In the Matter of Greater Jamaica Development Corporation, et al., Respondents,v.New York City Tax Commission, et al., Appellants.BriefN.Y.June 2, 2015TO BE SUBMITTED Court of Appeals State of New York In the Matter of GREATER JAMAICA DEVELOPMENT CORPORATION and JAMAICA FIRST PARKING, LLC., Petitioners-Respondents, -against- TAX COMMISSION OF THE CITY OF NEW YORK and NEW YORK CITY DEPARTMENT OF FINANCE Respondents-Appellants, BRIEF OF THE NEW YORK STATE CONFERENCE OF MAYORS AND MUNICIPAL OFFICIALS AS AMICUS CURIAE NEW YORK STATE CONFERENCE OF MAYORS AND MUNICIPAL OFFICIALS 119 Washington Avenue Albany, New York 12210 Telephone: (518) 463-1185 Richard J. Sinnott, of Counsel 2 TABLE OF CONTENTS TABLE OF CONTENTS ................................................................................................................ 2 TABLE OF AUTHORITIES .......................................................................................................... 3 PRELIMINARY STATEMENT .................................................................................................... 4 INTEREST OF THE AMICUS CURIAE ...................................................................................... 4 ARGUMENT……………………………………………………………………………………5 I. THE APPELLATE DIVISION DECISION IN THIS CASE FAILS TO FOLLOW DECISIONS OF THIS COURT WHICH DISTINGUISH DETERMINATIONS OF TAXABLE STATUS UNDER NEW YORK'S REAL PROPERTY TAX LAW FROM SUCH DETERMINATIONS FOR OTHER TAX PURPOSES. II. WHEN THE NEW YORK STATE LEGISLATURE WISHES TO DEFER DECISION-MAKING TO ANOTHER ENTITY, SUCH AS THE INTERNAL REVENUE SERVICE, IT DOES SO EXPLICITLY. CONCLUSION…………………………………………………………………………………9 3 TABLE OF AUTHORITIES Cases 4 PRELIMINARY STATEMENT The New York State Conference of Mayors and Municipal Officials respectfully submits this memorandum of law amicus curiae in support of Respondents-Appellants Tax Commission of the City of New York and New York City Department of Finance, which seeks a ruling from the Court of Appeals reversing the Appellate Division’s decision declaring the real property of the Petitioners-Respondents (stand-alone, for-profit, commercial parking facilities) to be tax exempt as a “charitable” use under section 420-a of the Real Property Tax Law. INTEREST OF THE AMICUS CURIAE The Conference of Mayors is a not-for-profit voluntary membership association whose members include 58 of the State’s 62 cities and 525 of the State’s 550 villages, thereby representing the overwhelming majority of such municipalities. This case involves a matter of statewide concern to all cities and villages. The reasoning of the decision of the Appellate Division is contrary to prior opinions of this Court and, if the expansive definition of “charitable” adopted by the Internal Revenue Service for Federal income tax purposes as applied by the Appellate Division below to New York’s Real Property Tax Law section 420-a, is embraced by this Court, the potential fiscal liability to local governments could cripple already financially-stressed municipalities. . The Supreme Court was correct when it concluded that the City’s Department of Finance had a rational basis fro revoking the tax exemption.. This brief argues that the Appellate Division was in error when it reversed the decision of State Supreme Court and held that the Petitioner-Respondents’ operation of stand-alone, for- profit, commercial parking facilities qualifies as a “charitable” use , thereby entitling the 5 Petitioners-Respondents to an exemption from real property taxation pursuant to section 420-a of the Real Property Tax Law. Affirmation of the Appellate Division decision in this case could be financially devastating n ot only to the City of New York, but to local governments across the State by significantly expanding the scope of the non-profit exemption statute (Real Property Tax Law, section 420-a) to include ,any other profit-making commercial enterprises, which the New York State Legislature could never have intended to be the beneficiaries of such government largesse. ARGUMENT I.THE APPELLATE DIVISION DECISION IN THIS CASE FAILS TO FOLLOW DECISIONS OF THIS COURT WHICH DISTINGUISH DETERMINATIONS OF TAXABLE STATUS UNDER NEW YORK’S REAL PROPERTY TAX LAW FROM SUCH DETERMINATIONS FOR OTHER TAX PURPOSES. In Matter of the Association of the Bar of the City of New York v Lewisohn, 34 NY2d 143, while acknowledging that Bar Associations have “functions and attributes properly characterizable as educational and, to a somewhat lesser extent, as charitable” (34 NY2d, at 153), this Court opined that “decisions acknowledging the charitable or educational character of Bar Associations for other explicit and distinguishable purposes [citations omitted] are unpersuasive.”