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Volume 5 - Opinions of Counsel SBEA No. 20

Opinions of Counsel index

Municipal corporations exemption (airport facilities) - Real Property Tax Law, § 406:

Real property owned by a municipality and located within its corporate limits, which is employed in the actual operation of an airport for the general use of the inhabitants of the municipality, is “held for a public use” and therefore exempt from taxation. However, such airport facilities leased to private concerns will be exempt only if open to use by the general public.

We have received an inquiry concerning the taxable status of a county airport located within the county’s corporate limits. The information provided indicates that a substantial amount of airport real property is leased by the county to private business concerns operating within the airport. This leased property includes parking concessions, a restaurant, “T” hangars and facilities leased to a local aeronautical corporation, car rental agencies, an airlines company, etc.

Ultimately, the question of taxable status in such a case turns on the definition and interpretation of the phrase “public use.” The applicable. statute is subdivision 1 of section 406 of the Real Property Tax Law, which provides as follows:

1. Real property owned by a municipal corporation within its corporate limits held for a public use, including real property held or used for cemetery purposes and all lots and plats therein conveyed by such municipal corporation as places for the burial of the dead, 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, (emphasis supplied)

In the case of Town of Harrison v. Westchester County (13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593), the Court of Appeals held that “although what comprises a ‘public use’ within the meaning of the statute ‘has never been defined with exactitude’ and ‘must necessarily depend upon the peculiar circumstances of each case,’ it has been said, and most appropriately, that ‘held for public use,’ in this connection means that the property should be 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.” (Citations omitted). It follows, therefore, that those portions of the land owned by a municipality which are employed in the actual operation of an airport for the general use of its inhabitants must be deemed to be “held for a public use” and, accordingly, exempt from taxation.

In the same case, the Court of Appeals noted that such exempt property would normally include not only the land which is used for runways but also ticket offices, waiting rooms and hangars used to house and maintain the aircraft serving the public. This principle, in our opinion, requires that parking concessions, restaurants, airline ticket facilities and hangars, and car rental services which are necessary to the operation of the airport and which are available to the general public are entitled to an exemption from taxation.

The remaining facilities, which appear to be hangars leased to private concerns, will be exempt only if such facilities are available to the general public; this is the clear holding of the Town of Harrison case. This principle of “public use” and its application to leased facilities was reiterated in the recent case of Dubbs v. Board of Assessment Review of the County of Nassau, 81 Misc.2d 591, 367 N.Y.S.2d 898, wherein the Court held that the controlling principle in determining taxable status is the fact that the private interests which lease publicly-owned real property do so solely “for the general benefit of the public to whom the facilities are open. It is that fact which compels the conclusion that it is held for the public use for tax exemption purposes. Stated differently, under the holding in Town of Harrison, it is access to the facilities by the public in order to utilize or enjoy the facilities or functions therein that determines whether or not property is held for public use” (367 N.Y.S.2d 907).

The sole question then would appear to concern the use of the facilities noted as a local aeronautical corporation and “‘T’ hangars.” If the use of such facilities is restricted to a specific group or class of people, then such facilities are subject to taxation. However, if such facilities are leased to a private concern which makes them available to the general public use, then they are clearly exempt from taxation.

August 11, 1975