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Conservation Update

January 28, 2008

Tax Ruling Threatens Adirondack Land Buys 


The latest threat to New York’s Forest Preserve comes not from climate change or invasive species, but from a court ruling in a case dealing with state forest lands in Western New York. 


In late 2007, in a case called Dillenburg v. New York, state Supreme Court Justice Timothy Walker issued an order prohibiting the state from making property tax payments on all lands managed by the Department of Environmental Conservation, including Forest Preserve lands in the Adirondack and Catskill Parks.  


Judge Walker immediately held in abeyance his own order pending appeals, but the ruling has caused uncertainty and apprehension for local governments and property owners in the Adirondacks and Catskills. Under the common law principle of sovereign immunity, codified in the state’s Real Property Tax Law, no municipality has the right to tax the state unless the state gives its consent. In 1885, the Legislature created the Forest Preserve, which protects public lands in the Adirondacks and Catskills. The following year, the Legislature agreed to allow Forest Preserve communities to collect taxes on these properties, the first such tax payments in state history. In 2006, New York paid an estimated $80 million on its land in the Adirondack and Catskill parks. 


Over the years, the Legislature approved other measures granting taxing authority to certain communities with substantial state property within their boundaries. Outside of the Forest Preserve, taxes are paid on most state forest lands, but not all. John C. Dillenburg III, who was then supervisor of the town of Arkwright in Chautauqua County, sued the state alleging that it did not treat all municipalities and school districts with state forest lands the same. Judge Walker agreed, citing a 1985 Court of Appeals decision: “The federal and state constitutions do not … require all taxpayers to be treated the same. They do require that those similarly situated be treated uniformly,” New York’s highest court ruled.


Judge Walker decried the entire system of taxing state land as a “hodgepodge” of state laws “devoid of any consistent rationale for taxation.” At the same time, Judge Walker recognized that state Forest Preserve payments to towns and school districts as rationally related to a legitimate state purpose.

 
Judge Walker noted that the Forest Preserve payments were justified because the large percentage of state owned land in the towns of the Adirondacks and Catskills. The court noted that small Adirondack and Catskill communities bear an expensive burden in providing emergency and other services to the many visitors to the Forest Preserve and that the Forest Preserve benefits all New Yorkers.   


Despite reaching these conclusions, Judge Walker decided to halt state tax payments for Forest Preserve lands as well as those on other DEC managed lands. According to an interview in Adirondack Explorer, Judge Walker’s law clerk Tony Scime said that Judge Walker’s decision was intended to “encompass all state lands, including the Forest Preserve.” Scime explained that the judge’s perspective was that the legislature should correct inequities in taxation, explaining “It’s a mess and the judge just thinks somebody has to get to the bottom of it.” Thus, the Forest Preserve tax payments are ensnared in a controversy over the taxability of state lands outside the Adirondack and Catskill Parks, a legal dispute that applies to less than 3 percent if the state land holdings. 


The Dillenburg decision has prompted calls by Adirondack legislators for a moratorium on additional state land purchases in the Adirondacks until the case is resolved and the legality of tax payments to towns and school districts is affirmed by appellate courts. 
ADK believes a moratorium would be premature. We believe that the portion of the decision that applies to Forest Preserve tax payments is likely to be overturned. Moreover, Adirondack and Catskill municipalities will continue to get tax payments from the state while the case makes its way through the courts. A moratorium would cost the state opportunities to purchase desirable parcels in the Adirondacks and Catskills. A moratorium would also be counterproductive, sending the message that state government lacks confidence that it will prevail in having the ruling reversed. 


A moratorium would also tie the state’s hands at a time when it has a rare opportunity to protect tens of thousands of Adirondack acres and open those lands to public recreation. In the Northwest Adirondacks, 70,000 acres owned by Lassiter Properties Inc. and Clerical Medical Investment Group are on the block. Also, the Nature Conservancy has purchased 161,000 acres from Finch, Pruyn and Company and plans to offer a substantial part of that land to the state. The state will need to move quickly to buy sensitive parcels and pay for conservation easements on others or the opportunity will pass forever. 


We have little doubt that the state appellate courts will uphold the constitutionality of the Forest Preserve payments. Hopefully, they will decide that question quickly, before they delve into the complex, yet narrow, issue in the original case.  ADK is following the legal proceedings closely and may take legal steps to ensure the continuance of Forest Preserve tax payments. 


Nevertheless, the uncertainty over the outcome of the Dillenburg case has already led some Adirondack towns to exercise their “local veto” of state land purchases. At a time when some 250,000 acres are available for state purchase for the Forest Preserve, any delay in the resolution of the Dillenburg decision could cost the hiking and paddling community priceless additions to the Adirondack and Catskill Forest Preserve.