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Volume 6 - Opinions of Counsel SBEA No. 21

Opinions of Counsel index

Municipal corporations exemption (property located outside corporate limits) (gravel bed) - Real Property Tax Law, § 406:

Where title to a gravel bed is in three municipalities but the parcel is located entirely within only one of the owner municipalities, only the interest in the property of the municipality in which it is located is exempt from taxation pursuant to section 406 of the Real Property Tax Law. The interests of the other owner municipalities are taxable.

A gravel bed, ownership of which is shared among three towns, is located entirely within one of those towns. Pursuant to Article 5-G of the General Municipal Law, the three towns formed a joint gravel bed committee for the purposes of acquisition and operation of an appropriate piece of property for a gravel bed. Sometime thereafter, title to a parcel of real property located within one of the towns was taken in the name of the three towns. We have now been asked to render an opinion as to the taxable status of this parcel.

It appears that the establishment of the joint gravel bed committee was a proper joint municipal operation since pursuant to section 145 of the Highway Law, towns may purchase land containing a gravel bed or other material for use on the public highways and bridges of the town. Moreover, pursuant to section 119-o of the General Municipal Law, towns are authorized to enter into agreements for the provision of a joint service. The term “joint service” is defined in subdivision c of section 119-n of the General Municipal Law as the:

joint provision of any municipal facility, service, activity, project or undertaking or the joint performance or exercise of any function or power which each of the municipal corporations or districts has the power by any other general or special law to provide, perform or exercise, separately . . .

The issue as to the taxable status of the gravel bed turns on the interpretation to be given to section 406 of the Real Property Tax Law. Pursuant to subdivision 1 of this section, real property owned by a municipal corporation located within its corporate limits and held for a public use is exempt from taxation. Our research discloses no judicial interpretations or administrative opinions concerning the taxable status of municipally owned gravel beds. However, the operation of a gravel bed has been referred to as a town purpose (5 Op.State Compt. 183), and it is our opinion that the use of real property as a gravel bed by a town would be a “public use” within the meaning of subdivision 1 of section 406. Thus, if the gravel bed in question were owned solely by the town in which it is located, we would consider the property exempt pursuant to section 406.

However, due to the fact that two other towns also share in the ownership of the property, additional questions are raised. Although it is not clear from the portion of the deed submitted, we assume that the three towns hold title to the parcel in question as tenants in common (see, McOuillin, The Law of Municipal Corporations (3d Ed) § 28.20). Pursuant to subdivisions 2 and 3 of section 406 of the Real Property Tax Law, real property owned by a municipal corporation not located within its corporate limits, but used for certain specified statutory purposes, may be exempt if the municipality in which the property is located agrees in writing to exempt it. The list of exempt purposes does not include a gravel bed or pit, and, in fact, the Attorney General has indicated that a gravel pit owned by a town, but located in an adjoining town, is taxable (1968, Op.Atty.Gen. 39). Similarly, with reference to a “sand reserve,” we have previously stated that such property is not exempt when located outside of the boundaries of the owning municipality (3 Op.Counsel SBEA No. 88). Thus, if the town in which the gravel bed is located had no ownership interest in the gravel bed in question, it is clear that the property would be fully taxable to the other two owner towns.

The given fact situation is a hybrid of the two situations discussed above. That is, as to the town in which the gravel bed is located, the property is exempt, but as to the other two owner towns, it is subject to taxation. As is indicated in a prior opinion of this office (1 Op.Counsel SBEA No. 101), no mention is made in section 406 concerning the proration of real property taxes. However, based on the interpretation of prior judicial decisions discussed in that opinion, we concluded that a leased portion of a municipally owned building was taxable while the remainder of the building, which was being used for public purposes, was exempt. A similar rationale should be followed in the present case. That is, the assessor of the town in which the gravel bed is located should enter the parcel on the taxable portion of the assessment roll, indicating a partial exemption equal to one-third of the assessed valuation of the property, the one-third exemption being due to the ownership interest of that town (see, Real Property Tax Law, § 502). Finally, pursuant to the contract entered into by the three towns, each town must share equally in the cost of the gravel bed’s operations. Accordingly, it appears that the three towns will then be liable for the taxes levied on two-thirds of the assessed value of the property.

April 15, 1977