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This opinion is uncorrected and subject to revision before

publication in the New York Reports.

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No. 108 

In the Matter of Greater Jamaica 

Development Corporation, et al.,

 Respondents,

 v.

New York City Tax Commission,

et al.,

 Appellants.

Vincent D'Orazio, for appellants.

Ronald G. Blum, for respondents.

New York State Conference of Mayors and Municipal

Officers; Lawyers Alliance for New York et al., amici curiae.

PIGOTT, J.:

Petitioner Jamaica First Parking, LLC (Jamaica First)

owns and operates five commercial parking facilities for the

purpose of furthering the goal of its sole member -- not-forprofit corporation Greater Jamaica Development Corporation

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(Greater Jamaica) -- revitalize downtown Jamaica, Queens. The

issue on this appeal is whether respondent New York City Tax

Commission improperly revoked Jamaica First's real property tax

exemption pursuant to Real Property Tax Law (RPTL) § 420-a (1)

(a). We hold that because Jamaica First's ownership and

operation of the parking facilities is not incidental to a taxexempt purpose, it is not entitled to a real property tax

exemption under that statute. 

I.

Greater Jamaica was formed in 1967 to promote commerce

and business growth in downtown Jamaica. It is exempt from

federal income taxation pursuant to Internal Revenue Code (26

USC) § 501 (c) (3),1 and, as Greater Jamaica's certificate of

incorporation states, it is "organized and . . . operated

exclusively for charitable, scientific and educational purposes

within the meaning of [that section]." Such purposes include,

among other things, the promotion and coordination of Jamaica's

business, commercial and retail districts; the encouragement of

development of Jamaica's commercial, industrial and manufacturing

facilities; and the provision of support and assistance in the

planning, development and expansion of Jamaica's cultural,

1

 As relevant here, the following organizations are exempt

from federal income taxation under this provision: "Corporations,

any community chest fund, or foundation, organized and operated

exclusively for religious, charitable, scientific, testing for

public safety, literary or educational purposes . . ." (emphasis

supplied). 

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recreational, governmental and transportation facilities in

Jamaica. 

Consistent with those purposes, in 1996, Greater

Jamaica purchased a parking garage from the City of New York

through New York City's Economic Development Corporation (EDC). 

Two years later, Greater Jamaica formed Jamaica First, a Delaware

limited liability company, with Greater Jamaica constituting

Jamaica First's sole member. Jamaica First's amended and

restated limited liability company agreement states that Jamaica

First was "formed for the purpose of acquiring, owning,

developing and operating public parking facilities on a nonprofit

basis, including financing the acquisition and development of

three public parking facilities in Jamaica, New York, in

furtherance of the charitable purposes of the Member." Jamaica

First's certificate of formation provides that it "shall carry on

any lawful purpose or activity not inconsistent with" Greater

Jamaica's tax exempt status under Internal Revenue Code (26 USC)

§ 501 (c) (3). 

In 2001, Jamaica First purchased three parking

facilities from the City of New York through the EDC; said

facilities had previously been operated by the New York City

Department of Transportation. Greater Jamaica expended monies to

renovate and upgrade the facilities. That same year, the

Internal Revenue Service (IRS) issued Greater Jamaica a private

letter ruling explaining that the separate legal existence of

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Jamaica First would be disregarded for federal income tax

purposes, such that the acquisition, financing, renovation,

operation and use of the parking facilities by Jamaica First

would be treated for federal income tax purposes as the

acquisition, financing, renovation, operation and use of the

parking facilities by Greater Jamaica. Moreover, according to

the letter ruling, Jamaica First's operation of the parking

facilities would be substantially related to Greater Jamaica's

charitable exempt purposes under Internal Revenue Code (26 USC) §

501 (c) (3) and would lessen the burdens of government within the

meaning of 26 CFR 1.501 (c)(3)-1(d)(2). 

In 2004, Greater Jamaica conveyed the parking garage it

purchased in 1996 to Jamaica First. Jamaica First thereafter

purchased vacant land from the City and finished construction of

a 410-car parking garage on that property in 2006. According to

Greater Jamaica and Jamaica First, all five parking facilities

provide below-market, reasonably-priced parking for local retail

stores, state and federal office buildings and religious

organizations.

In 2007, respondent New York City Department of Finance

(DOF) granted real property tax exemptions for the five parking

facilities pursuant to RPTL 420-a (1) (a). Four years later, the

DOF revoked the exemptions, stating that the properties' uses as

parking facilities did not fall into any of the enumerated uses

of section 420-a and asserting that the status that the IRS

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bestowed upon Greater Jamaica was "not determinative of the issue

of charitable use of the property as defined by 420-a." The DOF

determined that the use of the parking facilities, even for

economic development of an underdeveloped area, did not

constitute a "charitable" use, and that the parking facilities

were "not incidental to another recognized charitable purpose but

[were] the very purpose for which the property [was] being used." 

According to the DOF, although the parking facilities served an

important public purpose like community development, that purpose

by itself did not qualify the properties for a charitable

exemption under section 420-a. 

II.

Greater Jamaica and Jamaica First (collectively,

"petitioners") commenced this hybrid proceeding pursuant to RPTL

article 7 and CPLR article 78 against the DOF and the New York

City Tax Commission (collectively, "City") requesting a judgment

declaring that the City's decision to revoke the exemptions was

arbitrary and capricious and contrary to law and that Jamaica

First was entitled to the exemptions. Petitioners also sought a

judgment directing the City to grant the tax exemptions.2

 The

City cross-moved for an order dismissing that part of the

petition seeking relief pursuant to CPLR article 78, relying on

its 2011 revocation letter along with the statements in the

2 Petitioners further sought a judgment pursuant to article

7 of the RPTL challenging the amount of the assessments, but that

challenge is not at issue on this appeal. 

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amended verified petition and Jamaica First's amended limited

liability agreement that Jamaica First was "formed for the

purpose of acquiring, owning, developing and operating public

parking facilities on a nonprofit basis" as part of Greater

Jamaica's charitable purpose of promoting commerce and business

growth in Jamaica. The City argued that the parking facilities

were not entitled to a section 420-a exemption because they were

neither owned nor operated exclusively for a charitable purpose. 

Supreme Court upheld the City's revocation of the tax exemption

and granted its cross motion to dismiss the petition.

The Appellate Division reversed the order and judgment

insofar as appealed from by petitioners, granted the parking

facilities the tax exemption, annulled the City's determination

and denied the City's cross motion (111 AD3d 937, 937 [2d Dept

2013]). It held that the City failed to meet its burden of

establishing "revocation of the tax exemption on the grounds that

petitioners' activity did not conform to a charitable purpose

within the meaning of RPTL 420-a" (id. at 939). The court

explained that

"[a]bsent a precise statutory definition of

'charitable purpose,' courts have interpreted

this category to include relief of poverty,

advancement of governmental and municipal

purposes, and other objectives that are

beneficial to the community. Furthermore, a

property owner seeking a real property tax

exemption which demonstrates that it is a

not-for-profit entity whose tax-exempt status

has been recognized by the [IRS] and whose

property is used solely for charitable

purposes has made a presumptive showing of

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entitlement to exemption" (id. [internal

quotation marks, brackets and citations

omitted]).

