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Volume 10 - Opinions of Counsel SBRPS No. 33

Opinions of Counsel index

Housing development fund company exemption (scope) (special ad valorem levies and special assessments); (commencement of exemption) (completion of project) - Private Housing Finance Law, § 577:

The housing development fund exemption provided in section 577(1)(a) of the Private Housing Finance Law does not apply to special ad valorem levies or special assessments. Depending upon the language of the resolution granting the exemption, such exemption may commence with the first assessment roll prepared on the basis of a taxable status date occurring on or after the date the fund acquires title, even if a project is as yet incomplete.

Our opinion has been requested as to the scope of the permissive exemption from taxation authorized by section 577(1)(a) of the Private Housing Finance Law [PHFL]. In pertinent part, that statute provides:

1. (a) The local legislative body of any municipality in which a project of a housing development fund company is or is to be located may exempt the real property in such project from local and municipal taxes including school taxes, other than assessments for local improvements, to the extent of all or part of the value of the property included in the completed project (emphasis added).

We are asked (1) whether the phrase “assessments for local improvements” refers only to those types of charges identified in section 490 of the Real Property Tax Law and (2) whether the exemption would only commence when there is, in the words of the statute, a “completed project.”

We have previously said that the exemption, which may be granted pursuant to section 577(1)(a) of the PHFL, applies to general municipal (e.g., county and town) and school taxes (5 Op.Counsel SBEA No. 16). “Assessments for local improvements,” be they “special ad valorem levies” (see, RPTL, § 102(14)) or “special assessments” (id., § 102(15)), are not included and, therefore, the project remains fully liable for same. {1}

As to the second question, the closing phrase of the quoted sentence of section 577(1)(a) could be read to mean that an exemption does not commence until there is a “completed project,” that is, that an incomplete project, which includes perhaps only vacant land or foundations, is presently ineligible for exemption. Note, however, that paragraph (a) of section 577(1) also provides that an exemption granted by the local legislative body may continue for a period of no more than 40 years, “commencing in each instance from the date on which the benefits of such exemption first became available and effective.”

In this case, we have examined the resolution of the town board in which, pursuant to section 577 of the PHFL, it granted the exemption from taxation to the named Housing Development Fund Company (HDFC). In it, we find the following language: “NOW, THEREFORE, BE IT RESOLVED, that the parcels . . . shall be exempt . . . to the extent of the entire assessed value of said properties, during the period of time in which the [HDFC] has title to said properties, commencing when title vests with the [HDFC] and ending upon transfer to the purchasers” (emphasis added).

Reading the emphasized language of this resolution in conjunction with the closing phraseology of PHFL, section 577(1)(a), leads to the conclusion that the exemption for the property in question commences with the first assessment roll prepared on the basis of a taxable status date occurring on or after the date HDFC acquires title. {2}

April 22, 1997

{1}  Contrast the language in PHFL, § 577(1)(a) with that found in another housing exemption statute: RPTL, § 422. In the latter, the property is exempted from taxation and “from special ad valorem levies and special assessments to the extent provided in [§ 490].”

{2}  That the exemption does not commence immediately as of the date of acquisition by the HDFC is implied by the difference in statutory language of paragraph (a) of subdivision 1 and paragraph (a) of subdivision 3. In the latter, which involves UDC projects, provision is made for exemption to commence “from the date when such . . . company first acquired such property.”