New York Telephone Co. v. Supervisor of Town of Oyster Bay

Ciparick, J. (dissenting).

For essentially three reasons, I respectfully dissent and would vote to reverse.

A special ad valorem levy is defined as “a charge imposed upon benefited real property ... to defray the cost, including operation and maintenance, of a special district improvement or service” (RPTL 102 [14] [emphasis added]).1 The Town of Oyster Bay imposes a number of such ad valorem levies on plaintiff New York Telephone Company (NYTC), as owner of mass properties in the Town. Indeed, NYTC itself pays several ad valorem levies that contribute to the operation and maintenance of special districts, including a sewage collection district, sewage disposal district, public parking district, lighting district, park and drainage district, and a garbage and refuse collection district. Thus far, NYTC has elected to challenge only the ad valorem levy associated with the garbage and refuse collection district within a specific geographic area.

First, the narrow interpretation that both the majority and the lower courts give to the term “benefited” is unwarranted. These levies finance varying services associated with the operation and maintenance of “special districts” (RPTL 102 [16]). These special districts are established expressly to “benefit the *396health, welfare, safety or convenience of the inhabitants of such district or to benefit the real property within such district” (RPTL 102 [16]; see also Town Law § 202 [3]). The mass properties owned by plaintiff are real property as defined by RPTL 102 (12) (d) and subject, like all other real property within the special district, to special ad valorem levies.

While telephone poles may not produce or require municipal garbage collection, the Legislature did not indicate that a direct or actual benefit was necessary to trigger this type of levy. Instead, in its definition, it required only that the property at issue be “benefited” (RPTL 102 [14]). Moreover, the validity of a tax does not “depend on the receipt of some special benefit” (O’Flynn v Village of E. Rochester, 292 NY 156, 165 [1944]; see also Memphis & Charleston Ry. v Pace, 282 US 241, 246 [1931]), and an ad valorem tax “is payable regardless of whether the property is used or not” (Ampco Print-Advertisers’ Offset Corp. v City of New York, 14 NY2d 11, 22 [1964]).

A reading of RPTL 102 (14), in conjunction with other relevant sections of both the Real Property Tax Law and the Town Law, makes clear that an ad valorem levy, by definition, requires only an indirect or general benefit to the subject property. The mass properties at issue here are cleárly benefited within the meaning of RPTL 102 (14). An ad valorem levy cannot be based on the commensurate value of services; instead, it is by definition a levy based on the value of the property itself (see RPTL 102 [14]).

By contrast, a “[s]pecial assessment” is levied in “proportion to the benefit received” (RPTL 102 [15]). This language makes clear that there must be a direct benefit supporting a special assessment. Real Property Tax Law § 102 (14), however, does not include an analogous qualification in its definition of an ad valorem levy and the majority obliterates the distinction between the two.

The majority, in requiring the subject property to receive a “direct benefit from the Town’s garbage and refuse district,” unnecessarily and unjustifiably restricts the availability of, and a town’s ability to impose, an ad valorem levy on real property located within a special district (majority op at 395). Moreover, the majority’s restrictive reading of this distinct tax provision undermines the Town’s ability to operate and maintain necessary special districts. The subject mass properties at issue here, even if not producing trash or refuse, nevertheless are part of *397the geographically designated special district that requires this relevant and necessary service. Therefore, the telephone poles, wires, cables, lines, supports and enclosures that constitute NY-TC’s mass property are part of the special district, duly constituted by the Town Board pursuant to Town Law § 194.2 As such, it is clear that this property derives a benefit from the Town’s general maintenance and operation of the district. For example, at a minimum, the Town’s removal of trash from the district preserves the value and viability of real property within the district. Clearly, a well maintained and trash-free district benefits NYTC’s mass properties.

Second, today’s decision is a significant step beyond Applebaum v Town of Oyster Bay (81 NY2d 733 [1992]). There, a covenant prohibited plaintiff owners from receiving any garbage collection services from the Town, yet the Town imposed a special ad valorem levy for garbage collection—thus requiring plaintiffs to pay twice for essential garbage collection services. Here, NYTC is only responsible for the ad valorem levy for a garbage and refuse collection district from which it derives an indirect benefit. This indirect benefit is sufficient to support the imposition of the levy.

Third, the majority looks exclusively to the nature or inherent characteristics of the subject property to determine whether any direct benefit is evident. It is inconsequential, however, that the “species of real property at issue here cannot, even theoretically, produce garbage” (majority op at 395).3 The majority attempts to limit its holding to the subject garbage collection district but fails to distinguish how its logic applies exclusively to garbage collection districts, and not to the numerous other districts that depend on ad valorem levies for their maintenance.

The property is likewise incapable of producing sewage, yet NYTC pays an ad valorem levy in support of the sewage district. *398Similarly, telephone poles and wires, for example, have no need for a public park, yet NYTC pays a distinct levy in support of this special district. The mass properties will never directly benefit from the availability of public parking in the district, or from an efficient drainage system, yet NYTC, at least thus far, willingly pays an ad valorem levy for each of these services.

In short, the majority’s reasoning invalidating this ad valorem levy, and requiring a “direct benefit” to the subject real property, has potentially far-reaching consequences, as the majority’s rule jeopardizes a traditional method of financing costs of local government.

Judges G.B. Smith, Read and R.S. Smith concur with Judge Rosenblatt; Judge Ciparick dissents and votes to reverse in a separate opinion in which Chief Judge Kaye and Judge Graffeo concur.

Order affirmed, etc.

. Black’s defines an ad valorem tax as “[a] tax imposed proportionally on the value of something (esp. real property), rather than on its quantity or some other measure” (Black’s Law Dictionary 1496 [8th ed 2004]).

. Requiring only an indirect benefit does not, as the majority suggests, render the term “benefited” meaningless (majority op at 392 n 2). To the contrary, the term is used consistently with Town Law § 194 (1) (b) which requires a finding of “benefited” property prior to establishment of the district itself. The term is used to ensure that only real property within a special district will be subject to the Town’s special ad valorem levy. Therefore, contrary to the majority’s assertion, the term is not superfluous and does not cover “every conceivable species of real property” (majority op at 392 n 2). Only real property that exists within the geographically designated special district is benefited within the meaning of RPTL 102 (14).

. There may come a time when the property itself is abandoned and becomes refuse.