We're Empire State Development Corp (formerly UDC), and our subsidiary Queens West Development Corporation is redeveloping the Hunters Point waterfront in Queens. A private developer will borrow from outside lenders, and our subsidiary will be named mortgagee before assigning its interest to the lenders -- with the mortgage likely severed, split, and refinanced many times as multiple parcels are built out over years. Is all of that exempt from mortgage recording tax?

Plain-English summary

New York State Urban Development Corporation (UDC), doing business as Empire State Development Corp., is a "corporate governmental agency" of the state, constituting a political subdivision and public benefit corporation. In 1989, UDC joined the City of New York, the NYC Economic/Public Development Corporation, and the Port Authority as "Public Sponsors" of a plan to redevelop a roughly 94-acre waterfront tract in the Hunters Point section of Queens (the "Queens West" project) — envisioning millions of square feet of residential, office/hotel, and retail space plus public facilities. In 1992, UDC created a subsidiary, Queens West Development Corporation (QWDC), with UDC as majority shareholder and the City/EDC/Port Authority as minority shareholders, to implement the project across four development stages.

For Stage III (seven parcels), QWDC will ground-lease sites to a private developer, who will construct residential buildings, a public school, and parking, and contribute to public infrastructure. The developer will borrow from outside lenders to fund construction, secured by mortgages against its LEASEHOLD interest — QWDC's own fee interest will not be encumbered. QWDC will be named mortgagee (alone or with the lenders) and will record the mortgage(s), even though all economic rights inure to the lenders, to whom QWDC will assign its recorded interest afterward. The same pattern repeats if the developer incurs additional costs requiring further mortgages. Over the following years, the mortgages may be severed and split into substitute mortgages, further supplemented, converted from construction to permanent financing, refinanced between lenders, reassigned to new mortgagors, and — if a lessee later exercises a purchase option — even converted from a leasehold mortgage into a fee mortgage.

Article 11 of the Tax Law (§ 253) taxes mortgage recording, and § 252 doesn't provide UDC a specific statutory exemption on its own terms — but the UDC Act (Unconsolidated Laws) fills that gap on two levels. First, § 6254(1) makes UDC itself "a corporate governmental agency of the state, constituting a political subdivision and public benefit corporation," triggering the well-established common-law immunity for state agencies (Hotel Waldorf-Astoria Corp. v. State Tax Commission; Matter of Hamilton). Second, and more specifically here, § 6262(2) provides that a UDC SUBSIDIARY like QWDC has "all the privileges, immunities, tax exemptions and other exemptions" of UDC itself, and § 6272 separately declares that UDC and its subsidiaries "shall not be required to pay any taxes... of any kind" and "shall at all times be free from taxation of every kind" by the state and its political subdivisions. Because a later, more specific enactment governs an earlier general one on the same subject (Williamsburgh Power Plant Corp. v. City of New York), and the UDC Act's 1968 exemption postdates the 1909 mortgage recording tax provisions, this exemption prevails. UDC's power to make mortgage loans also implies power to record mortgages, since Tax Law § 253 taxes the recording PRIVILEGE, not the mortgage as property. And courts have applied the UDC Act's exemption liberally: in Wein v. Beame, the Court of Appeals upheld UDC's real property tax exemption even against a "straw man" argument, in a deal where UDC bought a hotel for one dollar and leased it right back to the seller — the court refused to police UDC's motives or degree of active participation.

Based on all of this, the Department concluded mortgage recording tax is not due on any mortgage recorded in connection with the Project, as long as UDC or QWDC is named mortgagee and presents the mortgage for recording. And as with the parallel Battery Park City Authority and RIOC opinions, later assignments, supplements, modifications, or amendments remain exempt as long as the secured principal debt doesn't increase; if it does, tax applies only to that increase.