The Appellate Division pointed to petitioners'

submission of the IRS's letter ruling recognizing them as

charitable organizations, and also to Greater Jamaica's

certificate of incorporation -- which stated that Greater Jamaica

was to be operated for charitable purposes -- as proof that it

was operated for a charitable purpose (see id.). As to Jamaica

First, the court observed that Jamaica First's certificate of

formation explained that it was created to carry out Greater

Jamaica's "charitable purposes by acquiring and operating public

parking facilities on a nonprofit basis," such that both

organizations had established that they were formed for a

charitable purpose pursuant to RPTL 420-a (id. at 939-940). 

Finally, according to the Appellate Division, "petitioners

demonstrated that the use of their public parking facilities was

consistent with their exempt purpose, as expressly noted by the

IRS in granting such operation tax exempt status," because their

"charitable purpose was to improve Jamaica's business district

through further economic development offering convenient and

inexpensive public parking to attract visitors and businesses was

central to their aim" (id. at 940). 

We granted the City leave to appeal and now reverse. 

III.

RPTL 420-a (1) (a) provides that real property owned by

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a corporation or association that is "organized or conducted

exclusively for . . . charitable purposes," if used "exclusively"

for such purposes, will be exempt from taxation (RPTL 420-a [1]

[a]). We have held that "[t]he term 'exclusively', in this

context, has been broadly defined to connote 'principal' or

'primary' such that purposes and uses merely 'auxiliary or

incidental to the main and exempt purpose and use will not defeat

the exemption'" (Matter of Yeshivath Shearith Hapletah v Assessor

of Town of Fallsburg, 79 NY2d 244, 249 [1992], quoting Matter of

Association of Bar of City of N.Y. v Lewisohn, 34 NY2d 143, 153

[1974]). Thus, whether property is used "exclusively" for

purposes of section 420-a is dependent upon whether the "primary

use" of the property is in furtherance of permitted purposes

(Matter of Yeshivath Shearith Hapletah, 79 NY2d at 250). 

Here, the City revoked the parking facilities' section

420-a tax exemption after having previously allowed the exemption

in 2007. Although the burden of proof generally lies with the

party seeking the exemption, in a situation like this, where the

taxing authority seeks to revoke that exemption previously

granted, it is the taxing authority that has the burden of

establishing that the property is not exempt from taxation (see

Matter of Lackawanna Community Dev. Corp. v Krakowski, 12 NY3d

578, 581 [2009], citing Matter of New York Botanical Garden v

Assessors of Town of Washington, 55 NY2d 328, 334 [1982]). In

order to meet that burden, the City was required to demonstrate

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either that petitioners were "not organized or conducted

primarily for" an exempt purposes or that the parking facilities

were "not used exclusively for carrying out thereupon one or

more" exempt purposes (RPTL 420-a [1] [a]; see Congregation

Rabbinical College of Tartikov, Inc. v Town of Ramapo, 17 NY3d

763, 764 [2011] [holding that municipality failed to establish

that the primary use of the property was not in furtherance of a

tax-exempt purpose]). 

The City revoked the tax exemption on the ground that

it was erroneously awarded in the first instance. It met its

burden in this regard by demonstrating that the "use" of the

parking facilities was not for "charitable" purposes but rather

for economic development, and that the use of the parking

facilities were not "incidental to another recognized charitable

purpose." Specifically, the City's revocation letter explained

that the City reached its determination after reviewing documents

submitted to it by Greater Jamaica and case law from this Court. 

The City also explained why it believed that the status granted

Greater Jamaica by the IRS had no bearing on the issue of

"charitable use" of the parking facilities under section 420-a. 

The letter stated that although the parking facilities may have

served "an important public purpose and support[ed] development

of a community," those factors did not qualify the facilities for

a charitable exemption. Indeed, according to the City's review

of the ownership structure of the lots along with other

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documentation, it appeared that Jamaica First collected monies

that exceeded the carrying, maintenance and depreciation charges

attributable to the premises and that Jamaica First utilized

those excess proceeds to fund other additional operations, such

as the purchase of an additional parking lot. 

The City submitted additional proof in the form of an

affirmation by the City's Assistant Corporation Counsel, which

pointed out that the factual allegations in the petition

established that the facilities were not entitled to the

exemption because Jamaica First was established for the sole

purposes of acquiring, owning, developing and operating public

parking facilities to promote Greater Jamaica's primary purpose

of promoting commerce and business growth in Jamaica. Thus, the

grounds in the City's revocation letter, which were plainly

sufficient on their own but nonetheless elucidated by the

affirmation of the City's Assistant Corporation Counsel detailing

how the allegations in the petition established that the parking

facilities were not being operated for a charitable purpose, were

sufficient to meet the City's initial burden of establishing that

petitioners were not entitled to the tax exemption, i.e., that

the use of the property was not in furtherance of a tax-exempt

purpose, thereby shifting the burden to petitioners to establish

their entitlement to an exemption. We hold that petitioners did

not meet their burden in that regard. 

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IV.

Although our inquiry as to whether petitioners

established that the parking facilities are entitled to a tax

exemption would ordinarily begin with an analysis of whether

petitioners were "organized or conducted exclusively for" a taxexempt purpose (RPTL 420-a [1] [a]), we assume for purposes of

this appeal that they were.3

 However, we must nonetheless

clarify that the Appellate Division erred to the extent that it

held that petitioners made a presumptive showing of their

entitlement to a real property tax exemption under section 420-a

by establishing that their tax-exempt status as a "charitable

organization" had been recognized by the IRS (111 AD3d at 939,

citing Matter of Plattsburgh Airbase Redevelopment Corp. v

Rosenbaum, 101 AD3d 21, 23 [3d Dept 2012], quoting Yeshiva Beth

Yahuda V'Chaim D'Betlan v Town of Shandaken, 100 AD2d 641, 642

[3d Dept 1984]). Yeshiva Beth involved an attempt by a school

district to vacate a default judgment against it that had been

obtained by a religious corporation (100 AD2d at 642). The court

held that the school district was unable to refute the religious

3

 Indeed, there is evidence in the record that both

petitioners met this standard. Affixed to the petition are

Greater Jamaica's certificate of incorporation which provides

that it is a not-for-profit entity that was operated for, among

other things, charitable purposes, and Jamaica First's

certificate of formation, which states that it was created to

assist in the charitable purposes of its member, Greater Jamaica.

Greater Jamaica's president submitted an affidavit detailing

certain of the works engaged in by Greater Jamaica that could

arguably be considered "charitable."

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corporation's "presumptive showing" of entitlement to an

exemption through its averment that it was a religious

corporation whose tax-exempt status had been recognized by the

IRS and that the property was used for a religious purpose (id.). 

