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Volume 10 - Opinions of Counsel SBRPS No. 120

Opinions of Counsel index

Municipal corporations exemption (golf course) (catering facility) - Real Property Tax Law, § 406:

A county owned golf course located within the county and operating on the county’s behalf by a licensee is entitled to exemption where the public’s access thereto is generally unlimited. Where that same licensee operates a catering facility on the premises and public access to that portion of the property is limited, the catering facility is not entitled to exemption.

Our opinion has been requested concerning the taxable status of a town-owned golf course which is operated by a private licensee. In addition to operating the golf course, the licensee has opened a catering business on the premises which caters private parties. The licensee is authorized to schedule two golf “outings” per week (Monday - Thursday), but one of these may not have more than 60 guests and the course must remain open to the public unless the town’s parks and recreation commissioner agrees otherwise. Given these facts, the question is if the golf course and/or catering facility may continue to receive a tax exemption pursuant to section 406(1) of the Real Property Tax Law.

To receive exemption pursuant to section 406(1), municipally-owned property located within the boundaries of its owner must be “held for a public use.” Citing an earlier decision (i.e., Herkimer County v. Village of Herkimer, 251 A.D. 126, 295 N.Y.S. 629 (4th Dept. 1937), aff’d, 279 N.Y. 560, 18 N.E.2d 854 (1939)), the Court of Appeals stated:

Although what comprises “a public use” within the meaning of the statute “has never been defined with exactitude” and “must necessarily depend upon the peculiar circumstances of each case”, it has been said, and most appropriately, that “Held for a public use, in this connection, means that the property should be occupied, employed, or availed of, by and for the benefit of the community at large, and implies a possession, occupation and enjoyment by the public, or by public agencies” (Town of Harrison v. County of Westchester,13 N.Y.2d 258, 263, 196 N.E.2d 240, 242, 246 N.Y.S.2d 593, 596 (1963)).

Subsequently, in a dissenting opinion which served as the basis for a reversal by the Court of Appeals, Appellate Division (2d Dept.) Justice Lazer disagreed with a majority decision concerning town-owned property leased to the Federal government [the majority held that the property was not exempt per § 406(1)]. Justice Lazer said:

In both Matter of County of Erie v Kerr, 49 A.D.2d 174, 373 N.Y.S.2d 913 [Rich Stadium]) and Matter of Dubbs v Board of Assessment Review of County of Nassau, 81 Misc.2d 591, 367 N.Y.S.2d 898 [Nassau Veterans Memorial Coliseum]), municipal facilities leased to private commercial interests for the showing of major league sporting contests, cultural events, public exhibitions and the like were declared to be held for public use despite the fact that the primary beneficiaries were the owners of major league sports franchises. Nevertheless, the rationale of Erie and Dubbs is not difficult to accept -- the uses involved provided a means of meeting the recreational needs of the residents of the locality whose facilities were utilized and thus the benefit flowed to those who carried the tax burden (Fallica v. Town of Brookhaven, 69 A.D.2d 579, 602-03, 419 N.Y.S.2d 102, 117 (2d Dept. 1979)).

The Court of Appeals subsequently reversed the Appellate Division on the basis of Justice Lazer’s opinion (52 N.Y.2d 794, 417 N.E.2d 1248, 436 N.Y.S.2d 707 (1980)).

Given these precedents, there appears to be little question but that a municipal golf course located within the boundaries of the owning municipality is exempt pursuant to section 406(1) of the RPTL (see, City of Amsterdam Town of Amsterdam, 100 A.D.2d 661, 473 N.Y.S.2d 861 (3d Dept. 1984)), even if it is operated on behalf of the municipality by a lessee (Fallica, supra). It is unlikely that a court would reach a different conclusion where, as here, the golf course is run on the municipality’s behalf by a licensee. Public accessibility appears to be the key factor. Here, the golf course may be unavailable to the public on one or (with town approval) two weekdays per week. It is a question for the trier of fact (i.e., the assessor in the first instance) whether that potential unavailability vitiates the public use test. For purposes of addressing the catering facility, we will assume the assessor would agree that the golf course is tax exempt.

Based on the facts provided, it appears that public access to the catering facility is far more restricted. There is some case law of relevance.

In Westchester County v. Rizzardi, 46 Misc.2d 1047, 261 N.Y.S.2d 350 (Sup.Ct., Westchester Co. 1965), {1}  the court denied exemption to a restaurant/catering facility located within a county park but operated by a private lessee-concessionaire. The court quoted from the Harrison decision (supra) and stated:

The primary use of [the facility] as a place where groups may gather to hold events requiring a large space does not of itself render the restaurant “occupied, employed or availed of for the benefit of the Community at large.” It is not regulated or controlled in any significant way by any agency or department of the county. Its use by the public does not differ in any substantial way from the public use of large restaurants everywhere. The arrangements for its use are made on the basis of separate consultation and contract. By no stretch of the imagination can these social gatherings be deemed functions in the public interest, any more than those which might be held in any large restaurant or caterer’s establishment. There is lacking that possession and enjoyment by the public or public agencies which were applied as the test in the Harrison and Herkimer cases. There are present the elements of exclusive and long-term control by a private concessionaire and use of the premises solely for his patrons and guests, which were the tests of taxability in the Harrison case (46 Misc.2d at 1051-52, 261 N.Y.S.2d at 353).

More recently, a court denied an exemption pursuant to section 406(1) for a purportedly public tennis club, finding the club’s membership limit of 225 to be inconsistent with a public use. The court found that the county had little or no control over the club’s operations (County Tennis Club v. Assessor for the Village of Scarsdale, 261 A.D.2d 616, 691 N.Y.S.2d 77 (2d Dept. 1999)).

Several of the above-cited decisions concern the operation of municipally-owned [exempt] property by lessees. Where exemption has been lost in leasehold situations (e.g., Harrison, (supra); County Tennis, (supra); Rizzardi, (supra)), it has been where the public has had its access to the leased property so restricted as to eliminate its “public use” thereof. Again, while this presents a question of fact for the assessor, the facts seem to support a conclusion that the catering facility is not held for a public use, so that that portion of the town’s property is not exempt pursuant to section 406(1).

November 27, 2000

{1}  Earlier litigation between these parties (39 Misc.2d 820, 241 N.Y.S.2d 963 (Sup.Ct. Westchester Co. 1963), aff’d, 22 A.D.2d 808, 254 N.Y.S.2d 999 (2d Dept. 1964)) was inconclusive on the issue of exempt status.