N.J. SC: Nonprofit housing group doesn't have to pay property taxes

By Jessica M. Karmasek | Sep 26, 2013

TRENTON, N.J. (Legal Newsline) -- The New Jersey Supreme Court ruled this week that a nonprofit housing group does not have to pay state property taxes.

The plaintiff in the case, Advance Housing, is a 501(c)(3) corporation, making it exempt from federal income tax.

A "supportive housing program to help people with psychiatric disabilities transition to independent living in the community," it provides housing and mental health, occupational placement and life management support services to low- and moderate-income individuals suffering from mental illness.

Most of Advance Housing's residents come from homeless shelters, transitional housing facilities and hospitals for the mentally ill.

However, the defendants, nine Bergen County municipalities, denied Advance Housing property tax exemptions for charitable purposes.

Advance Housing appealed to the state's tax court, which concluded that the "housing component" in its program was "not integrated with the counseling and support services."

The court said Advance Housing was running "essentially a subsidized housing program for clients who happen to be eligible for [its] supportive and counseling services."

In denying relief, the court said "some institutional aspect to the housing program" is necessary for a tax exemption under state law.

The state's Appellate Division thought differently, and reversed and remanded for a judgment granting it the charitable property tax exemption.

Eight of the municipalities filed petitions for certification, which the state's high court granted.

Justice Barry Albin, writing for a unanimous court, affirmed the appeals court's ruling.

"Advance Housing's residences are actually used for charitable purposes consonant with N.J.S.A. 54:4-3.6, entitling the property to tax-exempt status. Advance Housing's provision of housing with integrated supportive services to mentally disabled citizens, who otherwise would be dependent on government relief, is in furtherance of this State's express policy," Albin wrote Wednesday.

"The property -- purchased, in large measure, at public expense -- serves a vital need that would otherwise be borne by the State at a much greater cost.

"Accordingly, we hold that Advance Housing has met its burden of showing that the properties are entitled to charitable tax-exempt status under N.J.S.A. 54:4-3.6."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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