Attorney General of New York — Opinion
Dated: August 24, 1978
REAL PROPERTY TAX LAW, § 408; EDUCATION LAW, § 403-a.
Subject to section 403-a of the Education Law, the Middletown City School District may lease real property owned by the school district and such property shall retain its status of being exempt from real property taxes during the term of the lease.
Hon. Jacob E. Gunther School District Attorney Middletown City School District
This is in response to your letter of August 3, 1978, wherein you ask whether or not real property owned by the Middletown City School District which is leased will remain exempt from real property taxes pursuant to the Real Property Tax Law during the term of the lease.
Section 403-a of the Education Law provides for the leasing of real property owned by a school district. That section provides:
Ҥ 403-a. Leasing of school property.
“1. The board of education or trustees of a school district are hereby authorized to adopt a resolution providing that specific real property of such district is not currently needed for school district purposes and that the leasing of such real property is in the best interest of the school district. The terms of such lease shall be subject to the following:
“(a) The rental payment shall not be less than the fair market rental value as determined by the board of education.
“(b) The term of the lease shall not exceed five years.
“(c) The lease may be cancelled by either party upon one year’s notice.
“(d) Upon termination, the lessee shall be obligated to restore the real property to its original condition less ordinary depreciation, provided that the school district may waive such requirement if the tenant has made improvements to such real property which may not be removed without causing substantial damage to such real property.”
So long as these restrictions are complied with a school district may lease real property owned by it.
Section 102 (10) of the Real Property Tax Law defines a municipal corporation as including counties, cities, towns, villages and school districts. Under section 406 of the Real Property Tax Law, certain qualifications are placed on the uses to which real property owned by a municipal corporation may be put and still be exempt from real property taxes; however, section 408 of that article specifically excepts school districts from the restrictions contained in section 406. Section 408 provides:
Ҥ 408. School districts and boards of cooperative educational services
“Notwithstanding any limitation contained in section four hundred six of this chapter, all real property
owned by a school district or board of cooperative educational services 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.” (Emphasis supplied.)
Thus, it is our opinion a school district may lease real property owned by it subject to the restraints contained in section 403-a of the Education Law and during the term of the lease such property will retain its status of being exempt from real property taxes pursuant to section 408 of the Real Property Tax Law.