Tag Archives: exemptions

A Tale of Two Cities . . . Wanting to Tax the Same Property

In a recent appeal, the property owner – a condominium association – filed a tax appeal for its property which straddles the municipal boundaries of South Orange and Maplewood. The condominiums are located on the Maplewood side of the boundary line, and a 1.46 acre parcel containing a driveway, shrubbery, and plantings are located on the South Orange side. The property owner’s complaints alleged that the South Orange portion was not separately taxable from the condominium units because it is excluded from taxation as a common element of the complex, and the assessed value is shared among the individual units. Plaintiff renewed a previously denied motion for summary judgment to settle the legal issue of whether the disputed property qualified as excludable common elements, which South Orange opposed alleging there is no authority for the Township of Maplewood to assess the value of the property located within South Orange.

Common elements are excluded from separate taxation under N.J.S.A. 46:8B-19, which is a section of the New Jersey Condominium Act. Neither party disputed the classification as common elements. However, South Orange argued that it is constitutionally and statutorily obligated to assess the properties within its boundaries. The Tax Court held that, although South Orange is permitted to assess the property, the property is excluded statutorily as a separate taxable item as the common elements of the condominium association. Although potentially an impractical outcome for the parties, the judge did note that her decision did not prohibit the parties from discussing alternative resolutions available by statutes like N.J.S.A. 54:4-25, which permits municipalities to assign who may collect the taxes on a property that straddles multiple municipalities.

A copy of the Tax Court’s unpublished opinion in The Top Condominium v. South Orange can be found here.

For more on how condominium appeals have been handled previously by the Tax Court, please see the following blog posts:

To Conquer, Taxpayer Must Divide

Failure to Fix Report Dooms Expert’s Testimony

Montclair Tax Assessment: Might be Wrong, But Not In Error

Taxpayer’s Challenge to Re-Assessment Out of Time

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Appeal from Dismissal of Exemption Claim Permitted Late in the Game

A property owner’s motion to dismiss a complaint filed by a municipality was recently denied in Twp. of Cranbury v. Princeton Ballet Society.  Princeton Ballet Society (“PBS”) moved to dismiss the complaint filed by Cranbury, suggesting that it was filed past the statute of limitations to do so.  The Township’s complaint alleged that PBS’s property was not exempt from local property taxation.  At issue was whether the date to file the complaint ran from the time that the Middlesex County Board of Taxation issued its initial judgment in the matter, or from the time of an amended judgment nearly 2 months later.  The Township argued that the time to file its appeal began from the date that the amended judgment was mailed.  PBS argued that the time should be counted from the date the original judgment was mailed because the amended judgment did not materially or substantively change the original judgment.

The Township argued that there was a substantive difference between the two judgments because the first judgment failed to recognize the property as tax exempt, which was corrected in the second judgment, and that distinction created the appealable issue for the Township.  PBS argued that both judgments dismissed the Township’s petition without prejudice due to pending prior year appeals, and that the distinction was immaterial.  The Tax Court agreed with the Township that the exemption information was required to form the basis of an appeal to the Tax Court.  The amended judgment sought to be consistent of the denial of the relief sought by the Township, which was the imposition of an assessment.  Since the denial was only accomplished in the amended judgment, the time limit did not begin to run until the amended judgment was mailed.   Thus, PBS’s motion to dismiss the Township’s complaint was denied.

A copy of the Tax Court’s opinion in Twp. of Cranbury v. Princeton Ballet Society may be found here.

