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Property Taxation Without Services

BY Stewart E. Sterk
May 31, 2005

New York municipalities have often conditioned development approvals on developers' agreements to provide services ordinarily provided by the municipality. These agreements are typically silent on the tax consequences of the municipality's failure to provide services. Under what circumstances, then, can landowners challenge the municipality's power to collect taxes for services the municipality does not provide? Two cases recently decided — one by the Court of Appeals and one by the Second Department — shed light on that question.

New York towns and counties can and do fund most services by imposing ordinary real property taxes, which can be collected without regard to the benefit enjoyed by individual landowners. But the town or county can also establish a special district for a wide variety of purposes, and can finance district expenses by levying an ad valorem tax on all property within the district. (As a third alternative, the town or county can establish a special district and finance expenses by levying a special assessment proportioned to the benefit received by individual landowners — but special assessments are beyond the scope of this article).

Collard Incorporated Village of Flower Hill

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