Our state agency is redeveloping West 42nd Street/Times Square. Private developers will finance construction, with us named mortgagee even though private lenders are the real economic parties -- and developers will reimburse us for the mortgage recording tax we'd otherwise owe, into a project fund. Is recording those mortgages exempt from BOTH the state and New York City mortgage recording tax?

Plain-English summary

This is the earliest advisory opinion in the corpus on UDC's West 42nd Street/Times Square redevelopment — eight years before the 1997 opinion on the same project (TSB-A-97(5)R) that most later rulings cite as "the 42nd Street Advisory Opinion." In 1980, UDC (now Empire State Development Corporation) and New York City agreed to jointly redevelop the West 42nd Street area, aiming to eliminate blight and revitalize Times Square as an entertainment and business district. By 1989, the approved Project Plan called for four new office towers, a 2.5-million-square-foot trade mart, a 750-room hotel, restoration of nine historic theaters, and major public infrastructure improvements (subway entrances, sidewalks, lighting). UDC would acquire roughly 13 acres through condemnation, lease individual sites to private developers (or nonprofit/public entities for the theaters), and have each developer construct or rehabilitate buildings on its site.

To finance construction, developers would borrow from private lenders. UDC would be named mortgagee on each "Recognized Mortgage," obligated to record it, even though the loan funds and all beneficial rights belonged to the private lenders (UDC would later assign its interest to them). In exchange for the tax savings this structure created, each developer would pay UDC an amount equal to the mortgage recording tax that would otherwise have been due — those payments would go into separate project public-purpose funds jointly controlled by UDC and the City, used for Project purposes like reimbursing excess site acquisition costs or funding the nonprofit theaters' renovation and operation.

UDC asked three questions. First, is the initial recording exempt? The Department said yes: UDC's 1968 enabling statute (Unconsolidated Laws § 6272, exempting UDC and its subsidiaries from taxation "of every kind") is a later, more specific enactment that overrides Tax Law § 252's general 1909/1966 rule against exemptions from other statutes (Williamsburgh Power Plant Corp. v. City of New York), following the same reasoning already applied to the NYS Employees' Retirement System (Hotel Waldorf-Astoria Corp. v. State Tax Commission) and industrial development agencies. Second, do later assignments, supplements, modifications, or amendments stay exempt? Yes, to the extent the secured principal debt isn't increased; if it is increased, tax is due only on the increase. Third — and this is where the ruling breaks new ground — is UDC ALSO exempt from New York City's SEPARATELY administered local mortgage recording tax (Chapter 26, Title 11 of the NYC Administrative Code)? The Department declined to give a binding answer here: while "the rationale exempting UDC from the mortgage recording tax imposed under Article 11 of the Tax Law seems applicable to the City mortgage recording tax," a state Advisory Opinion under Tax Law § 171(24) can only bind the Department as to STATE-administered taxes. Since the City tax is administered by the City itself, UDC would need a separate, definitive answer from the New York City Finance Administration.

What this means for you

Public benefit corporations financing large multi-decade redevelopment projects

This is the foundational precedent for the entire UDC/ESDC "pass-through mortgagee" doctrine as applied specifically to 42nd Street/Times Square — cite THIS ruling (not just the 1997 follow-up) as the true origin case when tracing the project's mortgage recording tax history.

Developers and lenders whose deal involves BOTH state and New York City mortgage recording tax

Don't assume a state Advisory Opinion resolves your City tax exposure too, even where the same underlying exemption statute would seem to apply. If your project is in New York City, you may need a SEPARATE ruling or determination from the NYC Department of Finance to be confident about the local tax, even with a favorable state Advisory Opinion in hand.

Accountants and real estate attorneys tracking the 42nd Street Project's ruling history

The historical arc runs 89(2)R (this ruling, origin) → 97(5)R (later closing/expansion of the same project, cited more often in the corpus) → 09(1)R (RIOC Octagon, which cites "the 42nd Street Advisory Opinion" as background precedent). All three describe essentially the same doctrine applied at different project stages.

Common questions

Q: Does this ruling resolve whether UDC owes New York City's local mortgage recording tax?
A: No. The Department explicitly declined to give a definitive answer on the City tax, since it can only issue binding Advisory Opinions on state-administered taxes. It suggested (without deciding) that the same UDC Act exemption rationale likely applies, but said a definitive answer should come from the New York City Finance Administration.

