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Volume 12 - Opinions of Counsel SBRPS No. 18

Opinions of Counsel index

Municipal corporations exemption (public use requirement) (environmental remediation) - Real Property Tax Law § 406:

Municipally-owned real property undergoing environmental remediation is being “held for a public use” and may qualify for an exemption pursuant to section 406 (1) of the Real Property Tax Law. After remediation is completed, the assessor must decide if the property still qualifies for exemption.

We have received an inquiry concerning the municipal corporations exemption (Real Property Tax Law, § 406). A village purchased property for the purpose of rectifying ground petroleum pollution per Article 56, title 5, of the Environmental Conservation Law (ECL) (see also 6 NYCRR subpart 375-4). {1}  The property has now been cleaned and is vacant; the village is considering whether to use it for village purposes or sell it. The town assessor has refused to grant tax exempt status, and our opinion is sought on these facts.

The generally applicable requirement for the exemption of municipally-owned property located within the boundaries of the owning municipal corporation is that the property be “held for a public use” (RPTL,  § 406(1)). We have discussed this provision and the judicial decisions construing the same in several of our Opinions of Counsel (e.g., 10 Op.Counsel SBRPS No. 120). As we wrote therein:

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)).

While we are aware of no judicial or administrative opinion addressing whether remediation of a contaminated parcel constitutes a public use during the period of time that remediation is taking place, in our opinion, it seems reasonable to so conclude (see ECL, §§ 56-0502(1-a), 56-0505, 27-1403). That is, it seems self-evident that the community at large benefits from the restoration of property to its uncontaminated condition.

As of the next taxable status date following completion of the remediation, however, the assessor must decide anew if the municipally-owned property is still held for a public use. If the assessor refuses to grant exempt status, the municipal owner, like any other taxpayer, may seek administrative and, if necessary, judicial review of such determination (RPTL, Arts. 5, 7).

December 11, 2008

{1}  For purposes of this inquiry, we assume that the tax foreclosure provisions, including those granting “temporary incidents of ownership,” of section 56-0508 of the ECL were not used.