What this means for you

UDC/Empire State Development Corp. subsidiaries structuring project-specific financing vehicles

A UDC subsidiary created to implement a specific redevelopment project inherits UDC's own tax immunity and mortgage-recording-tax exemption by statute (§ 6262(2)) — you don't need to separately establish common-law state-agency immunity for the subsidiary itself.

Private developers and lenders on Empire State Development Corp.-sponsored waterfront and urban redevelopment projects

The pass-through mortgagee structure here — near-identical to Battery Park City Authority's (TSB-A-02(2)R) and RIOC's (TSB-A-01(5)R, TSB-A-09(1)R) — is a well-established financing pattern across multiple New York State development authorities; confirm the subsidiary/authority remains a named party through each later mortgage modification to preserve the exemption.

Common questions

Q: Does the exemption require UDC itself to be a party, or is the subsidiary's own name enough?
A: The subsidiary's own name is enough — § 6262(2) of the UDC Act expressly extends UDC's exemptions to its subsidiaries, so QWDC doesn't need UDC itself to be a co-mortgagee.

Q: Does the exemption survive a leasehold mortgage later converting to a fee mortgage (if a lessee exercises a purchase option)?
A: The opinion describes this conversion scenario as part of the ordinary course of these financings; the same supplemental-mortgage/no-increase-in-debt analysis under Tax Law § 255 would govern whether that conversion itself triggers new tax.

Q: Can other UDC subsidiaries or development projects rely on this specific opinion?
A: No. It binds the Department only as to this petitioner and these facts, though the reasoning mirrors the Department's established, consistent treatment of UDC/ESDC and its subsidiaries, RIOC, and Battery Park City Authority.

Citations and references

Statutes and regulations:

• Tax Law § 253 (mortgage recording tax on real property mortgages)
• Tax Law § 250(2) (increases in secured indebtedness deemed a taxable mortgage)
• Tax Law § 252 (no exemption by reason of any other statute, absent later specific enactment)
• Tax Law § 255(1)(a) (supplemental mortgage exemption where no new/further indebtedness)
• Unconsolidated Laws § 6254(1) (UDC as a corporate governmental agency, political subdivision, public benefit corporation)
• Unconsolidated Laws § 6262(2) (UDC subsidiaries inherit UDC's privileges, immunities, and tax exemptions)
• Unconsolidated Laws § 6272 (UDC and subsidiaries free from taxation of every kind by state/local government)
• Unconsolidated Laws § 6283 (UDC Act controls over inconsistent other laws); § 6284 (liberal construction mandate)

Case law and prior opinions cited:

• Matter of Hamilton, 148 N.Y. 310 (state/municipal property for public purposes not subject to taxation)
• Hotel Waldorf-Astoria Corp. v. State Tax Commission, 86 A.D.2d 330 (common-law state-agency immunity doctrine)
• Wein v. Beame, 43 N.Y.2d 326 (liberal interpretation of UDC's tax exemption; "straw man" ownership arguments rejected)
• Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214, aff'd 280 N.Y. 551 (later specific enactment governs earlier general enactment)
• Franklin Society for Home Building and Savings v. Bennett, 282 N.Y. 79; Matter of Silberblatt, Inc. v. Tax Comm., 5 N.Y.2d 635 (MRT taxes the recording privilege, not the instrument)
• City of New York v. State Tax Commission, 130 A.D.2d 890 (supplemental mortgage treatment under § 255)
• New York State Urban Development Corp., TSB-A-93(4)R (March 10, 1993) (UDC common-law and statutory immunity)
• One Park Place Associates, TSB-A-82(1)M (May 24, 1982) (industrial development agency legal-title mortgages exempt)

Related opinions (same statutory framework, different projects):

• TSB-A-01(5)R (May 23, 2001) (RIOC Southtown Project, successor UDC entity, nearly identical pass-through mortgagee structure)
• TSB-A-02(2)R (June 5, 2002) (Battery Park City Authority, parallel co-mortgagor structure)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a02_6r.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M021025A