In Yeshiva Beth, not only was the procedural posture

different from the one presented here, it also involved a

religious organization. Such organizations are recognized by

both Internal Revenue Code (26 USC) § 501 (c) (3) and RPTL 420-a

(1) (a). Indeed, a closer look at both provisions indicates that

there is some overlap between the two in the criteria that the

relevant taxing authorities will consider in determining whether

a corporation is either exempt from federal income taxation under

Internal Revenue Code (26 USC) § 501 (c) (3) or entitled to an

exemption under RPTL 420-a (1) (a) (see IRC § 501 [c] [3]

[organizations that are "organized and operated exclusively for

religious, charitable, scientific . . . or educational purposes"

entitled to federal income tax exemption]; RPTL 420-a [1] [a]

[real property entitled to tax exemption if "owned by a

corporation or association organized or conducted exclusively for

religious [or] charitable . . . purposes"]). However, there are

significant distinctions between the two provisions that prohibit

the application of the type of presumption that the Appellate

Division utilized in this case. 

First, as already noted, Internal Revenue Code (26 USC)

§ 501 (c) (3) exempts certain organizations from federal income

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taxation. Section 420-a exempts certain organizations from real

property taxation. Our local governments derive significant

revenue from the imposition of real property taxes, and federal

income taxation standards cannot be utilized to create a

presumption in favor of property owner seeking an exemption from

a state real property tax. 

Second, Internal Revenue Code (26 USC) § 501 (c) (3)

and section 420-a utilize different tests in determining whether

a given organization is entitled to a tax exemption under the

relevant statute. Internal Revenue Code (26 USC) § 501 (c) (3)

utilizes a two-pronged "organizational" and "operational" test,

meaning that the organization must be "organized exclusively for

one or more exempt purposes" delineated in that section (26 CFR

1.501 [c] [3]-1 [b] [1] [i]) and it must be "operated exclusively

for one or more exempt purposes" (26 CFR 1.501 [c] [3]-1 [c]

[1]). This requires an analysis of the organization and its

operation as a whole. In contrast, section 420-a considers

whether the real property is owned by a corporation or

organization that is "organized and conducted exclusively" for

one of the exempt purposes and whether the property is "used

exclusively for carrying out thereupon one or more of such

purposes" (emphasis supplied), meaning that the critical analysis

for real property tax exemption purposes requires an analysis of

the ownership and use of the property by the organization seeking

the exemption.

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And, finally, the Internal Revenue Code contains a

broad definition of what constitutes a "charitable" purpose. 

Specifically, the term "charitable" as used by Internal Revenue

Code (26 USC) § 501 (c) (3) is defined as

"[r]elief of the poor and distressed or of

the underprivileged; advancement of religion;

advancement of education or science; erection

or maintenance of public buildings,

monuments, or works; lessening of the burdens

of Government; and promotion of social

welfare by organizations designed to

accomplish any of the above purposes, or (1)

to lessen neighborhood tensions; (ii) to

eliminate prejudice and discrimination; (iii)

to defend human and civil rights secured by

law; or (iv) to combat community

deterioration and juvenile delinquency" (26

CFR 1.501 [c] [3]-1 [d] [2]). 

In contrast, section 420-a does not contain a definition of what

constitutes a "charitable" purpose, although, if the Legislature

intended for such an expansive definition of charitable purpose

to apply, it could have easily referenced the Internal Revenue

Code's definition in section 420-a or adopted it outright. 

That being said, although an entity's section 501 (c)

(3) status does not entitle it to a presumption that it is

"organized or conducted exclusively for" a tax exempt purpose

under RPTL 420-a (1) (a), that does not mean that courts

considering an owner's entitlement to an exemption under that

statute are prohibited from considering the entity's section 501

(c) (3) status as part of its overall analysis. Rather, we hold

that evidence of an organization's section 501 (c) (3) status, by

itself, does not create a presumption that the entity is entitled

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to a tax exemption under section 420-a. This is evident from our

prior holdings, where we have specifically stated that, for

purposes of determining a real property tax exemption, a

"favorable determination from the United States Department of the

Treasury as to [an entity's] exempt status for other tax

purposes" is not dispositive (see Matter of Swedenborg Found. v

Lewisohn, 40 NY2d 87, 95 [1976] [holding that nonprofit

corporation that distributed writings of theologian that were

sold at or below cost or distributed at no cost was not entitled

to real property tax exemption because its purpose was neither

primarily religious nor charitable]; Matter of Association of Bar

of City of N.Y., 34 NY2d at 154 [finding unpersuasive decisions

acknowledging the "charitable" character of bar associations]). 

Therefore, to the extent lower court cases have held that such a

presumption exists (see e.g. Oorah, Inc. v Town of Jefferson, 119

AD3d 1179, 1181 [3d Dept 2014]; Matter of Plattsburgh Airbase

Redevelopment Corp., 101 AD3d at 23), they should no longer be

followed for that proposition. 

Although we do not disturb the Appellate Division's

holding that petitioners met the "organized or conducted

exclusively for . . . charitable . . . purposes" prong of the tax

exemption test, we part company with the Appellate Division

relative to its holding that "petitioners demonstrated that the

use of their public parking facilities was consistent with their

exempt purpose, as expressly noted by the IRS in granting such

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operation tax exempt status" (111 AD3d at 940 [emphasis

supplied]). By so holding, the Appellate Division utilized the

petitioners' organizational status' under Internal Revenue Code

(26 USC) § 501 (c) (3) to support its holding that petitioners'

demonstrated that the use of the parking facilities was for an

exempt purpose. This was error. 

As explained above, the IRS's definition of what

constitutes an exempt "charitable" purpose is exceedingly broad,

including, among other things, "the lessening of the burdens of

[g]overnment" (26 CFR 1.501 [c] [3]-1 [d] [2]), while the second

prong of section 420-a (1) (a) requires a court to review "the

actual or physical use of the property when it exempts from

taxation property 'used exclusively for carrying out thereupon

one or more' exempt purposes" (Matter of Lackawanna Community

Dev. Corp., 12 NY3d at 581, quoting RPTL 420-a [1] [a]). Thus,

our analysis under section 420-a is concerned with the "use" of

the parking facilities as a whole, and whether the facilities are

"used exclusively for carrying out thereupon one or more of

[section 420-a's] purposes."

Petitioners argue that the facilities provide "belowmarket, reasonably priced parking" for residents, workers and

visitors to downtown Jamaica's retail stores and government

offices. They claim that the revocation of tax-exempt status

will result in the loss of business and visitors to malls and

shopping areas with more affordable (or free) parking. While

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Greater Jamaica's overall goal to create and maintain a viable

downtown Jamaica is commendable, as are the means in facilitating

that goal, i.e., through the operation of parking facilities that

enable visitors to frequent local businesses, that does not mean

that the facilitation of parking for such purposes constitutes a

charitable use of the property under section 420-a (1) (a). 

We disagree with petitioners' assertion that the

parking facilities are charitable in and of themselves because

they fulfill the primary purpose of economic development. The

economic benefit conveyed by below-market rate parking, however,

inures to the benefit of private enterprise and cannot be said to

further any charitable purpose. It lessens the burden of local

businesses, obviating any need for them to make their own parking

arrangements for prospective customers. The below-market rates

that the facilities charge provide an incentive for the public to

patronize those businesses, providing a dual benefit for local

business and a benefit to prospective customers of those

businesses. While these goals may be laudable, they are not

charitable. 

