Image courtesy of Julie Wenskoski /

Are cows assessable real property under RPTL 102(12)(f)? Sounds ridiculous, but a recent ruling by the First Department could result in the answer to this question being “yes.” In November, the First Department analyzed  the scope of “power generating apparatus” under RPTL 102(12)(f) in RCN Telecom Services of New York, LP v. Frankel (2012 NY Slip Op 07890, 1st Dept. November 2012). In RCN, the First Department concluded that it was the Legislature’s intent that all power generating apparatus be deemed assessable real property.  In RCN, the specific “power generating apparatus” at issue was “banks of batteries and emergency backup generators” that, allegedly, generated power.

The parties in RCN did not dispute (and the Court did not question) that these batteries and generators were movable with a few days’ worth of work and, that, moving them would not damage the buildings in which they were housed. Petitioner argued that because the batteries and generators were “movable machinery” they were not assessable real property. Respondents countered that the batteries and generators were “power generating apparatus” as stated in RPTL 102(12)(f) and, thus, were assessable.

Interestingly, the Court recognized that both parties were right – that the batteries and generators were both movable machinery and power generating apparatus. To resolve the case in favor of the Respondents, the Court turned to the the former Tax Law Section 3 to hold that, regardless of whether something is actually movable machinery that might otherwise fall outside the definition of assessable real property, all “power generating apparatus” is assessable real property. So, in the First Department, “power generation” trumps mobility.

Case law throughout the State’s four judicial departments has not always been consistent on what is and is not real property as it pertains to power generating machines. The prevailing case law in the Fourth Department might not find these batteries and generators assessable, while the other Departments have for some time now have been leaning in the same direction as the First Department in the RCN case.

The implications of this decision are far reaching. In short, in an age where technology is all about mobility, the mobility of the equipment takes a back seat to the commercial end use of the equipment. For example, new modes of “power generating apparatus” such as turbines that are frequently moved or removed and replaced, are not essential to any building (or might not even be within any building), are easily extracted, are sold on the open market, and are not intended to be permanent could be assessable real property under the First Department’s holding in RCN just because they are “power generating apparatus.”

Thus, the question becomes, where will the line be drawn as technologies make power generating equipment less cumbersome, more compact and more mobile? Just remember that, with today’s technologies, even a cow generates power (in more ways than one).

Who knows what tomorrow will bring to the power generating world. Is it not within the Legislature’s best interests to protect our State’s power generators and their financial health by encouraging such innovation without risking assessment?  Thus, despite the RCN decision, property owners, assessing units and taxing jurisdictions are cautioned about applying such a broad definition to all types of power generating technology. And cows.