Opinion
Docket No. 016049-2010
06-20-2012
A.S. Pushkin Memorial Home for the Aged Russian People, Inc. v. Township of Jackson
Alexander Pavliv, Esq. Pavliv & Rihacek, LLC Michael J. Gilmore, Esq. Gilmore & Monahan, P.A.
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Patrick DeAlmeida
Presiding Judge
R.J. Hughes Justice Complex Alexander Pavliv, Esq.
Pavliv & Rihacek, LLC
Michael J. Gilmore, Esq.
Gilmore & Monahan, P.A.
Dear Counsel:
This letter constitutes the court's opinion after trial in the above-referenced matter challenging the denial of an exemption for the subject property for tax year 2010. For the reasons explained more fully below, the court concludes that plaintiff failed to establish by a preponderance of the evidence that the use of the subject property satisfied the requirements for an exemption set forth in N.J.S.A. 54:4-3.6 for tax year 2010.
I. Findings of Fact and Procedural History
The following findings of fact are based on the testimony of the trial witnesses and the exhibits admitted into evidence during trial. R. 1:7-4.
Plaintiff A.S. Pushkin Memorial Home for the Aged Russian People, Inc. (the "Pushkin Home") is the owner of real property located at 130 Pushkin Lane in Jackson Township. The property, designated by the township as Block 11501, Lot 7, was considered exempt from local property taxes for many years. In 2009, the municipal tax assessor, after an inspection of the property, removed the exemption for tax year 2010.
As a result of the assessor's determination, the property was assessed as follows:
+-----------------------+ ¦Land ¦$ 980,000 ¦ +------------+----------¦ ¦Improvement ¦$ 304,500 ¦ +------------+----------¦ ¦Total ¦$1,284,500¦ +-----------------------+
Plaintiff challenged the assessor's determination through the filing of a Petition of Appeal with the Ocean County Board of Taxation. After the board issued an August 12, 2010 Judgment affirming the assessor's determination, plaintiff filed a timely Complaint in this court. Trial was held on May 16, 2012.
A single, approximately 19,000 square feet structure sits on the property. The building has fourteen rooms on the first floor for single-person occupancy. The second floor, with an additional ten single-occupancy rooms, is vacant, locked and not used by the plaintiff for any purpose. The facility has a communal kitchen in the basement and a communal bathroom on the first floor. A small office for the plaintiff and a small library for the residents are on the first floor of the facility. The property also includes five acres on which the building sits. The undeveloped portion of the property is available for use by the residents of the Pushkin Home.
The Pushkin Home was incorporated under New Jersey law on May 7, 1938. According to the organization's 1967 Constitution and By-Laws, plaintiff was formed "by members and Branches of the Russian Consolidated Mutual Aid Society of America" to "provide a home for such aged and infirm Russian men and women of Slavonic extraction as may be approved by the Board of Trustees." The Constitution and By-Laws provide that an "[a]pplicant for admission must be a person of respectability and in good health; member of the ROOVA, and a Life member of the A.S. Pushkin Home; not under 60 years of age." There are several aspects of the application criteria that warrant discussion.
First, according to the testimony at trial, ROOVA is an acronym for the Russian name of an organization associated with the issuance of insurance policies. The Russian name was not placed in the record, as the only witness to testify on plaintiff's behalf stated that he was not sufficiently fluent in Russian to pronounce the name correctly. ROOVA is no longer in existence, having been replaced by the Russian Brotherhood Organization, which also is no longer in existence. According to the testifying officer of the Pushkin Home, plaintiff no longer enforces the ROOVA membership criterion when considering tenants for the home. This change in practice was not recorded in writing and the organization did not amend its Constitution and By-Laws to reflect elimination of the ROOVA membership criterion.
Second, according to the officer, plaintiff's Board of Trustees eliminated the requirement that applicants to the home be of any particular ethnic background. This official action, however, also was not memorialized in writing. The record contains no evidence corroborating the testimony regarding this purported amendment to the membership criteria.
