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Volume 7 - Opinions of Counsel SBEA No. 102

Opinions of Counsel index

Industrial waste treatment facilities exemption (scope) (municipal water treatment plant); Municipal corporations exemption (water treatment plant) - Environmental Conservation Law, § 17-0105; Real Property Tax Law, §§ 406, 477:

A municipally-owned water treatment plant is not eligible for an exemption from real property taxation as an industrial waste treatment facility. It may, however, qualify for exemption under section 406 under certain circumstances.

May an assessor grant an exemption from taxation pursuant to section 477 of the Real Property Tax Law (RPTL) to a village water treatment plant located outside of its municipal borders? Section 477 provides that:

1. Industrial waste treatment facilities which were constructed or reconstructed in order to comply with the provisions of the environmental conservation law and codes, rules and regulations, permits or orders issued pursuant thereto and industrial waste treatment controlled process facilities shall be exempt from taxation to the extent of any increase in value thereof by reason of such construction or reconstruction. [Emphasis added].

Subdivision 5 of section 17-0105 of the Environmental Conservation Law (ECL), defines “industrial waste” as

any liquid, gaseous, solid or waste substance or a combination thereof resulting from any process of industry, manufacturing, trade, or business or from the development or recovery of any natural resources, which may cause or might resaonably [sic] be expected to cause pollution of the waters of the state in contravention of the standards adopted as provided herein.

Section 477 applies to “industrial waste treatment facilities” and not to water treatment plants, and subdivision 7 of that section incorporates by reference the ECL definition of “industrial waste”, which does not appear to include a village water system. Therefore, it is our opinion that the provisions of section 477 do not apply to a village water treatment plant.

Support for this conclusion is also found in the fact that the exemption granted by section 477 is set forth in title 2 of Article 4 (the exemption Article) of the RPTL. Title 2, by Legislative designation, refers to “Private Property”. The Court of Appeals found this relevant in concluding that the exemption provisions of section 480-a (also in title 2) did not apply to municipally-owned forest land (see, Honeoye Central School District v. Berle, 51 N.Y.2d 970, 416 N.E.2d 1056, 435 N.Y.S.2d 721 (1980)). Applying the same rationale to the facts at hand, the property in question would not be eligible for an exemption pursuant to section 477 even if it were considered as being an “industrial waste treatment facility”.

A second exemption statute may be applicable, however. That is subdivision 3 of section 406 of the RPTL, which provides as follows:

3. Real property owned by a municipal corporation not within its corporate limits . . . having a population of less than one hundred thousand . . . used as a water plant, pumping station, water treatment plant, water shed or reservoir, including necessary connections and appurtenances shall be wholly or partially exempt from taxation and exempt from special ad valorem levies and special assessments by any municipal corporation in which located, provided the governing board thereof shaft so agree in writing. [Emphasis added].

Thus, the village’s water treatment plant could be exempted from taxation, in whole or in part, to the extent that the governing body of any of the municipal corporations in which the property is located agrees in writing. That is, separate agreements to exempt may be reached between the village and the other municipal corporations within which the plant is located (i.e., the town, the county and the school district(s)). An agreement by one or more of these jurisdictions to exempt the plant would not affect the tax policies of the other municipal corporations.

May 12, 1982