On Friday, the Appellate Division of State Supreme Court, 4th Department, ruled in the Dillenburg Case that the state may continue to make tax payments on state-owned land. The ruling will ultimately protect the Forest Preserve, local schools and governments, and the local economy.
In December of last year New York State Supreme Court Judge Timothy Walker issued an order throwing out payments in lieu of taxes for state lands. The move threatened to have a huge impact on towns, schools, and taxpayers in the region. Town of Inlet Supervisor J.R. Risley, said his town has about 400 year-round residents, 10,000 summer residents, and that 93 percent of the land is state-owned. The ruling was expected to double the town’s tax rate. Twenty-two percent of the Saranac Lake Central School District tax levy comes from taxes on state land – the number is fourteen percent in Tupper Lake. The ruling had been stayed while awaiting appeal – it was #2 on Adirondack Almanack’s Top Stories of 2007.
“This is a major victory for those who live, work and recreate in the Adirondacks and Catskills,” said Neil Woodworth, executive director of the Adirondack Mountain Club (ADK). “The state Forest Preserve, which protects more than 3 million acres of wild lands in the Catskills and Adirondacks, is an important asset to all New Yorkers, and the fiscal burden of maintaining these lands should be shared by all New Yorkers and not fall on the shoulders of a few.”
Under the common law principle of sovereign immunity, codified in the state’s Real Property Tax Law, no municipality has the right to tax the state unless the state gives its consent. In 1886, the year after the Legislature created the Forest Preserve, lawmakers agreed to allow Forest Preserve communities to collect taxes on these properties, the first such tax payments in state history. In 2006, New York paid an estimated $80 million on its land in the Adirondack and Catskill parks.
Over the years, the Legislature expanded that taxing authority to certain communities with substantial state property within their boundaries. Outside of the Forest Preserve, taxes are paid on most state forest lands, but not all. John C. Dillenburg III, who was then supervisor of the town of Arkwright in Chautauqua County, sued the state, alleging that his community was being unfairly denied tax payments on state-owned property within its borders.
Judge Walker, decrying the system of taxing state land as a “hodgepodge” of state laws “devoid of any consistent rationale,” ordered the state to stop paying taxes on all of its lands. Judge Walker immediately stayed his own order pending appeals, and the state has continued making the tax payments, but the ruling caused uncertainty and apprehension for local governments and property owners in the Adirondacks and Catskills Parks.
The decision prompted calls for a moratorium on additional state land purchases in the Adirondacks until the case was resolved, a move that would have tied the state’s hands at a time when it has a rare opportunity to protect tens of thousands of Adirondack acres and open those lands to public recreation.
The Appellate Division in Rochester ruled that the Legislature has the discretion to waive sovereign immunity in certain cases without being subject to an “equal protection” challenge.
ADK, the Adirondack Council, the Open Space Conservancy, the Adirondack Landowners Association, the Residents’ Committee to Protect the Adirondacks, the Association for the Protection of the Adirondacks, the Catskill Center for Conservation and Development and Audubon New York filed a court brief in support of continued tax payments on Forest Preserve land. The coalition was represented by Marc S. Gerstman of Albany, former chief counsel for the state Department of Environmental Conservation.
A copy of the decision is available at http://www.courts.state.ny.us/ad4/.