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Volume 4 - Opinions of Counsel SBEA No. 89

Opinions of Counsel index

Special franchise assessment (generally) - Real Property Tax Law, §§ 102(17), 600:

The assessment of special franchise property is a function of the State Board of Equalization and Assessment and not of the local assessor.

We have received a general inquiry concerning the taxation of special franchise property.

The assessment of most taxable real property in the State is done by the town, village or city assessors of the district where the property is situated. However, this office, the State Board of Equalization and Assessment, assesses so-called special franchise property.

A “special franchise” in general terms consists of tangible real property of a utility which is situated in public places, together with the value of the intangible right or franchise to operate in the public place. Specifically, a special franchise is defined in subdivision 17 of section 102 of the Real Property Tax Law as:

. . . 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. The term special franchise shall not include property of a municipal corporation or special district, nor shall it include a crossing less than two hundred fifty feet in length of a public street, highway, water or other public place outside a city or village, unless such crossing be the continuation of an occupancy of another public street, highway, water or other public place.

Subdivision 1 of section 600 of the Real Property Tax Law requires the State Board to annually determine “. . . the assessment of each special franchise subject to assessment in each assessing unit.” Subdivision 1 of section 616 requires the State Board to file a certificate of the amount of the final assessment of a special franchise “. . . with the assessors of the assessing unit in which such special franchise is subject to assessment”, for entry on the assessment roll for taxation locally. Such assessments then become a part thereof with the same force and effect as if they had been originally made by the local assessors.

Although utility property located on private property is required to be assessed by the local assessor in the same manner as other real property in his assessing unit, such assessor has no authority to assess as real property the tangible property of a utility used in connection with a special franchise (Real Property Tax Law, § 624). In People ex rel. Niagara Falls Hydraulic Power & Mfg. Co. v. State Board of Tax Com’rs., 65 Misc. 213, 119 N.Y.S. 925, aff’d, 140 App. Div. 881, 124 N.Y.S. 1125, aff’d, 202 N.Y. 426, 95 N.E. 754, the court at Special Term indicated that where local assessors had included in their assessments special franchise property of a utility, in contravention of then section 49 of the Tax Law [now Real Property Tax Law, § 624], the utility company’s remedy was to bring a proceeding against the local assessors; once the special franchise assessment of the State Board had been transmitted to the assessor for insertion on the local assessment roll, what happens thereafter is not chargeable to the State Board, and cannot be reviewed in a proceeding against them.

February 7, 1975