Q: What happens to the exemption if the secured mortgage debt is later increased?
A: Tax is due only on the amount of the increase -- the exemption on the original principal amount is preserved, following the ordinary supplemental mortgage rule under Tax Law § 255.

Q: How does this ruling relate to the more commonly cited 1997 opinion on the same project?
A: This 1989 ruling is the earlier, foundational opinion on the 42nd Street Project generally; TSB-A-97(5)R addresses the Project at a later stage (after several Project Plan amendments through 1996) with more developer-specific facts. Both apply the same core UDC Act exemption analysis.

Q: Can another UDC project, or an unrelated developer, rely on this specific ruling?
A: No. It binds the Department only as to UDC and this project's facts, and even then only as to the STATE mortgage recording tax -- not the New York City local tax, which requires its own separate determination.

Citations and references

Statutes:

• Tax Law § 252 (general rule against MRT exemptions arising from other statutes)
• Tax Law § 253 (mortgage recording tax imposition, measured by principal debt secured)
• Tax Law § 253-a (authorizes NYC's separately administered local mortgage recording tax)
• Tax Law § 255 (supplemental mortgage treatment -- no new tax if secured debt isn't increased)
• Tax Law § 171(24) (limits Advisory Opinions to state-administered taxes)
• Unconsolidated Laws § 6272 (UDC and its subsidiaries free from taxation of every kind)
• Unconsolidated Laws §§ 6283, 6284 (UDC Act controls over inconsistent statutes; liberal construction mandate)
• Chapter 26, Title 11, NYC Administrative Code (City mortgage recording tax); NYC Administrative Code § 11-2603 (City tax administered same manner as state tax)

Case law and prior opinions cited:

• Matter of Hamilton, 148 N.Y. 310 (state/municipal property held for public purposes isn't a practical subject of taxation)
• Williamsburgh Power Plant Corp. v. City of New York, 255 A.D. 214, aff'd 280 N.Y. 551 (later specific enactment governs earlier general enactment)
• Hotel Waldorf-Astoria Corp. v. State Tax Commission, 86 A.D.2d 330 (state agency mortgagee immunity independent of Tax Law § 252)
• Matter of City of New York v. Tully, 88 A.D.2d 701 (state agency tax immunity)
• One Park Place Associates, TSB-A-82(1)M (Industrial Development Agency mortgage exemption line)
• 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 (mortgage recording tax taxes the recording privilege, not the mortgage as property)
• Matter of Rednow Realty Corp. v. Tully, 72 A.D.2d 621; Matter of Park and 46th St. Corp. v. State Tax Commission, 295 N.Y. 173; Matter of Bay View Towers Apts., Inc. v. State Tax Commission, 48 A.D.2d 86, aff'd 40 N.Y.2d 856 (supplemental mortgage / increased-indebtedness case law)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a89_2r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (2)R
Mortgage Tax
May 5, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M890324A

On March 23, 1989, a Petition for Advisory Opinion was received from the New York State
Urban Development Corporation, 1515 Broadway, New York, New York 10036-8960.
The issue raised is whether mortgages presented for recording by Petitioner, under
circumstances described below, are exempt from the mortgage recording tax imposed by Article 11
of the Tax Law. In addition, would mortgage recording tax be due if subsequently such a mortgage
is assigned, supplemented, modified or amended, to the extent the then outstanding principal
indebtedness secured by the mortgage is not increased and to the extent such principal is increased.
Also, would Petitioner be exempt from the mortgage recording tax imposed by Chapter 26 of Title
11 of the New York City Administrative Code.
ISSUE I
Petitioner, the New York State Urban Development Corporation, and certain of its wholly
owned subsidiaries (hereinafter collectively "UDC", unless the context requires otherwise), questions
whether mortgage recording tax is due upon the recording of any mortgage of property that is part
of UDC's 42nd Street Development Land Use Improvement Project (hereinafter "Project") where
(i) UDC is the named mortgagee (whether as trustee, agent, nominee or otherwise) and is obligated
to record the mortgage, (ii) the loan funds are provided by one or more persons or entities other than
UDC, (iii) the proceeds of the mortgage loans are used for Project acquisition and development
costs, and (iv) at such times as mortgage recording taxes would have been due and payable but for
UDC's exemption, the mortgagor will be obligated to pay UDC or its designee an amount equal to
the mortgage recording taxes that otherwise would have been payable, with all such amounts (and
interest thereon) retained in one or more separate funds controlled by UDC and the City of New
York (hereinafter "City"), which funds will be used solely for Project purposes as determined by
UDC and the City.
Facts
UDC was established by the New York State Legislature in 1968. McKinney's
Unconsolidated Laws of NY §§ 6251 et seq (New York State Urban Development Corporation Act,
L 1968, ch 174, as amended) (hereinafter "UDC Act")). UDC is a corporate governmental agency
of the state, constituting a political subdivision and public benefit corporation. As a public benefit
corporation, UDC exercises governmental authority.
Section 6252 of the UDC Act provides the following statement of legislative findings and
purposes:

TP-9 (9/88)

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May 5, 1989

It is hereby declared that the acquisition, construction, reconstruction, rehabilitation
or improvement of such industrial, manufacturing and commercial facilities, and of
such cultural, educational and recreational facilities including but not limited to
facilities identified as projects ... are public uses and public purposes for which public
money be loaned and private property may be acquired and tax exemption granted,
and that the powers and duties of the New York State urban development corporation
as hereinafter prescribed are necessary and proper for the purpose of achieving the
ends here recited. (Emphasis added.)
Section 6255 of the UDC Act provides that UDC is granted authority to acquire or contract
to acquire from any person, firm, corporation, municipality, federal or state agency, by grant,
purchase, condemnation or otherwise, leaseholds, real, personal or mixed property or any interest
therein; to own, hold, clear, improve and rehabilitate, and to sell, assign, exchange, transfer, convey,
lease, mortgage, or otherwise dispose of or encumber the same. In addition, section 6272 of the UDC
Act provides that it is entitled to fund, build, lease, sell or manage its properties and projects free
from any taxes, other than assessments for local improvements, upon or in respect properties.
The legislature mandated that both the general and specific powers granted to UDC be
broadly construed. Section 6284 of the UDC Act provides that the UDC Act "being necessary for
the welfare of the state and its inhabitants, shall be liberally construed so as to effectuate its
purposes." Moreover, section 6283 of the UDC Act provides that whenever the provisions of the
UDC Act "are inconsistent with the provisions of any other law, general, special or local, the
provisions of this act shall be controlling."
In 1980, UDC entered into a memorandum of understanding with the City for the
redevelopment of the West 42nd Street/Times Square area, the Project area. The redevelopment was
conceived as a joint effort, to be implemented by public agencies and private developers designated
by UDC and the City. A comprehensive study and plan of the Project area, aimed at turning Times
Square into a safe, lively center for entertainment, shopping, commuting and business, was
commissioned and completed in 1981. This plan (hereinafter "Project Plan") was initially approved
by UDC's Directors in 1981 and finally approved on October 4, 1984. In 1984, the Project also was
approved by the City's Board of Estimate.
The public uses and benefits expected to flow from the Project are reflected in the
determinations and findings made as part of UDC's approval process for the Project. The UDC
resolutions approving the Project in 1984 stated the goals of the Project were, among others:
[t]o overcome conditions of blight in the Project Area which have
discouraged new investment for over half a century and which
discourage the public's use of this historic part of New York City ....
to eliminate the blight and physical decay, as well as the crime and
frightening street life, that now characterize the West 42nd Street
area; ... to preserve and restore the area's extraordinary older theaters