Third, in 2007, the Board of Trustees adopted an amendment to the Constitution and By-Laws to reduce the minimum admission age of its tenants from 60 to 50. An officer of the organization testified that the written amendment contained a typographical error and "50" should be "55." Despite the fact that this amendment was adopted over five years ago, the alleged typographical error was not corrected. No evidence was introduced to corroborate the officer's testimony that the written amendment to the Constitution and By-Law contained an erroneous term.
Finally, although the Article II of the Constitution and By-Laws provides that plaintiff was organized for the purpose of providing a home to "infirm" people, Article VIII of the Constitution and By-Laws provides that all applicants for admission to the home must be "in good health." Plaintiff's officer attempted to explain this apparent contradiction at trial by testifying that the Board of Trustees amended the Constitution and By-Laws to remove the infirmity requirement but that this official action was never memorialized in writing. Again, no evidence was introduced to corroborate this testimony.
The court found the testimony regarding multiple changes to plaintiff's Constitution and By-Laws that were not memorialized in writing to be unreliable. It is not possible for the court to conclude that Pushkin Home amended its Constitution and By-Laws to alter the admission criteria on at least three occasions without written evidence of the amendments to corroborate the witness's testimony. Plaintiff introduced nothing - no minutes of Board meetings, no notes of Board members, no correspondence - to corroborate the officer's testimony regarding multiple changes to plaintiff's Constitution and By-Laws. The same is true with respect to testimony that the one written amendment to the Constitution and By-Laws in evidence contained a typographical error on the key subject of the amendment - the age criterion.
In light of the absence of corroborating evidence regarding the alleged amendments to the Constitution and By-Laws, the court must conclude that the organization's written Constitution and By-Laws submitted into evidence remain in effect as written. Having elected to incorporate via adoption of a Constitution and By-Laws, plaintiff must accept the legal consequences of the terms of that document, unless it is amended by official action. See General Trading Co. v. Director, Div. of Taxation, 83 N.J. 122 (1980)(business decisions will be given effect for tax purposes according to what actually occurred). Having not proven that the Constitution and By-Law were amended and having not proven that the age criterion is anything other than 50, plaintiff must have its exemption claim resolved through analysis of the written Constitution and By-Laws and written amendment in the record created at trial.
According to the uncontradicted testimony at trial, there is no written application process for admission to the Pushkin Home. Applicants make a verbal request of a Pushkin Home officer to become a tenant at the facility. Plaintiff requires two references and undertakes a criminal background check of the applicant. There is no income criterion and no attempt to determine the financial circumstances of the applicant. In addition, while the Constitution and By-Laws require that a "[p]hysical examination of the applicant must be made by a physician of the Home, before entering the Home; if the applicant is very sick and needs hospitalization, disabled or has a chronic disease, he shall not be admitted in the Home," no physical examination of an applicant is conducted. Thus, no attempt is made to determine if the applicant is "infirm" or in need of housing due to a medical condition.
In addition, the organization's founding document provides that "[i]f at any time the mental or physical condition of inmates (sic) becomes such that, in the opinion of the physician of the Home, they must be removed therefrom by the parties who obtained their admission, for they are no longer proper persons to be retained in the Home." Yet, no evidence was introduced that the Pushkin Home undertakes any evaluation of the medical condition of its tenants on an ongoing basis or that a physician, any medical staff, or anyone employed by the Pushkin Home for that matter, is regularly present at the facility.
Although plaintiff contends that applicants must meet the age requirement set forth in the amendment to the Constitution and By-Laws, no evidence was introduced that the organization requires proof of age from any applicant. The record contains no evidence with respect to the ages of the currents tenants of the Pushkin Home, the ages of the tenants on the valuation date, or any historic data concerning the ages of tenants admitted at any time in the past.
The organization's Board of Trustees, which has the right to waive any of the requirements for admission, makes the determination of which applicants meet the qualifications to become a tenant at the facility. An explanation of how that determination is made was not provided at trial. No applicant has ever been turned down.
Plaintiff's Constitution and By-Laws provide that plaintiff's recording secretary "shall keep a register upon which shall appear the names of all persons who have been admitted to the Home, with their age, place of birth and residence, date of the application and admission together with the name of the person through whom the application was made." Despite this directive, plaintiff provided no evidence with respect to the tenants who occupied the property on or about October 1, 2009 or at any other time. The record contains no evidence regarding the name, age, physical condition, date of occupancy or other information regarding even a single tenant, past or present, at the property. The Constitution and By-Laws also state that all tenants at the home shall "sign and execute in a book to be provided and kept by the President, the agreement and (sic) hereto annexed." No lease or other rental agreement from any tenant at the home was placed in evidence at trial.
