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Volume 3 - Opinions of Counsel SBEA No. 39

Opinions of Counsel index

State of New York exemption (liability for sewer charges) - Public Lands Law, § 19; Real Property Tax. Law, §§ 102(14), 404:

The State is not liable for a sewer charge imposed on an ad valorem basis which is a special ad valorem levy but it is liable for “sewer rents” based on actual use of sewer services or facilities.

Our opinion has been requested as to the liability of New York State for sanitary sewer charges imposed by a county water district on New York State property (an armory) located in that county.

Two types of sewer charges are covered: (1) a charge based on assessed value and (2) a charge based upon the total amount of water consumed on the property. We will consider each type separately.

Whether or not the armory is liable for the sewer charge which is based on assessed value depends upon the nature of the charge.

          If the charge is what is termed a “special ad valorem levy” in subdivision 14 of section 102 of the Real Property Tax Law, then it cannot legally be levied on property belonging to New York State. According to the definition in section 102, a “special ad valorem levy” is “a charge imposed upon benefited real property in the same manner and at the same time as taxes for municipal purposes to defray the cost, including operation and maintenance, of a special district improvement or service.” It would appear that this charge is a special ad valorem levy since it is levied in the same manner (that is, ad valorem) provided it also was levied at the same time as county taxes to defray the cost of the sewer service furnished by the district.

For the purpose of this opinion, therefore, we will assume that the charge is a “special ad valorem levy”.

The Attorney General has ruled that such a charge cannot be legally levied against state lands since the notice required by section 19 of the Public Lands Law cannot be given under procedures followed in assessing and levying an ad valorem charge (1953, Op.Atty.Gen. 133).

Section 19 provides that no “assessments for local improvements” (e.g., a “special ad valorem levy” is an assessment for a local improvement) on state lands are legal unless a notice is served on the State Comptroller at least three weeks prior to the “confirmation” of the assessment. Such a notice cannot be given with regard to special ad valorem levies since there is no “confirmation”. We understand that the State Comptroller has followed the Attorney General’s ruling since 1953 and does not pay such charges.

A different question is presented by the sewage charge which is based on water consumed. This charge seems to be a “sewer rent” imposed on users of the sewer facilities of the district pursuant to statutory authority contained in section 266 of the County Law and Article 14-F of the General Municipal Law. Sewer rents are based upon water consumption, and, therefore, are designed to measure the amount of use of the service.

Numerous cases have made a distinction between rents paid for water used and charges, such as special assessments and special ad valorem levies, imposed for an anticipated benefit arising from the presence of water or sewer systems on or near the property. The former (user charges) have always been considered contractual in nature dependent upon the express or implied consent of the user. The user can always avoid liability by disconnecting the system. On the other hand, the latter (i.e., special ad valorem levies) are considered to be imposed in the exercise of the power of taxation. This imposition is made regardless of the consent of the property owner or of whether the service is actually used. Cases so holding are Silkman v. Board of Water Commissioners, 152 N.Y. 327, 46 N.E. 612; New York University v. American Books Co., 197 N.Y. 294, 90 N.E. 825; and Rupersam Realty Corp. v. Karpeg Realty Corp., 253 App. Div. 695, 3 N.Y.S.2d 840.

The aforementioned distinction has also been made in numerous published opinions of the Attorney General and the State Comptroller, many of which state that all tax exempt properties (e.g., property of school districts, counties, the state and its agencies and the Federal Government) are liable for user charges. See 1966, Op.Atty.Gen. 118; 1953, Op.Atty.Gen. 118; 1939, Op.Atty.Gen. 238; 13 Op. State Compt. 222; 23 Op.State Compt. 539; 24 Op.State Compt. 308; and Op.State Compt. 70-695.

Thus, under the reasoning of these cases and opinions, we think the law unquestionably establishes that the State is liable for sewer and water rents based on actual uses of services or facilities.

June 12, 1973