For more blog posts on cases involving motions to dismiss an appeal, please see the following:

Property Owner’s Appeal Dismissed for Failure to Follow Court Rules

NJ Supreme Court: Failure to Name Correct Plaintiff Not Fatal to Tax Appeal

Expert’s “Gut Feeling” Survives Dismissal Claim

Calendaring Mistake By Attorney Not Worthy of Dismissal at County Board Hearing

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NJ Supreme Court Finds Group Homes Tax Exempt

The New Jersey Supreme Court affirmed a decision of the Appellate Division to classify homes rented by Advanced Housing to provide normalized community living arrangements for developmentally disabled people as tax exempt under N.J.S.A. 54:4-3.6 for tax years 2002 through 2009.  Nine Bergen County municipalities argued the properties were not used for a tax exempt purpose, but were instead subsidized housing for which an exemption should not be granted.  The central issue on appeal was whether affordable housing for people with severe and persistent psychiatric disabilities used as an integrated unit with the treatment services provided to both residents and non-residents of the program is actually being used for a charitable purpose.  The Court found Advanced Housing satisfied the legal criteria for an exemption by showing that: (1) it is organized exclusively for a charitable purpose; (2) its property is actually used for such a charitable purpose; and (3) its use and operation of the property is not for profit.  See Presbyterian Homes of the Synod of N.J. v. Division of Tax Appeals, 55 N.J. 275 (1970), and International Schools Services, Inc. v. West Windsor Twp., 207 N.J. 3 (2011).

The Court identified six principles to guide future courts in making the fact-specific determination whether a non-profit corporation, organized for a charitable purpose, is “actually” using property for a charitable purpose: (1) the charitable work done by the private entity will spare the government an expense that ultimately it must bear; (2) the private entity must not be engaged in a seeming commercial enterprise; (3) the property must be used in a manner to further the charitable purpose; (4) the receipt of government subsidies or funds is not contraindicated by a charitable purpose; (5) financial support and recognition by the State of a private entity’s charitable work may be indicative that its property is used for a charitable purpose; and (6) the private entity in carrying out its charitable mission through the use of its property is addressing an important and legitimate governmental concern.

Using these criteria, the Court found Advance Housing “actually” used the residences for a charitable purpose, and thus satisfied the requirements of N.J.S.A. 54:4-3.6.  It also found that without Advance Housing, many of the residents would be at greater risk of homelessness, and place a strain on other social services.  Therefore, Advance Housing established itself as a not-for-profit corporation, organized exclusively for a charitable purpose, and that the properties for which it seeks tax exemptions are actually used for the charitable purpose of providing supportive housing for the mentally disabled, entitling them to tax-exempt status.

A copy of the New Jersey Supreme Court’s opinion in Advanced Housing v. Twp. of Teaneck, __ N.J. __ (September 25, 2013), can be found here.

For news coverage on this story, please see the following articles:

N.J. Supreme Court: Hackensack’s Advance Housing non-profit is tax-exempt – The Record

N.J. Supreme Court rules nonprofit housing groups do not have to pay property taxes – Star-Ledger

N.J. Supreme Court Ends Teaneck’s Bid To Tax Non-Profit – Teaneck Patch

For more discussion on property tax exemption cases, please see the following blog posts:

Bergen County “Group Homes” Entitled to Tax Exemption

Property Tax Exemption Denied to West Windsor Non-Profit

Tax Exemption does not require “lawful use” under zoning ordinance

Property Owner Keeps Tax Abatement After Municipality Failed to “Turn Square Corners”

Newark Church Denied Property Tax Exemption

Hospital’s Off-Site Physical Therapy Center Granted Property Tax Exemption

NJ Courts Deny Property Tax Exemption

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Bergen County Hospital: Exemption Safe or on Thin Ice?

A recent opinion by New Jersey Tax Court Judge Christine Nugent concluded that a long-time Bergen County hospital could remain exempt from local property taxation, but directed further proceedings to determine if the exemption would, in fact stand.  The hospital, formerly known as the Bergen Pines County Hospital in Paramus, has been operated by a for-profit, third-party entity for approximately 15 years and is currently known as the Bergen Regional Medical Center.   The property is approximately 62 acres in size, and is improved with 22 buildings totaling about one million square feet of space.