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for theatrical and upgraded movie use, and, by so doing, to revitalize
the project area as a theater and entertainment center serving tourists
and all New Yorkers; ... [and] to help upgrade public facilities in the
project area, particularly the Times Square subway station ....
The Project involves the construction of four new office towers, a 2.5 million-square-foot
trade mart and a 750-room hotel. Nine turn-of-the-century theaters along West 42nd Street will be
restored and converted into legitimate theaters as part of the Project. Numerous public
improvements, including sidewalk and lighting improvements, nine new subway entrances and an
expanded and reconfigured Times Square subway station, also form part of the Project.
Under the Project Plan, UDC is to acquire fee title, through condemnation or otherwise, to
approximately 13 acres of land in midtown Manhattan (hereinafter "Land"). UDC has divided the
Land into various sites and will lease the sites to the Projects designated developers (or, in the case
of the theaters, possibly to public or not-for-profit organizations). Except with respect to certain
theater sites, the tenant of each site (or an affiliate thereof) will be the developer of, and will pay
certain acquisition costs for, that site. Each developer also will pay for improvements to public
facilities (sidewalks, lighting, subway improvements, etc.) at or near its site. The tenant under each
lease will be obligated to construct or rehabilitate certain buildings and improvements on the leased
premises. Title to all buildings and improvements will be held by UDC for * the term of the lease.
(UDC may convey its title (or any portion thereof) to the Land and Project improvements to a UDC
subsidiary, the City, or a public benefit corporation or other entity appropriately constituted and
exempt from the payment of real property taxes. If UDC makes such a conveyance, UDC's rights
as landlord under the leases will inure to the benefit of the transferee.)
Except for certain UDC expenses, all payments under the leases will inure to the benefit of
the City. Upon substantial completion of the Project (and, under certain circumstances, at other
times) the City may acquire the landlord's rights under each lease. At the end of the term of each
lease, ownership of all buildings and improvements will revert to the landlord, tn most cases,
however, the tenant will have an option to purchase its site beginning 15 years after completion of
the initial construction or renovation work.
Subject to receipt of the rulings requested herein, the contemplated financing arrangements
for the Project are as follows:
1.
Pursuant to certain documents between UDC and the developers (hereinafter "Project
Documents"), UDC will be the named mortgagee (whether as trustee, agent, nominee or otherwise)
under each of the Project mortgages securing loans whose proceeds are used for Project acquisition
and development costs (hereinafter "Recognized Mortgages"). UDC will be obligated to be so named
and will be obligated to record the respective mortgages. The loans which are secured by the
mortgages will be provided by lenders other than UDC.
2.
At such times as mortgage recording taxes would have been due and payable but for
UDC's exemption, the respective developer will be obligated (pursuant to its Project Documents)

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to pay to UDC or its designee an amount equal to the mortgage recording taxes that otherwise would
have been payable. All such amounts (and interest thereon) will be retained in one or more separate
Project public purpose funds controlled by the City and UDC, which funds will be used solely for
Project purposes as determined by the City and UDC, including the payment or reimbursement of
excess site acquisition costs and possibly the costs of renovating or operating certain of the not-for­
profit theaters.
3.
Each Recognized Mortgage will, inter alia, obligate the respective developer to
perform its obligations under its respective Project Documents, with the result that a default by a
developer under its ground lease from UDC or other Project Documents will also constitute a default
under its mortgage(s). A separate agreement between UDC and each lender (and/or the respective
mortgages themselves) will provide that, although UDC holds legal title to the Recognized
Mortgages, the respective lender is, in all other respects, the beneficial owner of the mortgage notes
and mortgages. UDC will fully retain all of its enforcement rights under the ground leases.
4.
Upon the substantial completion of the improvements relating to a particular lease,
or possibly sooner, UDC will assign to the lender all of its right, title and interest in and to the
corresponding Recognized Mortgage(s).
The Project is exempt from real property taxation, other than assessments for local
improvements, by virtue of UDC's ownership of the Land. The Project also enjoys an exemption
from New York sales tax.
Petitioner contends that UDC and its projects are exempt from taxes "of every kind" and the
imposition of mortgage recording tax on Recognized Mortgages would result in a tax upon UDC and
in respect of the Project, in violation of the Legislature's mandate that UDC not be required to pay
any taxes upon or in respect of its projects, properties or monies.
Petitioner further contends that Project mortgages are exempt from the mortgage recording
tax where UDC is the named mortgagee, notwithstanding the private lenders' beneficial interest
contemplated in such mortgages.
Discussion
Article 11 of the Tax Law imposes taxes on the recording of mortgages of real property
measured by the principal debt or obligation secured by such mortgage. Section 252 of Article 11
of the Tax Law, applicable to exemptions from the mortgage recording tax, provides, with certain
exceptions not relevant herein, 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.