Apart from tax returns, no financial records of the organization were introduced at trial. Plaintiff's only witness testified that he preferred to leave the Pushkin Home's records in the office at the facility. Tenants at the property pay $400 a month for their room, including utilities. No services are provided to the tenants. The Pushkin Home does not provide meals, transportation, laundry service, house cleaning, or medical support to any tenant. Tenants have access to the communal bathroom, communal kitchen, library and grounds.
No evidence was introduced with respect to whether the rent charged at the facility is at, below or above market rent for similar housing in the area. A failure to pay rent will result in eviction, although plaintiff is reluctant to displace its residents. The Constitution and By-Laws permit a tenant, in lieu of rent, to assign to the Pushkin Home insurance policies or other personal or real property. There is no evidence in the record with respect to how often this provision of the Constitution and By-Laws was employed by tenants.
Of the fourteen available units at the property (not including the ten units on the locked and vacant second floor), six were rented at or around October 1, 2009. As noted above, the identity of the tenants is not included in the evidence introduced at trial. The duration and terms of their tenancies are not addressed by any of the evidence in the record.
Tenants arrive at the facility by word of mouth, with most referrals coming from the Russian community in the area near the Pushkin Home. In addition, during the summer months, congregants at nearby churches rent rooms at the facility on a short term-basis to attend church functions. Plaintiff introduced no evidence with respect to the rent charged for those short-term stays or the frequency of such visits. Two rooms at the house are reserved for individuals who visit the nearby churches or cemetery and wish to stay overnight free of charge. There is also no evidence in the record regarding the frequency of these visits.
Plaintiff's officer testified that the Pushkin Home is licensed as a rooming house by the Department of Community Affairs. The facility's rooming house license was not introduced into evidence and the witness did not know what class of rooming house license was issued to the Pushkin Home. As will be explained more fully below, the rooming house license class is a crucial fact with respect to the one of plaintiff's claimed exemptions.
It is undisputed that the Pushkin Home does not operate at a profit. The officers of the organization receive no salary and revenue from the operation of the facility does not add to the personal wealth of any individual. The relevant valuation date for tax year 2010 is October 1, 2009. During 2009, plaintiff received $69,437 in income, comprised of rents, contributions and payments from the purchaser of 44 acres of vacant land near the facility sold by plaintiff to a developer for $1.7 million. Plaintiff ended the tax year with a balance of $56,187 in assets.
The municipal tax assessor credibly testified that "a young gentleman" came to her office in 2009 asking for an explanation of why he had not received a homestead property tax rebate from the Director, Division of Taxation. The gentleman identified himself as a tenant at the Pushkin Home. After the assessor explained that homestead property tax rebates are not available to tenants at properties that are exempt from taxation, the tenant became upset and left the assessor's office. Because of the assessor's impression that the tenant was not elderly or infirm, she and a member of her staff inspected the subject property.
Plaintiff objected to the assessor's testimony regarding her opinion of the age of the tenant who made an inquiry at her office. The court overruled the objection, holding that a lay witness can offer opinion testimony rationally related to her perceptions. See N.J.R.E. 701. The court does not make a finding with respect to the age of the tenant who visited the assessor's office. The testimony of the assessor regarding the tenant's office visit is not critical to the analysis of whether plaintiff proved that it is entitled to an exemption. The office visit by a Pushkin Home tenant and the assessor's perception of the age of the tenant merely explain why the assessor inspected the subject property in 2009.
During the inspection, the assessor was surprised to find no staff member present at the Pushkin Home. A tenant allowed her into the facility. She concluded that the property was being used as a rooming house that provided no services to its tenants and fulfilled no charitable purpose. As a result, she removed the exemption on the property for tax year 2010.
