We're a not-for-profit local development corporation set up under section 1411 of the Not-For-Profit Corporation Law to manage and develop the Brooklyn Navy Yard for job creation. If we mortgage our leasehold interest to finance new industrial space, is that mortgage exempt from New York's mortgage recording tax?

Plain-English summary

The Brooklyn Navy Yard Development Corporation is a not-for-profit local development corporation (LDC) incorporated under section 1411 of the Not-For-Profit Corporation Law, operating exclusively for charitable, public, or quasi-public purposes: relieving unemployment and promoting job opportunities in Brooklyn. It fulfills this mission by managing the Brooklyn Navy Yard under a lease with the City of New York (the Yard's owner) — leasing space, developing underutilized areas, and modernizing infrastructure to attract new industry and jobs. To expand available industrial space, the corporation sought commercial financing, which would be secured by a mortgage (or assignment of rents) given by the corporation as mortgagor.

Tax Law § 252 generally states that no mortgage of New York real property is exempt from mortgage recording tax "by reason of anything contained in any other statute." But Not-For-Profit Corporation Law § 1411(f) provides its own, specific exemption: "the income and operations" of corporations incorporated under that section "shall be exempt from taxation." This creates a direct conflict between the general MRT statute and the specific LDC exemption statute. New York courts resolve such conflicts by applying the rule that a later, more specific enactment governs an earlier, more general one on the same subject (Williamsburg Power Plant Corp. v. City of New York; First National Bank and Trust Co. v. Village of Saltaire). Since the mortgage recording tax provisions date to 1909 and § 1411 of the Not-For-Profit Corporation Law is later and specific to LDCs, the LDC exemption prevails. The Department therefore concluded that mortgages given by the Brooklyn Navy Yard Development Corporation are exempt from mortgage recording tax — consistent with its prior opinions reaching the same result for other § 1411 LDCs (Albany County Business Development Corporation, TSB-A-07(3)R; Greater Syracuse Business Development Corporation, TSB-A-97(54)S/(7)R).

What this means for you

Local development corporations incorporated under NFPCL § 1411

Your enabling statute's own tax exemption for "income and operations" extends to mortgage recording tax on mortgages you give as mortgagor, notwithstanding Tax Law § 252's general no-exemption-by-other-statute rule — this has been the Department's consistent position across multiple opinions spanning at least a decade.

Lenders financing § 1411 LDC projects

Don't build mortgage recording tax into the closing costs for a loan to a genuine § 1411 local development corporation; confirm the borrower's LDC incorporation status and structure the closing accordingly.

Common questions

Q: Does this exemption apply to any nonprofit, or only § 1411 LDCs specifically?
A: Only entities incorporated or reincorporated under NFPCL § 1411 — the exemption traces directly to that section's specific "income and operations" tax-exemption language, not to nonprofit status generally.

Q: Is this a one-off ruling, or has the Department applied it consistently?
A: The opinion itself cites two earlier opinions reaching the identical conclusion for other § 1411 LDCs, so this is an established, consistently-applied position.

Q: Can another LDC 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 treatment of § 1411 LDCs generally.

Citations and references

Statutes and regulations:

• Tax Law § 252 (no exemption by reason of any other statute, absent conflict resolution via later specific enactment)
• Not-For-Profit Corporation Law § 1411(f) ("income and operations" of § 1411 corporations exempt from taxation)

Case law and prior opinions cited:

• Williamsburg 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)
• First National Bank and Trust Co. v. Village of Saltaire, 256 App. Div. 156
• Albany County Business Development Corporation, TSB-A-07(3)R (June 26, 2007)
• Greater Syracuse Business Development Corporation, TSB-A-97(54)S, (7)R (August 25, 1997)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a08_1r.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-08(1)R
Mortgage Recording Tax
February 15, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M071220A

On December 20, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from the Brooklyn Navy Yard Development Corporation, Brooklyn Navy
Yard, Building 292, 63 Flushing Avenue, Unit 300, Brooklyn, New York 11205.
The issue raised by Petitioner, Brooklyn Navy Yard Development Corporation, is
whether a mortgage recorded by a not-for-profit local development corporation incorporated
under section 1411 of the New York State Not-For-Profit Corporation Law is exempt from the
mortgage recording taxes imposed by Article 11 of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a not-for-profit local development corporation incorporated under section
1411 of the New York State Not-For-Profit Corporation Law. Petitioner was established and
operates exclusively for the charitable, public, or quasi-public purposes of relieving and reducing
unemployment, promoting and providing for additional and maximum employment, and
bettering and maintaining job opportunities in the city of New York, particularly in the borough
of Brooklyn.
Petitioner fulfills its corporate purposes by managing the Brooklyn Navy Yard (“Navy
Yard”) under a lease with the Navy Yard’s owner, the city of New York. Petitioner manages the
leasing of space in the Navy Yard, develops underutilized areas of the Navy Yard, and oversees
the ongoing modernization of the Navy Yard’s infrastructure. Through its activities, Petitioner
attracts new industry to Brooklyn and facilitates the development and retention of industry,
thereby lessening the burdens of government and acting in the public interest.
Petitioner seeks to create additional employment opportunities by developing unoccupied
and underutilized portions of the Navy Yard into modern industrial space that would be leased to
businesses that would provide jobs that would otherwise not exist in Brooklyn or the city of
New York. As part of the expansion plan, Petitioner has approached various commercial banks
and other lending institutions to help it finance the creation of additional industrial space in the
Navy Yard. The lenders have expressed interest in providing Petitioner with a loan for this
purpose.
The loan would be secured by a mortgage (or an assignment of rents) given by Petitioner,
as mortgagor, to the lenders, as mortgagee. As part of the loan documents, Petitioner would

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Mortgage RecordingTax
February 15, 2008

covenant and agree to arrange for the mortgage to be recorded immediately following the closing
of the loan.
Applicable law and regulations
Section 252 of the Tax Law provides, with certain exceptions, that "No 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, . . ."
Section 1411(f) of the Not-For-Profit Corporation Law provides that "The income and
operations of corporations incorporated or reincorporated under this section shall be exempt from
taxation."
Opinion
Notwithstanding the language of section 252 of the Tax Law, the Tax Department has
considered claims for exemption from various public authorities in New York State based on tax
exemptions in their creating statutes and has ruled in certain cases that the recording of
mortgages issued by the authorities were exempt from the tax imposed by Article 11 of the Tax
Law. This position is consistent with the general rule that where a conflict or variance exists
between two enactments relating to the same general subject matter, a later special statute takes
precedence against a general statute, and the prior general statute must yield to the later specific
or special statute. (Williamsburg Power Plant Corp. v City of New York, 255 App Div 214, affd
280 NY 551; First National Bank and Trust Co. v Village of Saltaire, 256 App Div 156).
Therefore, in accordance with the rationale set forth in Williamsburg Power Plant Corp.
v City of New York, supra, and First National Bank and Trust Co. v Village of Saltaire, supra,
since Petitioner is incorporated under section 1411 of the Not-For-Profit Corporation Law, and
since section 1411(f) of the Not-For-Profit Corporation Law provides that the income and
operations of corporations incorporated or reincorporated under such section shall be exempt
from taxation, mortgages given by Petitioner are exempt from the mortgage recording taxes
imposed by Article 11 of the Tax Law. See Albany County Business Development Corporation,

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Mortgage RecordingTax
February 15, 2008

Adv Op Comm T&F, June 26, 2007, TSB-A-07(3)R; Greater Syracuse Business Development
Corporation, Adv Op Comm T&F, August 25, 1997, TSB-A-97(54)S, (7)R.

DATED: February 15, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.