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Volume 9 - Opinions of Counsel SBEA No. 24

Opinions of Counsel index

Business investment exemption (scope) (bed and breakfast operation) - Real Property Tax Law, § 485-b:

A bed and breakfast operation is neither a hotel nor a motel and is ineligible for exemption pursuant to section 485-b of the RPTL.

Is a “bed and breakfast” operation eligible for a business investment exemption pursuant to section 485-b of the RPTL?

Section 485-b provides, in summary, that real property which has been improved subsequent to July 1, 1976, for the purposes of commercial business or industrial activity, may receive a partial exemption from taxation and special ad valorem levies for a ten-year period.

Subdivision 5 of section 485-b expressly provides:

5. The provisions of this section shall apply to real property used primarily for the buying, selling, storing or developing goods or services, the manufacture or assembly of goods or the processing of raw materials. This section shall not apply to property used primarily for the furnishing of dwelling space or accommodations to either residents or transients other than hotels or motels. (emphasis added)

While the statute authorizes the granting of an exemption with respect to real property improved for the purpose of commercial activity, the property must also be used primarily for the purposes set forth in subdivision 5. By its express language, subdivision 5 excludes property used for the furnishing of dwelling space or accommodations to residents other than hotels or motels. {*}  The issue is whether a bed and breakfast operation is included within the definition of a hotel or motel, or whether it is something else such as a rooming house.

In VonDerHeide v. Zoning Board of Appeals of Town of Somers, Westchester, 204 Misc. 746, 123 N.Y.S.2d 726 (S.Ct., Westchester Co., 1953), aff’d, 282 A.D. 1076, 126 N.Y.S.2d 852 (2d Dept. 1953) reh. and app. den., 283 A.D. 713, 127 N.Y.S.2d 852 (2d Dept. 1954)), the court described an “inn” or “hotel” as an “establishment where for a consideration guests, transient or otherwise, are lodged, and may receive . . . meals, maid or room service . . . and other necessities, conveniences and facilities to care for all their ordinary and proper wants, day and night” for a stay of one day or longer.

We understand a “bed and breakfast” operation to refer to a homeowner who makes available to his or her customers a room plus breakfast for one or more days, for a fixed fee per day. Meals are eaten with the owner’s family; there are no separate living or toilet facilities.

It does not appear to be the services that a hotel provides that distinguish it from a “bed and breakfast” operation. Rather, it is the nature of the relationship between the hotel and its guests vis-à-vis the “bed and breakfast” proprietor and his or her customers.

A “bed and breakfast” is more closely analogous to a boarding house than to a hotel or motel. A principal distinction is that in boarding houses, “the proprietor deals with his customers individually with respect to terms and accommodations and exercises the right to reject any or all applicants at his pleasure” (66 N.Y.Jur.2d, Hotels, Motels and Restaurants, § 5). This can also be said of a “bed and breakfast” operation.

However, with hotels and motels, the “proprietor deals with the public basically on the basis of an implied contract and may not arbitrarily refuse to receive as a guest one who is entitled to be so received” (Id.). The proprietor of a hotel or motel holds out his establishment as a place open to the public, and “he may not arbitrarily deny such accommodations as he may have available to any travelers who seek them in a proper manner and at a suitable time” (Id. § 47).

March 31, 1988

{*}  The term “motel” is of recent vintage and is an abbreviated form of “motorists’ hotel” (66 N.Y.Jur.2d, Hotels, Motels and Restaurants, § 7).

In other words, it is the legal duties that attach to the proprietor of a hotel and motel, as opposed to a “bed and breakfast”, that are dispositive. A hotel or motel must hold itself out as open to the public generally. A bed and breakfast operator can “pick and choose” and reject any or all applicants at his or her pleasure.

Accordingly, we conclude that a “bed and breakfast” is neither a hotel nor a motel and, therefore, based on the rule of strict construction which must be given to all exemption statutes (see Herkimer County v. Village of Herkimer, 251 App. Div. 126, 295 N.Y.S. 629 (4th Dept., 1937), aff’d, 279 N.Y. 560, 18 N.E.2d 854 (1939)), it is our opinion that such property is ineligible for the exemption authorized by the provisions of section 485-b.