§ 1196-l. Exemption from taxes, assessments and certain fees; payments
in lieu of taxes. 1. It is hereby determined that the creation of an
authority and the carrying out of its corporate purposes is in all
respects for the benefit of the people of the state and is a public
purpose, and an authority shall be regarded as performing a governmental
function in the exercise of the powers conferred upon it by this title
and shall not be required to pay any taxes, special ad valorem levies or
special assessments upon any real property owned by it or any filing,
recording or transfer fees or taxes in relation to instruments filed,
recorded or transferred by it or on its behalf; provided, however, that
any real property owned or acquired by the authority outside of a
sponsoring municipality shall be exempt from real property taxes, ad
valorem levies or special assessments only pursuant to and to the extent
provided by an agreement with the governing body of the municipality in
which such real property is located.

2. An authority may pay, or may enter into agreements with any
municipality to pay, a sum or sums, annually or otherwise or to provide
other considerations to such municipality with respect to real property
owned by the authority located within such municipality and constituting
a part of a water or sewerage system.

3. Any bonds issued pursuant to this title together with the income
therefrom shall be exempt from taxation except for transfer and estate
taxes. The revenues, moneys and all other property and activities of an
authority shall be exempt from all taxes and governmental fees or
charges, whether imposed by the state or any municipality, including
without limitation real estate taxes, franchise taxes, sales taxes or
other excise taxes. Notwithstanding the foregoing provision of this
subdivision, any real property owned or acquired by an authority outside
a sponsoring municipality shall be subject to subdivision one of this
section. The state hereby covenants with the purchasers and with all
subsequent holders and transferees of bonds issued by an authority
pursuant to this title, in consideration of the acceptance of and
payment for the bonds, that the bonds of the authority issued pursuant
to this title and the income therefrom shall be free from such taxation,
as aforestated herein, and that all revenues, moneys, and other property
pledged to secure the payment of such bonds shall at all times be free
from such taxes, as aforestated herein.