Court Opinion

ID: 5833230
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:30:57.811937+00
Date Added: 2024-06-11T08:43:30.593161
License: Public Domain

Lazer, J. (dissenting).
The Northern Regional Headquarters of the United States Internal Revenue Service in Holtsville in the Town of Brookhaven is located in a building complex constructed by the town and leased to the General Services Administration of the United States Government. The annual rental for the property, which comprises 42 acres with parking facilities for 2,755 automobiles and buildings which can accommodate up to 4,700 employees, is $2,100,000, and the term of the lease is 20 years. Although it has an assessed valuation of $2,500,000, since the tax year 1972-1973 the parcel has been listed on the town tax rolls as exempt from taxation. Inter alia, Special Term found the exemption valid and granted the town summary judgment declaring the property to be tax exempt and dismissing plaintiffs’ declaratory judgment action for failure to state a cause of action. The majority of this court has voted to reverse portions of the judgment and to grant summary judgment to the plaintiffs on the ground that the tax exemption is unwarranted because the property is not held for a public use. Although I am in agreement with the majority that plaintiffs’ various other contractual and statutory contentions lack merit, I depart on the issue of the exemption and join with Mr. Justice Suozzi in voting to affirm. In my opinion, the property qualifies for *599exemption from real estate taxes under subdivision 1 of section 406 of the Real Property Tax Law.
The enabling legislation which authorized the Town of Brookhaven to acquire the land, construct the facility, and lease it to the General Services Administration (L 1970, ch 972) was enacted pursuant to a home rule request. The following legislative findings appear in the statute:
"The location of a federal office building and related improvements within a municipality in which it is constructed create and greatly improve employment and business opportunities in the municipality and has a beneficial effect on the physical and economic development of the municipality. Experience has shown that ancillary private business and professional activities with significant potential for creating job opportunities for residents of a municipality are quickly attracted to an area which surrounds federal office buildings, that nearby residential development is accelerated and that the local real property value and revenues to the municipal government are correspondingly increased. In addition to serving the local public convenience in having federal services nearby, a federal office building is an important stablizing and growth factor in the economic vitality of the municipality in which it is located.
"If a federal office building project is constructed in a municipality in accordance with an integrated comprehensive and long-range plan for the physical and economic development of the municipality, it can promote and serve to attract, encourage and develop the entire area in such municipality by facilitating the provision of adequate parking facilities which can be used by persons living, working and shopping in the area, as well as by the federal employees, by incorporating existing or proposed arterial highways and controlled access roads for improved traffic movement and by assisting the town in planning and providing for parks, recreation areas and other facilities for the use of the residents of the town. * * *
"In order to accomplish the aforesaid public purposes, the town of Brookhaven should be empowered and authorized to acquire land and to construct thereon and own an office building primarily to provide space suitable for permanent activities of the Federal government and its employees together with related facilities, all of which will be of service to the town residents and the public at large. In carrying out such purposes and in exercising the powers granted by this *600act, the town shall be regarded as performing an essential governmental and town function and these public purposes are hereby found and declared to be town purposes and town uses.”
Subdivision 1 of section 406 of the Real Property Tax Law reads: "Real property owned by a municipal corporation within its corporate limits held for a public use, including real property held or used for cemetery purposes and all lots and plats therein conveyed by such municipal corporation as places for the burial of the dead, shall be exempt from taxation and exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.”
Although the findings in the quoted enabling legislation might seem dispositive of the current controversy, a "public purpose” for condemnation purposes is not ipso facto a public purpose for taxation exemption purposes (Town of Harrison v County of Westchester, 13 NY2d 258) and, therefore, adjudication is dependent on other criteria as well. "[W]hat comprises 'a public use’ within the meaning of the statute 'has never been defined with exactitude’ and 'must necessarily depend upon the particular circumstances of each case’ ” (Town of Harrison v County of Westchester, supra, p 263). The factors involved are often relative, not absolute, and the test may be one of degree (County of Westchester v Town of Harrison, 201 Misc 211). In Town of Harrison (supra), the Court of Appeals resorted to rather traditional language in declaring that the test of public use is whether the property is held for the benefit of "the community at large” and for the possession, occupancy or enjoyment by the public or by public agencies.