On October 25, 2002, a Petition for Advisory Opinion was received from New York State
Urban Development Corporation d/b/a Empire State Development Corp., 633 Third Avenue, 34th
Floor, New York, New York 10017.
The issues raised by Petitioner, the New York State Urban Development Corporation d/b/a
Empire State Development Corp., are:
(1) Whether the taxes imposed by Article 11 of the New York State Tax Law and Chapter
26 of the New York Administrative Code (collectively, the "mortgage recording tax") are
due upon the recording of any mortgage of property (including, without limitation, leasehold
estates) that is part of Hunters Point (Queens West) Waterfront Development Use
Improvement Project (the "Project") when (a) Queens West Development Corporation
(“QWDC” as hereinafter defined) is either the sole named mortgagee (whether as trustee,
agent, nominee or otherwise) or a co-mortgagee (whether or not a private entity is the other
co-mortgagee(s)); (b) QWDC records the mortgage; (c) the loan funds secured by the
mortgage are provided by one or more persons or entities other than QWDC; and (d) the
mortgage is entered into in furtherance of the Project including, without limitation, use of
the loan proceeds for Project development costs incurred by parties other than QWDC in
furthance or in respect of the project (hereinafter "Development costs") or to reimburse
parties (including QWDC) for any such Development costs.
(2) Whether the mortgage recording taxes are due upon the recording of the applicable
instrument or otherwise if the mortgage is supplemented or if the mortgage so supplemented
is thereafter from time to time supplemented to the extent that the then outstanding principal
indebtedness (and/or an unfunded principal portion thereof to the extent the same constitutes
or will constitute a bona fide debt) secured by or to be secured by the mortgage (or any
resulting substitute mortgage ) is not increased, or, if increased, mortgage recording tax is
to be imposed only with respect to any increase in the amount of secured indebtedness, and
then only if the mortgage is not exempt because of issue 1 and mortgage recording tax would
otherwise have been required to be paid on such additional indebtedness.
Unless the context otherwise requires, references in this Opinion to Petitioner includes
Petitioner and its subsidiaries and affiliates and entities in which Petitioner and/or its subsidiaries
and affiliates participate, including, without limitation the Queens West Development Corporation,
and their successors. "Development costs" as used in this , shall include, without limitation, all
"hard" and "soft" costs with respect to the Project in respect of acquisition, demolition, construction,
maintenance, repair, and rehabilitation, abatement and remediation, all carrying costs, loan fees,

-2­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
acquisition and construction period interest, start-up expenses, and all related costs, fees, charges
and expenses, including contributions and/or other obligations to or associated with the cost of
planning, implementing, developing or carrying the Project, until it has been finally completed.
"Supplemented" , “supplementation” and "supplement" as used in this Opinion, shall include,
without limitation, any assignment, consolidation, substitution, severance, splitting, restatement
modification, amendment, spreader and/or extension.
In 1989, a Memorandum of Understanding was entered into among Petitioner, the New York
City Public Development Corporation (now the New York City Economic Development
Corporation) ("EDC"), The City of New York (the "City") and the Port Authority of New York and
New Jersey (the "PA") (collectively, Petitioner, EDC, the City and the PA, being referred to as the
"Public Sponsors"). The Memorandum of Understanding provided for the comprehensive
redevelopment of an approximately 94-acre tract of land (including lands under water) along the
East River in the Hunters Point section of Queens County, New York (the "Project site"). The
Project site is generally bounded as follows: (a) on the North by the Anable Basin; on the West by
the U. S. pierhead line; (c) on the South by Newtown Creek; and (d) on the East by 5th Street from
the Anable Basin to 49th and 50th Avenues, then by 2nd Street between 50th Avenue and Newtown
Creek. The Project site also includes a strip of land from 5th to 21st Streets comprising 48th Avenue
plus an unused railroad cut on a portion of which has been constructed the Hunters Point
Community Park. In 1990-91, the Petitioner adopted a General Project Plan for the Project. The
Plan includes approximately 6.4 million square feet of residential space, 2.4 million square feet of
office/hotel space, 225,000 square feet of retail space and 115,000 square feet of public facilities.
In 1992, Petitioner, with the agreement of the City, EDC and the PA, created a subsidiary, called
QWDC, for the purpose of implementing the Project. Petitioner is the majority shareholder in
QWDC and EDC and the PA are minority shareholders.
The principal goal of the Project is to remove the substandard and unsanitary conditions that
currently impede effective and economic use of the Project site and to replace these conditions with
a viable development consisting of residential, commercial, cultural and recreational facilities and
providing public access to the waterfront. The Project also seeks to implement a range of public
policy objectives including:
(1) The expansion and reinforcement of the boroughs of New York City outside of
Manhattan as feasible alternate locations to Manhattan for development.
(2) The creation of commercial sites with large floor plates for businesses which, but for the
availability of such sites, would leave the City or State of New York for other locations.
(3) The recognition of historical prominence of the Project site as the symbolic "gateway"
to Queens and creation of a new image for and access to the water's edge for use by
residents, employees and visitors.