The petitioners further claim that the parking

facilities lessen the burden on local government, which,

incidentally, is deemed a "charitable" purpose under the Internal

Revenue Code (see 26 CFR 1-501 [c] [3]-1 [d] [2]). They claim

that the creation of the parking facilities relieved Jamaica of

the burden of operating public parking lots. Essentially,

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petitioners' argument is that the parking facilities provide a

public benefit. But, as we have held on more than one occasion,

"public benefit is not the test of qualification for exemption"

(Matter of Association of Bar of City of N.Y., 34 NY2d at 154-

155; see Matter of Swedenborg Found., 40 NY2d at 95).

To be sure, we have observed that "[f]or property to be

entitled to an exemption on the ground that it is being used for

a charitable purpose, it must a fortiori be used for a public

purpose," explaining, for example, that "one may not establish a

trust solely for the benefit of oneself and one's family, and

then obtain a tax exemption for property owned by such a trust by

claiming that it is a charitable organization" (Matter of North

Manursing Wildlife Sanctuary, 48 NY2d 135, 140 [1979]). We

explained in Matter of North Manursing that exemptions are

provided for those charitable uses that benefit the public and

"not for so-called 'charities' which benefit only their creators"

(id.). Our utilization of the term "public purpose" and indirect

reference to "public benefit" acknowledges that while

consideration of the benefit bestowed upon the public is but one

factor that the courts may consider in determining whether the

property is "used exclusively" for one of the enumerated tax

exempt purposes, it is the "used exclusively" test, and not the

alleged "public benefit" test, that is the relevant inquiry. The

parking facilities may very well provide a "public benefit," but

the overall use to which these facilities are put, i.e., to

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further economic development and lessen the burdens of

government, cannot be deemed "charitable" within the meaning of

section 420-a (1) (a). 

Nor can it be said that the operation of the parking

facilities is "incidental" to a charitable purpose in the vein of

similar uses that we, and other courts, have upheld as tax exempt

(see Matter of Merry-Go-Round Playhouse, Inc. v Assessor of City

of Auburn, 24 NY3d 362, 368 [2014] [use of apartment buildings to

provide housing for summer stock actors was incidental to theater

organization's primary purpose of encouraging art appreciation

through theater]; Matter of Adult Home at Erie Station, Inc. v

Assessor of City of Middletown, 10 NY3d 205, 216 [2008] [use of

residences by participants in a community re-entry program was

incidental to the property owner's "charitable purpose" of

combating homelessness and drug abuse among low-income people];

Matter of St. Luke's Hosp. v Boyland, 12 NY2d 135, 143 [1962]

[partial tax exemption granted to portions of 10 apartment

buildings owned by hospital because the apartments, which were

occupied by its staff and their families, was "reasonably

incident" to the hospital's primary purpose]; see also Matter of

Vassar Bros. Hosp. v City of Poughkeepsie, 97 AD3d 756, 759 [2d

Dept 2012] [parking garage parcel only partially exempt where a

substantial portion of said garage was "allocated for a use not

reasonably incidental to the purpose of the hospital," i.e., a

medical office adjacent to the garage]; Matter of St. Francis

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Hosp. v Taber, 76 AD3d 635, 640 [2d Dept 2010] [partial exemption

granted for parking garage adjacent to nonprofit hospital that

was utilized by hospital's visitors, patients and staff, since

such use was "necessarily incidental" to the hospital's exempt

purpose]; Matter of Ellis Hosp. v Assessor of City of

Schenectady, 288 AD2d 581, 583 [3d Dept 2001]). 

In Vassar Bros., St. Francis Hosp. and Ellis Hosp., the

courts held that the nonprofit hospitals' parking spaces that

were set aside for employees and patients of private medical

clinics were not entitled to a tax exemption because such uses

were not "incidental" to the nonprofit hospitals' primary

purposes. The same can be said for the uses of parking

facilities in this instance. They are commercial lots that exist

to promote economic development in downtown Jamaica, providing

easy access to local retail stores and government buildings. 

While there may be a tenuous connection between the monies raised

from the parking facilities and other charitable purposes engaged

in by Greater Jamaica -- indeed, petitioners acknowledge that

Jamaica Parking "has contributed excess revenues to assist

[Greater Jamaica] in meeting its operating expenses" -- the uses

of these facilities are not incidental to Greater Jamaica's

charitable purposes. 

Petitioners acknowledge that any monies in excess of

the operating costs of the parking lots are utilized by Greater

Jamaica in furtherance of charitable uses. But that does not

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detract from the fact that the parking lots' primary use is to

generate profits for distribution to Greater Jamaica4 (see e.g.

Matter of Stuyvesant Sq. Thrift Shop v Tax Commn. of City of

N.Y., 76 AD2d 461, 464-465 [1st Dept 1980], affd for reasons

stated below 54 NY2d 735, 737 [1981] ["The fact that the net cash

profits are ultimately distributed to various institutions

organized for charitable purposes does not in and of itself

directly involve the (thrift store) in the charitable activities

of the distributee organization within the meaning of" the real

property tax law exemption statute]; cf. Matter of Salvation Army

v Town of Ellicott Bd. of Assessment Review, 100 AD2d 361, 364-

365 [4th Dept 1984] [thrift store provided "meaningful work and

areas of endeavor" to persons seeking to "become self-supporting

assets to society" and the profit-making aspect of the store was

"only a small part of the purpose of the Salvation Army thrift

stores"]). Inasmuch as the parking facilities themselves are not

incidental to a charitable purpose, they are not entitled to a

section 420-a (1) (a) tax exemption. 

Accordingly, the order of the Appellate Division should

be reversed, with costs, and the matter remitted to that court

4

 Our determination in this regard is premised not on the

fact that the parking facilities themselves may be profitable,

but is instead premised on how the parking facilities are

utilized (see Matter of Adult Home, 10 NY3d at 216). And, as we

have noted in other instances, "[a] 'commercial patina' alone is

not enough to defeat tax-exempt status . . ." (Matter of Symphony

Space v Tishelman, 60 NY2d 33, 38-39 [1983]; see Matter of Merry

Go-Round Playhouse, Inc., 24 NY3d at 367). 

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for consideration of issues that were raised but not determined

on the appeal to that court. 