The tax assessor testified that plaintiff's Vice President admitted to her that plaintiff was accepting tenants who did not meet the criteria for membership in the Constitution and By-Laws in order to generate enough income to pay the taxes on the 44 acres of vacant, non-exempt land owned by plaintiff, which was later sold to a developer. The court overruled plaintiff's objection to the admission of this testimony, concluding that the statement was an exception to the hearsay rule as an admission by a party opponent. N.J.R.E. 803(b). The court does not rely on the statement to reach its conclusion that plaintiff did not prove that it is entitled to an exemption pursuant to N.J.S.A. 54:4-3.6.
II. Conclusions of Law
Plaintiff argues that the building at the subject property is entitled to an exemption under three provisions of N.J.S.A. 54:4-3.6. The relevant provisions of the statute provide an exemption from local property taxation for:
all buildings actually used in the work of associations and corporations organized exclusively for the moral and mental improvement of men, women and children . . . .In all three instances, the exemption applies only if the use of the building is "not conducted for profit" and the entity seeking the exemption is a non-profit entity that "owns the property in question and is incorporated or organized under the laws of this State and authorized to carry out the purposes on account of which the exemption is claimed . . . ." Ibid.
[N.J.S.A. 54:4-3.6 (the "moral and mental improvement" exemption)].
* * *
all buildings actually used in the work of associations and corporations organized exclusively for . . . charitable purposes . . . .
[including] cases where the charitable . . . work therein carried on is supported partly by fees and charges received from or on behalf of beneficiaries using or occupying the buildings; provided the building is wholly controlled by and the entire income therefrom is used for said charitable . . . purposes.
[N.J.S.A. 54:4-3.6 (the "charitable" exemption).]
* * *
all buildings actually used in the work of associations and corporations organized exclusively for hospital purposes . . . .
* * *
as used in this section "hospital purposes" includes health care facilities for the elderly, such as nursing homes; residential health care facilities; assisted living residences; facilities with a Class C license pursuant to P.L. 1979, c. 496 (C. 58:13B-1 et al.), the "Rooming and Boarding House Act of 1979"; [and] similar facilities that provide medical, nursing or personal care services to their residents . . . .
[N.J.S.A. 54:4-3.6 (the "hospital purposes" exemption).]
If a building is found be exempt, "the lands whereon any of the buildings . . . are erected, and which may be necessary for the fair enjoyment thereof, and which is devoted to the purposes above mentioned and to no other purpose and does not exceed five acres" is also exempt. Ibid. The parties do not dispute that in the event plaintiff establishes that its building is exempt, the land on which the building sits, which measures five acres, is necessary for the fair enjoyment of the facility.
Because they represent a departure from the fundamental approach that all property owner bear their fair share of the local property tax burden "[t]ax exemption statutes are strictly construed, and the burden of proving entitlement to an exemption is on the party seeking it." Abunda Life Church of Body, Mind & Spirit v. City of Asbury Park, 18 N.J. Tax 483, 485 (App. Div. 1999)(citing New Jersey Carpenters Apprentice Training and Educ. Fund v. Borough of Kenilworth, 147 N.J. 171, 177-78 (1996), cert. denied, 520 U.S. 1241, 117 S. Ct. 1845, 137 L Ed. 2d 1048 (1997); Princeton Univ. Press v. Borough of Princeton, 35 N.J. 209, 214 (1961)). "'[A]ll doubts are resolved against those seeking the benefit of a statutory exemption . . . .'" Chester Borough v. World Challenge, Inc., 14 N.J. Tax 20, 27 (Tax 1994)(quoting Township of Teaneck v. Lutheran Bible Inst., 20 N.J. 86, 90 (1955)). These standards, however, do "not justify distorting the language or the legislative intent" of the exemption statute. Boys' Club of Clifton, Inc. v. Township of Jefferson, 72 N.J. 389, 398 (1977). The three exemptions claimed by plaintiff will be addressed in turn. A. Moral and Mental Improvement Exemption.
Our Supreme Court has established a three-prong test to determine whether property is exempt under the moral and mental improvement provision of N.J.S.A. 54:4-3.6. A claimant must demonstrate that: (1) it is organized exclusively for the moral and mental improvement of men, women and children; (2) the subject property must actually be used for the tax exempt purpose; and (3) the operation and use of the property must not be conducted for profit. Paper Mill Playhouse v. Township of Millburn, 95 N.J. 503, 506 (1984). The test mirrors the statutory standards set forth above.
At the time Paper Mill Playhouse, supra, was decided, N.J.S.A. 54:4-3.6 required that the subject property be actually and exclusively used for the tax exempt purpose for the moral and mental improvement exemption. The statute has since been amended to eliminate the exclusive use requirement for the moral and mental improvement exemption. L. 1985, c. 395. Secondary School Admissions Test Bd. v. Borough of Princeton, 13 N.J. Tax 467, 478 n. 7 (Tax 1993).
The prongs are analyzed as follows:
(1) Organized exclusively for the moral and mental improvement of men, women and children.
Whether an entity is organized exclusively for the moral and mental improvement of men, women and children must be determined from the property owner's organizational documents. Black United Fund v. City of East Orange, 17 N.J. Tax 446, 455 (Tax 1998), aff'd, 339 N.J. Super. 462 (App. Div. 2001); 1711 Third Avenue, Inc. v. City of Asbury Park, 16 N.J. Tax 174, 182 (Tax 1996); Planned Parenthood v. City of Hackensack, 12 N.J. Tax 598, 610 n. 6 (Tax 1992), aff'd, 14 N.J. Tax 171 (App. Div. 1993). "There is no legislative delineation of the 'moral and mental improvement' classification in the exemption statute. The cluster of abstract concepts themselves suggest that, at most, only a descriptive definition is contemplated." Chester Theater Group v. Borough of Chester, 115 N.J. Super. 360, 364 (App. Div. 1971). The property owner's activities, however, must provide an important public service. Town of Bloomfield v. The Academy of Medicine, 47 N.J. 358, 362-366 (1966).
Plaintiff's Constitution and By-Laws do not establish that the Pushkin Home was established exclusively for the moral and mental improvement of men, women and children. The organizational document of Pushkin Home contains a clear statement of purpose: "The object of the Corporation shall be to provide a home for such aged and infirm Russian men and women of Slovanic extraction as may be approved by the Board of Trustees." The Constitution and By-Laws makes no mention of improving the moral or mental state of the tenants at the Home. There is nothing in plaintiff's founding documents that provides for the education of the Home's tenants or the provision of social or cultural services to tenants. The Pushkin Home is not organized to advance "the development or betterment of the mental faculties" of its tenants or to promote "the development of man's awareness of himself and his consciousness of the world around him . . . ." Chester Theatre Group, supra, 115 N.J. Super. at 364. The provision of shelter for a monthly rent, the exclusive objective authorized in plaintiff's Constitution and By-Laws, does not satisfy the first prong of the Paper Mill Playhouse test.
(2) The subject property must actually be used for the tax exempt purpose.
Even if the court were to consider plaintiff to be organized exclusively for the moral and mental improvement of men, women and children, it is clear that the subject property is not actually used for that purpose. The entire second floor of the building is locked, vacant and not used for any purpose. Only a portion of the first floor, at best six out of fourteen rooms, as well as the common kitchen and common bathroom, are used as rental properties. There is no evidence in the record that plaintiff offers any service to its tenants, apart from providing living space and utilities in exchange for rent. Pushkin Home does not offer its tenants educational, social, medical, or financial assistance. In fact, no employee of plaintiff is present at the facility on a regular basis. There is nothing about the experience of living at the Pushkin Home that enhances the lives of the tenants beyond what would be experienced at any other apartment building or rooming house.
The fact that plaintiff maintains a small library at the facility does not change this conclusion. As an evidentiary matter, the record is silent with respect to the size, offerings, hours and condition of the library and its collection. Plaintiff introduced no evidence even remotely describing the library. As far as can be gleaned from the record, one room at the facility contains reading materials that are available to tenants. Nothing in the record details how, when or if the library collection is used by the tenants. This is an insufficient evidentiary basis to support a finding that plaintiff uses the subject property for the mental improvement of its tenants.
(3) The operation and use of the property must not be conducted for profit.