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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.
This principle has been applied to exempt from the mortgage recording tax mortgages on
property when legal title is held by a New York State industrial development agency even though
beneficial ownership of such property is held by private interests. (See 1982 Opns St Comp No. 82­
188, p 240; One Park Place Associates, Advisory Opinion of the State Tax Commission, May 24,
1982, TSB-A-82(1)M).
Also, 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 .... " The court reasoned that imposition of a tax upon a mortgage held by a New York
State agency was tantamount to a tax upon the agency itself. The court, thus, concluded that the tax,
on the recording of the mortgage securing the loan, in this case amounted to an unlawful assessment
of the agency's property in violation of its general immunity from taxation. (See also, Matter of City
of New York v. Tully, 88 AD2d 701.)
It appears that UDC, therefore, is exempt from the mortgage recording taxes imposed by
Article 11 of the Tax Law by virtue of it being a New York State agency constituting a political
subdivision and public benefit corporation. However, in any event, the provisions of the UDC act
are conclusive in this
respect.
Section 6272 of the UDC Act provides, in pertinent part, that:
[t]he 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 function... [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

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and all other political subdivisions of the state.
Moreover, 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."
Therefore, 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.
Inasmuch as section 252 of the Tax Law was enacted in 1909, and last amended in 1966, it
must yield to the exemption provisions contained in the law creating UDC which were enacted in
1968. Therefore, if the provisions of the UDC Act exempt from the recording tax the mortgages
created pursuant to the Project, such exemption provisions will prevail.
The UDC Act gives UDC the power to execute mortgages. Having such power implies that
UDC may also perform the activity of recording mortgages. It is to be noted that the taxes imposed
under section 253 of the Tax Law are not imposed on the mortgages themselves, as property, but on
the taking of anaction, that is, on the exercise of the privilege of recording a mortgage. Franklin
Society for Home Building and Savings v Bennett, 282 NY 79; Matter of Silberblatt, Inc. v Tax
Comm, 5 NY2d 635; One Park Place Associates, Advisory Opinion of the State Tax Commission,
May 24, 1982, TSB-A-82(1)M.
An informal opinion of the Attorney General, dated March 7, 1956, states that
[i]t 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 UDC is the mortgagee and will record the Recognized Mortgages, in view of the
Attorney General's opinion, UDC would be the party required to pay the taxes imposed by Article
11, if such taxes are due.
However, section 6272 of the UDC Act, specifically provides that UDC or its subsidiaries
shall not 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." In addition, section 6284 of the UDC
Act provides that the UDC Act "shall be liberally construed so as to effectuate its purposes."

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Conclusion
UDC will be named mortgagee, the Recognized Mortgages will be recorded by UDC and a
default by a developer under its ground lease will be a default under the mortgage. In view of the
provisions contained in section 6284 of the UDC act providing that the UDC act be liberally
construed and section 6272 exempting UDC, its subsidiaries, projects, property and moneys from
state taxation of every kind, and the fact that New York State agencies are immune from taxation,
it is concluded that UDC can record Recognized Mortgages without payment of the mortgage
recording taxes imposed under section 253 of Article 11 of the Tax Law.
ISSUE 2
If a mortgage referred to in issue 1 is assigned, supplemented, modified or amended, or if any
mortgage so assigned, supplemented, modified or amended is thereafter from time to time assigned,
supplemented, modified or amended, is the mortgage recording tax due (upon the recording of the
applicable instrument or otherwise) to the extent the then outstanding principal indebtedness secured
by the mortgage is not increased; or where such principal indebtedness is increased, is mortgage
recording tax due only with respect to the amount of the increase.
Facts
In addition to the contemplated assignments of the Recognized Mortgages to lenders noted
above, UDC anticipates that the mortgages securing the Project's financing will, from time to time
(before and/or after UDC has ceased to be the designated mortgagee), be assigned, supplemented,
modified or amended and that the applicable instruments reflecting such assignment, supplement,
modification or amendment will be recorded. Thus, for example, in accord with customary mortgage
financing practices, it is anticipated that mortgages securing acquisition and construction financing
will be assigned, supplemented and modified and converted to permanent financing upon the
completion of construction. Further, from time to time, the Project mortgages may be assigned from
one lender to another, or the loans may be refinanced. It is also possible that the identity of the
mortgagors will change, either by reason of the assignment of a lessee's interest to an affiliate or to
an unrelated person. Finally, if and when a lessee exercises a purchase option contained in its lease,
the leasehold mortgage may be converted into a mortgage secured by a fee interest.
UDC submits that the recording of any assignment, supplement, modification, or amendment
of such mortgages (or successor mortgages) is exempt from the mortgage recording tax to the extent
the principal amount of secured indebtedness is not increased. If the mortgage recording tax were
to become payable upon the recording of an assignment, supplement, modification or amendment,
e.g. upon the conversion to permanent financing or upon a refinancing, the benefits of UDC's tax
exemption with respect to the original mortgage would be lost; at best, the tax would only have been
deferred.