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Matter of Greater Jamaica Development Corporation v New York City

Tax Commission

No. 108

READ, J. (DISSENTING):

Petitioner Greater Jamaica Development Corporation

(Greater Jamaica), formed in 1967 under New York's former

Membership Corporation Law, is organized and operated exclusively

for charitable, scientific and educational purposes within the

meaning of section 501 (c) (3) of the United States Internal

Revenue Code with a broad remit to improve economic and living

conditions in Jamaica, Queens,1 an aging urban area that had

1Greater Jamaica's Certificate of Incorporation delineates

seven specific charitable corporate purposes: (1) to promote,

assist, participate in and coordinate sound planning and improve

development of Jamaica's business-commercial-retail district; (2)

to encourage and effect the development and expansion of

commercial, industrial and manufacturing facilities in Jamaica;

(3) to support and assist in the planning, development and

expansion of educational, cultural, recreational, residential,

governmental, transportation and other related facilities in

Jamaica; (4) to carry on research and other studies in order to

develop an overall comprehensive plan and subsidiary plans as may

be necessary or appropriate for Jamaica's sound growth and

improved development; (5) to provide assistance of every kind,

including the rendering of advice, technical services and

financial aid in connection with securing private or government

aid to individuals, associations, corporations and other

organizations, whether organized for profit or otherwise,

interested in or working toward the sound growth and improved

development of Jamaica or any part thereof, and to provide such

assistance in connection with the formation of such

organizations; (6) to assist and cooperate with federal, state

and local departments, agencies and government organizations of

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fallen on especially hard times. From the outset of Greater

Jamaica's efforts on behalf of the Jamaica community, it was

apparent that the shortage of downtown parking hampered economic 

revitalization. Accordingly, in 1976 Greater Jamaica applied to

the United States Economic Development Administration on behalf

of the City of New York (the City) for a grant to construct a new

municipal garage. The application was approved, resulting in a

$3.4 million grant to the City, which completed construction of a

530-car garage in 1978. The New York City Department of

Transportation initially operated this public parking facility. 

Over time the garage sunk into a state of disrepair

and, consequently, disuse. In 1996, Greater Jamaica purchased it

from the City through the New York City Economic Development

Corporation (EDC). Two years later, Greater Jamaica formed

Jamaica First Parking, LLC (Jamaica First) as a special-purpose

nonprofit entity with the sole purpose of owning and operating

parking facilities exclusively "in furtherance of the charitable

purpose of the member [i.e., Greater Jamaica])." In 2001,

Jamaica First purchased three additional run-down parking

facilities from the City. Then in 2004, Jamaica First bought

vacant land from the City and constructed a 410-car public

parking garage with a $5 million grant from the City through the

every kind in furtherance of Greater Jamaica's purposes to the

end that Jamaica shall receive the maximum possible benefit from

federal, state and local programs; and (7) to assist and

cooperate with other organizations in furtherance of the

aforesaid purposes. 

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EDC.2 Greater Jamaica matched the grant with $6 million in debt

from the proceeds of tax-exempt facility revenue bonds issued by

the New York City Industrial Development Agency. This garage was

completed in 2006. Greater Jamaica alleges that these "parking

facilities, operated efficiently and at below-market rates, are

integral to [its] mission of creating and maintaining a viable

downtown Jamaica." 

In 2007, the New York City Department of Finance (DOF

or the agency) granted Greater Jamaica a full exemption from real

property taxes for the five parking facilities (three garages and

two lots) (see Real Property Tax Law § 420-a [1] [a], discussed

infra). DOF continued to grant the exemption for ensuing tax

years until 2011. Then, although the tentative assessment roll

for the 2011-2012 tax year, dated January 5, 2011, still listed

the full exemption as applicable, DOF suddenly executed an about2Hereafter, "Greater Jamaica" refers collectively to Greater

Jamaica and Jamaica First, unless the context specifically

indicates otherwise. As a single-member limited liability

company, Jamaica First is generally treated as a branch or

division of its owner, Greater Jamaica, for federal income tax

purposes rather than as a separate entity (see 26 CFR 301.7701-

3). Similarly, the City disregards single-member limited

liability companies as separate entities for purposes of section

420-a (1) (a) so long as certain requirements are fulfilled (see

e.g. DOF Letter Ruling No. 074873-021, 2007 NY City Tax LEXIS 17

[Nov 21, 2007)]). DOF's General Counsel raised a question about

whether Greater Jamaica and/or Jamaica First met certain of these

requirements when she informed Greater Jamaica that its real

property tax exemption was going to be revoked. Although

repeatedly referring to the five properties as "a stand-alone,

for-profit, commercial parking garage" or a "free-standing

commercial parking lot," the City does not suggest on this appeal

that Greater Jamaica and Jamaica First are separate entities.

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- 4 - No. 108 

face. In a letter dated February 23, 2011, DOF, by its General

Counsel, notified Greater Jamaica of its intention to revoke the

exemption, beginning with the 2011-2012 tax year. By notice

dated February 24, DOF formalized the revocation.

Greater Jamaica, and amici curiae the Lawyers' Alliance

for New York, the Queens Chamber of Commerce and the Nonprofit

Coordinating Committee of New York, Inc., assert that the

decision to revoke Greater Jamaica's real property tax exemption

was transparently "political," pointing to an opinion column in a

New York City tabloid, with a dateline of December 3, 2010

(http://www.nydailynews.com/new-york/queens-garage-companyunusual-tax-exemption-2-000-space-parking-system-article1,469,283). The column's author lambasted the City for "dol[ing]

out charitable tax exemptions to parking garages" while

reportedly "tak[ing them] away from churches"; intimated that the

exemption was granted only because of Greater Jamaica's allegedly

close ties to "several major Queens political figures"; and

stated that DOF's spokesman had assured the author that

"officials are taking another look at the arrangement" by

"reviewing this issue to determine whether these properties are

eligible for a tax exemption." Whatever prompted DOF's review

and subsequent revocation of Greater Jamaica's section 420-a (1)

(a) exemption, the agency has not justified its determination

that as of 2011 the five parcels no longer qualified.

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Relevant Law

Pursuant to Real Property Tax Law § 420-a (1) (a), real

property is mandatorily exempt from taxation if it satisfies two

criteria. First, the property must be owned by a nonprofit

corporation or association organized or conducted exclusively for

one or more specified purposes (religious, charitable, hospital,

educational or moral or mental improvement of men, women or

children); second, the property must be used exclusively for

carrying out one or more of the enumerated purposes.3 With

respect to both the first ("purpose") and the second ("use")

criterion, we have interpreted the term "exclusively" to mean

"principally" or "primarily" rather than "only" or "solely" (see

e.g. Matter of Association of Bar of City of N.Y. v Lewisohn, 34

NY2d 143, 153 [1974]). 

We have cautioned that tax authorities and the courts

should not interpret the general categories of "charitable,

educational and moral and mental improvement" in section 420-a

(1) (a) in a way that is "overly narrow" or "so literal and

narrow that it defeats the exemption's settled purpose," even

though, in the first instance, "exemption statutes [are to] be

3Section 420-a (1) (a) reads as follows:

"Real property owned by a corporation or association

organized or conducted exclusively for religious,

charitable, hospital, educational, or moral or mental

improvement of men, women or children purposes, . . . and

used exclusively for carrying out thereupon one or more of

such purposes either by the owning corporation or

association . . . shall be exempt from taxation."

