N.Y. Public Authorities Law § 1174-n: Exemption from taxes, assessments and certain fees; payments in lieu of taxes

§ 1174-n. Exemption from taxes, assessments and certain fees; payments

in lieu of taxes. 1. It is hereby determined that the creation of the

authority and the carrying out of its corporate purposes is in all

respects for the benefit of the people of the state and is a public

purpose, and the authority shall be regarded as performing a

governmental function in the exercise of the powers conferred upon it by

this title and shall not be required to pay any taxes, special ad

valorem levies or special assessments upon any real property owned by it

or any filing, recording or transfer fees or taxes in relation to

instruments filed, recorded or transferred by it or on its behalf.

2. The authority may pay, or may enter into agreements with any

municipality to pay, a sum or sums annually or otherwise or to provide

other considerations to such municipality with respect to real property

owned by the authority located within such municipality and constituting

a part of its water system.

3. Any bonds issued pursuant to this title together with the income

therefrom shall be exempt from taxation. The revenues, moneys and all

other property and all activities of the authority shall be exempt from

all taxes and governmental fees or charges, whether imposed by the state

or any municipality, including without limitation real estate taxes,

franchise taxes, sales taxes or other excise taxes. For purposes of this

subdivision, the phrase "exempt from taxation" means exempt from direct

taxation in conformity with established judicial interpretation of the

tax exempt status of the obligations of the state and its agencies,

entities, authorities and political subdivisions and thus, the meaning

of such phrase is in conformity with the legislative intent expressed by

section twenty-two of chapter one hundred sixty-six of the laws of

nineteen hundred ninety-one regarding the tax exempt status of

obligations of the state and its agencies.

4. The state hereby covenants with the purchasers and with all

subsequent holders and transferees of bonds issued by the authority

pursuant to this title that the interest thereon shall be exempt from

taxation. The state further covenants with the holders of such bonds

that all revenues, moneys, and other property pledged to secure the

payment of such bonds shall at all times be free from such taxes. For

purposes of this subdivision, the phrase "exempt from taxation" means

exempt from direct taxation in conformity with established judicial

interpretation of the tax exempt status of the obligations of the state

and its agencies, entities, authorities and political subdivisions and

thus, the meaning of such phrase is in conformity with the legislative

intent expressed by section twenty-two of chapter one hundred sixty-six

of the laws of nineteen hundred ninety-one regarding the tax exempt

status of obligations of the state and its agencies.

5. Notwithstanding the above, nothing herein shall prevent the state

from assessing a tax or surcharge against the water customers based on

their water consumption, provided, however, that all such taxes and

surcharges and the authority's obligation to collect and pay such taxes

and surcharges shall be subordinate to the rights of holders of all of

the authority's bonds and notes and to the payment of principal,

premiums if any, and interest thereon.