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Volume 10 - Opinions of Counsel SBRPS No. 11

Opinions of Counsel index

Nonprofit organizations exemption (educational) (public access television station) - Real Property Tax Law, § 420-a:

Real property owned by a nonprofit organization and used to provide public access, educational style, television programming for the benefit of the public at large may receive a nonprofit organization exemption (Real Property Tax Law, § 420-a).

Our opinion has been requested concerning the eligibility of real property owned and used by a local public access television station [PATV] for a nonprofit organizations exemption (Real Property Tax Law, 420-a). The subject property includes a television studio and administrative offices, and related transmission facilities. {1} 

According to PATV’s exemption application and supporting materials, PATV was incorporated in 1981 and began operations during 1984. PATV is a not-for-profit corporation, and is exempt from federal income taxation pursuant to Internal Revenue Code, section 501(c)(3). PATV develops, produces and transmits television programming on areas of public interest, educational subjects and governmental affairs that the station deems beneficial to the community. In addition, PATV provides access to community television programming by local residents, consistent with the Federal policy promoting public access to such television programming (see 47 U.S.C. § 521 et seq.).

According to PATV’s president, PATV is a public access station funded in part by the town in which it is located. The town assigns a portion of the franchise tax it receives from the local cable television company to PATV, in order to provide local residents with access to television programming.

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 purposes (e.g., 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. To determine whether PATV is eligible for exemption pursuant to section 420-a, therefore, it must first be determined whether PATV is organized for an exempt purpose.

In Symphony Space, Inc. v. Tishelman, 60 N.Y.2d 33, 453 N.E.2d 1094, 466 N.Y.S.2d 677 (1983), the Court of Appeals held that, while exemption statutes should be construed strictly against the taxpayer seeking the benefit of the exemption, an interpretation so literal and narrow that it defeats the exemption’s settled purpose is to be avoided. The Court further held that, rather than dissecting each exempt purpose, section 420-a may encompass property used primarily for various and varied charitable and educational purposes and the moral or mental improvement of the citizenry.

PATV’s exemption application states that it is organized for charitable, educational and moral improvement purposes, specifically, to provide “public noncommercial educational and general audience television programming services” without charge to the general public. In addition, PATV states in its exemption application that it offers studio and television equipment, and training to operate the equipment, with “little or no cost” to all persons and organizations.

The supporting documents included with the exemption application, including the approval granted to PATV by the New York State Board of Regents, indicate that PATV is incorporated as an educational corporation pursuant to section 216 of the Education Law. Section 216 of the Education Law authorizes the Board of Regents to incorporate associations whose approved purposes are, in whole or in part, of educational or cultural value deemed worthy of recognition and encouragement by the University of the State of New York. {2} 

“Educational” has been defined in the context of section 420-a to refer to the development of faculties and powers and the expansion of knowledge by teaching, instruction or schooling (Swedenborg Foundation, Inc. v. Lewisohn, 40 N.Y.2d 87, 351 N.E.2d 702, 386 N.Y.S.2d 54 (1976)). Education, however, is not limited to traditional settings using traditional teaching methods. Education can occur in such places as undeveloped wilderness (Mohonk Trust v. Board of Assessors, 47 N.Y.2d 476, 392 N.E.2d 871, 418 N.Y.S.2d 763 (1979)) or the theatre (Symphony Space v. Tishelman, supra). Presumably, education may occur through television transmissions as well.

In addition to determining whether PATV is organized or conducted for exempt purposes, however, it must also be determined whether all or part of its subject property is used exclusively for exempt purposes. The term “exclusive” has been defined, in this context, to mean “principal or primary” (Association of Bar of City of New York v. Lewisohn, 34 N.Y.2d 143, 313 N.E.2d 30, 357 N.Y.S.2d 555 (1974)). A test for exclusive use is whether the primary use of the property is reasonably incident to or in furtherance of the organization’s exempt purposes (General Hospital v. Wagner, 47 A.D.2d 37, 364 N.Y.S.2d 934 (4th Dept., 1975), aff’d, 39 N.Y.2d 863, 352 N.E.2d 133, 386 N.Y.S.2d 216 (1976)). In other words, the determination of whether the property seeking exempt status is used exclusively for the statutory purposes “depends upon whether its primary use is in furtherance of the permitted purposes” (Yeshivath Shearith Hapletah v. Assessor of the Town of Fallsburg, et al., 79 N.Y.2d 244, 251, 590 N.E.2d 1182, 582 N.Y.S.2d 54, 56 (1992)).

PATV’s application form (EA-420-a/EA-420-b USE) states that the property will be used as a television broadcasting studio and administrative offices to provide free public broadcasting services to residents of the county in which it is located.

In Gay Alliance of Genesee Valley v. Rochester Assessor (201 A.D.2d 887, 607 N.Y.S.2d 789 (4th Dept., 1994)), the Appellate Division held that the petitioner, whose activities included a peer facilitation counseling program, a speakers bureau, and the publication of a monthly newsletter promoting the civil rights of homosexual persons, was eligible for the nonprofit organization exemption, because the corporation used its property primarily for various and varied charitable and educational purposes, as well as for the moral and mental improvement of the citizenry.

In our opinion, therefore, consistent with the Court of Appeals holding in Symphony Space and the Appellate Division’s decision in Gay Alliance, a corporation which uses real property in furtherance of a corporate purpose of providing public access, educational style, television programming for the benefit of the public at large may be considered eligible for the nonprofit organization exemption. {3} 

December 22, 1994

{1}  Since transmission facilities and equipment owned by PATV (e.g., an antenna) are not real property (see RPTL, § 102(12)(i), as amended by L.1987, c.416 and L.1985, cc.71, 72), this opinion is inapplicable to such equipment.

{2}  We note that section 236 of the Education Law provides for the establishment of educational television corporations. However, PATV is not an educational corporation established pursuant to Education Law, section 236. Section 236 of the Education Law authorizes the Board of Regents to incorporate any group or association for the purposes of constructing, owning, operating or maintaining a nonprofit and noncommercial public television station or public television and/or radio station for providing educational television and radio programs. The television programs developed and presented by such corporations are required to be of an educational, instructional or cultural nature (§ 236(3)(a), (3)(d)).

{3}  The PATV property appears to be analogous to the real property reviewed in Symphony Space, as it “provides the general public with access, otherwise limited, to the various aspects of the performing arts, including the unique opportunity to create, perform, learn, and otherwise be involved in the wide spectrum of activities that are housed in the theatre” (Symphony Space, supra, 466 N.Y.S.2d at 680).