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Volume 9 - Opinions of Counsel SBEA No. 61

Opinions of Counsel index

Municipal corporations exemption (agreement to exempt) (counties and school districts) - Real Property Tax Law, § 406:

A county or a school district in which eligible municipally-owned property is located may agree to exempt the property pursuant to RPTL, section 406, even if the town in which the property is located refuses to do so.

We have received an inquiry concerning the exemption available to municipal corporations (Real Property Tax Law, § 406). A city owns a sewage treatment plant situated entirely within a town assessing unit. The town has refused to negotiate an exemption as authorized in section 406(3). The question is whether the city may request exemption from the county and school district.

Section 406(3) of the RPTL provides, in relevant part:

Real property owned by a municipal corporation not within its corporate limits while used as a sewage disposal plant or system, including necessary connections and appurtenances . . . shall be wholly or partially exempt from taxation and wholly or partially exempt from special ad valorem levies and special assessments, by any municipal corporation in which located, provided the governing board thereof shall so agree in writing. (emphasis added)

Although the town is the only “assessing unit” in which the plant is located (RPTL, § 102(1)), the county and school district containing the plant are both “municipal corporations” (§ 102(10)). Accordingly, the county and school district may each enter into a separate exemption agreement with the city, pursuant to section 406.

In considering the taxable status of a village-owned sewage treatment and disposal plant located outside the village, the Attorney General concluded:

Such real property may be granted a tax exemption in whole or in part but each municipality (i.e., town, village, city, county and school district) in which it lies must grant the exemption. The exemption granted by one municipality does not apply to the taxes to be levied by any other municipality. (1973, Op.Atty. Gen. 176, 177).

In an earlier opinion, the State Comptroller reached a similar conclusion (Op.State Compt. 69-53).

As to a water treatment plant (also subject to possible exemption in section 406(3)), we have stated:

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. (7 Op.Counsel SBEA No. 102)

Accordingly, in our opinion, the city may negotiate separate exemption agreements with the county, town and school district. If, for example, agreement is reached only with the county, the town assessor will be obligated to exempt the plant from county taxes, leaving the property taxable for other purposes.

February 6, 1991