Defendant does not dispute that the Pushkin Home is not conducted for profit. The record contains no evidence of a profit motive or the diversion of funds to the officers of Pushkin Home. This prong of the Paper Mill Playhouse test is satisfied.
In light of the fact that plaintiff has failed to produce a preponderance of evidence satisfying two of the three prongs of the Paper Mill Playhouse test, the court concludes that plaintiff has not established that its property is entitled to a "moral and mental improvement of men, women and children" exemption under N.J.S.A. 54:4-3.6 for tax year 2010. B The Charitable Exemption
The statutory criteria for a charitable exemption are properly summarized as follows. A claimant must demonstrate that: (1) it owns the property; (2) it is organized exclusively for charitable purposes and is authorized to conduct the activities for which the property is used; (3) the property was actually used for the tax exempt purpose; and (4) the operation and use of the property was not conducted for profit, although fees may be collected from or on behalf of beneficiary of the charitable services, provided revenue from the fees are used to further the organization's charitable purposes. See Essex Properties Urban Renewal Assocs. v. City of Newark, 20 N.J. Tax 360, 364 (Tax 2002).
N.J.S.A. 54:4-3.6 previously required actual and exclusive use of the buildings for charitable purposes. L. 2001, c. 18 removed the exclusive use element of the statute of the charitable use exemption.
(1) Ownership of the subject property.
It is undisputed that plaintiff owns the subject property. The court concludes that this factor of the charitable exemption test is satisfied.
(2) Organized exclusively for charitable purposes.
Whether an entity is organized for charitable purposes must be determined from the property owner's organizational documents. See Black United Fund, supra, 17 N.J. Tax at 445; 1711 Third Avenue, supra, 16 N.J. Tax at 182; Planned Parenthood, supra, 12 N.J. Tax at 610 n. 6. The Supreme Court, when examining this issue, explained:
We have not previously had occasion to define "charitable purposes" as used in N.J.S.A. 54:4-3.6. Courts of other states with similar statutes have defined "charitable purposes" as:Adopting this definition, the Court held that "the term 'charity' in a legal sense is a matter of description rather than a precise definition." Id. at 285. "Therefore, the determination of whether property is devoted to a charitable purpose depends upon the facts or circumstances of each case. As a guide, however, it should be borne in mind that a sometimes stated justification for charitable tax exemptions is that if the charitable work were not being done by a private party, it would have to be undertaken at public expense." Ibid.
[A]n application of property for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religion, by relieving their bodies from disease, suffering and constraint, by assisting them to establish themselves for life, or by erecting or maintaining public buildings or works, or otherwise lessening the burden on government.[The Presbyterian Homes of the Synod of New Jersey v. Division of Tax Appeals, 55 N.J. 275, 284 (1970)(quoting Coyne Electrical School v. Paschen, 146 N.E. 2d 73, 79 (Ill. 1957)(footnote and emphasis omitted).]
The court is not convinced that plaintiff is established exclusively for charitable purposes. While it may be a charitable purpose to provide affordable housing to elderly and infirm tenants on a non-profit basis, plaintiff is not organized exclusively for that purpose. Applicants for admission to the Pushkin Home must be in good health and not under 50 years of age. There is no requirement in plaintiff's organizational papers that tenants meet any income or asset criteria. Nor is there a requirement that plaintiff charge below market rent or refrain from evicting tenants who fail to make rental payments. In fact, plaintiff's Constitution and By-Laws contemplate that tenants unable to pay rent will pledge insurance policy proceeds and real and personal property to the organization to cover rental expenses.
Care for "the needy aged is a proper concern of government, and property used for that purpose has been held to be exempt from taxation." Presbyterian Homes, supra, 55 N.J. at 288. Plaintiff, however, is not organized exclusively for that purpose. Tenants at the Pushkin Home need not establish that they are needy. Nor are tenants 50 years and over necessarily aged. Even if the court were to consider plaintiff's age limit to authorize the Pushkin Home to admit the aged, the age requirement may be waived by the Board of Trustees for, apparently, any reason they deem appropriate. Plaintiff's authorized purposes extend beyond the charitable care of needy elderly tenants. Plaintiff has not submitted sufficient evidence to satisfy the second prong of the charitable purpose exemption.