(Id.) The examples of “other explicit and distinguishable purposes” referenced by this Court included cases involving the interpretation of Federal estate tax laws (deductions), and another regarding the exemption of a “charitable corporation” from tort liability for the negligence of its administrative and non‐administrative agents and servants. 6 Two years later, this Court reached a similar conclusion in the case of Swedenborg Foundation, Inc. v Lewisohn , 40 NY2d 87. In determining that the Foundation was not organized exclusively for “charitable” or “educational” purposes within the meaning of then‐section 421 [now section 420‐a] of the Real Property Tax Law [RPTL] , this Court declared that “[n]or does the fact that the foundation has received favorable determinations from the United States Department of the Treasury as to its exempt status for other tax purposes affect the outcome [citation omitted]” ( 40 NY2d, at 95; emphasis added). Notwithstanding the unambiguous, straight‐forward language from this Court in those two cases, six years after the Swedenborg Foundation decision, the Appellate Division, Third Department, took a contrary position in Yeshiva Beth Yehuda V’Chaim D’Betlan v Town of Shandaken , 100 Ad2d 641. Apparently ignoring this Court’s opinions in both the Bar Association and Swedenborg Foundation cases, and with citation to no authority, the Third Department declared that “[p]laintiff’s averment that it is a religious corporation whose tax‐ exempt status has been recognized by the Internal Revenue Service and whose property is used solely for religious purposes has made a presumptive showing of entitlement to exemption under section 421 [now 420‐a] of the Real Property Tax Law.” (100 AD2d 642; emphasis added). That decision was cited favorable by the Third Department more recently (in 2012) in Matter of Plattsburgh Airbase Redevelopment Corp. v Rosenbaum , 101 AD3d 21, at 23, and both cases were cited favorably by the court below in the matter now before this Court. The “presumptive” link, created by the Second and Third Departments, between determinations of taxable status under New York’s Real Property Tax Law, and determinations of taxable status made by other persons or entities for 7 other taxing purposes run counter to the opinions of this Court as expressed in the Bar Association and the Swedenborg Foundation cases . Accordingly, the opinion of the Second Department , on appeal before this Court, should be reversed, and the real property should be declared to be taxable. II. WHEN THE NEW YORK STATE LEGISLATURE WISHES TO DEFER DECISION‐ MAKING TO ANOTHER ENTITY, SUCH AS THE INTERNAL RVENUE SERVICE, IT DOES SO EXPLICITLY. By chapter 47l of the Laws of 1978, the State Legislature added section 304 to the Real Property Tax Law, commonly referred to as the “Renters Real Property Tax Deduction Law”. In so doing, the Legislature attempted to create in renters an “interest” in the real property those renters occupied, such that they were made “personally liable for the taxes levied on the assessments declared for their respective units” (subd. 5 of section 304). Accordingly, assessors were directed to ‘assign an assessed valuation to each [residential] rental unit of said real property by establishing the relationship of the yearly rent for the unit to the total yearly rent”, and then applying that ratio to the assessment of the entire property, less any portion of the assessment attributable to non‐rental use (id.). The express purpose of this legislation was to create a real property tax “obligation” on each residential renter such that their “tax payments” would be considered a deductible expense for purposes of Federal income tax reporting. This was made clear in the effective date provision of the legislation (section 7 of L. 1978, c.471, as amended by L. 1982, c. 893, section 7), namely, that the act would take effect only after” the commissioner of internal revenue of the United 8 States shall issue a ruling that payments of real property taxes made by a renter with an interest in real property pursuant to [ subd. 2 of section 304 of the RPTL] with