The City of Syracuse Industrial Development Agency is issuing bonds to finance our office building, secured by a mortgage the Agency will record (with us joining as co-mortgagor on our leasehold interest), plus a pledge and assignment of the Agency's rights under our lease. Does mortgage recording tax apply to any of that?

Plain-English summary

The City of Syracuse Industrial Development Agency (established 1979 under General Municipal Law § 926, a "corporate governmental agency, constituting a public benefit corporation") agreed to acquire land, construct, and equip a ten-story office building in Syracuse for One Park Place Associates, a New York general partnership, then lease the completed building back to the partnership. The project was financed through three separate series of industrial development revenue bonds. Each series was secured by two things: a mortgage on the project executed by the Agency (with the partnership joining as co-mortgagor, pledging its leasehold interest as additional collateral), and a Pledge and Assignment of the Agency's rights under the lease, including its right to collect rent. The mortgage indentures required the Agency itself to record both the mortgages and any related documents securing the bonds.

The question was whether mortgage recording tax under Tax Law § 253 applied to any of this -- the mortgage, the lease, or the pledge and assignment. First, the Department confirmed WHO would owe the tax if it applied: since Tax Law § 253 is silent on which party pays, a 1956 Attorney General informal opinion establishes that the party who actually records the instrument bears the tax, so it would fall on the Agency (which covenanted to record).

On exemption, the Department confronted the same structural conflict seen in other governmental-instrumentality mortgage rulings: Tax Law § 252 broadly bars exempting any mortgage "by reason of anything contained in any other statute," but General Municipal Law § 874(1) -- enacted later, in 1969, specifically to govern IDAs -- declares that "the carrying out of [an IDA's] corporate purposes is in all respects for the benefit of the people of the state... and is a public purpose," making the Agency's activities a governmental function that "shall be required to pay no taxes or assessments... upon its activities." Applying the standard rule that a later, more specific statute controls over an earlier, general one (Williamsburgh Power Plant Corp. v. City of New York; First National Bank & Trust Co. of Bay Shore v. Village of Saltaire), the 1969 IDA-specific exemption law overrides the 1966-amended general Tax Law § 252 bar.

The Department then reasoned that because General Municipal Law § 858(4) expressly empowers an IDA "to sell, convey, mortgage, lease, pledge, exchange or otherwise dispose of" its property, and because the recording tax under § 253 falls on the ACT of recording (a "privilege" tax) rather than on the mortgage as property (Franklin Society v. Bennett; Matter of Silberblatt, Inc. v. Tax Comm), the power to execute mortgages implicitly carries with it the power to record them without tax. On that basis, the recording of the mortgages, the lease, and the pledge and assignment -- all part of the Agency's authorized financing activity -- fell outside mortgage recording tax entirely.

What this means for you

Industrial Development Agencies and their bond counsel

An IDA's General Municipal Law § 874(1) governmental-function exemption can override the Tax Law § 252 general anti-exemption bar for mortgages the IDA itself executes and records as part of an authorized bond financing -- covering not just the primary mortgage but related security documents like leases and pledge-and-assignment instruments recorded as part of the same transaction.

Developers and tenants in IDA-financed projects (PILOT/leaseback structures)

If your project financing routes title and mortgage-recording obligations through an IDA (a common structure for securing property-tax and other benefits), the IDA's own tax immunity can extend to the mortgage recording tax on the financing documents -- this 1982 ruling is one of the earliest Mortgage Recording Tax opinions applying that logic and predates the IDA-financing rulings more commonly cited in the Real Estate Transfer Tax context by roughly a decade.

Bond counsel and public-finance attorneys

This ruling illustrates the same "later, more specific statute beats the general 1909/1966 Tax Law § 252 bar" doctrine recurring across public-authority Mortgage Recording Tax opinions (compare SONYMA in TSB-A-84(1)M) -- but grounds it specifically in an IDA's General Municipal Law § 858(4) power to mortgage, lease, and pledge property, which the Department read as implicitly including the power to record those instruments tax-free.

Common questions

Q: Who would have owed the mortgage recording tax if no exemption applied -- the IDA or the private developer?
A: The Agency, because Tax Law § 253 is silent on which party pays and a longstanding Attorney General opinion holds the party who actually presents the instrument for recording bears the tax; here the Agency covenanted to record.

Q: Does the exemption cover only the primary mortgage, or also the lease and pledge/assignment?
A: All three. The Department treated the lease and the pledge and assignment of the Agency's lease rights as related documents recorded as part of the same authorized bond-financing activity, covered by the same governmental-function exemption.

Q: Why does a 1969 General Municipal Law provision override a Tax Law provision that's also on the books?
A: Under ordinary statutory-construction principles, when two statutes addressing the same subject conflict, the later and more specific one controls -- and the IDA-specific exemption (1969) postdates and is narrower than the general Tax Law § 252 bar (last amended 1966).

Q: Can another IDA-financed project rely on this specific ruling?
A: No. It binds the Department only as to this petitioner and these facts, though the underlying "IDA governmental function overrides § 252" doctrine is a general principle likely to apply to similarly structured IDA financings.

