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Volume 5 - Opinions of Counsel SBEA No. 7

Opinions of Counsel index

Municipal corporations exemption (sewage disposal plant) (dwelling for plant operator) - Real Property Tax Law, § 406:

A dwelling built by a village to house the operator of the village sewage plant is exempt from taxation if (1) the operator lives in the building only so long as he is employed in his present capacity by the village; and (2) the presence of the operator is essential to the proper functioning of the premises.

We have received an inquiry requesting our opinion as to the taxable status of a dwelling built by a village to house the operator of the village sewage plant. It is stated that the operator is to occupy the premises rent free but that his right to so occupy the premises is to be considered part of his compensation.

Section 300 of the Real Property Tax Law provides that all real property within the State is subject to taxation unless specifically exempted therefrom by law.

Section 406 of the Real Property Tax Law, which grants an exemption to real property of municipal corporations, provides in pertinent part as follows:

§ 406. Municipal corporations

1. Real property owned by a municipal corporation within its corporate limits held for a public use . . . shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.

A “municipal corporation” is defined in subdivision 10 of section 102 of the Real Property Tax Law to include a “village.” In this case, the village owns the property in question, and the property is located within the corporate limits of the village. Therefore, the only remaining question is whether the use to which the property is being put (i.e., as a home for the operator of the sewer plant) meets the “public use” requirement of section 406.

The courts have held that real property “held for a public use” means property which is “occupied, employed or availed of, by and for the benefit of the community at large and implies a possession, occupation and enjoyment by the public, or by public agencies” (Herkimer County v. Village of Herkimer, 251 App. Div. 126, 128, 295 N.Y.S. 629, 634, aff’d, 279 N.Y. 560, 18 N.E.2d 854; see also, Town of Harrison v. Westchester County, 13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593). Thus, real property owned by a municipal corporation located within its corporate boundaries and actually used for a public purpose, such as a park open to the public, is clearly entitled to an exemption. On the other hand, property leased to a private individual for private residential purposes is clearly not being used for a public purpose. There are, however, questions which fall somewhere in between these extremes, the resolution of which must depend on the facts in each case. Such questions of fact are to be answered initially by the assessor, subject to possible review by a court.

A review of previous cases suggests two factors which should be considered in determining the taxable status of property such as this: first, whether the occupant or tenant has “exclusive long-term control” of the premises (see, Town of Harrison v. Westchester County, supra); and second, whether the presence of this employee-occupant is essential to the proper functioning of the premises (see, St. Luke’s Hospital v. Boyland, 12 N.Y.2d 135, 187 N.E.2d 769, 237 N.Y.S.2d 308; 2 Op.Counsel SBEA No. 19).

In the Town of Harrison, supra, the Court of Appeals found that “exclusive long-term control” of the property by a private corporation for private purposes warranted the conclusion that such property was not held for a public use. A tenancy from month-to-month or year-to-year might be considered not to be such extensive control as to defeat an otherwise valid public use. Based on the facts presented, we believe that the plant operator in question does not have such “exclusive, long-term control” as would lead one to conclude that a “public use” was not involved here; that is, such control is in the village since, we assume, this individual and his family may remain on the premises only so long as he is employed as plant operator by the village.

In regard to the second factor, the St. Luke’s Hospital case, supra, and the cases cited in 2 Op.Counsel SBEA No. 19 all relate to the exemption available to real property owned by certain nonprofit corporations as provided by section 421 (i.e., § 420) of the Real Property Tax Law. While this latter statute is distinguishable from section 406 in that section 421 requires the property to be “used exclusively” for one or more exempt purposes, while section 406 does not, we believe that the reasoning in these cases is applicable to these facts. That is, if accommodations for the employee are not available in the area, or if his presence on the premises is required on a twenty-four hour basis (i.e., if the residence is provided as an adjunct to the functioning and maintenance of this sewage plant rather than as merely a convenience to the operator), it is our opinion that the residence provided to the sewage plant operator is “held for a public use” within the meaning of section 406 and is therefore entitled to the exemption from real property taxation afforded by that section. (See also, 26 Op.State Compt. 244.) However, absent such unique circumstances or a showing that it is in the public interest (i.e., to prevent vandalism, destruction or other hazards to the plant, such as fire) to have the property occupied, we believe the property in question would be taxable.

May 22, 1975