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- 6 - No. 108 

construed strictly against the taxpayer seeking the benefit of

the exemption" (Matter of Symphony Space v Tishelman, 60 NY2d 33,

36 [1983]). In Symphony Space itself, we held that a nonprofit's

theater for the performing arts qualified for an exemption

pursuant to section 420-a (1) despite a "'commercial patina'"

created by rentals and the charging of admission fees for

performances (id. at 38). And over the years, New York's courts

have considered a wide range of endeavors to fall within the

broadly stated categories of purposes specified in section 420-a

(1) (a) (see e.g. Mohonk Trust v Board of Assessors of Town of

Gardiner, 47 NY2d 476 [1979] [an organization whose primary

purpose "is the preservation of wilderness areas" constitutes a

"charitable, educational, or mental or moral improvement" purpose

under the statute]; Matter of North Manursing Wildlife Sanctuary

(City of Rye), 48 NY2d 135 [1979] [land used "as a wildlife

sanctuary for birds and small animals" is a charitable use under

the statute]; Adult Home at Erie Station, Inc. v Assessor (10

NY3d 205, 214 [2008] [Erie Station] [housing provided to the

elderly at below market rates "is plainly [used for] a charitable

purpose"]; Matter of Salvation Army v Town of Ellicott Bd. of

Assessment Review (100 AD2d 361 [4th Dept 1984] [characterizing

"work therapy" and "rehabilitation opportunities" as a charitable

purpose]; Farm Sanctuary Inc. v Patton (221 AD2d 67, 69 [3d Dept

1996] [organization which has "the primary purpose . . . [of] the

care and maintenance of abandoned and abused farm animals"

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- 7 - No. 108 

qualifies as a charitable purpose]); Plattsburgh Airbase

Redevelopment Corp. v Rosenbaum (101 AD3d 21, 24 [3d Dept 2012]

[an organization whose "very purpose is to own, maintain, market

and sell [] land to promote economic development" is engaged in

and using the land for a charitable purpose]). 

The determination of whether real property is used

exclusively for an exempt purpose turns on whether its primary

use is in furtherance of the organization's exempt purpose. 

Property used for purposes that are "reasonably incident" to the

organization's primary purpose qualifies for exemption, a

standard the courts have also broadly construed (People ex rel.

Watchtower Bible & Tract Socy. v Haring (8 NY2d 350, 358 [1960];

see e.g. St. Joseph's Health Ctr. Props, inc. v Srogi, 51 NY2d

127 [1980] [property used as a residential facility for hospital

staff]; Rudolf Steiner Educ. & Farming Assn. v Brennan, 65 AD2d

868 [3d Dept 1978], appeal denied, 46 NY2d 709 [1979] [a farm

operated by an educational institution]; Univ. Auxiliary Servs. v

Smith, 78 AD2d 959 [3d Dept 1980], affd, 54 NY2d 986 [1981]

[improved land used to provide services (food services, a book

store and recreation) to a college community and vacant land

owned by the educational institution]).

Finally, where a municipality seeks "'to withdraw a

previously granted tax exemption,'" we have held that "'the

municipality bears the burden of proving that the real property

is subject to taxation'" (Matter of Lackawanna Cmty. Dev. Corp. v

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- 8 - No. 108 

Krakowski, 12 NY3d 578, 581 [2009], quoting Matter of New York

Botanical Garden v Assessors of Town of Washington, 55 NY2d 328,

334 [1982] [emphasis added]).

Showing Necessary to Justify Revocation

In 1971, the Legislature amended former section 420 (1)

of the Real Property Tax Law, which mandated tax exemptions for

real property owned by a host of nonprofit organizations, to

carve out and place in paragraph (a) (present-day section 420-a

[1] [a]) those nonprofits whose real property remained

mandatorily exempt; and to create a new paragraph (b) (presentday section 420-b [1] [a]) to specify other categories of

nonprofits whose real property municipalities were newly

empowered to tax pursuant to duly enacted local legislation (see

L 1971, ch 414). Although the categories specified in former

section 420 (1) (b) are not exactly the same as those in its

present-day counterpart, the statute's general scheme to qualify

for a permissive exemption remains both the same as when first

enacted in 1971, and effectively identical to that established by

Real Property Tax Law § 420-a (1) (a) to qualify for a mandatory

exemption: first, the property must have been owned by a

nonprofit corporation or association organized or conducted

exclusively for one or more specified purposes (e.g., bible,

tract, benevolent, missionary, infirmary, public playground,

scientific, literary, bar association, medical society, library,

etc.); second, the property must have been used exclusively for

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- 9 - No. 108 

carrying out one or more of the enumerated purposes.

Many localities adopted local legislation permitting

them to terminate the previously mandatory tax exemptions enjoyed

by certain nonprofit organizations in their communities. The

litigation that ensued generally called upon the courts to decide

whether such a locality had, in fact, properly reclassified a

particular nonprofit as qualified only for a permissive

exemption. One of our first major cases addressing this aspect

of the 1971 legislation involved an arboretum owned by the New

York Botanical Garden (the Botanical Garden) and located in the

Town of Washington (the Town) in Westchester County.

After the Botanical Garden acquired the arboretum in

1973, the Town treated the property as exempt from real property

taxation. In 1977, however, the Town adopted a local law to

exercise its power under the Real Property Tax Law to tax

property owned by a nonprofit organization and used for

scientific purposes. Acting under this local legislation, the

Town restored the arboretum property to the tax rolls on the

ground that the Botanical Garden's primary purpose and the

arboretum's primary use were scientific and research-oriented. 

The Botanical Garden commenced an article 78 proceeding to have

the arboretum property declared tax exempt.

In order to resolve the case on the merits, we were

first required to determine whether the Botanical Garden or the

Town had the burden of proof, and what that burden entailed. We

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- 10 - No. 108 

initially observed that while the taxpayer seeking a real

property exemption ordinarily bears the burden of proof, 

"under the circumstances presented here, in which the

municipality, pursuant to its power under [the Real

Property Tax Law], is seeking to withdraw a previously

granted tax exemption, the municipality bears the

burden of proving that the real property is subject to

taxation. Thus, the taxing authority must prove that

the corporation or association is organized for a

purpose only qualifiedly exempt (in this case, a

scientific purpose) and that the property is used for

such a purpose" (New York Botanical Garden, 55 NY2d at

334-335 [emphases added]).

Proceeding to the merits, we examined the Botanical

Garden's charter, and held that "[g]iven the wide range of

purposes for which [the Botanical Garden] is organized, we cannot

say that the town has sustained its burden of proving that a

scientific purpose predominates, notwithstanding [the Botanical

Garden's] own declarations of its scientific, among other,

purposes" (id. at 335). In deciding whether the Botanical Garden

was a qualifiedly exempt scientific or a mandatorily exempt

charitable entity, we also considered it relevant that "the will

provision under which the arboretum was deeded to [the Botanical

Garden] permits such a grant only to a 'charitable organization'"

(id. at 335 n *). 

Next, we determined that the Town had not shown that

the arboretum property was primarily used for a purpose that was

only qualifiedly exempt (i.e., a scientific purpose). We

observed that "the use to which this particular parcel [was] put

accomplished several [absolutely] exempt purposes, including

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- 11 - No. 108 

educational, charitable and moral improvement purposes" (id. at

336). Finally, we rejected the Town's argument that restrictions

on public access to the arboretum's lands "deprive[d] them of a

public purpose" (id. at 337).

