Some organizations within the City of New York have a unusual benefit – they are exempted from having to pay for water and sewer charges. Religious organizations are entitled to the benefit if the water and sewerage they use is in real estate used in a public place of worship. The limits of this special exemption was tested yesterday in a case before the Court of Appeals – Matter of Brooklyn Assembly Halls of Jehovah’s Witnesses, Inc. v Department of Envtl. Protection of the City of New York.
The exemption is set forth in Chapter 696 of the Laws of 1887, as subsequently amended (the water exemption statute), which provides that:
“the real estate owned by any religious corporation located in the city of New York as now constituted, actually dedicated and used by such corporation exclusively as a place of public worship . . . [is] hereby exempted from the payment of any sum of money whatever to said city, for the use of water taken by same from said city.”
In addition, New York City Administrative Code § 24-514(e) exempts:
“[a]ny real property . . . entitled to an exemption from the payment of water rents or charges . . . from payment of the sewer rents or charges imposed hereunder.”
The Brooklyn Assembly Halls of Jehovah’s Witnesses applied for the exemption in 1991 for a building they owned in Brooklyn. The building was 100,000 square feet, four stories high, with an attached three-story structure, and contained multiple meeting and assembly halls used for religious instruction and worship. In its application, the Church indicated that there were “[t]wo apartments on premises — One is for the manager and his wife. The second apartment is for the technical maintenance caretaker and his wife. All are ministers.”
The City Department of Environmental Protection (DEP) denied the application on the grounds that under its implementation of the exemption only one dwelling in a building was allowed for a caretaker.
The Church dropped the matter until 2002 when it reapplied for the exemption. In this application, the Church indicated that there were regularly scheduled events 30 weekends per year with approximately 1500-2000 in attendance per day at each event. In addition, it claimed that two caretakers were needed to live on the premises given the size of the facility, maintenance and security needs, and insurance requirements.
The DEP again denied the application on the grounds that the use of the building had not changed. A subsequent investigation by DEP revealed the building contained additional guest rooms that were not disclosed in the Church’s application. The Church was advised that it could seek a partial exemption by installing a separate water meter for the non-qualifying portion of the premises.
Instead, the Church commenced an Article 78 proceedings directing and compelling the City to grant its application for the exemption, and to reimburse the Church for charges paid under protest. The Church argued that the determinations denying its request for an exemption were arbitrary and capricious and contrary to law.
The Court of Appeals upheld the denial of the Church’s application. The Court set forth the general rule that the construction given statutes by the agency responsible for their administration, if not irrational or unreasonable, should be upheld. It then stated:
“While the agencies [DEP] might legitimately have chosen to read the statute more generously, we cannot say that they acted irrationally by limiting the exemption to premises devoted exclusively to public worship plus the residence of a caretaker for these premises, if there is one. This interpretation, uniformly applicable to religious corporations throughout the City, is easily understood and administered, and is reasonable in light of the water exemption statute’s language and legislative history.”
The Court rejected the Church’s argument that the DEP’s interpretation ignored a religious organization’s actual need for water consumption. The Court found that there was nothing in the water exemption’s legislative history which suggested such a broad interpretation. The Court also rejected the Church’s claim that the water exemption laws should be interpreted in the same way as Real Property Tax Law § 420-a(1), which exempts from taxation any real property owned by religious organizations organized or conducted exclusively for religious purposes, if used exclusively for such purposes. The Court stated that the DEP was not called upon to interpret the statutory exemption from water charges afforded religious corporations “in th[e] context” of Real Property Tax Law § 420-a(1). And there was nothing to suggest that the two sets of legislation shared a common source.