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Volume 6 - Opinions of Counsel SBEA No. 81

Opinions of Counsel index

Business investment exemption (local option) (repeal) - Real Property Tax Law, § 485-b:

Although less artful than reducing the percentum of exemption to zero, a local law or resolution providing for the “repeal” of the exemption authorized by section 485-b of the Real Property Tax Law is valid and must be implemented by the assessor.

A town local law provides that the partial exemption from taxation, accorded by Real Property Tax Law, section 485-b, is repealed insofar as such exemption would have been applicable to eligible real property assessed for town purposes. We have been asked for an opinion as to whether the term “reduced to zero” should have been used rather than “repeal.”

By way of summary, section 485-b provides for a ten year exemption on certain new construction, alterations, installations or improvements for the purpose of commercial, business or industrial activity. The measure of the exemption is fifty percent of the increase in assessed value attributable to the new construction the first year, decreasing by five percentage points each year thereafter for nine years (subd. 2(a)). However, subdivision 7 of this section authorizes a county, city, town, village or school district, acting independently, to adopt a local law and a school district to adopt a resolution, to reduce the percentum of exemption otherwise allowed pursuant to this section. Where no action is taken by a municipality, the exemption applies for purposes of that municipality to the extent set forth in subdivision 2(a) of section 485-b (5 Op.Counsel SBEA No. 109). Should a municipality act to reduce the percentum of the exemption, its act will apply only with respect to taxes to be levied by or on behalf of the acting municipality (6 Op.Counsel SBEA No. 27). Subdivision 7 of section 485-b reads as follows:

A county, city, town or village may, by local law, and a school district which levies school taxes may, by resolution, reduce the per centum of exemption otherwise allowed pursuant to this section; provided, however, that exemptions existing prior in time to passage of any such local law or resolution shall not be subject to any such reduction so effected. A copy of any such local law or resolution shall be filed with the state board.

We are unaware of any judicial interpretation relating to this matter. A memorandum in support of the bill which enacted section 485-b into law (L.1976, c.278) includes the statement that “the bill does contain a local option provision which counties, cities, towns, villages and school districts may exercise” (McKinney’s Session Laws of New York, 1976, p.2309). Both the State Board and the State Comptroller have concluded that this provision authorizes a municipality to reduce the percentage of exemption to zero (5 Op.Counsel SBEA No. 81; 32 Op.State Compt. 130). Such act clearly would have the effect of eliminating or, to use the language incorporated into the aforementioned local law, “repealing” the exemption as it might otherwise relate to taxes to be levied by or on behalf of the acting municipality.

“It is the object of all interpretation and construction of statutes to ascertain the intention of the lawmakers, and this is generally accomplished by a literal reading of the words used” (People ex rel. Twenty-third St. R. Co. v. Commissioners of Taxes of New York, 95 N.Y. 554, 558). It is clearly the intention of subdivision 7 of section 485-b to afford municipalities an option of either reducing the amount of exemption that would otherwise be allowed or of eliminating the exemption for purposes of the acting municipality. A literal reading of the local law enacted by the town reveals that the intention of the local legislative body in adopting the law was to provide that such exemption not be allowed for town purposes.

Consequently, we believe that the language used in the pertinent local law is neither improper nor inconsistent with the authority provided by the State Legislature in section 485-b. Moreover, it is well settled that there is a presumption of validity in favor of a local act and in the absence of attack on the legality thereof, it is assumed to be valid (see, e.g., Bollard v. Rice, 167 Misc. 826, 4 N.Y.S.2d 806, aff’d, 254 App.Div. 733,6 N.Y.S.2d 92, appeal denied, 254 App. Div, 863, 6 N.Y.S.2d 441, aff’d, 280 N.Y. 593, 20 N.E.2d 29). Therefore, an assessor required to make a determination as to taxable status of property for school district purposes should take cognizance of a school district resolution adopted in conformance with the provisions of Real Property Tax Law, section 485-b(7), to “repeal” the exemption.

June 21, 1979