Tax issue at question in dispute between MTA, Village of Mineola

To have taxed or not to have taxed?

The question is the crux of a dispute between the Village of Mineola and the Metropolitan Transportation Authority over a former transit building at 250 Old Country Rd.

At issue is $740,806.68 the MTA was asked to pay the village between 2007 and 2013 and in protest, deposited within the past year in escrow, according to Mineola Village Attorney, John Spellman.

While village officials believe the site should have been taxed, transit authority leaders say the agency, as a public entity, is exempt from real property taxations, including for the Old Country Road building, once the offices for KeySpan but later deeded to the transit authority. The agency, which sold the site to a developer this year -- to make way for an $85 million apartment complex -- has invoked the state's public authorities law and demanded a total refund.

Spellman said the village and the transit agency are in "productive and amicable" settlement talks to resolve the exemption dispute; but MTA officials declined to comment on negotiations. The village, Spellman said, is open to settling the issue of whether the public authorities law applies to the MTA, "because it's a gray area."

Brian Egan, co-chairman of the Municipal Law Committee for the Suffolk County Bar Association, and a village attorney for several Suffolk villages, said both sides "have good legal arguments and points. It depends on what operations they had there, if it was closely related to their municipal mission."

The village contends the MTA leased out the site, did not use the property for operational purposes and should not be exempt. "Our position is that when a public authority operates property for a profit unrelated to transportation, then it should be taxed," Spellman said.

In a letter to the village, dated June 5, 2012, and found in court records, the MTA wrote "though the MTA had considered using some of the office space for its own employees, it did not. Several tenants continued occupying some of the office space under existing leases for some time, but it is now vacated (save for three telecommunications antenna leases.)"

In a motion filed in Nassau County Supreme Court last year, MTA officials said real property it owns is "exempt from taxation regardless of the fact that it is leased to private persons."

They cited case law and statutes, such as section 412 of the state's real property tax law: "Real property owned by public authorities enumerated in the public authority law shall be entitled to such exemption as may be provided therein."

Agency officials said the MTA "has been and continues to be injured as it will be forced to pay real property taxes upon property that is not legally subject to taxation."

Cary Ziter, a spokesman for the state tax department declined to weigh in on the dispute, but referred to the state's public authorities law that says, "The authority shall be required to pay no fees, taxes or assessments . . . "