Citations and references

Statutes:

• Tax Law § 253 (mortgage recording tax); § 252 (general anti-exemption provision)
• General Municipal Law § 856(2) (IDA as public benefit corporation); § 858(4) (power to mortgage, lease, pledge property)
• General Municipal Law § 874(1) (IDA governmental-function tax exemption); § 888 (IDA law controls over inconsistent statutes)
• General Municipal Law § 926 (establishing the City of Syracuse Industrial Development Agency)

Case law and prior authority cited:

• Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214, aff'd 280 N.Y. 551; First National Bank & Trust Co. of Bay Shore v. Village of Saltaire, 256 App. Div. 156 (later specific statute controls over earlier general statute)
• Franklin Society v. Bennett, 282 N.Y. 79; Matter of Silberblatt, Inc. v. Tax Comm, 5 N.Y.2d 635 (mortgage recording tax is a privilege tax on the act of recording, not a property tax on the mortgage)
• 1956 Atty Gen [Inf Opns] 27 (party who records the mortgage bears the recording tax)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_1982.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a82_1m.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-82 (1) M
Mortgage Tax
June 18, 1982

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. M820512A

On May 12, 1982, a Petition for Advisory Opinion was filed by One Park Place Associates,
Suite 1000, 500 South Salina Street, Syracuse, New York 13202.
The issue raised is whether the mortgage recording taxes imposed under section 253 of the
Tax Law are required to be paid upon the recording of certain mortgages by the City of Syracuse
Industrial Development Agency (hereinafter "the Agency"), as well as upon the recording by the
Agency of a lease and a pledge and assignment of its rights under such lease.
The City of Syracuse Industrial Development Agency was established by Chapter 641 of the
Laws of 1979, which amended the General Municipal Law by adding thereto a new section 926.
Under such provision the Agency is established "for the accomplishment of any or all of the purposes
specified in title one of article eighteen-A of this chapter [and has] the powers and duties now or
hereafter conferred by title one of article eighteen-A of this chapter upon industrial development
agencies." Such provision goes on to state that "the agency . . . and its operations and activities shall
in all respects be governed by the provisions of title one of article eighteen-A of this chapter."
Pursuant to subdivision 2 of section 856 of the General Municipal Law, such an agency is" . . . a
corporate governmental agency, constituting a public benefit corporation."
Petitioner states that the "Agency has agreed with the Petitioner, a New York general
partnership, to acquire the land for and to cause to be constructed and equipped a ten-story office
building (the "Project") to be located in the City of Syracuse, New York, and to lease the Project to
the Petitioner pursuant to a simultaneously executed lease (the "Lease Agreement"). The Project will
be financed by the issuance by the Agency of three separate series of industrial development revenue
bonds. Each series of the Agency's bonds will be secured by: A. a mortgage on the Project which will
be executed by the Agency and in which the Petitioner will join as a co-mortgagor for the purpose
of mortgaging, as additional collateral security for the bonds, its leasehold estate as created pursuant
to the Lease Agreement, and B. a Pledge and Assignment of certain of the Agency's right, title and
interest in, to and under the Lease Agreement, including an assignment of the Agency's right to
receive rentals under said Lease Agreement."
Petitioner also states that the indentures of mortgage contain covenants to the effect that the
Agency is the party required to record the mortgages, as well as "any related documents which are
executed by the Agency and the Petitioner to secure the Agency's bonds."

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-82 (1) M
Mortgage Tax
June 18, 1982

An informal opinion of the Attorney General, dated March 7, 1956, provides 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.
Since the Agency covenants in the indentures of mortgage that it will record the mortgages
and related documents, in view of the Attorney General's opinion the Agency would be the party
required to pay the taxes imposed by Article 11, if such taxes are due.
Section 252 of the Tax Law contains a general prohibition against exemptions from the
mortgage recording taxes imposed under Article 11 of the Tax Law "by reason of anything contained
in any other statute," with certain exceptions not relevant to the present matter. However, such
prohibition is overcome by subdivision 1 of section 874 of the General Municipal Law, which
provides as follows:
It is hereby determined that the creation of the agency and the
carrying out of its corporate purposes is in all respects for the benefit
of the people of the state of New York and is a public purpose, and
the agency shall be regarded as performing a governmental function
in the exercise of the powers conferred upon it by this title and shall
be required to pay no taxes or assessments upon any of the property
acquired by it or under its jurisdiction or control or supervision or
upon its activities.
One of the powers the Agency is authorized to exercise is the power " . . . to sell, convey,
mortgage, lease, pledge, exchange or otherwise dispose of any such property in such manner as the
agency shall determine." General Municipal Law, §858(4).
In addition, section 888 of the General Municipal Law provides that:
Insofar as the provisions of this title are inconsistent with the
provisions of any other act, general or special, or of any local laws of
the municipality, the provisions of this title shall be controlling except
in cases of inconsistency with the Indian law.
The previously described portion of section 252 of the Tax Law relating to exemptions is
derived from Chapter 729 of the Laws of 1905, and was last amended by Chapter 388 of the Laws

-3­
TSB-A-82 (1) M
Mortgage Tax
June 18, 1982
of 1966. Article 18-A of the General Municipal Law, authorizing the creation of the Agency, was
enacted by Chapter 1030 of the Laws of 1969. It has been held that where a conflict or variance
exists between two enactments relating to the same general subject matter, a later special statute
takes precedence over a general statute and the prior general statute must yield to the later specific
or special statute. Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214, aff'd
280 N.Y. 551; First National Bank and Trust Co. of Bay Shore v. Village of Saltaire, 256 App. Div.
156.
In this situation, the later statute specifically exempts from tax the activities of the Agency,
one of which is the execution of mortgages. The granting of the power to execute mortgages implies
that the Agency may also perform the activity of recording mortgages as well as related documents.
It is to be noted that the taxes imposed under section 253 are not imposed on mortgages themselves,
as property, but on the taking of an action, that is, on the exercise of the privilege of recording a
mortgage. Franklin Society v. Bennett, 282 N.Y. 79; Matter of Silberblatt , Inc. v. Tax Comm, 5
N.Y. 2d 635.
It follows from the foregoing that the recording of the mortgages in question by the City of
Syracuse Industrial Development Agency, as well as of any other related documents the recording
of which would otherwise be subject to tax under Article 11 of the Tax Law, is not subject to the
taxes imposed under Section 253 of the Tax Law.

DATED: May 24, 1982

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau