Opinion 99 - 6


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

BONDS AND NOTES -- Revenue Anticipation Notes (issuance in anticipation of payments in lieu of taxes); (issuance in anticipation of State aid paid on transition assessments) -- Tax Anticipation Notes (issuance in anticipation of payments in lieu of taxes)

SCHOOL DISTRICTS -- Finances (issuance of revenue anticipation notes or tax anticipation notes in anticipation of payments in lieu of taxes); (issuance of revenue anticipation notes in anticipation of State aid paid on transition assessments)

LOCAL FINANCE LAW, §§24.00, 25.00; REAL PROPERTY TAX LAW, §545: A school district may not issue revenue anticipation notes or tax anticipation notes in anticipation of the receipt of payments in lieu of taxes from a public authority. A school district, however, may issue revenue anticipation notes in anticipation of the receipt of State aid payable pursuant to section 545 of the Real Property Tax Law.

You ask whether a school district may issue revenue anticipation notes in anticipation of the receipt of payments in lieu of taxes from a public authority. If not, you also ask whether the school district may issue tax anticipation notes in anticipation of the receipt of such payments. Finally, you ask whether a school district may issue revenue anticipation notes in anticipation of the receipt of "transition aid" payable under section 545 of the Real Property Tax Law.

Section 25.00 of the Local Finance Law authorizes school districts to issue revenue anticipation notes ("RANs") in anticipation of the collection or receipt of certain types of "revenue" (Local Finance Law, §25.00[b][1]). Insofar as here relevant, the term "revenue" is defined as including "taxes" and "moneys" (Local Finance Law, §25.00[a][5]). The term "taxes" is defined as "taxes other than real estate taxes" (Local Finance Law, §25.00[a][1]). The term "moneys" is defined in relevant part as "moneys to be received from the state [or] the United States government " (Local Finance Law, §25.00[a][3]). Section 24.00 of the Local Finance Law authorizes school districts to issue tax anticipation notes ("TANs") in anticipation of the collection of "taxes" levied or to be levied for a fiscal year (Local Finance Law, §24.00[a][1]).

Certain public authorities are expressly authorized or required to make payments in lieu of taxes (see, e.g., Public Authorities Law, §§1012, 1020-p[2], 1105 [3], 1296[2], 2770[1], 2796[1]; see also General Municipal Law, §858[15]; Public Housing Law, §52[3], [3-a]). Since these public authorities are generally exempt from taxation (Public Authorities Law, §§1012, 1020-p[2], 1105[1], 1296[1], 2766, 2792; see also General Municipal Law, §874[1]; Public Housing Law, §§52[3], 158), the payments in lieu of such taxation obviously are not taxes (see, e.g., Efco Products v Cullen, 161 AD2d 44, 560 NYS2d 158; County of Jefferson v City of Watertown, 30 Misc 2d 534, 241 NYS2d 339). Therefore, it is our opinion that a school district may not issue RANs or TANs on the theory that such payments are "taxes".

As to whether these payments constitute "moneys" within the meaning of section 25.00(a)(3) of the Local Finance Law, we note that it is well-established that public authorities have an existence separate and apart from the State, even though they exercise governmental functions (see Plumbing, Heating, Piping and Air Conditioning Contractors Assoc. v. New York State Thruway Authority, 5 NY2d 420, 185 NYS2d 534; see also Schulz v State of New York, 84 NY2d 231, 246 n. 4, 616 NYS2d 343, 350 n. 4). While for certain purposes a public authority may be considered an arm or agency of the State (see, e.g. Easley v. New York State Thruway Authority, 1 NY2d 374, 153 NYS2d 28), "that is far different from saying that it is the State" (Plumbing, Heating, Piping and Air Conditioning Contractors Assoc. v. New York State Thruway Authority, supra, 5 NY2d at 424, 185 NYS2d at 537). Indeed, the courts have held that bond proceeds of a public authority are not the "money of the State", nor "money under its [the State's] control" or within "the possession, custody or control of any officer, agent, or agency of the state" (see Smith v Levitt, 30 NY2d 934, 935, 335 NYS2d 687, 688). Thus, generally, moneys of a public authority are not considered to be moneys of the State. Therefore, in our view, a school district ordinarily may not issue RANs on the theory that payments in lieu of taxes from a public authority are "moneys to be received from the state" as that phrase is used in section 25.00(a)(3).

Section 545 of the Real Property Tax Law, inter alia, provides for the establishment of certain "transition assessments" whenever the State or an agency of the State, including a "State public authority", acquires real property which becomes exempt as a result of the acquisition, and the property constitutes 2% or more of the total taxable assessed valuation on the latest preceding assessment roll (Real Property Tax Law, §545[1], [7][a], [g]). Section 545 also requires the State Comptroller to pay "as state aid" amounts equivalent to the taxes levied on those transition assessments (Real Property Tax Law, §545[5]). The state aid must be paid in the manner prescribed by section 544 of the Real Property Tax Law out of "moneys appropriated by the legislature" for the payment of taxes on State-owned lands (id.). Since the amounts payable pursuant to section 545 are paid by the State Comptroller, as state aid, from moneys appropriated by the State Legislature, we believe that such amounts constitute "moneys to be received from the state" as that phrase is used in section 25.00 of the Local Finance Law and that a school district may issue RANs in anticipation of such amounts.

Accordingly, in our opinion, a school district may not issue RANs or TANs in anticipation of the receipt of payments in lieu of taxes from a public authority. It is also our opinion, however, that a school district may issue RANs in anticipation of the receipt of State aid payable pursuant to section 545 of the Real Property Tax Law.

August 24, 1999
J. Scott Greer, Esq., Attorney
Shoreham-Wading River Central School District