In 2001, the hospital began leasing portions of its facilities to physicians and other health care service providers.  This led to partial property tax assessments being levied by the Borough of Paramus beginning in 2005 and, in 2008, the Borough filed an appeal to remove the exemption on the bases that the operation by a for-profit administrator and the third-party leases invalidated the exemption which had been historically enjoyed pursuant to N.J.S.A. 54:4-3.3, which governs county-owned properties used for a public purpose.

The consolidated years under appeal came before the Tax Court earlier this year in a summary judgment proceeding.  The Court concluded that the operation by the for-profit administrator did not cause the hospital to forfeit its property tax exemption because the authorizing legislation specifies that the property be owned by a County (which it was) and that it be used for a public purpose (which it was).

Two issues were left unresolved, and require further fact-finding:

(1) whether the act of leasing space to third-party providers vitiates the exemption as a private use or purpose of the property; and

(2) whether use of the space, even if a private use, could constitute a de minimus use, which would not invalidate the exemption.

This one will be interesting to watch, as the Tax Court indicated that the outcome of the trial could render the property either entirely exempt or wholly taxable.  With an estimated assessed value of nearly $100,000,000, the loss of the exemption would provide a significant new ratable for the Borough.

A copy of the Tax Court’s opinion is available here.

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Bill would provide tax relief for towns purchasing properties for flood relief

Under a bill approved and amended by the Senate Community and Urban Affairs Committee, flood-prone properties acquired by municipalities after Superstorm Sandy would be exempt from county, school, and fire district taxes for the following tax year.  A companion bill was introduced in the Assembly under bill number A3362.  Currently, if a municipality acquires a property prior to October 1, it must pay the county, school, and fire district taxes owed for the remainder of that tax year, and if the property is acquired after October 1, it must pay the county, school, and fire district taxes owed for the remainder of that tax year and for all of the following tax year.

Municipalities receive grants for acquiring flood-prone property for open space and conservation purposes under the Blue Acres Program.  The Blue Acres program is overseen by Green Acres and provides State grants and low-interest loans to help towns and counties purchase properties that may be prone to damage caused by storms.

To see the amended version of S2256, please click here.

If you wish to contact your local legislator about these bills, please click here.

For more news stories on these bills and Blue Acres funding, please see the following articles:

Senate Panel Approves Bill Providing Tax Relief to Towns Purchasing Flood-Prone Properties

Hurricane Sandy brings relevance to Blue Acres program

DiMaio’s Green Acres/Blue Acres bill receives committee approval

For more information of legislative developments related to New Jersey property taxes, please see the following blog posts:

Refunds for Environmental Remediation?

Changes to Statute Requiring Payment of Taxes Pending Appeal Being Considered

Legislative Reform For Tax Assessments On The Way?

Will Income Tax Be Used to Offset Property Taxes?

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Holiday House in Cape May enjoys property tax holiday as exemption is granted.

The Tax Court granted an exemption to Holiday House, a Christian retreat house that is owned by the Girls Friendly Society of Pennsylvania (GFS) located in Cape May.  GFS is a religious and charitable nonprofit organization.  The Holiday House is 4,400 square feet, with 35 guest rooms and can accommodate up to 50 guests.  Built in the late 1800s, the house has been designated a key historic property.  GFS began using it in 1910 and purchased it in 1930.

Holiday House is occupied seasonally from May through September.  It is located two blocks from the beach.  For about the first six weeks of the summer season the house is used by GFS.  During the remainder of the summer season, rooms are available for rent, which was at the heart of this property tax exemption case.

GFS argued that the rentals were available only to those affiliated with religious groups and choirs in the Episcopalian Church and to individual GFS members and their families and are not available to the general public.  Moreover, it argued that the rentals are not conducted for profit.  GFS also argued that while rented, the facility is still supporting the organization’s work by providing employment opportunities for GFS teenagers and income to offset the cost for food and utilities and operating expenses.

The municipality argued that the predominate purpose of the Holiday House is to give members and non-members a vacation at the shore.   While the municipal assessor testified that the property “appears to be a retreat house, unpretentious, simple and peaceful” it is advertised in a way that “give[s] the impression that the Holiday House is [also] a very affordable bed and breakfast open to the general public.”

