Halpern, Crane and Michels. The opinion of the court was delivered by Michels, J.A.D.
The City of Long Branch appeals from a judgment of the Division of Tax Appeals of the Department of the Treasury (Division) holding that several buildings owned by Monmouth Medical Center (the Center) were exempt in whole or in part from the property taxes imposed by Long Branch.
The Center is a private, nonprofit hospital corporation organized and existing under the laws of the State of New Jersey. It was incorporated originally in 1889 as the Long Branch Hospital pursuant to an act entitled "An Act to provide for the incorporation of associations for the erection and maintenance of hospitals, infirmaries, orphanages, asylums, and other charitable institutions." L. 1877, c. 103. In 1900 the name of the hospital was changed to Monmouth Memorial Hospital Association and in 1958 it was changed to Monmouth Medical Center.
The Center operates a hospital in Long Branch, New Jersey, which provides general hospital services to residents of Long Branch and the surrounding communities. The Center owns, in addition to the hospital building proper, several other buildings which comprise what is often referred to as the "Hospital Complex of The Center." The several properties which are part of this complex and are involved in this appeal are described briefly as follows.*fn1
The Borden Apartments (Block 208, Lot 2)
The Borden apartments are located about a block and a half from the main entrance to the hospital. The building contains 70 apartment units of one, two and three-bedroom apartments. One section of the building was built in the 1950s and another section was built in the 1960s. The apartments are used exclusively as residences for resident physicians, interns and nurses on the staff of the Center. The rents charged by the Center are substantially lower than rents for comparable apartments in the area, and actually serve as a subsidy to attract qualified personnel to the Center's staff. The Center operates the Borden apartments at a net loss. The garage of the building is used by the Center to store some of its vehicles and landscaping equipment, the basements to store records and furniture, and one of the rooms for a classroom.
Long Branch assessed the land at $10,000 and the building at $240,000 for the year 1973. The Monmouth County Board of Taxation (county board) reduced the assessment on the land to $7,000 and on the building to $160,000. The Division found "that the exclusive use to which this apartment is put is an integral part of the operation of the hospital" and cancelled the 1973 assessment.
Steinan Housman Wing (Block 205, Lot 1)
The Steinan Housman Wing is a three-story building attached to the hospital building proper and connected by common hallways. The Center built the building in the early 1950s. Approximately one-half of the Steinan Housman Wing is occupied and used by the Center for several of its
departments, such as security and finance offices, medical education, pulmonary medicine, inhalation therapy, public relations, cardiac physiology, renal dialysis and tumor registry. The Monmouth County Medical Examiner also has an office in this building. The remaining half of the building is occupied and used as private physicians' offices. The physicians occupying these offices use them for the conduct of their private professional practices as well as for the performance of certain hospital staff functions. The Center charges these physicians a rental rate less than that charged for comparable office space in the area, and the financial records reveal that this building is also operated by the Center at a loss. The physicians renting these offices, with one exception, are in some way affiliated with the Center either as employee-physicians or appointed-physicians without financial remuneration.
Long Branch assessed the building at $256,850 for 1973 and the county board reduced the assessment to $131,750. The Division found that notwithstanding the fact that the physicians used the offices in part for their private practices, the Steinan Housman Wing was "exclusively used as an integral unit of the Medical Center for its convenience," and therefore cancelled the 1973 assessment.
The Professional and Educational Building (Block 206, Lot 1)
The Professional and Educational Building is a six-story building located directly across the street from the main hospital complex. It was constructed in 1969 with the assistance of federal funds. The Center rents the first floor of the building to Brookdale Community College, which uses the space for administrative offices and classrooms for its nurses' training program. The student nurses in the program render some services to the hospital patients. The second, third and fourth floors of the buildings are rented to physicians and one dentist for offices for the private practice of
medicine and dentistry. Of the physicians and dentist renting these offices, only three hold medical administration posts on the staff or are involved in the operation of the hospital. The other physicians and the dentist apparently have privileges at the hospital and render some clinic service without charge and are available for some emergency duty. The Center uses the fifth and sixth floors for storage.
Long Branch assessed the building at $665,000 for 1973. The county board reduced the assessment to $540,700. The Division found that use of the first floor of the Professional and Educational Building by the "student nurses is a direct hospital use and a necessary part thereof"; that "[t]he presence of the physicians is reasonably necessary to the operation of the hospital" and that the property was ...