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Volume 9 - Opinions of Counsel SBEA No. 68

Opinions of Counsel index

Nonprofit organization exemption (ecological) (public benefit) - Real Property Tax Law, § 420-a:

Undeveloped real property, which is owned by a nonprofit organization committed to the preservation of natural areas, and which is kept in an undeveloped condition, may be eligible for the nonprofit organizations exemption if there is public access to the property, or if the assessor determines that the use otherwise benefits the public.

We have received a request for an opinion concerning the taxable status of property owned by a land conservancy corporation (Conservancy).

According to the information contained in its application for exemption, Conservancy is a nonprofit organization committed to the preservation of natural areas within a particular area of the State. Conservancy also states that the property in question is to be “preserved in its current undeveloped condition” in accord with the corporate purposes of the organization.

Section 420-a of the Real Property Tax Law provides an exemption from taxation for property which is owned by a nonprofit corporation or association organized or conducted exclusively for certain specified exempt purposes if such property is used exclusively to carry out those exempt purposes (i.e., religious, charitable, hospital, educational, or moral and mental improvement of men, women or children). The term “exclusive” has been defined, in this context, to mean, “principal or primary” (Association of the Bar of the City of New York v. Lewisohn, 34 N.Y.2d 143, 313 N.E.2d 30, 357 N.Y.S.2d 555 (1974)). Whereas, in the past, these purposes have been narrowly construed (see, e.g., Ass’n. of the Bar v. Lewisohn, supra, the recent trend, especially with respect to environmentally oriented organizations, has been to blur distinctions among purposes and, consequently, to broaden the scope of the exemption.

In Mohonk Trust v. Gardiner, 47 N.Y.2d 476, 392 N.E.2d 876, 418 N.Y.S.2d 763 (1979), the Court of Appeals held that the actual purpose of a trust organized primarily for the preservation of wilderness areas was for the benefit of the public. The Court concluded that such use “neatly fit” within “the broad category of charitable, educational, or moral improvement of man purposes” and, therefore, the property was entitled to exemption. That is, the exempt purposes of section 420-a encompasses lands used for “environmental and conservation purposes which are necessary to the public good, and which are open to and enjoyed by the public” (418 N.Y.S.2d at 767-768).

On the basis of its Mohonk decision, the Court of Appeals then held in Matter of North Manursing Wildlife Sanctuary v. City of Rye, 48 N.Y.2d 135, 397 N.E.2d 693, 422 N.Y.S.2d 1 (1979), that a wildlife sanctuary would qualify for tax exemption if operated for the public benefit, even if the land was not entirely open to the public. Further, in New York Botanical Gardens v. Town of Washington, 55 N.Y.2d 328, 434 N.E.2d 703, 449 N.Y.S.2d 467 (1982), the Court found that the land there in question was “dedicated to a number of general activities, most predominant of which were conservation, preservation, instruction, recreation and ecological study.” Based on this finding, the Court held, “We see no reason to depart from our prior holdings that lands used for such a combination of purposes should be deemed to fall within the broader categories of absolutely exempt uses.” (55 N.Y.2d 328, 336)

In each of these cases, public access was a key component. We believe that although such access may be limited (see, North Manursing, supra), it is nevertheless an essential element of a conservancy’s exempt purposes. If only a portion of the property is used exclusively for exempt purposes, the assessed value should be apportioned between taxable and exempt portions (see, Sailors’ Snug Harbor, New York v. Tax Commission, 26 N.Y.2d 444, 259 N.E.2d 910, 311 N.Y.S.2d 486 (1970); 3 Op.Counsel SBEA No. 77). The determination of the taxable status of property is a factual one, to be made in the first instance by the assessor and is subject to administrative and judicial review.

March 6, 1991