The Tax Court in Girls Friendly Society of Pennsylvania v. City of Cape May held that the actual and predominant use of the property is for the benefit of GFS’ members, which qualified as a charitable purpose and, therefore, the property is entitled to the exemption.  The court went on to find that the house was actually used for this purpose and that the use of the property by nonmembers for a fee does not destroy the exemption.

NOTE:  We at McKirdy & Riskin would like extend our best wishes to the people of Cape May and all communities along the New Jersey coast that are struggling in the aftermath of Hurricane Sandy.  Our thoughts and prayers are with you.

For more on cases addressing exemptions see:

Tribe’s First Amendment Rights Not Violated by Denied Tax Exemption  

Tax Court to Nonprofit – Only 2% Exempt

Property Tax Exemption for Sale

Bergen County “Group Homes” Entitled to Tax Exemption

Property Tax Exemption Denied to West Windsor Non-Profit

Property Tax Exemption Does Not Require Compliance With Municipal Zoning Ordinance

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Tenants’ Temporary Structures Found As Taxable Real Property

In a recent unpublished opinion, a Tax Court judge considered an in limine motion seeking to bar the report and testimony of the Township of Belleville’s appraisal expert as lacking a credible factual basis.  The property owners filed complaints challenging the assessment on their real property in Belleville for tax years 2008 through 2010.  The property owners argued that Belleville’s expert improperly deemed two trailers and one Quonset Hut on their property owned by tenants as taxable real property instead of exempt personal property.  Additionally, they argued that the expert improperly designated the attic in their single-family home as another bedroom when it is an unfinished space used only for storage.

The court found that, pursuant to N.J.S.A. 54:4-1, the trailers and the Quonset Hut are taxable as real property, and that plaintiffs failed to present sufficient evidence to qualify for an exemption under either N.J.S.A. 54:4-1(a) and (b).  Under N.J.S.A. 54:4-1(a), personal property is exempt from taxation if it can be removed without material injury to either the real or personal property, and it is an item not ordinarily intended to be affixed to real property.  Under section (b), property must be machinery or apparatus or equipment used in the conduct of business.  The court’s holding specifically found that the trailers and hut qualified as taxable structures because they had utility connections, housed people and equipment, and that no evidence was presented as to what effect the removal of the structures would have on the property.  Finally, the court deferred its decision on the attic issue for a later hearing.

For more on property tax cases focused on expert testimony and report issues, or lack thereof, please see the following blog posts:

Experts’ Opinions on Golf Course Valuation Not Up to Par

Apples and Oranges? Another Tax Appeal Dismissed

Expert’s “Gut Feeling” Survives Dismissal Claim

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Red Bull Exemption Redux

Earlier this year in the 2010 tax appeal Red Bull Arena Inc. v. Town of Harrison, the Tax Court granted summary judgment to the Town and rejected a claim by the owners of the Red Bull Arena, home to the New York Red Bulls Soccer Club, that the property is entitled to a tax-exemption under the Local Redevelopment and Housing Law (“LRHL”).  In consideration of the issue then, the Court found that the property is owned by the Harrison Redevelopment Agency, a municipal entity created pursuant to the LRHL, and leased to Red Bull through the Hudson County Improvement Authority. Pursuant to the terms of the lease, Red Bull is responsible for the payment of any real property taxes assessed.

Red Bull argued that the 12-acre property was acquired by the Harrison Redevelopment Agency to be redeveloped for the “public good” and that since the stadium provides a “public good” and the redevelopment agency is a tax-exempt entity, the stadium should be tax-exempt.  The tax court judge rejected Red Bull’s argument finding that once the property was transferred to Red Bull and no longer held by the redevelopment agency, it no longer fulfilled the statutory purpose of redevelopment and was no longer exempt.

