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Volume 10 - Opinions of Counsel SBRPS No. 68

Opinions of Counsel index

Exemptions generally (special ad valorem levies) (tax exempt property within villages) - Real Property Tax Law, §§ 102(14), 490; Town Law, §§ 190, 209:

Notwithstanding a literal reading of section 490 of the Real Property Tax Law, where a town sewer district extends into a village, a parcel located within such village, which is exempt from taxation pursuant to one of the sections enumerated in section 490 of the RPTL, should also be exempt from charges imposed for the operation and maintenance of that district.

Our opinion has been requested concerning the provisions of section 490 of the Real Property Tax Law, which provide, in part, that:

Real property exempt from taxation pursuant to [listed provisions of article four of the RPTL] shall also be exempt from special ad valorem levies and special assessments against real property located outside cities and villages . . . except [for the ‘capital cost’ portion of certain improvement district charges such as] sewer systems. . . .

The facts are that a town sewer district [hereafter District], extends into a village. The question is whether a particular property, exempt pursuant to one of the sections listed in section 490 and located within the village, is liable for the “operation and maintenance” portion {1} of the special ad valorem levy charged by the District.

In 7 Op.Counsel SBEA No. 88, we concluded that real property, which was exempt from taxation pursuant to one of the sections enumerated in section 490 of the RPTL, was also exempt from special ad valorem levies and special assessments of a county special district (other than for capital costs of water, sewer, drainage and highway improvements). Relying, in part, on our opinion, the State Comptroller thereafter concluded that parcels entitled to exemption pursuant to section 490 are exempt from special ad valorem levies and special assessments imposed on behalf of county improvement districts regardless of their location inside or outside of cities and villages (Op.State Compt. 82-302).

Neither the Comptroller’s nor our opinion addresses town improvement districts such as the one in question. Addressing that subject necessitates examining some legislative history.

The language in section 490 is derived from a 1953 amendment (L.1953, c.876) to former section four of the Tax Law. It was carried forward into section 490 of the RPTL when the RPTL was codified in 1958.

In 1958, at the time of the enactment of the RPTL, special district charges, including special ad valorem levies, were not imposed on properties located within cities and villages because town special districts did not extend into cities and villages. {2}  However, in 1959, section 190 of the Town Law, pertaining to the establishment or extension of town improvement districts, was amended (c.856) to allow for the extension of such a district into a village upon the consent expressed by the village in local law, ordinance or resolution. {3}  The following year, section 209 of Article 12-A of the Town Law (which sets out an alternate procedure for the establishment or extension of town improvement districts) was similarly amended (L.1960, c.537). {4} 

Despite these changes to provisions of the Town Law, which bear an obvious relationship to section 490 of the RPTL, in the nearly 40 years which have passed since those enactments, section 490 of the RPTL has not been similarly amended. This leaves us with an anomalous result in that the language of section 490, read literally, means that the real property of an entity exempt under one of the sections listed therein is exempt from town special district charges (for operation and maintenance) if it is in the town-outside-village area, but taxable if it lies within the village. We do not believe the courts would countenance such a result. {5}

As the Court of Appeals has stated, “There must also be a rational reason for deliberately imposing the demonstrably different [real property] tax burdens on similar properties because of their different geographic locations” (Foss v. City of Rochester, 65 N.Y.2d 247, 260, 480 N.E.2d 717, 491 N.Y.S.2d 128, 135 (1985)). In Foss, because the Court found that “no rational demographic basis for such a difference [was] suggested or apparent, the statute [there in issue was declared to be] unconstitutional” (ibid.). Similarly here, we can think of no rational demographic basis for charging an otherwise tax exempt entity for District charges just because it is located within village boundaries.

Although the courts generally disfavor amendments by implication (see, e.g., People v. Bromwich, 200 N.Y. 385, 93 N.E. 933 (1911)), “[a]mendments of a statute may be either express or implied . . .” (McKinney’s Statutes, Vol I, § 370 (1971)). In this case, we believe that a literal application of section 490 to these facts would lead to an unconstitutional result and that the courts would be likely, therefore, to read into section 490 an implied amendment to make it comport with the previously discussed amendments of sections 190 and 209 of the Town Law.

Accordingly, although a literal reading of section 490 might lead to a different conclusion, given the equal protection problem, in our opinion, the District should not impose the operation and maintenance charges on the parcel in question.

July 16, 1998

{1}  As noted in section 490 itself, the additional exemption provided by section 490 does not extend to the capital cost portion of charges imposed for sewer district systems (see, Y.M.C.A. v. Rochester Pure Waters District, 37 N.Y.2d 371, 334 N.E.2d 586, 372 N.Y.S.2d 633 (1975)).

{2}  Accord: see definition of “special ad valorem levy” (RPTL, § 102(14) as added L.1958, c.959).

{3}  In approving that amendment, Governor Rockefeller wrote, “At present provision is made for improvement districts in only those areas of a town lying outside incorporated villages.” He then discussed the then-pending law’s provision assuring that village residents first consented to being included in the district, and continued, “The purpose of this bill is to enable village residents to enjoy the benefits or services that are provided by town improvement districts in the event such services are not available from the village” (1959 New York State Legislative Annual, p. 465). In relevant part, the provision remains the same today.

{4}  The bill’s intent was expressed by its sponsor: “This bill would be solely permissive and make a procedure available where persons living outside of a village and those in the village, with the approval of the village government, desire to solve service problems through the creation of town districts which could include village areas in such towns” (1960 New York State Legislative Annual, p. 229).

{5}  As we noted in 10 Op.Counsel SBRPS No. 47, “as a general rule, a literal construction of a statute must be avoided if it will lead to absurd results, [so] we must look behind the wording of this particular law, and find a reading that will further, rather than frustrate, its purpose.”