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Tax Assessment & Condemnation Report

Fiber Optic Cables Are Not Taxable Real Property

Posted in Assessments, Utilities, Valuation

Image courtesy of Mr. Lightman / FreeDigitalPhotos.net

As discussed in our prior post, cows might be considered assessable or taxable real property under Section 102(12) of the Real Property Tax Law. See RCN v. Frankel, (1st Dept. 2012). However, fiber optic cables are not assessable real property under the same statute. At least that is what the First Department concluded in RCN NY Communications, LLC v. Tax Comm’n of the City of NY, 95 A.D.3d 456 (1st Dept. 2012).

In RCN/NYC, the court was asked to consider whether fiber optic lines, poles, wires, supports and enclosures located in the buildings of RCN’s customers were assessable or taxable real property. Although fiber optic cables are electrical insulators, these cables transmit light impulses and do not conduct electricity. As a result, the First Department concluded that fiber optic cables do not satisfy the definition of real property under RPTL Section 102(12)(i), which includes “all lines, wires, poles, supports and inclosures for electrical conductors . . . used in connection with the transmission or switching of electromagnetic voice, video and data signals . . .”.

The municipality argued that the fiber optic cables transmitted voice, video and data signals and that light is part of the electromagnetic spectrum. However, the unambiguous language of the statute includes only “lines, wires, poles, supports and inclosures” which are “for electrical conductors.” Accordingly, the First Department held that since fiber-optic cables are not “for electrical conductors” they are not assessable or taxable real property under RPTL 102(12)(i).

The implications of this decision are far reaching and will impact every municipality or assessing unit that includes fiber-optic cable in its tax base. The decision will also impact the State Office of Real Property Services’ advisory values for the 2013 rolls and some of the appraisals used to establish the 2013 equalization rates. On the flip side, telecommunications companies whose physical plants consist mostly or exclusively of fiber optic cable should see a dramatic reduction in their property tax bills.