AUBURN | The Merry-Go-Round Playhouse, Inc., after successfully appealing a Cayuga County Supreme Court decision, has been granted tax-exempt status for two Auburn apartment buildings it uses to house staff during the theater season.
The properties at 112 Franklin St. and 230 Genesee St. were determined unanimously by the state Supreme Court's Appellate Division, Fourth Judicial Department to be "incidental to the primary or major purpose of (the theater company)," which is a tax-exempt organization. The decision was filed March 22.
When the Playhouse challenged the taxes on the apartment buildings, which it purchased in 2011 for a combined $900,000, it lost the case in March 2012 in Cayuga County, but appealed the decision, arguing that under state Real Property Tax Law, any property that is used to further the primary purpose of a tax-exempt organization is also exempt from property taxes.
The appellate division confirmed that the Playhouse itself is tax-exempt, as it provides the "presentation of theater as the showcase for all the arts" and encourages "appreciation of wholesome entertainment in the Auburn area" and conducts "year round programs in the performing arts for children, teenagers and adults."
The lynchpin of the argument for the tax-exempt status of the apartments, however, was the Playhouse's argument that those housing units — 30 of them — are an integral part of its mission.
"Petitioner (Playhouse) met its burden ... by presenting evidence that the primary use of the properties furthers a primary or major purpose of that corporation," the decision stated.
According to The Citizen archives, the apartment buildings brought in more than $31,000 annually in property taxes for the city, county and school district in past years when they were privately owned.
With the decision from the appellate division, the case has been remanded back to Supreme Court in Cayuga County to determine how much of a refund the three municipalities owe the Playhouse.
However, the city of Auburn plans to try to fight the decision, said city attorney John Rossi.
Rossi said the Auburn City Council authorized his office to request permission from the state Court of Appeals to appeal the decision of the appellate division. Permission is required from that top court prior to an appeal of an appellate division decision.
City Councilor Peter Ruzicka said he is not optimistic about the city's chances of getting an appeal in time to help the budget situation and is upset that the Playhouse appealed the county decision even after the city has been generous in helping the theater company establish itself downtown.
"As a taxpayer, I view this as a kick in the teeth," he said.
And as a councilor, Ruzicka said he is concerned about the city's financial shortfall and how a potential refunding of taxes to the Playhouse could hurt the city fiscally even more.
"(The Playhouse) can certainly afford to give up this amount in taxes," he said.
Ed Sayles, producing artistic director for the Finger Lakes Musical Theatre Festival, which is produced by the Merry-Go-Round Playhouse, said the Playhouse is a non-for-profit organization and does not have surplus money to give up.
"It's even more important that the theater receives everything it's entitled to at this time, due to the fact that we have made a major commitment to the economic development of this community with our expansion into the Finger Lakes Musical Theatre Festival," Sayles said.