Religious Educ. Ass'n v. City of New York

• Decision Date: 23 December 1983
• Citation: 123 Misc.2d 786,472 N.Y.S.2d 533
• Court: New York Supreme Court
• Parties: RELIGIOUS EDUCATION ASSOCIATION and Yeshiva & Mesivta Torah Temimah, Inc. v. The CITY OF NEW YORK.

Page 533

472 N.Y.S.2d 533

123 Misc.2d 786

RELIGIOUS EDUCATION ASSOCIATION and Yeshiva & Mesivta Torah Temimah, Inc. v. The CITY OF NEW YORK.

Supreme Court, Special Term Kings County, Part I.

Dec. 23, 1983.

Goldburd & McCone, New York City, for plaintiffs.

Frederick A.O. Schwarz, New York City, for City of New York.

MEMORANDUM

JAMES H. SHAW, Jr., Justice.

Plaintiffs, concededly tax exempt religious and educational corporations, move for summary judgment to cancel as tax liens, the taxes assessed against premises 567 Ocean Parkway, Brooklyn (567 Building), owned by plaintiff Religious Education Association (Association) for the tax years of 1975/76, 1977/78, 1978/79, 1979/80 and 1980/81 or in the alternative, partial summary judgment for all of the above tax years except for the years 1977/78 and 1978/79.

The basic facts are not disputed. Plaintiffs have a common board of directors and officers. Plaintiff, Yeshiva & Mesivta Torah Temimah, Inc. (Yeshiva) maintains and conducts a parochial school at 555 Ocean Parkway, Brooklyn (555 Building). Said premises had been and presently still are exempt from realty taxes. Plaintiff Association acquired the adjoining premises, the 567 Building, a two-family house, on September 5, 1974. Initially said premises appear to have been fully used by plaintiff Yeshiva as a workshop and storage of books. Thereafter, and on July 1, 1977 to December 31, 1978 plaintiff Association commercially rented the first floor of said premises and left to plaintiff Yeshiva the use of the second floor.

It is alleged by the City that alterations of 567 Building "were begun to convert the property to offices for the use of the adjacent school, but were suspended due to lack of funds. In the meantime, it was used in part for storage of school supplies, and in part for a students' workshop, except for a period from July 1, 1977 to December 31, 1978 * * * [the period of the rental * * * When the alterations were resumed in 1980, it was * * * [converted] into a dormitory for students of the school instead of offices. This work was thereafter completed and, commencing in 1981, the entire premises had been used as a students' dormitory. [Association] does not receive any rent from such use of its property by the Yeshiva." (City's--Walla aff., p. 2, pp 3, 4).

The City denied tax exemption to the 567 Building for the year 1975/76 but did grant tax exemption for the year 1976/77 and thereafter revoked tax exemption for years 1977/78 through 1980/81, upon the ground that the alteration work had been suspended and the property was not being used for exempt purposes. "However, exemption was again granted for 1981/82 and 1982/83 upon completion of the alterations and use of the property as a students' dormitory" (Walla aff., p. 3).

This court will not at this late date consider plaintiff's application to review the denial of tax exemption for the tax year 1975/76. The mere ownership of realty by a tax exempt organization does not ipso facto entitle it to remission of realty taxes on the property. The determinative factor is the use or non-use of the property (see People ex rel. Blackburn v. Barton, 63 App.Div. 581, 71 N.Y.S. 933; People ex rel. Missionary Sisters of Third Order of St. Francis v. Reilly, 85 App.Div. 71, 83 N.Y.S. 39, affd. 178 N.Y. 609, 70 N.E. 1107). Upon the denial of plaintiff's application, either for valid or invalid reasons, plaintiffs should have then contested such denial, and not in this action. Neither of the parties has submitted to this court the record of the proceedings for tax exemption for the year 1975/76, so that this court may have some basis on which to rule, even as of this late date, on whether it has authority to consider the validity of the denial of tax exemption for the year 1975/76. Accordingly, that phase of plaintiffs' motion is denied.

With respect to the other tax years, the court holds that it has proper jurisdiction and authority to rule thereon. Since different statutes and principles of law apply to the subsequent tax years in question, each year will be considered and determined separately.

For the tax years 1977/78 and 1978/79, the City revoked tax exemption because "Occupancy of a portion by a commercial tenant * * * disqualified the portion so used for exemption * * * and the property was qualified, at most, for a partial exemption by reason of the use of, or alterations to make use of, the remaining portion for religious and educational purposes" (Walla aff., p. 4). The contention of the City is "Under these circumstances, the taxes were not void, but merely erroneous. Correction could have been obtained only by timely application * * * " (Walla aff., p. 4). Plaintiffs, on the other hand, contend that the exemption portion could not be taxed by the City; that the City failed to give the necessary notice of revocation of exemption, and that in any event the City's revocation "would only apply to 1978/79 and not to 1977/78 since plaintiffs were not renting the premises on the taxable assessment date for 1977/78, to wit, January 25, 1977" (Goldburd aff., p. 4).

For sequential clarity, the court will consider plaintiffs' contentions in their inverse order.

The contention that the revocation would only apply to the tax year 1978/79 is in this court's judgment in contravention of the spirit and rationale of section 494 of the Real Property Tax Law (RPTL).

Section 494 RPTL provides that in a City having a population of 1,000,000 or more (New York City) a transfer of "title to or possession of property which is exempt from taxation, such property shall immediately become subject to taxation and shall be taxed pro rata for the unexpired portion of the taxable year." While the statute refers to a transfer of title or possession of the property (the entire property), nevertheless, its application, particularly in large cities, where notice of a change of "possession" is not readily discoverable and where the properties may be multistoried or cover extensive areas, the City should be protected against a non-disclosure and loss of taxes. The court disallows plaintiffs' claim for exclusion of part of the tax year of 1977/78.

With respect to the failure of the City to give the statutory notice (sects. 1511 and 1512 of the New York City Charter) of its revocation of tax exemption and the imposition of 100 percent of the realty tax, the City contends that the notice is required only on an increase of tax assessment and not on a revocation of tax exemption, be it in whole or part. Again, this court will indulge in...