A January 3, 2006 letter from the Internal Revenue Service admitted into evidence states that plaintiff is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. However, "[i]t is well established that the standards under § 501(c)(3) 'have no relation to state law governing property tax exemption.'" Black United Fund, supra, 339 N.J. Super. at 466 (quoting Presbyterian Homes, supra, 55 N.J. at 286 n. 3). The fact that plaintiff satisfies the federal statutory criteria for exemption from federal income tax is immaterial to whether plaintiff's use of the subject property satisfies the criteria in N.J.S.A. 54:4-3.6 for an exemption from local property tax.
(3) The subject property must actually be used for the tax exempt purpose.
There is also insufficient evidence in the record upon which to make a finding that the subject property is actually used for charitable purposes. The only evidence in the record establishes that plaintiff rents rooms at the subject property for $400 a month, including utilities, to anyone who passes a criminal background check. The court was not presented with a rent roll or any identifying information about even a single tenant at the facility. There is no evidence in the record that any tenant at the property is aged, infirm, needy, or in anyway receiving services or support from plaintiff. Nothing in the record suggests that the tenants at Pushkin Home would, if not renting a room from plaintiff, be homeless, in a medical care facility, or in some way burdens on the State fisc. See Salt and Light Co. v. Township of Mount Holly, 15 N.J. Tax 274, 285 (Tax 1995)(holding that providing shelter to the homeless on a not-for-profit basis constitutes a charitable use), aff'd, 16 N.J. Tax 40 (App. Div. 1996), certif. denied, 148 N.J. 458 (1997).
In addition, the record contains no evidence with respect to whether the rent charged by plaintiff is at, below or above market rent for similar accommodations in the marketplace. Thus, it is not possible for the court to determine that plaintiff is providing what might be considered a charitable service by renting rooms to needy tenants at below market rates. Nor did plaintiff produce any financial records, apart from its tax returns, which might illuminate the source of the rent payments received by plaintiff, whether rents are subsidized by state or federal funds, and whether the rent collected by plaintiff comports with any governmental guidelines or regulations regarding housing costs for individuals enrolled in government assistance programs. The record is completely devoid of meaningful information on which this court might make factual findings regarding a charitable use of the subject property. Operating a rental facility is not, in and of itself, a charitable endeavor, even if tenants are in some way disadvantaged. See e.g. Disability Residential Center v. City of Somers Point, 371 N.J. Super. 1, 12 (App. Div. 2004)(holding that "a facility that merely rents out dwellings to a disabled population is not entitled to an exemption."); accord Advance Housing, Inc. v. Township of Teaneck, 422 N.J. Super. 317, 331-335 (App. Div. 2011) (analyzing legal precedents requiring the provision of services to clients to support award of charitable exemption to rental property), certif. granted, 209 N.J. 100 (2012); Essex Properties Urban Renewal, supra, 20 N.J. Tax at 367-368 (rejecting claim for charitable exemption where taxpayer failed to produce sufficient evidence to establish level of services provided to tenants). C. Hospital Purposes Exemption
As noted above, N.J.S.A. 54:4-3.6 provides an exemption for "all buildings actually used in the work of associations and corporations organized exclusively for hospital purposes." The statute explains that
as used in this section "hospital purposes" includes health care facilities for the elderly, such as nursing homes; residential health care facilities; assisted living residences; facilities with a Class C license pursuant to P.L. 1979, c. 496 (C. 55:13B-1 et al.), the "Rooming and Boarding House Act of 1979"; [and] similar facilities that provide medical, nursing or personal care services to their residents . . . .[N.J.S.A. 54:4-3.6.]
Plaintiff claims exemption under this provision based on its having been issued a rooming house license by the Department of Community Affairs ("DCA"). There are multiple deficiencies in plaintiff's argument.
