Opinion ID: 2015169
Heading Depth: 1
Heading Rank: 1

Heading: The Effective Date for Commencement of PILOTs

Text: In our view, the courts below erred in concluding that LIPA's PILOT obligation superseded LILCO's real property tax liability immediately upon the February 29, 1992 date of transfer of Shoreham. Under the Suffolk County Tax Act, the tax status date for the December 1, 1991-November 30, 1992 taxable year was June 1, 1991 (Suffolk County Tax Act former § 5). Real property taxes owed on the Shoreham plant for the 1991-1992 taxable year became a lien on that property on December 1, 1991 (Suffolk County Tax Act § 13 [b]). Thus, Shoreham's statutory tax-exempt status as property of LIPA did not go into effect before the June 1, 1991 tax status date for the December 1, 1991-November 30, 1992 taxable year. Moreover, the taxes owed on the Shoreham plant for that year became a lien on the property before it was acquired by LIPA, its present tax-exempt owner. The well-established general rule is that ownership of real estate on the taxable status date determines whether the property is subject to real property taxation for the entire ensuing taxable year, irrespective of the property's subsequent acquisition by a tax-exempt entity during that taxable year ( see , People ex rel. Luther v McDermott , 265 N.Y. 47, 51; Matter of Adams Co. v Nist , 72 AD2d 908, 909; Young Israel v City of New York , 33 AD2d 561; Lutheran High School Assn. v City of New York , 29 AD2d 890, affd 27 N.Y.2d 939, rearg denied 28 N.Y.2d 859). There is an exception if the acquiring entity is the State or Federal Government, but that exception does not apply where, as here, the tax lien, even if inchoate, has attached to the property before the transfer of ownership ( see , United States v Alabama , 313 US 274, 281-282; 8 Opns Counsel SBEA No. 44; 4 Opns Counsel SBEA No. 60; cf. , Loconti v City of Utica , 61 Misc 2d 855; 1981 Opns St Comp No. 81-7). The lien, of course, cannot be enforced so long as the State or the United States holds title, but the lien itself is not extinguished ( see , United States v Alabama , supra ; 8 Opns Counsel SBEA No. 44, op. cit. ). The general rule may be overcome by legislation indicating a contrary intention ( see , People ex rel. American Bible Socy. v Commissioners of Taxes & Assessments , 142 N.Y. 348, 350-352; Rochester Hous. Auth. v Sibley Corp. , 77 Misc 2d 205, 209-210, affd 47 AD2d 718; see also , United States v Alabama , supra ). We find no indication, either in the statutory language or legislative history, that the Legislature intended to override the general rule and make Shoreham's tax-exempt status, triggering LIPA's PILOT obligation, effective immediately upon acquisition. If anything, the express wording of Public Authorities Law § 1020-q (1) supports the opposite view. Thus, Public Authorities Law § 1020-q (1) provides that annual PILOTs are due [e]ach year after property theretofore owned by LILCO is acquired by [LIPA]    and , as a consequence, is removed from the tax rolls  (emphasis supplied). Undeniably, however, Shoreham was not finally removed from the tax rolls until July 1, 1992, [1] well after the May 31, 1992 due date for payment of the final, second half installment of 1991-1992 taxes on the plant. Accordingly, PILOTs (payments in lieu of taxes) would not become due until the next succeeding tax payment became due, i.e., for the December 1, 1992-November 30, 1993 taxable year. We find unpersuasive plaintiffs' argument that, because the removed from the tax rolls language was not repeated in that portion of Public Authorities Law § 1020-q (1) dealing specifically with Shoreham PILOTs, the PILOTs on LIPA's acquisition of that property should begin immediately upon transfer. There is nothing in the legislative history to indicate an intent by the Legislature to provide for Shoreham PILOT payments out of synchronization with PILOTs on other acquired LILCO properties or out of synchronization with the statutory tax years. Rather, the specific statutory treatment of PILOTs attributable to the Shoreham transfer was intended solely to address the declining payment schedule for Shoreham PILOTs, differing from PILOTs on other LILCO property acquired by LIPA in only that respect. Likewise, we reject plaintiffs' argument that provisions of the Suffolk County Tax Act with respect to the tax status date and the effective date of attachment of tax liens, etc., are preempted by the LIPA Act ( see , Public Authorities Law § 1020-gg). Although the enforcement mechanisms of the Suffolk County Tax Act may not be applied to LIPA, the provisions relied upon by us to determine when PILOTs supersede LILCO's tax liability on Shoreham are not in conflict with the LIPA Act, which only preempts when LIPA Act provisions are inconsistent with other statutory provisions. For the foregoing reasons, the judgment must be modified to declare that LIPA's PILOT obligation begins with the December 1, 1992-November 30, 1993 taxable year.