-3­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
(4) The creation of a new mixed-use neighborhood, including a significant expansion of the
City's housing stock.
(5) The expansion of the City's tax base by opening underdeveloped areas, generating new
employment and business opportunities, and increasing potential revenue generation.
(6) The creation of a significant public open space that opens the Queens waterfront to
passive recreational uses for the use of all people, through the provision of a continuous
publicly accessible waterfront esplanade.
The Project is intended to be implemented in four stages. The Stage I and II development
areas comprise the northern end of the Project site and will be developed primarily for residential
use. A portion of these residential units have been set aside for low, moderate, and middle-income
households, the elderly and residents of local community board districts. The Stage III area is
located at the southern end of the Project site and also will be developed primarily for residential
use. The Stage IV development area, located in the southern central portion of the Project site, will
form a commercial core. All four development areas will include open space for public recreational
and/or community uses.
QWDC has entered into ground leases for the four development parcels comprising Stage
I of the Project. Pursuant to these leases, two high-rise residential buildings have been completed
as well as two community parks and other publicly accessible open space.
QWDC designated a developer (together with its affiliates or designees, the “Developer”)
for all seven development parcels comprising the Stage III area. Pursuant to agreements to be
entered into between QWDC and the Developer, QWDC will lease the parcels to the Developer and
the Developer will construct residential buildings (a portion of which shall contain retail space), a
public school, and/or parking areas in accordance with Petitioner’s General Project Plan and design
guidelines. The Developer will also make a contribution toward the development of the Project site
including the creation of open space for public recreational and/or community uses and the
installation of the infrastructure for the site. Payments under leases inure to the benefit of QWDC
(and through QWDC to the Public Sponsors).
The documents to be entered into between QWDC and the Developer will provide for an
exemption from sales taxes on construction materials, from real estate taxes and from any mortgage
recording tax. The Developer is required, however, to make certain payments to and/or on behalf
of QWDC in lieu of sales, real estate and mortgage recording taxes, which will inure generally to
the benefit of the QWDC or the Public Sponsors. The savings provided by the mortgage recording
tax exemption would reduce the total cost of the development of the parcels. As with the Stage I
development, QWDC and the Public Sponsors consider this savings to be necessary to make the
development of these parcels, in accordance with the General Project Plan and the design guidelines
and under current market conditions, economically feasible.

