However, section 421 of the Real Property Tax Law exempts only real property which is owned by the Salvation Army and used exclusively for religious, charitable, benevolent or other purposes. The question as to the taxable status of housing provided by an exempt organization for its employees is a very ambiguous area of the law. There are significant decisions which hold such property to be exempt pursuant to section 421, but it appears that in each case there was strong evidence that a local housing problem existed and that the provision of the homes in question was essential to the continued and efficient functioning of the exempt organization (See St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769; Faculty-Student Association of State University College at Oswego, Inc. v. Sharkey, 35 App. Div.2d 161, 316 N.Y.S.2d 698, aff’d 29 N.Y.2d 621; Pratt Institute v. Boyland, 16 Misc.2d 58, 174 N.Y.S.2d 112, aff’d 8 App. Div.2d 625, 185 N.Y.S.2d 753).

It is our opinion that in order for an exemption to be granted to real property provided by an exempt organization as residences for its employees, certain unique circumstances must exist. One such circumstance is the existence of a housing shortage as discussed above. Other circumstances relate to the existence of a direct and essential connection between the organization and the residence. Examples of such a connection are that of the residence of the chief executive officer of an institution where such residence is used for official receptions and functions (e.g., the president and/or dean of a college), and that of the residence of employees of the organization who perform essential supervisory or maintenance duties (e.g., the residences of a dean of students at a school or college or the chief custodian of an institution).

July 29, 1971