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Volume 3 - Opinions of Counsel SBEA No. 24

Opinions of Counsel index

Assessment, special franchise (rural electric cooperatives) - Real Property Tax Law, § 102 (17) ; Rural Electric Cooperative Law, § 66:

Section 66 of the Rural Electric Cooperative Law, which exempts electric cooperatives from “franchise” taxes, does not exempt the holder of a “special franchise” from real property taxes.

Our opinion has been requested concerning an exemption pursuant to section 66 of the Rural Electric Cooperative Law.

The State Board has requested that the applicant fill out its forms preparatory to assessing its “special franchise” property. Section 66 of the Rural Electric Cooperative Law exempts electric cooperatives “from all other franchise, excise, income and corporation taxes whatsoever” upon payment of a $10 license fee.

Subdivision 12 (h) of section 102 of the Real Property Tax Law classifies a “special franchise” as real property for taxation purposes and the term “special franchise” is defined in subdivision 17 of that section as follows:

17. “Special franchise” means the franchise, right, authority or permission to construct, maintain or operate in, under, above, upon or through any public street, highway, water or other public place mains, pipes, tanks, conduits, wires or transformers, with their appurtenances, for conducting water, steam, light, power, electricity, gas or other substance. For purposes of assessment and taxation a special franchise shall include the value of the tangible property situated in, under, above, upon or through any public street, highway, water or other public place in connection therewith. . . .

These provisions make special franchise property real property for purposes of assessment and taxation on an ad valorem basis (People v. State Board of Tax Commissioners, 196 N.Y. 39, 89 N.E. 851). Real property taxes are not “franchise, excise, income and corporation taxes”, the taxes from which cooperative electric companies are exempt under section 66. We know of no law which exempts the property of electrical cooperatives from real property taxes.

Thus, it is our opinion that the tangible property of an electrical cooperative located in public places, together with the intangible right to so occupy such places, is subject to real property taxation. For this reason, the electrical cooperative must fill out the required report forms and file them with the State Board.

The procedure thereafter is that the State Board will assess the special franchise property and after notice and hearing will certify the assessment to each city and town in which the property is located. The assessment is then put on the local real property assessment roll and local taxes are levied thereon.

April 24, 1973