-4­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
Under the contemplated financing arrangements, the Developer will borrow funds from
sources not related to or acting as nominee for the Developer other than Petitioner, QWDC or the
Public Sponsors (the “Lenders”), which funds will be used to pay for or reimburse parties, including
QWDC, for Development costs. The borrowings will be secured by one or more mortgages against
one or more of the leasehold interests held by the Developer. QWDC's fee interest will not be
encumbered by the mortgage(s). QWDC will be named mortgagee, either alone or with the Lenders,
and record one or more mortgage(s) in the approximate amount of the Development costs. Although
QWDC will be named mortgagee, all rights under the mortgages(s) will inure to the benefit of the
Lenders, who will for all purposes be the beneficial owners of the mortgages. Upon recording the
mortgage or mortgages, QWDC will assign to the Lenders all of QWDC's right, title and interest in
and to the mortgage and the Lenders will at the time of the assignment, or thereafter, fund the
mortgages which, at all times, will secure bona fide debt. After assigning its interest to the Lenders,
QWDC will continue to hold fee title to the affected portions of the Project site and will have
enforcement rights under the lease(s) therefor. However, it is also contemplated that if the
Developer incurs additional Development cost beyond those originally anticipated or makes other
additional expenditures in performing any obligations of QWDC with respect to the Project, QWDC
will, as mortgagee, enter into the record either alone or with the Lenders, an additional mortgage or
mortgages against one or more of the leasehold interests held by the Developer and thereafter assign
such mortgage or mortgages to Lenders who will at the time of the assignment, or thereafter, fund
such mortgage(s) which, at all times, will secure bona fide debt.
After QWDC initially records any of the mortgages and assigns its interest therein to one or
more Lenders, the mortgage or mortgages may from time to time (and over a period of several years)
be severed and split. The resulting substitute mortgages may be further supplemented and, in this
event, appropriate instruments reflecting the supplementation will be recorded in the appropriate
amounts, but in no event aggregating more than the then outstanding principal amount including any
unfunded advances which constitute bona fide debt to the respective Lenders financing all or any
portion of the Development costs, and the lien of the mortgage from the leaseholds not the subject
of the respective resulting substitute mortgages shall be released. The Lenders (or successors
thereto) will fund the loans to the extent of the amount secured by the substitute mortgage. The
funding under the substitute mortgages may be in the form of advances as construction progresses
on a particular leasehold or as Development costs are incurred, or in the form of a full advance of
the loan proceeds upon or after an assignment of a substitute mortgage. In accordance with
customary mortgage financing practices, mortgages securing construction financing may be
assigned, supplemented, modified and converted to permanent financing upon completion of
construction or the expiration of the term of the initial loans. Permanent loans may be refinanced
or assigned by one lender to another. The identity of the mortgagor may also change by reason of
the assignment of the lessee/mortgagor's interest to an affiliate or to an unrelated person. Finally,
if and when a lessee exercises the purchase option contained in a lease, a leasehold mortgage may
be converted into a mortgage secured by a fee interest or may be spread to cover the fee interest.

-5­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
Applicable Law
Article 11 of the Tax Law imposes taxes on the recording of mortgages of real property
measured by the principal debt or obligation secured or which under any contingency may be
secured by the mortgage. Section 252 of Article 11 of the Tax Law, which sets forth the
preponderance of the exemptions from the mortgage recording tax, provides, with certain exceptions
not relevant here, that "[n]o mortgage of real property situated within this state shall be exempt, and
no person or corporation owning any debt or obligation secured by mortgage of real property
situated within this state shall be exempt, from the taxes imposed by this article by reason of
anything contained in any other statute."
Even though section 252 of the Tax Law does not provide a specific exemption for the
operations of UDC, it is well established that State agencies enjoy an immunity from taxation
independent of the statutory exemptions listed in section 252 of the Tax Law for property utilized
in the public interest. (New York State Urban Development Corp., Adv Op Comm T&F, March 10,
1993, TSB-A-93(4)-R.)
Subdivision (1) of section 6254 of the New York State Urban Development Act (the UDC
Act) states in pertinent part as follows:
There is hereby created the New York state urban development corporation.
The corporation shall be a corporate governmental agency of the state, constituting
a political subdivision and public benefit corporation. . . .
In addition, subdivision (2) of section 6262 of the UDC Act states:
The corporation may transfer to any subsidiary corporation any moneys, real
or personal or mixed property or any project in order to carry out the purposes of this
act. Each such subsidiary corporation shall have all the privileges, immunities, tax
exemptions and other exemptions of the corporation to the extent the same are not
inconsistent with the statute or statutes pursuant to which such subsidiary was
incorporated.
In a March 29, 1913, opinion, the Attorney General opined that no mortgage recording tax
was due when New York State acted as mortgagor and quoted the following passage from Matter
of Hamilton, 148 NY 310, 313-314:
The property held by the state, or by any of its municipal divisions, for public
purposes, is not, and never has been, subject to taxation . . . The end and object of all
taxation is to raise revenue for the purpose of defraying the expenses of government,
and since no revenue could be raised by imposing taxes on property owned by the
state itself, or by any of its political divisions, such property is in no just or practical
sense the subject of taxation. . . .

