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Volume 6 - Opinions of Counsel SBEA No. 61

Opinions of Counsel index

Nonprofit organizations exemption (generally) (local option to tax - grandfather clause) - Real Property Tax Law, § 420:

Paragraph (c) of subdivision 1 of section 420 prohibits a municipality from discriminating among property owned by members of the same class of nonprofit organizations through the adoption of a grandfather clause when exercising its local option to tax.

Our opinion has been requested concerning whether, pursuant to section 420 of the Real Property Tax Law, a municipality may terminate the exemption with respect to all or some of the enumerated organizations, but continue the exemption by means of a “grandfather clause” for those organizations which had previously received an exemption in the municipality.

In our opinion, to allow heretofore exempt properties of a certain class to remain exempt pursuant to a “grandfather clause” while properties owned by organizations of a similar class, which had not previously received exemption, are made subject to the local option to tax provision would be contrary to the obvious intent of paragraph (c) of subdivision 1 of section 420. That paragraph, in relevant part, provides:

No local law, ordinance or resolution adopted pursuant to this section shall provide for the taxation of any particular property or owner. Any such local law, ordinance or resolution shall apply alike to all property owned by any corporation or association organized or conducted for one or more of the purposes specified in such local law, ordinance or resolution, and used for carrying out thereupon one or more of such purposes. (emphasis supplied)

It is clear that the proposed “grandfather clause” would necessarily require that the law would not “apply alike to all property” of the same class.

Accordingly, a municipality is given a local option pursuant to paragraph (b) of subdivision 1 of section 420 to tax one or more of the classes of corporations or associations organized or conducted exclusively for the purposes listed in such paragraph (3 Op.Counsel SBEA No. 20). However, one particular organization or parcel cannot be singled out as the object of taxation or as the object of continued exemption through the adoption of a “grandfather clause.”

January 25, 1978