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Volume 9 - Opinions of Counsel SBEA No. 74

Opinions of Counsel index

Real property, definition of (boat slips) - Real Property Tax Law, §§ 102(12)(b), 564:

Privately owned boat slips in Long Island Sound, which are constructed on submerged lands owned by the State, are taxable.

We have received an inquiry concerning the taxable status of boat slips in the waters of Long Island Sound. The slips were constructed by the developer of a condominium complex on the shore of the Sound pursuant to a lease from the New York State Office of General Services.

Title to the land under the water under the slips remains in the State (State Law, § 7-a). The condominium form of ownership of the development and the relationship between the purchasers of the condominium units and the developer are not relevant to the issue in this Opinion.

Paragraph (b) of subdivision 12 of section 102 of the Real Property Tax Law defines “buildings and other articles and structures, substructures and superstructures erected upon, under or above the land, or affixed thereto, including bridges and wharves and piers” as real property for purposes of the real property tax.

In 3 Op.Counsel SBEA No.84, we interpreted this provision to include a “dock” as a pier or wharf and thus real property when erected upon or affixed to land. There is no question that the same provision would include the boat slips at issue. The question is whether they are assessable to the developer and its successors or whether they are exempt from taxation as lands of the State (pursuant to Real Property Tax Law, § 404).

Section 564(1) of the Real Property Tax Law reads as follows:  “Improvements not owned by the State, shall be assessed and taxed in the name of the owners thereof.” If the developer “owns” the boat slips, the slips are taxable to it. In People ex rel. Hudson River Day Line v. Franck, 275 N.Y. 69, 177 N.E. 312 (1931), the realtor built a dock at Bear Mountain under an agreement with the Palisades Interstate Park Commission. The agreement authorized the realtor to erect and use the dock for twenty years, at which time the dock would revert to the Commission. The Court of Appeals held that the realtor did not own the dock for purposes of the real property tax.

In a subsequent case involving improvements erected on Federal property, the Court of Appeals restated the holding in Franck as follows: “Where land is nontaxable, being owned by the State, buildings thereon are assessable to the lessee if they are removable from the property under the terms of the lease” (Fort Hamilton Manor v. Boyland, 4 N.Y.2d 192, 198, 173 N.Y.S.2d 560, 564 (1958)). In other words, there must be some indicia of ownership to the lessee, otherwise the improvement will be deemed to be a permanent addition to the exempt land and therefore exempt itself.

We have reviewed the agreement between the developer and the Office of General Services, pursuant to which the property is leased and the boat slips constructed. Article 15 of the agreement provides that the lessee developer surrender the premises in the same condition the premises were received, removing all property situated thereon. Any property not removed will become the property of the State.

The intent of the parties would appear to be that the lessee “owns” the boat slips. Only in the event the lessee fails to comply with the agreement will the boat slips become State property. Under the analysis of Franck and Boyland, the lessee developer “owns” the boat slips for purposes of section 564, and the slips are assessable and taxable to it.

April 22, 1991
Revised July 1992