Kiryas Joel made the request after it struck a controversial deal with Woodbury to lift a stop-work order on the project.
The order was issued after it was discovered that construction on the towers began without building approvals.
Village trustees cut Kiryas Joel a break, however, as part of an intermunicipal agreement that allowed Woodbury to inspect the facility, as well as determine what color to paint the towers.
Kiryas Joel also agreed not to drill wells on the property or buy water from an adjoining land owner.
Kiryas Joel needs the tanks to supply water to several new condominiums, a new women's health center and a firehouse. It fought four years to build the tanks, first on county-owned Gonzaga property, where it ran into legislative opposition, then at the current site in Woodbury.
Anger over the project still lingers, especially among some Woodbury Town Board members who opposed the Village of Woodbury's decision to lift the stop-work order and allow Kiryas Joel to build.
Woodbury village trustees, however, were not willing to give Kiryas Joel another break by exempting the property from taxes.
The towers are on half an acre that last year was assessed at $68,600.
Woodbury Mayor Stephanie Berean-Weeks said her municipality also pays taxes to towns where it owns land.
"It's not unusual for a municipality to pay another municipality taxes for property it owns," the mayor said.