Now, in connection with an appeal for the 2011 tax year, the Town filed a motion for summary judgment on Count One of plaintiff’s Complaint where it is alleged that the property is tax exempt.  In considering the motion, and Red Bull’s cross-motion for summary judgment, the court noted that Red Bull raised no new material issues of fact or law.  The court granted the Town’s motion for summary judgment and denied Red Bull’s cross-motion.  The Court again found that the LRHL is designed to exempt property acquired for redevelopment for that period during which it is held by the redevelopment agency until it is transferred to a private entity for development. During the land taking, development design and planning, demolition and land clearance, the subject property was a project of the agency and thus qualified for an exemption under the LRHL.  But after the property was transferred to Red Bull, the exemption was lost.

A copy of the Tax Court’s letter opinion may be found here.

See also, Red Card for Red Bull Soccer Stadium,  our February 11, 2012 blog entry regarding the Tax Court’s disposition of the exemption claim in connection with the 2010 appeal.

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Tribe’s First Amendment Rights Not Violated by Denied Tax Exemption

In a recent unpublished opinion, a Tax Court judge held that the Ramapough Mountain Indians were not entitled to an exemption under N.J.S.A. 54:4-3.6 for the use of their property for religious purposes.  The Ramapoughs argued that the statute is unconstitutional as applied to them because of the statute’s requirement that a building exist on any property to qualify for an exemption.  Specifically, they argued that the requirement violated their Free Exercise of Religion under the First Amendment.

The Tax Court held that the Ramapoughs’ First Amendment rights were not violated by the statute because “burdens, including tax burdens are permitted.” The Tax Court reasoned that the requirement was not intentionally discriminatory, and also treated all property owners similarly.  Moreover, “the power to grant or enlarge an exemption from taxation resides in the Legislature and may be exercised by that body consistent with state and federal constitutional requirements.”

The Ramapoughs also failed to qualify for an exemption under the requirements set forth In Paper Mill Playhouse v. Millburn Township, 95 N.J. 503 (1984).  There, the New Jersey Supreme Court established that a claimant must demonstrate: (1) it is organized exclusively for the moral and mental improvement of men, women and children; (2) the property must be actually used for the tax exempt purpose; and (3) the operation and use of the property must not be conducted for profit.  The documents submitted by the Ramapoughs established that the group failed to satisfy the first prong because the group was not organized exclusively for qualifying activities.  Additionally, the group failed to establish that the property had been used for tax exempt purposes during the qualifying period.

For more on property tax exemptions, please see the following blog posts:

Tax Court to Nonprofit – Only 2% Exempt

Property Tax Exemption for Sale

Property Tax Exemption Does Not Require Compliance With Municipal Zoning Ordinance

Newark Church Denied Property Tax Exemption

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Red Card for Red Bull Soccer Stadium

Like a referee ejecting a soccer player for overly aggressive play, the New Jersey Tax Court has thrown out a tax appeal that claimed Red Bull Arena, home to the New York Red Bulls Soccer Club, is a tax-exempt entity.

Red Bull Arena in Harrison, NJ.

Image via Wikipedia

The arena sits on a 12-acre parcel that is located within a designated redevelopment area under the local redevelopment and housing law (“LRHL”).  While the property is owned by the Harrison Redevelopment Agency, a municipal entity created pursuant to the LRHL, it is leased to Red Bull through the Hudson County Improvement Authority. Pursuant to the terms of the lease, Red Bull is responsible for the payment of any real property taxes assessed.  Red Bull argued that the property was acquired by the Harrison Redevelopment Agency to be redeveloped for the “public good” and that since the stadium provides a “public good” and the redevelopment agency is a tax-exempt entity, the stadium should be tax-exempt.

Much like an unsympathetic referee ignoring the pleas of a player whistled for a hard foul, the tax court judge rejected Red Bull’s argument. The court found that once the property was transferred to Red Bull and no longer held by the redevelopment agency, it no longer fulfilled the statutory purpose of redevelopment and was no longer exempt.    Red Bull, undeterred by the judicial red card, has vowed to appeal the decision.

See story from the Jersey Journal here.

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