Stewart v. Town of Oyster Bay, 77 N.Y.2d 730 (1991)

A special ad valorem levy for garbage collection is invalid when imposed on property owners who do not receive the benefit of the town’s garbage collection services due to a prior agreement requiring them to provide their own garbage disposal.

Summary

The Town of Oyster Bay imposed a special ad valorem levy on properties within a homeowners association for garbage collection, even though the association was required by a prior agreement to provide its own garbage disposal. The property owners sued, arguing the levy was invalid. The New York Court of Appeals held that the levy was indeed invalid because the property owners did not receive the benefit of the town’s garbage collection services due to the restrictive covenant. The court emphasized that imposing such a levy without providing the corresponding service is impermissible.

Facts

Plaintiffs owned property in a development formed as a homeowners association within the Town of Oyster Bay. A declaration of covenants and restrictions, a condition for zoning and planning approval by the Town and County, required the homeowners association to provide for the disposition of garbage, ashes, and waste at their own expense. The declaration also stated the Town would not be requested or petitioned to provide such services. Pursuant to the declaration, the homeowners retained a private company for garbage collection. Despite this, the Town continued to impose an ad valorem levy for Garbage Collection District No. 1 on the properties.

Procedural History

Plaintiffs commenced an action in Supreme Court, Nassau County, seeking a declaration that the levy was invalid. The Supreme Court declared the levy illegal and invalid. The Appellate Division, Second Department, affirmed this decision. The Town of Oyster Bay appealed to the New York Court of Appeals.

Issue(s)

Whether a special ad valorem levy for garbage collection services is validly imposed on property owners who, due to a prior agreement with the town, do not receive the benefit of those services.

Holding

No, because the property owners do not receive the benefit of the garbage collection services for which the levy is imposed.

Court’s Reasoning

The Court of Appeals relied on the principle that a property owner should not be taxed for a service from which they derive no benefit. The court cited Matter of Sperry Rand Corp. v Town of N. Hempstead, which allowed a property owner to recover ad valorem levies paid to a Town’s garbage district where the petitioner did not have the benefit of that Town’s garbage collection service. In the instant case, the Town of Oyster Bay does not provide and does not intend to provide the residential property owners with the benefit of garbage collection services. The court stated, “We hold, therefore, that this ad valorem levy imposed by the Town for garbage collection services, where the owners do not receive the benefit of that service, is invalid.” The court also cited Landmark Colony at Oyster Bay Homeowners’ Assn. v Town of Oyster Bay, where a homeowner’s association was precluded from receiving garbage collection services due to an agreement and therefore was not required to pay the garbage collection tax. The Town argued that the waiver of garbage collection services could not invalidate the levy and the municipal garbage district could not be diminished without meeting statutory requirements, including a public hearing. The Court found this argument unpersuasive because the original declaration expressly made garbage collection the sole responsibility of the property owners and prohibited them from petitioning the Town for such services. The court clarified that this declaration was not a waiver by successor property owners to object to the imposition of an ad valorem levy where they did not receive the corresponding services.