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Volume 2 - Opinions of Counsel SBEA No. 96

Opinions of Counsel index

Public Authorities exemption (taxes on property leased to M.T.A.) - Public Authorities Law, § 1275:

Immunity from real property taxation granted to property acquired by the state does not attach to property which is leased to the state.

We have been asked to give our opinion as to the taxable status of certain property belonging to the Penn-Central Railroad Company which has been leased to the Metropolitan Transportation Authority.

As we understand the facts, the M.T.A. has leased property to the Penn-Central for a term of sixty (60) years commencing June 1, 1972. The taxable status date for the 1972 assessment rolls of towns in the county in question was May 1 of 1972. The property was assessed on the 1972 assessment roll in the name of Penn-Central. Also the State Board treated the property as subject to the railroad ceiling of Penn-Central for the railroad ceiling established for 1972 assessment rolls. (The “taxable status” of railroad ceiling property was December 31, 1971 under the provisions of the Real Property Tax Law, section 489-k, subdivision 6).

No complaint was filed objecting to the manner in which the property was treated on the 1972 roll, and taxes were levied on assessments after application of Penn-Central’s railroad ceiling. Sometime in December of 1972, Penn-Central notified the local assessor that the property was exempt under section 1275 of the Public Authorities Law.

The New York State Legislature has provided that the taxable status of property in towns shall be determined as of May 1st of each year. Thus, whether or not property is entitled to an exemption conferred by law is determined as of the taxable status date (Lutheran High School Ass’n of New York v. City of New York, § 30 App. Div.2d 553, aff’d 27 N.Y.2d 939, 267 N.E.2d 101, 318 N.Y.S.2d 314). This interpretation has been applied to property acquired by various governmental bodies other than New York State in numerous opinions of the State Comptroller (see for example, 69-318, 69-85, and 17 Op.State Compt. 214).

The apparent exception to this construction under which property acquired by the state after taxable status date but prior to lien date, is based on the “immunity” doctrine. That is, property belonging to the sovereign state is immune from taxes from the date of acquisition and becomes taxable only where a statute clearly makes it so.

Here, the state has not acquired title to the property. Rather, a governmental agency has leased the property which becomes exempt solely through the operation of section 1275 of the Public Authorities Law. We are of the opinion that the “immunity” of the state does not attach to such “leased” property. There is a sound reason why a court would not so extend the immunity doctrine-the removal of property from the taxable portion of any assessment roll causes budgetary deficiencies. Thus, our conclusion is that the property is taxable as Penn-Central property on the 1972 assessment roll.

However, the property will be exempt from taxation on all subsequent assessment rolls under section 1275 of the Public Authorities Law as property “leased by the authority and used for transportation purposes”.

March 7, 1973