-6­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
This principle has been applied in exempting from the mortgage recording tax the recording
of mortgages on property the legal title of which is held by an industrial development agency and
the beneficial ownership of which is held by a non-exempt private party. (See 1982 Opns St Comp
No. 82-188, p 240; One Park Place Associates, Adv Op St Tx Comm, May 24 1982,
TSB-A-82(1)(M) and New York State Urban Development Corp., supra.)
In Hotel Waldorf-Astoria Corp. v. State Tax Commission, 86 AD2d 330, 334, in
acknowledging that a $45 million mortgage secured by the Waldorf-Astoria hotel was exempt from
the mortgage recording tax because the mortgagee (the New York State Employees' Retirement
System) was a New York State agency, the court stated: "as a State agency, the Retirement System
enjoys an immunity from taxation independent of the statutory exemptions listed in Section 252 of
the Tax Law. . . ."
Furthermore, Section 6272 of the UDC Act provides, in pertinent part, that:
The exercise of the powers granted by this act will be in all respects for the
benefit of the people of this state . . . and will constitute the performance of an
essential governmental function and [UDC] and its subsidiaries shall not be required
to pay any taxes, other than assessments for local improvements, upon or in respect
of a project or of any property or moneys of [UDC] or any of its subsidiaries, levied
by any municipality or political subdivision of the state, nor shall [UDC] or its
subsidiaries be required to pay state taxes of any kind, and [UDC], its subsidiaries,
projects, property and moneys . . . shall at all times be free from taxation of every
kind by the state and by the municipalities and all other political subdivisions of the
state.
Section 6283 of the UDC Act states: "[i]nsofar as the provisions of this act are inconsistent
with the provisions of any other law, general, special or local, the provisions of this act shall be
controlling."
Also, Section 6284 of the UDC Act provides: "[t]his act, being necessary for the welfare of
the state and its inhabitants, shall be liberally construed so as to effectuate its purposes."
Consistent with the legislative mandate of the UDC Act, courts have given liberal
interpretation to its tax exemption provisions. For example, in Wein v. Beame, 43 N.Y.2d 326, the
New York Court of Appeals upheld an exemption from real property taxes as applied to the
Commodore Hotel property in Manhattan. The hotel had been sold to Petitioner for one dollar, then
leased back to the seller for 99 years. Arguments that Petitioner had no real interest in the property,
and was a "straw man" brought into the project solely to provide a tax exemption, were rejected.
The court stated:

