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Volume 5 - Opinions of Counsel SBEA No. 23

Opinions of Counsel index

Assessment review, tax certiorari proceeding (stipulation) (“frozen assessment”) - Real Property Tax Law, Article 7:

A stipulation entered into in settlement of an Article 7 proceeding under which an assessing unit agrees to assess a taxpayer’s property in a stated amount over a period of years is “ultra vires” and unenforceable.

Our opinion has been requested as to the validity of a stipulation entered into in settlement of an Article 7 proceeding under which the assessors of a town agreed to assess the taxpayers’ property in a stated amount for five years.

According to the transcript of a pre-trial hearing held on June 11, 1975 in the Article 7 proceeding of Allen v. Board of Assessors of the Town of Catharine, a stipulation was entered into between the respective parties under which the proceeding was settled and discontinued upon the conditions and understandings that: (1) the assessments on two parcels on the 1974 town tax roll would remain at $34,500 and $168,700 and (2) the assessments in these amounts “shall remain unchanged for a period of five years, this period embracing the years 1975 through 1979, unless there are substantial improvements to the property by way of new structures or improvements to existing structures.”

Several taxpayers have questioned the legality of the agreement. It is our opinion that the agreement is “ultra vires” and unenforceable.

The first reason is that the agreement violates the provision in Article XVI of the New York State Constitution, that: “The power of taxation shall never be surrendered, suspended or contracted away, except as to securities issued for public purposes pursuant to law.” Under this stipulation the town clearly purports to contract away the taxation power.

The above provision was adopted in 1938. But even before 1938, a municipality (as contrasted with the State) could not contract away the legal duty of an assessor to assess all property each year according to the full value standard required by law unless exempt by State law (Lee and LeForestier, Review and Reduction of Real Property Assessments, § 76:05; People ex rel. N.Y.C.R.R. Co. v. Mealey, 224 N.Y.187, 120 N.E.155; Troy Union R.R. Co. v. City of Troy, 227 App. Div. 351, 238 N.Y.S.577, aff’d, 253 N.Y. 597, 171 N.E. 798).

The last mentioned case involved the validity of an agreement by a city to refund in future years any taxes levied against the property of a railroad in excess of an assessed value of $30,000. The Court considered this agreement to refund to be an indirect attempt to effect a tax exemption of the railroad’s property to the extent of taxes levied upon a valuation in excess of $30,000. In holding the covenant to be “ultra vires” and unenforceable, the Court said (238 N.Y.S., at 580):

In matters of taxation, a city exercises merely delegated powers from the state, and has no jurisdiction or authority beyond. And it has no inherent power to grant exemptions from taxation.

Thus it is beyond the power of a municipality or an assessor to agree to “freeze” an assessment in future years.

August 19, 1975

NOTE:  Construes law prior to L.1995, c.693.