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Volume 2 - Opinions of Counsel SBEA No. 98

Opinions of Counsel index

Nonprofit organizations exemption (ecological) - Real Property Tax Law, § 421:

A parcel of land owned by a nonprofit organization organized for ecological improvement, which is merely isolated from use and remains unmanaged and totally wild does not satisfy the requirement of section 421 that the property be used exclusively for exempt purposes. Proper management of the same area in conjunction with a planned program of public use for ecological and educational purposes would satisfy the requirement of the statute for purposes of exemption from real property taxation.

We have received an inquiry concerning the taxable status of real property owned by a nonprofit organization devoted to ecological improvement.

The statute pursuant to which the property of such an organization could be exempt is section 421 of the Real Property Tax Law. The requirements of that statute can be summarized as follows:

1. The real property must be owned by an organization which is organized exclusively for one or more of the purposes listed in subdivision 1 of section 421.

2. The real property must be used exclusively for carrying out one or more of the purposes listed in subdivision of 1 of section 421. Any portion of the property which is not used is subject to taxation.

3. No officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operations, except reasonable compensation for services performed in furtherance of the corporate purposes.

4. No exemption shall be granted if the organization is a guise or pretense for directly or indirectly making any other pecuniary profit for such organization or for any of its members or employees.

In determining whether real property satisfies the requirements of section 421, it must be borne in mind that statutes exempting real property from taxation must be strictly construed, and that no exemption will be granted by any doubtful implication. In other words, the right to the exemption must be clearly established according to the statutory provision, and if a doubt exists, then that doubt should be resolved in favor of taxation (Lawrence-Smith School Inc. v. City of New York, 280 N.Y. 805, 21 N.E.2d 693).

The test as to whether an organization is organized exclusively for exempt purposes within the meaning of subdivision 1 of section 421 must be determined from the purposes recited in its certificate of incorporation.

The Nature Conservancy states the object of the corporation to be as follows:

“(a) to preserve or aid in the preservation of all types of wild nature, including natural areas, objects, flora and fauna, and biotic communities; (b) to establish nature reserves or other protected areas to be used for scientific, educational, and aesthetic purposes; (c) to promote the conservation and proper use of our natural resources; (d) to engage in or promote the study of plant and animal communities and of other phases of ecology, natural history, and conservation; and (e) to promote education in the field of nature preservation conservation.”

The purposes set forth in the certificate of incorporation of the Nature Conservancy, Inc. appear to meet the requirements of section 421 as being organized exclusively for the moral or mental improvement of men and women and for educational and scientific purposes.

Whether the second requirement of section 421 is met (that is, is the property being used exclusively for exempt purposes) is a determination which must be made by the local assessors who have first hand knowledge of the actual use being made of the property.

With respect to whether the parcel is being used exclusively for exempt purposes, it should be noted that the use of real property for ecological purposes is a relatively new concept insofar as it relates to the exempt status provided in section 421. However, the legal precedents available would seem to indicate that certain ecological uses of real property do qualify for exempt status under that law (In Matter of Wildlife Preserves Inc. v. Scopelliti, 66 Misc.2d 611, 321 N.Y.S.2d 1004; People ex rel. Untermeyer and McGregor, 295 N.Y. 237, 66 N.E.2d 292; Petition of North Manursing Wildlife Sanctuary, 52 Misc.2d 96, 274 N.Y.S.2d 915, rev’d 28 App. Div.2d 891, 282 N.Y.S.2d 18; In re American Museum of Natural History, 17 Misc.2d 855, 187 N.Y.S.24; 390).

It is our opinion that a parcel of land which is simply isolated from public and private use and is unmanaged and which, therefore, becomes a totally wild dwelling place for whatever plants and creatures come to inhabit it would not be a use which is set forth in section 421.

If, however, there is some professional or scientific management of the area in conjunction with a planned program of use of the area for educational or scientific purposes, such use would be within the scope of the exemption statute.

In the most recent case cited above, the Wildlife Preserves Inc. case, the Court found that a wildlife sanctuary was exempt on the basis of the following facts (321 N.Y.S.2d at page 1007):

“I am satisfied from the foregoing that the Marsh Sanctuary is a storehouse of scientific and educational material and, based on the testimony, that this area, since 1957, has been posed to keep out marauders; that trails have been established to facilitate travel through the sanctuary; that signs have been posted identifying the sanctuary and welcoming the visitor; that funds have been expended on affixing identification markers to trees and shrubbery and on feeding certain wildlife. I find that over the years there has been considerable activity conducted by this corporation and committees under its supervision designed to bring the advantages of the sanctuary to the attention of schools, colleges such as Rutgers, Yale, Columbia and others, which in fact made subsequent use of the facilities, and other groups, and that over the years groups of Scouts, nature lovers, Audubon Society members, school groups and adult education groups have either been brought through the sanctuary or had the materials gathered there called to their attention in the form of lectures or written articles, and that this activity was of a level to sustain any burden which may be cast on the owner of the premises above and beyond the preservation of the area as a sanctuary.”

Whether the use of the property in this case will fall within the above guidelines is a matter the assessor must determine by investigating the facts surrounding the use of that property.

January 15, 1973
Revised August 7, 1973