Provides that when owned by a telephone company real property shall include conduits for conducting or transmitting electricity, power, light or other substance upon, above or underground

Section two of this bill provides that this act shall take effect immediately.

Justification

Paragraphs (d) and (i) of subdivision 12 of section 102 of the Real Property Tax Law describe the types of telecommunication equipment that are considered "real property" and are therefore assessable. The current definitions of assessable real property in these provisions each includes "all lines, wires, poles, supports and inclosures" used in connection with conducting electricity, but these provisions do not currently specifically mention equipment for conducting light, i.e., fiber optic technology.

Prior to 1985, real property taxation of telecommunications equipment was limited to telephone and telegraph property, such as lines, wires and poles. With the deregulation of AT&T and the emergence of new telecommunications equipment in the in mid-1980s, the Legislature amended the Real Property Tax Law to cover a wider variety of telecommunications equipment, such that telecommunications providers would be taxed on a more equitable basis. The legislative history from the 1985 amendments indicates that the changes were specifically intended to expand the definition of real property to include various emerging types of telecommunication equipment then exempted, including fiber optic equipment. See Bill Jacket for Chapter 71 of the Laws of 1985, Sponsor's Memorandum (intent of legislation to impose the real property tax "in an equitable fashion on various types of telecommunications property now exempted or not now taxed"); New York State Board of Equalization and Assessment, Report to Governor Mario M. Cuomo on the Taxation of Telecommunications Property (January, 1985) at 10, 13 (discussing fiber optic technology as one of the emerging types of telecommunications equipment to be considered in defining telecommunications equipment). Moreover, in 1985, the Legislature amended subparagraph (i) of subdivision 12 of section 102 of the Real Property Tax Law to specifically refer to the transmission of "electromagnetic voice, video and data signals," which would necessarily include fiber optic transmission, given that light is part of the electromagnetic spectrum. Finally, the definition of "special franchise" in subdivision 17 of section 102 of the Real Property Tax Law includes the right to construct, maintain or operate "mains, pipes, tanks, conduits, wires or transformers, with their

appurtenances, for conducting water, steam, light, power, electricity, gas or other substance" (emphasis added).

Nevertheless, in a 2012 opinion of the Appellate Division, First Department in Matter of RCN N.Y. Communications, LLC v. Tax Commn. of the City of N.Y., the court held that the current language of paragraph (i) of subdivision 12 of section 102 of the Real Property Tax Law does not specifically include equipment used for providing fiber optics communications services. This ruling has resulted in loss of revenue for New York City and other taxing authorities and does not comport with the Legislature's intent that both emerging and traditional telecommunications equipment be taxed.

By amending the definition of real property to include equipment used for conducting or transmitting any other type of energy or substance, this bill would clarify the intent of the Legislature to tax all telecommunications equipment (including fiber optic conductors), conform the definition of subdivision 12 of section 102 of the Real. Property Tax Law with the definition of "special franchise" in subdivision 17 of section 102 of the Real Property Tax Law, and bring the definition up to date with modem telecommunications technology. The proposed bill would also make clear that the definition is intended to be expansive as it applies to types of conductors or transmitters, covering all relevant types of conductors or transmitters, including any new type of technology going forward.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.

Legislative history

New Bill

Fiscal implications

None

Effective date

Immediately.