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Volume 4 - Opinions of Counsel SBEA No. 74

Opinions of Counsel index

Real property, definition of (microwave receiving equipment) - Real Property Tax Law, §§ 102(12)(d), 102(12)(f):

All the appurtenances in an installation which are an integral part of the equipment essential to the completion of the delivery of television signals (including microwave receiving equipment) on cables are real property for purposes of taxation.

The transmission of radio and television signals does not appear to be the buying and selling of a tangible product, thus the property of the corporation owning the microwave receiver is not excluded from the definition of real property by section 102(12)(f) of the Real Property Tax Law.

We have received an inquiry concerning the taxable status of certain microwave receiving equipment owned by a corporation. The receiver is mounted on a tower belonging to a cablevision corporation. It is connected by cable to base receiving station equipment and is then connected by wires and cables to the cable television receiver equipment.

All real property in New York State is subject to taxation, special ad valorem levies and special assessments unless specifically exempt therefrom by law (Real Property Tax Law, § 300). The power to define and classify which property should be taxable as real property is vested in the Legislature (Beagell v. Douglas, 2 Misc.2d 361, 157 N.Y.S.2d 461).

Subdivision 12 of section 102 of the Real Property Tax Law defines real property to include the following:

§ 102. Definitions
. . .
12. “Real property”, “property” or “land” mean and include:
. . .
(d) Telephone and telegraph lines, wires, poles and appurtenances; supports and inclosures for electrical conductors and other appurtenances, upon, above and under ground;

The New York Court of Appeals has held that any system employing electrical apparatus to send messages or signals in any form constitutes telephonic and telegraphic signals within the meaning of the above paragraph (Holmes Electric Protective Co. v. Williams, 228 N.Y. 407, 127 N.E. 315). Accordingly, it has been held that a corporation in the business of relaying and distributing television broadcasts by means of wires, poles or cables constitutes a telephone and telegraph corporation (Harper v. City of Kingston, 17 Misc.2d 627, 188 N.Y.S.2d 577; 1952, Op.Atty.Gen. 166).

It has been our opinion that the equipment comprising a television community antenna system (i.e., “cable television”), is taxable real property under the provision contained in paragraph (d) of subdivision 12 of section 102 (4 Op.Counsel SBEA No. 24).

In Matter of New York Telephone Co. v. Ferris, 257 App. Div. 415, 13 N.Y.S.2d 359, aff ’d w/o, 282 N.Y. 667, 26 N.E.2d 805, the court concluded that the word “appurtenances” in the aforementioned statutory provision included “. . . telephone lines, wires, poles and all accessory apparatus installed . . . as an integral part of the equipment essential to the completion of a telephone call” (13 N.Y.S.2d, at 363). It is our opinion that, similarly, all the appurtenances in an installation which are an integral part of the equipment essential to the completion of the delivery of television signals on cables for receipt by a customer of the company come within this definition of real property.

The test for taxability established by the Legislature, as interpreted by the courts, includes items which come within the above definition of being appurtenant to lines, wires and poles themselves, notwithstanding the fact that the items may be detached or removed from the realty without substantial injury thereto (Matter of New Power Co. v. Johnson, 37 App. Div. 264, 55 N.Y.S. 924). The fact that some or all the lines may be leased from a telephone or telegraph company does not take equipment which is appurtenant thereto out of the statutory definitions set forth above (People ex rel. Holmes Electric Protective Co. v. Chambers, 1 Misc.2d 990, 125 N.Y.S.2d 436, aff ’d, 285 App. Div. 886, 139 N.Y.S.2d 245, aff ’d, 1 N.Y.2d 760, 135 N.E.2d 56, 152 N.Y.S.2d 304; and Mackay Radio and Telegraph Co. v. Tax Commissioner of the City of New York, 12 Misc.2d 423, 169 N.Y.S.2d 751).

In Mackay, supra, the petitioner claimed the assessment of its property was illegal since all of its central office equipment, branch office equipment, and equipment located in the offices of its subscribers were, in fact, accessories and appurtenances of a wireless communication system located largely in Suffolk County, and engaged exclusively in atmospheric international communications. However, the petitioner conceded the fact that the property (located in New York County) sought to be taxed was connected by a system of lines owned by either the New York Telephone Company or Western Union Telegraph Company and that said lines were taxed to those owners. The court concluded, at p. 753, that:

. . . the assessments were legally levied. The equipment in question, while used in connection with certain wireless stations and equipment located without New York County, nevertheless is directly connected with and to telegraphic lines within New York County and is clearly appurtenant to those lines. Without being so connected, the equipment would be useless. The fact that the lines are leased and others pay the tax thereon does not take the equipment in question out of the statutory definition for the levy of assessment by respondent.

Therefore, it is our conclusion that the equipment in question is taxable as real property under the provisions of paragraph (d) of subdivision 12 of section 102, despite the fact that it may be used in conjunction with a wireless system since it is appurtenant to lines, wires and poles which would be taxable under the same subdivision.

However, in addition, the corporation has apparently objected to the taxation of this property on the ground that it is a so-called 9-A corporation under the Tax Law and therefore believes that the property would be entitled to the exemption from real property taxation provided for certain property by paragraph (f) of subdivision 12 of section 102.

The conditions for exemption pursuant to this subdivision are as follows:

1. it must be movable machinery or equipment;

2. it must not be essential to the support of a building or other structure;

3. the property must be removable without material injury;

4. it must be used for trade or manufacture;

5. the property must be owned by a corporation taxable under Article 9-A of the Tax Law.

Our research into the history of the 9-A corporation exemption supports the proposition that the phrase “trade or manufacture” was intended to cover the buying and selling of a tangible product. Since the transmission of radio and television signals does not appear to be the buying and selling of a tangible product, we do not believe that the machinery in question is “used for trade or manufacture.” Therefore, even if the microwave receiver is “movable”, and the corporation is a so-called 9-A corporation, this property cannot qualify for this particular exemption.

Finally, the lines, poles, cables and appurtenances thereto which are placed in, under, above, upon or through public streets or other public places constitute the tangible components of a special franchise and must be included in the value of such special franchise pursuant to subdivision 17 of section 102 of the Real Property Tax Law.

July 8, 1974