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Volume 10 - Opinions of Counsel SBRPS No. 86

Opinions of Counsel index

Urban Development Corporation exemption (liability for fire district charges) - McKinney’s Unconsolidated Laws, § 6272:

Property belonging to the Urban Development Corporation is liable for special ad valorem levies charged for fire district purposes.

We have been asked if property belonging to the Urban Development Corporation is liable for fire district charges. It appears so.

The general exemption for UDC property provides the corporation and its subsidiaries “shall not be required to pay any taxes, other than assessments for local improvements . . .” (L.1968, c.174, § 1 [§ 22], McKinney’s Unconsolidated Laws, § 6272). {1}  It is our understanding that most fire districts are financed through special ad valorem levies, so the question is whether fire district charges are “assessments for local improvements.”

In construing the phrase “other than assessments for local improvements,” as used in section 125(1)(a) of the Private Housing Finance Law, the Appellate Division, Third Department, determined that “an ad valorem levy is an assessment for a local improvement” and that the “costs of providing fire protection services” have been funded through ad valorem levies (Crandall Public Library v. Glens Falls, 216 A.D.2d 814, 629 N.Y.S.2d 100, 102 (3d Dept., 1995)). The following year, the same court said:

Fire protection, garbage collection and sewer services, on the other hand, have been characterized as services which impart direct and tangible benefits upon real property, enhancing its value, with the result that levies to fund them constitute assessments for local improvements (L.P.A. Associates v. Daby, 231 A.D.2d 827, 647 N.Y.S.2d 867, 868 (3d Dept., 1996)). {2} 

While we question whether the Legislature intended UDC property to be liable for special ad valorem levies, given the recent precedents (as well as the Comptroller’s opinion), we are constrained to conclude that UDC property is liable for special ad valorem levies charged for fire district purposes.

August 13, 1999

{1}  We have stated, however, that if title is in a subsidiary organized pursuant to certain articles of the Private Housing Finance Law, a UDC residential project’s exemption may be limited as per McKinney’s Unconsolidated Laws, § 6265 (2 Op.Counsel SBEA No. 45).

{2}  In a 1974 opinion, the State Comptroller stated that the UDC “may be assessed for fire, lighting and sewer districts. These are improvement districts to which the exemptions granted by § 6272 do not apply . . .” (30 Op.State Compt. 79, 80).