-7­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
It is not for us to speculate as to the motive for UDC’s participation, nor to
delineate the amount of active participation which is necessary to denominate a
particular project a UDC project. Here, UDC will be the owner of the building, and
it is enough that UDC has to combat otherwise inevitable urban blight, and which is
thus clearly in accordance with the benign purposes of the Legislature in creating
UDC. . . . (emphasis added)
An apparent inconsistency exists between the Tax Law and the UDC Act. Where a conflict
exists between two enactments relating to the same subject matter, the latter specific enactment
governs the earlier general enactment. (Williamsburgh Power Plant Corp. v. City of New York, 255
App Div 214, affd 280 NY 551 and New York State Urban Development Corp., supra.)
As the pertinent provisions of section 252 of the Tax Law as cited previously in this Opinion
were enacted in 1909, they must yield to the exemption provisions contained in the law creating
UDC which were enacted in 1968.
Furthermore, the UDC Act gives Petitioner the power to make mortgage loans, secured by
first mortgage liens. Having this power implies that Petitioner may also perform the activity of
recording mortgages. Section 253 of the Tax Law imposes the mortgage recording tax on the
exercise of the privilege of recording a mortgage, not on the mortgage itself as property. (Franklin
Society for Home Building and Savings v. Bennett, 282 NY 79; Matter of Silberblatt, Inc. v. Tax
Comm, 5 NY2d 635; and One Park Place Associates, and New York State Urban Development
Corp., supra.)
Also, in an informal opinion of the Attorney General, dated March 7, 1956, it was stated that:
It should be noted that section 257 of Article 11 of the New York State Tax
Law is silent as to which party to the mortgage shall pay the tax. Under its terms the
taxes shall be payable on the recording of each loan subject to tax so that the party
who records is the one upon whom the tax is imposed. . . . (1956 Atty Gen [Inf Opns]
27, at 28.)
Furthermore, Section 6272 of the UDC Act specifically provides that Petitioner or its
subsidiaries shall not be "required to pay state taxes of any kind" and Petitioner, its subsidiaries,
projects, and moneys "shall at all times be free from taxation of every kind by the state and by the
municipalities and all other political subdivisions of the state."
Also, Section 255(1)(a) of the Tax Law provides, in pertinent part, as follows:
If subsequent to the recording of a mortgage on which all taxes, if any,
accrued under this article have been paid, a supplemental instrument or mortgage is
recorded for the purpose of correcting or perfecting any recorded mortgage, or
pursuant to some provision or covenant therein, or an additional mortgage is recorded
imposing the lien thereof upon property not originally covered by or not described

-8­
TSB-A-02(6)R
Mortgage Recording Tax
December 13, 2002
in such recorded primary mortgage for the purpose of securing the principal
indebtedness which is or under any contingency may be secured by such recorded
primary mortgage, such additional instrument or mortgage shall not be subject to
taxation under this article . . . unless it creates or secures a new or further
indebtedness or obligation other than the principal indebtedness or obligation secured
by or which under any contingency may be secured by the recorded primary
mortgage. . . .
Also, Section 250(2) of the Tax Law provides that "[a] contract or agreement by which the
indebtedness secured by any mortgage is increased or added to, shall be deemed a mortgage of real
property for the purpose of this article, and shall be taxable as such upon the amount of such increase
or addition."
In addition, once a mortgage has been given and recorded, the recorded primary mortgage
may be changed by a supplemental mortgage and, under the provisions noted above, no additional
recording tax will be due as long as the amount secured remains the same. (City of New York v.
State Tax Commission, 130 AD2d 890, 891 and New York State Urban Development Corp., supra.)
Conclusions
Based on the foregoing, it is concluded that the mortgage recording tax is not due upon the
recording of any mortgage recorded in connection with the Project, if Petitioner or QWDC is named
mortgagee (whether as trustee, agent, nominee or otherwise) and Petitioner or QWDC presents the
mortgage for recording.
Also, to the extent that the mortgage continues to secure the same principal debt or
obligation, the recording of any assignment, supplement, modification or amendment of a mortgage
described in the preceding paragraph is exempt from the mortgage recording tax, either because such
instrument does not create a new mortgage subject to tax under section 253 of the Tax Law, or
because the instrument constitutes a "supplemental mortgage" under Section 255 of the Tax Law.
(New York State Urban Development Corp., supra.) To the extent that a new or further
indebtedness were secured in conjunction with the recording of any assignment, supplement,
modification or amendment of such mortgage, mortgage recording tax would be imposed only with
respect to any new or further indebtedness, and then only if mortgage recording tax would otherwise
have been required to be paid on such new or further indebtedness.

DATED: December 13, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.