Discussion

Real Property Tax Law § 420-a establishes a mandatory tax exemption for real property of nonprofit corporations. To qualify for exemption under section 420-a, a party must demonstrate first, that the nonprofit corporation is "conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes, or for two or more such purposes" and second, that the property is "used exclusively for carrying out thereupon one or more of such purposes" (RPTL 420-a [1]). Where the property for which exemption is being sought is unimproved, as it is here, and, therefore, not being used to further any of the enumerated objectives, it is still possible for nonprofit organizations to receive tax exemption for their land. Section 420-a (3) of the Real Property Tax Law provides, in pertinent part:

"Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association * * *"

(RPTL 420-a [3] [emphasis added]).

To demonstrate that the improvements are in "good faith contemplated" within the meaning of section 420-a, the applicant seeking an exemption must have "concrete and definite plans for utilizing and adopting the property for exempt purposes within the reasonably foreseeable future" ( Congregation K'hal Torath Chaim, Inc. v Town of Ramapo, 72 AD2d 804, 805 [2d Dept 1979] [citing 4 Ops Counsel of State Bd of Assessors No. 52, p 90 [1975]; see also 10 Ops of Counsel NY Real Property Services Office No. 72 [1998]; Economic Opportunity Commn. of Nassau County, Inc. v Village of Hempstead, 148 AD2d 570, 572 [2d Dept 1989]).

The parties dispute whether Legion's improvements were in good faith contemplated to facilitate the religious use of the property. Legion argues that an application for a special use permit, while at times a relevant factor in determining good faith, cannot properly be made a prerequisite to real property tax exemption under section 420-a (3)(a). The Town contends that Legion's failure to apply for a special use permit for the relevant tax years -- 1997 through 2001 -- refutes any claim that it had "a concrete or definite plan" to develop the property for religious institutional purposes. It further argues that Legion's intended use of the property was illegal absent a special use permit and, therefore, Legion was barred from tax exemption. While generally tax exemption statutes must be construed against the taxpayer, they should not be so narrowly interpreted as to defeat their settled purpose to encourage, foster and protect religious institutions as a public benefit ( see Matter of Yeshivath Shearith Hapletah v Assessor of Town of Fallsburg, , 79 NY2d 244, 249 [1992]; see also People ex rel. Watchtower Bible & Tract Socy., Inc. v Haring, , 8 NY2d 350, 358 [1960]).

The Town's reliance on Matter of Oxford Group-Moral Re- Armament, MRA, Inc. v Allen (309 NY 744 [1955][arising under the predecessor statute to section 420-a]) is misplaced. Oxford involved land that was already developed and actually being used for exempt purposes in violation of the municipal zoning law, not property that was vacant or otherwise unimproved, as is the case here. Oxford provides no support for the proposition that nonprofit organizations must acquire or apply for special permits to qualify for tax exemption on the basis of good faith. The additional requirement imposed by the Appellate Division that an applicant must possess a special use permit is also not found in section 420-a. We, therefore, reject the proposition that a special use permit is required as a condition precedent to a real property tax exemption pursuant to Real Property Tax Law § 420-a (3)(a).

An application for a special use permit may well be a factor in determining good faith. A zoning authority may look to other criteria to determine if in fact a public benefit improvement is contemplated and is the subject of concrete or definite plans. The inquiry necessarily is fact-specific. Moreover, each taxable year is distinct and separate for purposes of RPTL 420-a (3)(a) exemption eligibility. With each application for renewal, the boundaries of good faith take on new dimensions. As years pass, the taxpayer may reasonably be required to show some concrete act toward developing or otherwise improving the property to carry out the tax exempt purpose. Property must not be allowed to lie idle indefinitely at the expense of the localities and its citizens. This "landbanking" has the effect of diminishing the tax base of a locality and increasing the tax burden for schools and other municipal operations.

The Appellate Division erred in determining that the proposed use was illegal absent the acquisition of a special use permit. The court therefore did not undertake a review of the issue of "good faith contemplation" and instead concluded the principal use of the property was to be for "religious institution[al] purposes, not for worship" (303 2 at 508). The proper inquiry should have been whether the development of the property for tax exempt purposes was "in good faith contemplated." As the Appellate Division never reached that issue, we remit to it for that purpose.[1] In light of our determination, we need not consider Legion's other arguments.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the case remitted to that court for further proceedings in accordance with this Opinion. M/O Legion of Christ v. Town of Mount Pleasant No. 14 R. SMITH, J. (dissenting in part):

I agree that the Appellate Division committed an error of law in holding that the absence of a special permit barred petitioner's application for a real property tax exemption. On my view of the record, however, that error was the sole basis on which the application was or could have been denied. I therefore see no need to remit for further proceedings, and would simply grant petitioner's motion for summary judgment annulling the denial of the tax exemption.

Petitioner presented to the respondent Board of Assessment Review (BAR) and to the courts below a development plan, prepared by an outside land use planner, to use the property for outdoor religious activities, including Stations of the Cross, a Grotto of Our Lady, an Outdoor Chapel and a Rosary Path. It is not disputed that the property, if so used, would be entitled to a tax exemption, so the only possible issue is whether the proposed use was "in good faith contemplated" within the meaning of RPTL 420-a(3). I see no basis in the record for doubting that it was.

No evidence suggests, and no one has advanced the theory, that petitioner's plan for the property was a sham designed to preserve a tax exemption, and that the petitioner was in fact planning to leave the property unimproved or to develop it in some non-exempt way. The sole fact on which the BAR and the courts below relied in denying the exemption was that petitioner had not fulfilled applicable legal requirements for its proposed use -- principally, that it had not applied for or obtained a special permit. But petitioner's reason for not applying was that it did not believe a special permit to be required; in petitioner's view, the proposed use would constitute a "church or other place of worship" under the applicable zoning ordinance. Whether petitioner is right or wrong about this, its decision not to apply for a special permit does not, under these circumstances, create any doubt about its good faith in contemplating the development described in its submission.

The BAR denied a tax exemption solely because "no formal plans, building permits, special permits or other occurrences legally required to make use of the property... have been filed, applied for or undertaken." The BAR did not find the petitioner was not intending to use the property in the way it said it was, or even suggest there was any doubt about petitioner's intention. Similarly, the parties' submissions to Supreme Court contain nothing that places petitioner's good faith in doubt. Supreme Court specifically found: "whatever parts of the ... plan [submitted by petitioner] have not been completed... are contemplated in good faith."

This finding was not challenged by respondents on appeal; it was not disturbed by the Appellate Division; and it was not (and could not be) questioned in this Court. Indeed, it seems that the parties and the lower courts have operated on the assumption that petitioner's right to a tax exemption turns entirely on the issue of whether a special permit is a prerequisite to the exemption. Since we unanimously rule in petitioner's favor on this issue, I see no basis for denying summary judgment to petitioner.

Accordingly, I would reverse and grant petitioner's motion for summary judgment, and I respectfully dissent from so much of the Court's opinion as does otherwise.