New York Law Review

Tag: Real Property Tax Law § 485-b

  • Pyramid Co. of Watertown v. Assessor of the Town of Watertown, 73 N.Y.2d 151 (1989): Business Investment Exemption After Prior IDA Ownership

    Pyramid Co. of Watertown v. Assessor of the Town of Watertown, 73 N.Y.2d 151 (1989)

    A property owner can receive a business investment exemption under Real Property Tax Law § 485-b even after the property received a real property tax exemption while owned by an Industrial Development Agency (IDA), provided the prior exemption was not authorized by the Real Property Tax Law and did not cover the same improvements.

    Summary

    Pyramid Company sought a business investment exemption after completing a shopping mall. During construction, Pyramid conveyed the property to the Jefferson County Industrial Development Agency (JCIDA) to obtain favorable financing, leasing it back. While JCIDA owned the property, it was exempt from real property taxes, but Pyramid made payments in lieu of taxes (PILOT). After completion, JCIDA reconveyed the property to Pyramid, who then applied for a business investment exemption, which the assessor denied. The court held that Pyramid was entitled to the exemption because the prior exemption was under the General Municipal Law, not the Real Property Tax Law, and it did not cover the same improvements.

    Facts

    Pyramid acquired property in Watertown in 1985 and began constructing a shopping mall.

    To secure favorable financing, Pyramid conveyed the property to JCIDA and leased it back during construction.

    While JCIDA owned the property, it was exempt from real property taxes, but Pyramid made PILOT payments equivalent to what taxes would have been.

    After completion in 1987, JCIDA reconveyed the property to Pyramid.

    The town reassessed the property at a significantly higher value due to the completed improvements and Pyramid applied for a business investment exemption.

    Procedural History

    The assessor denied Pyramid’s application for the business investment exemption.

    Pyramid commenced an Article 78 proceeding to challenge the denial.

    The Supreme Court granted the petition.

    The Appellate Division affirmed.

    The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether Pyramid is entitled to a business investment exemption under Real Property Tax Law § 485-b after the property was previously exempt from real property taxes while owned by the JCIDA.

    Holding

    Yes, because to be foreclosed from receiving a business investment exemption, the prior exemption must have (1) been authorized by the Real Property Tax Law and (2) covered the same improvements which are the subject of the pending exemption.

    Court’s Reasoning

    The court reasoned that while the property was exempt when owned by JCIDA, the exemption was authorized by General Municipal Law § 874, not the Real Property Tax Law. Real Property Tax Law § 412-a merely refers to the General Municipal Law. The court stated, “Nothing in it ‘authorizes’ an exemption. It merely refers to an exemption independently ‘provided’ in General Municipal Law § 874”.

    Furthermore, the prior exemption did not cover the same improvements. The assessment during JCIDA’s ownership reflected the value of the land and partially completed construction. The business investment exemption application concerned the increased valuation due to the completed mall, representing improvements not previously assessed or exempted.

    The court emphasized that the intent of Real Property Tax Law § 485-b (2) (d) was to prevent double exemptions for the same improvements, either through combining or sequentially using exemptions. In this case, Pyramid did not receive more than one exemption for the same improvement.

    The court noted the town had not opted out of the § 485-b exemption, and the development increased the town’s tax base even with the exemption. The court stated that “[f]ar from losing anything, respondents will gain substantial new revenues from the development.”

  • Newsday, Inc. v. Town of Huntington, 46 N.Y.2d 272 (1978): Interpreting Local Laws Restricting Tax Exemptions

    Newsday, Inc. v. Town of Huntington, 46 N.Y.2d 272 (1978)

    A local law or resolution restricting a tax exemption under Real Property Tax Law § 485-b will be interpreted narrowly, and its applicability is limited to the specific terms outlined in the law or resolution itself.

    Summary

    Newsday sought a partial tax exemption for its new publishing plant under Real Property Tax Law § 485-b. The school district passed a resolution to deny this exemption for properties constructed after the resolution’s date. Newsday argued their plant was built in reliance on the exemption. The court held that because Newsday’s plant was substantially (90%) completed before the resolution’s passage, it did not fall within the resolution’s scope, which applied only to properties “constructed, altered, or improved” after the resolution date. Thus, Newsday was entitled to the partial tax exemption.

    Facts

    Newsday, a Long Island newspaper, obtained a building permit in November 1977 for a $6.5 million publishing plant in Huntington. In September 1978, they inquired about a partial tax exemption. By April 9, 1979, the plant was 90% complete. Newsday filed for a partial exemption under Real Property Tax Law § 485-b on May 10, 1979. The town assessor initially indicated the exemption would apply to town, county, and special district taxes, but not school taxes because the school district adopted a resolution on April 9, 1979, that reduced the exemption to zero.

    Procedural History

    Newsday sued for a declaratory judgment stating its entitlement to a partial school tax exemption under § 485-b. The Supreme Court granted summary judgment to Newsday. The Appellate Division affirmed the Supreme Court’s decision, with one Justice dissenting. The Town of Huntington appealed to the New York Court of Appeals.

    Issue(s)

    Whether Newsday’s publishing plant, substantially completed before the school district’s resolution denying tax exemptions for properties constructed after the resolution date, fell within the scope of the resolution and was therefore ineligible for the partial tax exemption under Real Property Tax Law § 485-b.

    Holding

    No, because the school board’s resolution, by its own terms, applied only to property “constructed, altered, or improved” after the date of the resolution. Given that Newsday’s plant was 90% complete before the resolution, it did not fall within the resolution’s scope.

    Court’s Reasoning

    The Court focused on the specific language of the school board’s resolution, which applied to properties “constructed, altered, or improved after the date of this resolution.” The court reasoned that the phrase “constructed” could not reasonably be interpreted to include Newsday’s plant, which was already 90% complete when the resolution was passed. The court emphasized the finding of fact that the plant was substantially complete and had received a temporary certificate of occupancy shortly after the resolution. Therefore, the assessor erred in denying Newsday the exemption based on the school board’s resolution. The Court avoided the broader question of whether the plant was entitled to an exemption due to reliance, stating there was no need to reach that argument given the resolution’s plain language. The court noted that while local governments can remove themselves from the tax exemption program under § 485-b, this specific resolution did not apply to Newsday’s project. The court stated that “exemptions existing prior in time to passage of any such local law or resolution shall not be subject to any such reduction so effected”.