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Discussion
Section 255 of the Tax Law contains the supplemental mortgage provisions and provides,
in pertinent part, that:
[i]f 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
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 ....
Section 250 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."
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. Of course, were the indebtedness secured by the lien to be
reduced or the lien terminated for any reason, tax would be due on any increase on the new
obligation. (See Matter of Rednow Realty Corp. v. Tully, 72 AD2d 621, 622.)
"Both sections 253 and 255 of the Tax Law require that only a mortgage on the principal debt
or obligation, or a new or further indebtedness other than the principal obligation should be subject
to the recording tax. (Matter of Park and 46th St. Corp. v. State Tax Commission, 295 NY 173, 178­
179.)" Matter of Bay View Towers Apts., Inc. v. State Tax Commission, 48 AD2d 86, 89, affd 40
NY2d 856 (emphasis added).
Conclusion
To the extent that the principal amount of secured indebtedness is not increased, the
recording of any assignment, supplement, modification or amendment of any Recognized Mortgage
is exempt from the mortgage recording tax, under current law, either because such action does not
create a new mortgage subject to tax under section 253 of the Tax Law, or because such action
constitutes a "supplemental mortgage" under section 255 of the Tax Law. Where the principal
amount of secured indebtedness of a Recognized Mortgage is increased, the mortgage recording tax
is due only with respect to the amount of the increase.

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ISSUE 3
Is UDC exempt from the mortgage recording tax imposed by Chapter 26 of Title 11 of the
New York City Administrative Code.
Discussion
Section 253-a.1 of the Tax Law, states:
Any city in this state having a population of one million or more,
acting through its local legislative body, is hereby authorized and
empowered to adopt and amend local laws imposing in any such city
.o. a tax ... for each one hundred dollars and each remaining major
fraction thereof of principal debtor obligation which is or under any
contingency maybe secured at the date of execution thereof, or at any
time thereafter, by a mortgage on such real property situated within
such city and recorded on or after the date upon which such tax takes
effect ....
Section 253-a.2 of the Tax Law states:
The taxes imposed under the authority of this section shall be
administered and collected in the same manner as the tax imposed
under subdivision one of section two hundred fifty-three.., all the
provisions of this article relating to or applicable to the administration
and collection of the tax imposed by such subdivision shall apply to
the taxes imposed under the authority of this section with such
modifications as may be necessary to adopt such language to the tax
so authorized.
The City imposes a mortgage recording tax pursuant to Chapter 26 of Title 11 of the New
York City Administrative Code. The tax is imposed on the recording of a mortgage on real property
situated within the City.
Section 11-2603 of the New York City Administrative Code provides that the tax is
administered by the Commissioner of Finance in the same manner as the tax imposed under section
253.1 of Article 11 of the Tax Law.
In addition, section 6272 of the UDC Act provides that:
[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.

-10­
TSB-A-89 (2)R
Mortgage Tax
May 5, 1989

Conclusion
The rationale exempting UDC from the mortgage recording tax imposed under Article 11
of the Tax Law seems applicable to the City mortgage recording tax imposed under Chapter 26 of
Title 11 of the New York City Administrative Code. However, the City mortgage recording tax is
administered by the City. Further, an advisory opinion may only be issued by the New York State
Commissioner of Taxation and Finance with regard to taxes administered by the State Tax
Commission (now the Commissioner) (Tax Law, § 171, subd. 24th) A definitive opinion on the City
mortgage recording tax, therefore, should come from the New York City Finance Administration.

DATED: May 5, 1989

s/FRANK J. PUCCIA
Director
Technical Services

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