respect to such interest, will be deductible by such renter pursuant to [section 164 (1)(a) of the Internal Revenue Code of 1954]…”. Subsequently, in Revenue Ruling 79‐180, the Internal Revenue Service concluded that this real property tax “imposed” on renters by the State of New York was not deductible item for renters under section 164 of the Internal Revenue Code, because section 304 of the Real property Tax Law did not relieve the property owner of the obligation to pay the taxes due on the property (whether the renters paid their share of the bill or not) or vitiate the sale of the real property for non‐payment of the taxes. Nonetheless, for purposes of the case now before this Court, it should be apparent from the condition included in the effective date clause of the “Renters Real Property Tax Deduction Law “ that when the State Legislature intends to defer statutory interpretation to another entity , such as the Internal Revenue Service (IRS), it does so using specific and explicit language. To the contrary, the opinion of the Appellate Division, Second Department in the matter now before this Court reaches the conclusion that an IRS determination of the taxable status of an organization or corporation is “presumptive evidence of entitlement to exemption” for the same entity under New York’s Real Property Tax Law. There is, however, no statutory basis for this conclusion, only the unfounded opinions of the Third Department and, in this case, that of the Second Department. As this Court has said in another real property tax exemption context, “if the Legislature had intended to provide a blanket real property tax exemption for local development corporations, it would have done so expressly, as it has in 9 other contexts…” (Matter of Lackawanna Community Development Corp v Krakowski , 12 NY3d 578, at 581). In the same vein, it does not seem unreasonable to assume that had the State Legislature intended IRS determinations of taxable status for Federal income tax purposes to be binding on all assessors in New York State, it would have done so in express terms in section 420‐a of the Real Property Tax Law. CONCLUSION For the foregoing reasons, the Amicus respectfully requests that this Court reverse the Appellate Division’s decision and declare the property in question to be taxable real property. Dated: Albany, New York December 16, 2014 Respectfully Submitted, Richard J. Sinnott, Esq. Counsel to the New York State Conference of Mayors and Municipal Officials 119 Washington Avenue Albany, New York 12210 Telephone: (518) 463-1185 10 AFFIDAVIT OF SERVICE STATE OF NEW YORK) ss: COUNTY OF ALBANY) Ursula Cook, being duly sworn deposes and says: I am not a party to this action, am over the age of eighteen and reside at 1305 Cullen Avenue, Schenectady, New York 12309. On the 16th day of December, 2014, I served three copies of the annexed Proposed Brief by The New York State Conference of Mayors and Municipal Officials For Leave To File A Brief As Amicus Curiae and Supporting Affirmation on each of the parties listed below in the case Greater Jamaica Development Corporation and Jamaica First Parking, LLC., v Tax Commission of The City of New York and New York City Department of Finance, Queens County Index No. 21215/11, Appellate Division: Second Department. I served the papers on plaintiffs-respondents by dispatching them by overnight delivery service, Federal Express, enclosed in a properly addressed wrapper. The papers were deposited into the custody of the overnight delivery service prior to the latest time designated by the overnight delivery service for overnight delivery addressed to plaintiffs-respondents’ last known address listed below. I served the papers on defendants-appellants by dispatching them by overnight delivery service, Federal Express. The papers were deposited into the custody of the overnight delivery service prior to the latest time designated for overnight delivery by the overnight delivery service addressed to defendants-appellants’ last known address listed below. MANATT, PHELPS AND PHILLIPS, LLC. Attorneys for Petitioners-Respondents Seven Times Square New York, New York 10036 Telephone: (212) 790 – 4500 ZACHARY W. CARTER, ESQ. Corporation Counsel of the City of New York Attorney for Respondents-Appellants 100 Church Street, Room 5-231 New York, New York 10007 Telephone: (212) 356-2133 11 Ursula Cook Sworn to before me this day of December, 2014