Importantly, Town taxing authorities did not just wake

up one day and decide to reevaluate Botanical Garden's tax-exempt

status. Rather, something objective -- a change of law (i.e.,

Chapter 414 of the Laws of 1971 and the local law adopted

pursuant thereto) -- prompted the reevaluation. Further, the

nature of the change in law was such that we were required to

decide whether the Town had properly determined that the

nonprofit's purpose and use qualified only for a permissive

exemption, or stated another way, no longer qualified for a

mandatory exemption. 

Although Botanical Garden arose in a particular context

-- the 1971 amendments to the Real Property Tax Law -- we cited

it in Lackawanna for the general proposition that a municipality

(there, the City of Lackawanna) bore the burden of proof to

justify revocation of a nonprofit's real property tax exemption. 

We did not articulate any particular test for the courts to apply

when deciding that a revocation was not arbitrary; more to the

point, we assuredly did not say that once a municipality makes

colorable allegations that a nonprofit's use of real property

fails to further an exempt purpose, then the burden shifts back

to the nonprofit to establish its entitlement to an exemption

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- 12 - No. 108 

(cf. majority op at 10). We simply stated conclusorily that

"[t]he Lackawanna tax assessor [had] satisfied his burden"

(Lackawanna, 12 NY3d at 581). This was an easy conclusion to

reach on the record in Lackawanna, though, because the assessor

justified his decision on an independent and objective basis --

i.e., the New York State Office of Real Property Services (ORPS)

Exemption Administration Manual, which clearly indicated that the

property was taxable. Indeed, ORPS issued an advisory letter to

that effect to an attorney for the City of Lackawanna. And

notably, there was a change in use after the exemption was

originally granted: the nonprofit acquired the properties between

1981 and 1985, and did not lease to a for-profit corporation

until 1993. 

Here, the City has not satisfied its burden of proof. 

First, it has not shown that Greater Jamaica fails to fulfill

section 420-a (1) (a)'s "purpose" or "organized or conducted"

criterion, unless the majority is willing to go so far as to

declare that economic and community development are not

"charitable, educational, or mental or moral improvement"

purposes within the meaning of Real Property Tax Law § 420-a (1)

(a). We have never so held4 and neither has the Appellate

4Citing Lackawanna, the City claims that we have "held that

the economic revitalization of a distressed community does not

qualify as a charitable purpose under RPTL 420-a." To the

contrary, in Lackawanna we pointedly "pause[d] to note [that] we

[were] not deciding whether [the property at issue] was exempt

from taxation prior to LCDC's leasing it to an entity that

carrie[d] out for-profit manufacturing activities on the

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- 13 - No. 108 

Division (see Plattsburgh Airbase Redevelopment Corp., 101 AD3d

at 24-25). Indeed, the majority acknowledges that "there is

evidence in the record" that both Greater Jamaica and Jamaica

First were "organized or conducted exclusively for" a tax exempt

purpose (majority op at 11, 11 n 3; see also p 1, n 1, p 2, n 2,

supra). As the majority also acknowledges, a nonprofit

organization's section 501 (c) (3) status bears on the overall

analysis of whether it is "organized or conducted exclusively

for" a tax-exempt purpose within the meaning of section 420-a (1)

(a). Accordingly, I now turn to the City's newly-minted opinion

that the parking facilities are not used for Greater Jamaica's

exempt purposes.

The City's Rationale for Revocation

It has long been the rule that "judicial review of an

administrative determination is limited to the grounds invoked by

the agency" (Rizzo v New York State Div. of Hous. & Community

Renewal, 6 NY3d 104, 110 [2005] [internal quotation marks

omitted]; see also Matter of New York State Ch., Inc., Associated

Gen. Contrs. of Am. v New York State Thruway Auth., 88 NY2d 56,

75 [1996] [declining to adopt an agency's "[p]ost hoc

rationalization"]). Thus, the majority improperly considers

proof offered by the City in response to the petition in this

case (see majority op at 10, discussing an affirmation of a City

property" (Lackawanna, 12 NY3d at 581). Instead, "we assume[d]

without deciding that prior to . . . being leased, the [property

at issue] held by LCDC was exempt from taxation" (id.).

- 13 -
- 14 - No. 108 

attorney).

Concomitantly out-of-bounds is the City's explanation,

first advanced on appeal, that its decision to grant Greater

Jamaica the tax exemption for tax years 2007-2008 through 2010-

2011 was simply a "mistake," or "erroneously awarded in the first

instance" (see id. at 9). In any event, the City's bare

assertion of mistake is insufficient to satisfy its burden of

proof. As the Appellate Division observed, a municipality may

meet its burden to establish that a nonprofit's real property is

subject to taxation "by proving, for example, a change in the

law, a change in the use of the property, or that the tax

exemption was erroneously awarded in the first instance" (111

AD3d 937, 939).

But there must be some objective indication that a

revocation on the "erroneously awarded" basis was prompted by

something other than a mere change of heart; that is, a prior

decision does not become a "mistake" or "erroneous" any time a

municipality decides to interpret existing authorities in a

different way. Otherwise, the burden of proof has not, in

reality, shifted from the nonprofit to the municipality when an

exemption is withdrawn. The nonprofit still effectively bears

the burden of showing entitlement and, importantly, enjoys no

protection from being sandbagged by capricious and unpredictable

administrative decisionmaking, which is what Greater Jamaica

claims occurred here. Thus, the cases where the Appellate

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- 15 - No. 108 

Division referred to exemptions that had been "erroneously

awarded" all dealt with an exemption granted despite a particular

clear precedent to the contrary; namely, exemptions that

contradicted "well-settled" law that "'real property . . . being

used as a retirement community for middle-income elderly does not

qualify for a tax exemption under [RPTL] 420-a'" (Matter of Quail

Summit, Inc. v Town of Canandaigua, 55 AD3d 1295 [4th Dept 2008],

quoting Matter of Greer Woodycrest Children's Servs. v Fountain,

74 NY2d 749, 751 [1989] and citing Matter of Presbyterian

Residence Ctr. Corp. v Wagner, 66 AD2d 998, 999 [1978], affd for

reasons stated 48 NY2d 885 [1979]; see also Matter of Pine

Harbour, Inc. v Dowling, 89 AD3d 1192 [3d Dept 2011]).

Here, the letter from DOF's General Counsel indicates

merely a change of heart about Greater Jamaica's entitlement to

an exemption. No new factual circumstances are adduced; the only

post-2007 case that the General Counsel mentions is Lackawanna,

which is cited along with Association of the Bar for the

proposition, presumably well understood by the City in 2007, that

an important public purpose does not alone qualify a nonprofit's

real property for an exemption under Real Property Tax Law § 420-

a (1) (a). As "a preliminary matter," the General Counsel

observed that Greater Jamaica's tax-exempt status under federal

law was "not determinative of charitable use of the property as

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- 16 - No. 108 

defined by 420-a."5 Tellingly, though, she does not claim that

DOF originally granted the exemption to Greater Jamaica in

mistaken reliance on a presumption that Greater Jamaica was

qualified therefor solely because of its federal tax-exempt

status. For this reason, the majority's lengthy discussion about

a presumption is beside the point in this case, which involves a

revocation.