It is, of course, a fundamental rule of statutory construction that a statute is to be construed as a whole (Long Is. Trust Co. v Porta Aluminum Corp., 44 AD2d 118) and that all parts thereof are to be construed together in order to determine legislative intent (Gaden v Gaden, 29 NY2d 80). Analysis of article 4 of the Real Property Tax Law in accordance with these tenets of construction reveals a consistent and intelligible legislative scheme composed of a progression from the broadest of exemptions based on ownership alone to a narrower exemption for municipal corporations based on ownership and public use and ultimately to the most restrictive exemptions which require that the use be exclusively for that purpose for which the entity claiming the exemption was *601established. Thus, article 4 provides a tax exemption for property owned by: the United States, unless otherwise provided by the laws of the United States (§401, subd 2); the State of New York, unless otherwise provided in title 2 of article 5 of the Real Property Tax Law (§404); and school districts and boards of co-operative educational services (§ 408), without restriction as to use. The statute then exempts property belonging to a municipality within its corporate limits only if the property is "held for a public use” (§ 406, subd 1, the section in current controversy), and property owned by a special district if the land is within the district’s boundaries and is "used exclusively for the purpose for which such district was established” (§ 410; see People ex rel. Bd. of Comrs. for Improvements on Great Chazy Riv. v Sancomb, 259 NY 1). Under section 412 the exempli status of property belonging to a public authority is such "as may be provided” in the Public Authorities Law which generally provides that such property is exempt to the extent that it is used in carrying out a corporate purpose (see Erie County Water Auth. v County of Erie, 47 AD2d 17). Section 416 provides that real property belonging to the United Nations is exempt if used exclusively for headquarters for carrying on its functions, and property belonging to foreign governments is exempt if used exclusively for offices or quarters for such government’s representatives and their staffs (§ 418). Finally, under section 421, property belonging to a nonprofit organization is exempt to the extent the property is used exclusively for carrying out the purpose of the organization.
The majority’s construction of "held for a public use” is so narrow that on the basis of its reasoning the exemption of municipal property would only be proper if the property were utilized primarily for the benefit of local inhabitants or for an exclusively municipal purpose. In essence, the majority is maintaining that despite the various gradations of use listed in article 4, the Legislature really meant "municipal” when it utilized the word "public” in subdivision 1 of section 406. The distinction in terms has a long statutory and jurisprudential history, however. Not only does the State Constitution refer to county, city, town and village purposes (see NY Const, art VIII, § 2), but the principle that a "public purpose” is broader in scope than a "municipal purpose” has been expressed in numerous cases (see, e.g., Grimm v County of Rensselaer, 4 NY2d 416; Matter of Tobin v La Guardia, 290 NY 119; Hesse *602v Rath, 249 NY 436). At the same time that it finds the two terms indistinguishable, the majority seems to be attributing a very narrow construction to "municipal purpose” by tying the persons benefited directly to those who carry the tax burden. The Court of Appeals seemed more liberal in Grimm v County of Rensselaer (supra), where a community college was held to be operated for a county purpose despite the fact that two thirds of the student body resided outside of the county.
The qualification that municipal property is exempt only if used for "municipal purposes” is not unique and is to be found in other jurisdictions (see, e.g., State ex rel. Harper v McDavid, 145 Fla 605; Chadwick v City of Crawfordsville, 216 Ind 399; City of Norfolk v Board of Supervisors of Nansemond County, 168 Va 606). The Legislature’s failure to resort to such terminology in subdivision 1 of section 406 of the Real Property Tax Law is a clear reflection of its intent to permit tax exemption of municipal facilities utilized for the benefit of the broad public at large.
In former years, the judicially declared dichotomy between governmental and proprietary uses served as a convenient method of determining whether property was held for a public use (see, e.g., Lloyd v City of New York, 5 NY 369; Bailey v Mayor, 3 Hill 531; Wilson & Co. v City of New York, 73 NYS2d 206, affd 276 App Div 755, mot for lv to app den 276 App Div 894; Matter of County of Westchester v Rizzardi, 39 Misc 2d 820, affd 22 AD2d 808; Clark v Sprague, 113 App Div 645). The distinction, much criticized as archaic (cf. County of Nassau v South Farmingdale Water Dist., 62 AD2d 380), now seems to have been abandoned in favor of other approaches under which revenue producing functions sponsored by commercial interests may be encompassed by the term "public use.” In both Matter of County of Erie v Kerr (49 AD2d 174 [Rich Stadium]) and Matter of Dubbs v Board of Assessment Review of County of Nassau (81 Misc 2d 591 [Nassau Veterans Memorial Coliseum]), municipal facilities leased to private commercial interests for the showing of major league sporting contests, cultural events, public exhibitions and the like were declared to be held for public use despite the fact that the primary beneficiaries were the owners of major league sports franchises. Nevertheless, the rationale of Erie and Dubbs is not difficult to accept—the uses involved provided a means of meeting the recreational needs of the residents of the locality *603whose facilities were utilized and thus the benefit flowed to those who carried the tax burden.
