Real property tax uncertainty remains for New Jersey not-for-profit hospitals in the wake of Gov. Christie's pocket veto of S3299/A4903 (the Bill). The Bill was the New Jersey Legislature's response to the New Jersey Tax Court's decision this past year in AHS Hospital Corp., d/b/a Morristown Memorial Hospital v. Towns of Morristown, 28 N.J. 456 (Tax Ct. 2015).1 The Bill would have required the owner of an acute care not-for-profit hospital to make an annual "community service contribution" to the municipality where the hospital was located based on a formula of "$2.50 a day for each licensed bed" in the hospital in the prior tax year. The annual community service contribution for a satellite emergency care facility was $250 per day.
According to the Senate Budget and Appropriations Committee Report:
[T]his bill maintains the property tax exempt status of a nonprofit hospital with for-profit medical providers on site as long as the hospital remains organized as a nonprofit institution under State law, and requires nonprofit hospitals to, in lieu of property taxes, pay an annual community service contribution to their host municipalities. The clarified property tax exemption under the bill extends to the portions of hospital property used for medical purposes, and the community service contributions are required to be used to offset the costs of public safety services, such as police and fire safety services, or to reduce the property tax levy.
The Bill also would have allowed an owner "required to remit the community service contribution" to apply to the New Jersey Health Care Facilities Financing Authority for a certificate exempting the owner from the payment of the community service contribution if the owner was "in financial distress or at risk of being in financial distress." The Bill did not define "financial distress."
With no legislative guidance, many uncertainties (and likely additional costs for legal and other expert valuation services) remain for both not-for-profit hospitals and municipalities. All parties will be looking to assert and defend their positions regarding the extent of the applicable exemption as well as the valuation and assessment of the nonexempt portions of the hospitals' properties. Indeed, the examination of whether a hospital is tax-exempt will continue to be an analysis based on the factual circumstances of how each hospital is organized and conducts its operations. See Day Pitney Alert, New Jersey Tax Court Invalidates Hospital's Tax Exemption, June 29, 2015.
Luke Pontier and Nicole Magdziak co-authored an article, "A Cautionary Tale of Orphan Signature Pages," published in the Fall 2019 issue of Dimensions, a newsletter of the New Jersey Builders Association.
On January 17, Craig Gianetti and Justin Hannan will be speaking on a panel, "Low Income Housing Tax Credits and Opportunity Zones: Synergies and Conflicts," at the 2020 Economic Leadership Forum, produced by the New Jersey Bankers Association.
On December 11, Craig Gianetti will be speaking at "The Land Use Institute: Mt. Laurel and Other Hot Topics," a program presented by the New Jersey Institute for Continuing Legal Education (NJICLE) in cooperation with the New Jersey State Bar Association (NJSBA) Land Use Section and the New Jersey Chapter of the American Planners Association.
On October 25, Christopher Stracco and Katharine Coffey co-presented a webinar for the New Jersey Institute of Continuing Legal Education (NJICLE), entitled "The Legal Aspects of Electronic Billboards and Signs."
Christopher Stracco co-authored the New Jersey chapter for the 2019 edition of The Property Tax Deskbook, a publication of the American Bar Association Section of Taxation.
Craig Gianetti is featured in a Market Forecast special section in the January 2020 issue of Real Estate New Jersey.
Day Pitney LLP announced today that April F. Condon has joined the firm as a partner in the Real Estate and Environmental group in its Stamford office. She joins from Robinson & Cole LLP.
Day Pitney Press Release
Craig Gianetti, a partner in Day Pitney's Real Estate & Land Use group, has been elected to serve as Vice Chair of the Land Use Law Section of the New Jersey State Bar Association (NJBSA).
Day Pitney's representation of Cottontail Holdings LLC and Two Franklin Realty is noted in an article, "NJ Office Complex Overvalued By $15M, State Tax Court Says," published by Law360 Tax Authority.