N.J.S.A. 55:13B-1 authorizes the licensure of both "boarding houses" and "rooming houses." A "boarding house" provides single room occupancy dwelling space
wherein personal and financial services are provided to the residents, including any residential hotel or congregate living arrangement . . . any community residence for the developmentally disabled and any community residence for the mentally ill . . . any adult family care home . . . any dormitory owned or operated on behalf of any nonprofit institution of primary, secondary or higher education for the use of its students, any building arranged for single room occupancy wherein the units of dwelling space are occupied exclusively by students enrolled in a full-time course of study at an institution of higher education approved by the New Jersey Commission on Higher Education, any facility or living arrangement operated by, or under contract with, any State department or agency, upon the written authorization of the commissioner, and any owner-occupied, one-family residential dwelling made available for occupancy by not more than six guests, where the primary purpose of the occupancy is to provide charitable assistances to the guests and where the owner derives no income from the occupancy.[N.J.S.A. 55:13B-3.]
A "rooming house" is "a boarding house wherein no personal or financial services are provided to the residents." N.J.S.A. 55:13B-3.
As is the case with plaintiff's other claims, the evidentiary record is insufficient to support the conclusion that operation of the Pushkin Home qualifies as an exempt hospital use of the property. Although plaintiff's officer testified that Pushkin Home is a licensed rooming house, no documentary evidence was introduced to support his testimony. The record does not contain a copy of Pushkin Home's license or any evidence confirming issuance of said license. It is not possible for the court to determine if such a license was issued, when the license was issued, and whether the license was valid on the October 1, 2009 valuation date. In light of plaintiff's consistent failure to maintain accurate records with respect to the operation of the Pushkin Home (plaintiff's officer testified with respect to numerous instances of purported amendments to the organization's Constitution and By-Laws that were not reduced to writing, a purported typographic error in one amendment that has gone uncorrected for seven years, and a failure to produce a list of tenants, despite a Constitutional requirement that such a list be maintained), the court is not prepared to accept without corroboration the officer's testimony that the facility had a current rooming house license on the valuation date. This failure of evidence alone is sufficient to conclude that plaintiff has not established entitlement to a hospital purpose exemption under N.J.S.A. 54:4-3.6.
In addition, even if the court were to accept the proposition that the Pushkin Home is a licensed rooming house, there is no testimony with respect to the class of rooming house license awarded to the facility. The DCA issues five classes of licenses to rooming houses: Classes A through E. See N.J.A.C. 5:27-1.6(a). The hospital purposes exemption is limited to Class C rooming house licenses. Plaintiff's officer testified that he did not have personal knowledge with respect to the class of the license issued to the Pushkin Home. Having produced no evidence with respect to the class of its license, Pushkin Home has not established that its operations qualify for an exemption under the hospital purpose provision.
Although neither party presented argument with respect to the significance of a Class C rooming house license, the court notes that N.J.A.C. 5:27-9.1 begins a subset of regulations applicable to Class B and Class C rooming house licensees. The regulations that follow concern diets and menus, food service, food sanitation, and laundry services. See N.J.A.C. 5:27-9.2 through N.J.A.C. 5:27-9.5. In addition, N.J.A.C. 5:27-10.1 begins a subset of regulations applicable to Class C licensees with respect to services that cannot be offered by Class A and Class B licenses. The regulations that follow concern assistance in dressing, assistance in bathing and personal hygiene, transportation to health services, monitoring of medication, and supervision of self-administration of medication. See N.J.A.C. 5:27-10.2 through N.J.A.C. 5:27-10.5. It appears that a Class C rooming house provides services related to the care of the elderly and medically compromised persons not offered by plaintiff.
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Because plaintiff has not proven that it held on the valuation date a Class C rooming house license, the court need not determine whether having such a license alone qualifies a facility for the hospital purposes exemption. The plain language of N.J.S.A. 54:4-3.6 suggests to qualify for the exemption, a property must not only be operated pursuant to a Class C license, but also "provide medical, nursing or personal care services to the[] residents" of the facility. The court offers no opinion with respect to whether plaintiff, which quite plainly does not offer any medical, nursing or personal care services it its tenants, could be considered to operate the subject property for hospital purposes, even if it held a Class C rooming house license.
Plaintiff has not established by a preponderance of the evidence that its use of the subject property satisfies the requirements for an exemption pursuant to N.J.S.A. 54:4-3.6. As a result, the Judgment of the Ocean County Board of Taxation must be affirmed. A Final Judgment is enclosed.
Very truly yours,
Patrick DeAlmeida, P.J.T.C.