Next, the General Counsel discounted Matter of

Salvation Army v Town of Ellicott Bd. of Assessment Rev. (100

AD2d 36 [4th Dept 1984]) and similar unnamed cases on the ground

that these authorities merely

 "demonstrate[d] that where a commercial enterprise

(such as a thrift shop) is incidental to the main

exempt purpose (providing rehabilitation and therapy

for religious and charitable reasons) the commercial

aspect does not destroy the entitlement to the

exemption. Here, the parking lots are not incidental

to another recognized charitable purpose but are the

very purpose for which the property is being used."

This last statement dodges the issue. There is no

question that the parking lots are being "used" as parking lots -

- i.e., areas where visitors to Jamaica's urban core may leave

their vehicles temporarily for a fee; the question is whether

this use is incidental to Greater Jamaica's broad charitable

purpose to foster economic and community development, just as the

thrift shop's operation was incidental to the Salvation Army's

5This comment, as is the case with much of what the letter

says, seems to respond to a submission made by Greater Jamaica,

which is not included in the record.

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- 17 - No. 108 

broadly stated exempt purposes. Additionally, DOF could have and

should have been well-aware of the decision in Salvation Army in

2007. At that time, the agency would have been obligated to

grant the exemption based on a determination that existing

precedent supported the proposition that the parking facilities

did, in fact, represent a use incidental to Greater Jamaica's

charitable purposes.

The General Counsel also discussed whether the fact

that the properties were owned by Jamaica First, a single-member

limited liability company, rather than by its sole member,

Greater Jamaica, disqualified Greater Jamaica from the exemption. 

In this regard, she stated that "it appears that [Jamaica First]

collects amounts from the lots that exceed the carrying,

maintenance and depreciation charges attributable to the

premises" (see majority op at 9-10, citing this as a reason

substantiating the City's revocation of Greater Jamaica's tax

exemption). The General Counsel's comment apparently refers to

one of the requirements for determining whether to disregard

Jamaica First as a separate entity; namely, the requirement that

"[r]ent may not exceed carrying, maintenance and depreciation

charges as specified in section 420-a" (DOF Letter Ruling No.

074873-021, supra, n 2 [emphasis added]; see also Real Property

Tax Law § 420-a [2] [a nonprofit organization leasing real

property to a corporation or association organized or conducted

exclusively for one of the exempt purposes enumerated in section

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- 18 - No. 108 

420-a will receive an exemption for that property if it is used

primarily for an exempt purpose and "any moneys paid for such use

do not exceed the amount of the carrying, maintenance and

depreciation charges of the property"]; Sisters of St. Joseph v

City of New York, 49 NY2d 429 [1980]). But in this case, Greater

Jamaica did not lease the parking facilities to or collect rent

from Jamaica First (see Matter of Scenic Hudson Land Trust v

Sarvis, 234 AD2d 301 [2d Dept 1996] and cases discussed therein). 

Finally, the majority states that the "economic benefit

conveyed by below-market rate parking [] inures to the benefit of

private enterprise," and concludes, on that basis, that this use

"cannot be said to further any charitable purpose." To the

extent that the majority argues that Greater Jamaica is not

entitled to an exemption because it receives revenue, this

misapprehends the nature of Greater Jamaica's activities and our

precedent. In a broad sense, the parking facilities benefit, and

are used by, Greater Jamaica in two distinct ways. First, the

parking facilities generate revenue, which is funneled back into

Greater Jamaica's numerous development initiatives. But

crucially, the parking facilities directly further Greater

Jamaica's charitable purpose of economic rejuvenation by allowing

shoppers and other visitors a safe place to park while they

patronize local businesses and educational, arts and religious

institutions. This is not a situation where Greater Jamaica's

"avowed [charitable] purpose [is] a guise or pretense" for

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- 19 - No. 108 

profit-making (Real Property Tax Law § 420-a [2]).

In Lackawanna, by contrast, we held that the LCDC was

not entitled to a real property tax exemption for land that was

leased to a for-profit manufacturing firm (Lackawanna, 12 NY3d at

580). In so holding, we explicitly noted that our decision was

based solely on the fact that the only use of the property was as

a revenue-producing rental. Greater Jamaica, however, does not

simply use the parking facilities as revenue-generating

properties meant to raise funds for its economic development

mission; it does not lease the facilities to a for-profit

enterprise. As a result, Greater Jamaica is more akin to the

petitioners in Erie Station. 

In that case, one petitioner, Adult Home at Erie

Station, Inc. ("AHESI"), operated an adult home that provided its

elderly residents with housing and what AHESI described as "a

program of personal care" (Erie Station, 10 NY3d at 214). We

held that although "renting homes to elderly people who are not

poor is not a 'charitable activity,'" citing Greer Woodycrest and

Presbyterian, AHESI's property was "plainly [used for] a

charitable purpose" because the property was provided at belowmarket rates (id).

The second petitioner in Erie Station, Regional

Economic Community Action Program, Inc. ("RECAP"), was in a

different position than AHESI because RECAP received the market

rate for its properties (id. at 215). Nonetheless, we held that

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- 20 - No. 108 

RECAP's property was also exempt from property taxation because

"RECAP is engaged in social work, helping homeless people,

alcoholics, drug addicts and other afflicted members of society

to become productive and useful citizens," which we characterized

as "undoubtedly a charitable activity" (id.). We elaborated as

follows: 

"That [the beneficiaries of RECAP's housing] pay market

rents, and that RECAP may even benefit economically

from its rental income, does not change the result. The

issue is not whether RECAP benefits, but whether the

property is "used exclusively" for RECAP's charitable

purposes. RECAP could lose its exemption . . . if the

economic benefit went to its officers or employees

personally, but an economic benefit to a charitable

organization does not by itself extinguish a tax

exemption. The question is how the property is used,

not whether it is profitable" (id. at 216 [emphasis

added]; see also Congregation Rabbinical College of

Tartikov v Town of Ramapo, 17 NY3d 763, 765 [2011] ["an

economic profit made by a religious corporation 'does

not by itself extinguish a tax exemption,'" quoting

Erie Station, 19 NY3d at 216]). 

To sum up, cases decided both before and after 2007

support DOF's 2007 decision to grant a tax exemption to Greater

Jamaica for the parking facilities. DOF points to no change in

law or the use of the property or any other objective

consideration to justify its 2011 flip-flop. Before today, we

had never ruled that a local government might simply change its

opinion and revoke an exemption without some objective predicate

for its revised determination. Whether or not the 2011

revocation was improperly motivated, as Greater Jamaica and

various amici contend, is impossible to say. On this record, all

we know is that DOF interpreted the facts and the law one way in

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2007, and the opposite way in 2011, although neither the facts

nor the law had changed in the interim. Such an unexplained

reversal of position is the very epitome of arbitrary

administrative decisionmaking. Accordingly, I respectfully

dissent.

* * * * * * * * * * * * * * * * *

Order reversed, with costs, and matter remitted to the Appellate

Division, Second Department, for consideration of the issues

raised but not determined on the appeal to that court. Opinion

by Judge Pigott. Chief Judge Lippman and Judges Rivera, AbdusSalaam and Fahey concur. Judge Read dissents in an opinion in

which Judge Stein concurs.

Decided July 1, 2015

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