The majority declares further, however, that "increasing the tax burden on the paying taxpayers cannot be legally justified where the latter do not themselves obtain benefit from the use of the tax exempt property.” To support this position, the majority cites to the situation which existed in this State in the 19th century when municipal property located outside the corporate limits was held exempt and not subject to taxation by the municipality in which it actually was located. Prior to an amendment in 1896 to the Tax Law which added the restriction that only municipal property "within its corporate limits” could be exempt (L 1896, ch 908), it was routinely ruled that municipal property owned outside corporate limits was entitled to an exemption, if held for a public purpose; the hardship on the taxpayers of the host municipality was deemed immaterial (see People ex rel. Mayor of City of N. Y. v Board of Assessors of City of Brooklyn, 111 NY 505; City of Rochester v Town of Rush, 80 NY 302). The 1896 amendment was intended to remedy an injustice, not present here, resulting from one municipality acquiring property outside its corporate limits and having it qualify for the statutory "public use” tax exemption when it was to be used solely for the benefit of its own taxpayers (see People ex rel. City of Amsterdam v Hess, 157 NY 42).
The pre-1896 analogy is hardly relevant to the national service provided by the Holtsville facility. By its holding, the majority has moved a considerable distance toward revival of the outmoded distinction between governmental and proprietary uses, albeit in a modified form which renders governmental uses proprietary and vice-versa. Thus the fact that the primary pecuniary benefit flows to private interests becomes insignificant if local recreations or cultural needs are met by use of the municipal facility. But from that position—for which Erie and Dubbs provide some authority—the majority has proceeded to its unsupported conclusion that where exemption from municipal taxation is concerned (1) the size of the public is a determinative factor, and (2) the greater the number of persons served in comparison to the number of local residents, the less "public” is the use. By this reasoning, a use is nongovernmental or proprietary if the municipality derives revenue from it and if the number of local people served by the use of a municipal facility is dwarfed by the *604total number served. Therefore, even if the function performed is the basic governmental one of collection of the Nation’s taxes, it is proprietary in nature, and the property in which the activity takes place cannot be exempted from taxation. There is no evidence that the Legislature ever intended its selection of the words "public use” in subdivision 1 of section 406 of the Real Property Tax Law to receive such a contorted construction.
Finally, the majority’s conclusion is at variance with that enunciated by the Legislature with reference to the very facility at current issue. The acquisition, construction, and leasing of the Holtsville facility to the United States by the town was recognized by the Legislature "as performing an essential governmental and town function and these public purposes are hereby found and declared to be town purposes and town uses” (L 1970, ch 972). While this special legislative act "cannot in and of [itself] grant tax exemption, [it is], nonetheless, valid indicia of legislative intention” (see Matter of County of Erie v Kerr, 49 AD2d 174, 179, supra) and is entitled to respect since it relates to a situation of which the Legislature was aware (cf. Matter of New York City Housing Auth. v Muller, 270 NY 333).
I conclude that the use of the Holtsville property reflects the requisite "coalescence of public ownership and public use” (see Jersey City v Jersey City Parking Auth., 138 NJ Super 442, 444, affd 71 NJ 492) within the meaning of subdivision 1 of section 406 and, therefore, the exemption was correct. Accordingly, I dissent and vote to affirm the judgment dismissing the complaint.
Gulotta and Cohalan, JJ., concur with Shapiro, J.; Suozzi, J. P., and Lazer, J., dissent and vote to affirm the judgment, with separate opinions; Suozzi, J. P., concurs in the dissenting opinion of Lazer, J.
Judgment of the Supreme Court, Suffolk County, dated December 20, 1977, modified, on the law, by deleting the first and third decretal paragraphs thereof and substituting therefor a provision awarding plaintiffs, in their individual capacity, judgment to the extent of declaring that the subject property is not exempt from real property taxation, in accordance with the opinion herein. As so modified, judgment affirmed, without costs or disbursements.