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Volume 10 - Opinions of Counsel SBRPS No. 16

Opinions of Counsel index

Public authorities exemption (Metropolitan Transportation Authority) (special assessments) - Public Authorities Law, § 1275:

Real property owned by the Metropolitan Transportation Authority is exempt from special assessments. (5 Op.Counsel SBEA No. 96 overruled)

We have been asked whether real property owned by the Metropolitan Transportation Authority [MTA] is liable for special assessments. Public authorities are entitled to whatever exemptions are granted them in the Public Authorities Law (Real Property Tax Law, § 412).

Until recently, it was our opinion that section 1275 of the Public Authorities Law, which exempts MTA property from taxation, did not extend to special assessments. That section provides in relevant part:

[P]roperty owned by the authority, property leased by the authority and used for transportation purposes, and property used for transportation purposes by the authority . . . shall all be exempt from taxation and special ad valorem levies. The authority shall be required to pay no fees, taxes or assessments on real estate. . . . The terms “taxation” and “special ad valorem levy” shall have the same meanings as defined in section [102] of the real property tax law. . . .

The rationale for our position was explained in 5 Op.Counsel SBEA No. 96, a 1976 opinion, which was based, in part, on 1 Op.Counsel SBEA No. 23, a 1971 opinion.

Subsequently, however, the court in Town of Cheektowaga v. Niagara Frontier Transportation Authority, 82 A.D.2d 175, 442 N.Y.S.2d 322 (4th Dept., 1981), construed the exemption language in section 1299-o of the Public Authorities Law, which, at that time, was virtually identical to that used in section 1275. The court concluded that the statutory exemption from “assessments” included special assessments. Interestingly, the court noted how the statute referred to the RPTL definitions of “taxation” and “special ad valorem levy” but did not do so for “special assessment” (442 N.Y.S.2d at 324, fn. 2). Despite what we would consider the Legislature’s intentional omission of a reference to special assessments, indicating an intent to make the authority liable for such charges, the court held otherwise.

The following year, section 1299-o was amended to specifically make the Niagara Frontier Transportation Authority [NFTA] liable for special benefit assessments (L.1982, c.836). We believe that this was done to overrule the result in the Cheektowaga case.

Nevertheless, in Metropolitan Transportation Authority v. Imholz, 121 A.D.2d 724, 504 N.Y.S.2d 60 (2d Dept., 1986), the court, in reliance on Cheektowaga, held that section 1275 “extends to special benefit assessments” (id.). That is, although the NFTA exemption statute (§ 1299-o) was amended to narrow its scope, the MTA exemption statute (§ 1275) has not been so amended. In the absence of a similar amendment to section 1275, the Imholz decision remains a controlling precedent within the Second Department and other courts must also follow it pending a decision of the Appellate Division in which they are located or of the Court of Appeals (Mountain View Coach Lines, Inc. v. Storms, 102 A.D.2d 663, 476 N.Y.S.2d 918 (2d Dept., 1984); People v. Shakur, 215 A.D.2d 184, 627 N.Y.S.2d 341 (1st Dept., 1995); 29 NY Jur2d, Courts and Judges, §§ 483, 488 and cases cited therein).

Moreover, a recent Court of Appeals decision lends support to the proposition that the MTA is exempt from special assessments. In New York State Dormitory Authority v. Board of Trustees of Hyde Park Water District, 86 N.Y.2d 72, 653 N.E.2d 1159, 629 N.Y.S.2d 989 (1995), the Court held that the Dormitory Authority’s exemption (Public Authorities Law, § 1685), which exempts that Authority from “taxes and assessments,” applies to special assessments. The court quoted the Cheektowaga decision (supra) with approval, and also noted that where the Legislature “intended not to exempt a particular public authority from special benefit assessments, it has said so explicitly (see, e.g., Public Authorities Law, 1299-qq, 1316, 1341 [exempting other public authorities from payment of all taxes ‘except special benefit assessments’]” (86 N.Y.2d at 79, 629 N.Y.S.2d at 991, emphasis in original). {1}

Accordingly, it is now our opinion that real property owned by the MTA is exempt from special assessments. Our prior opinion on this subject (5 Op.Counsel SBEA No. 96) is therefore overruled.

December 6, 1995

{1}  The Court also noted that the Dormitory Authority’s exemption was enacted in 1944, before the definition of “special assessment” was included in the RPTL (L.1958, c.959). In this case, the MTA exemption was added in 1965, that is, after the recodification of the RPTL. Given the other grounds for the Court’s decision (as discussed above), however, it appears to us that the chronological order of statutory enactments was not the major rationale for the Court’s determination.