On appeal from the Tax Court of New Jersey.
Bischoff, J. H. Coleman and Gaulkin. The opinion of the court was delivered by Gaulkin, J.A.D.
Plaintiff Paper Mill Playhouse made claim to exempt from local property taxes for the 1978 tax year three parcels of real property on which it operates a theater and conducts related activities. The Essex County Board of Taxation denied the claim but the Tax Court reversed that determination and granted the exemption. Defendant Township of Millburn now appeals.
Plaintiff claimed the exemption under N.J.S.A. 54:4-3.6, which provides in relevant part:
The following property shall be exempt from taxation under this chapter: . . . all buildings actually and exclusively used in the work of . . . corporations organized exclusively for the moral and mental improvement of men, women and children . . ., the land whereon any of the buildings hereinbefore mentioned are erected . . . and which is devoted to the purposes above mentioned and to no other purpose . . .; provided, in the case of all the foregoing, the buildings, or the lands on which they stand, or the . . . corporations . . . using and occupying them as aforesaid, are not conducted for profit. . . .
The parties do not dispute the governing legal principles or the operative facts; they disagree only as to the conclusions to be drawn upon application of the law to the facts. The essence of that disagreement is whether plaintiff should be regarded as "an entertainment enterprise," as urged by the municipality, or "an outstanding New Jersey cultural center," as characterized by plaintiff.
Paper Mill Playhouse is a nonprofit New Jersey corporation formed in 1934 under Title 15 of our statutes. Its certificate of incorporation states the corporate purposes as follows:
SECOND: The purposes for which this corporation are [sic] formed are to promote in the County of Essex, New Jersey and elsewhere in the State of New Jersey, and outside of the State of New Jersey, a greater interest in and a greater appreciation of art, music, drama, history, literature, education and the theater, . . . .
Upon dissolution of the corporation its assets must be turned over to another similar charitable organization and cannot inure to the benefit of any individual.
The by-laws of the corporation include the following statement of its purposes:
Section 2. The purposes for which this corporation is formed are to promote in the County of Essex, New Jersey, and elsewhere in the State of New Jersey and outside the State of New Jersey within the community served by the theatre, a greater interest in and a greater appreciation of art, music, drama, history, literature, education and the theatre, and in order to accomplish such purposes, by the presentation of concerts, dramas, ballet, and musical performances at the theatre owned by the corporation on Brookside Drive in Millburn, New Jersey, and other associated means, to form within the organization herein incorporated, individual groups or organizations for the particular development and promotion of the matters herein specified.
The three adjacent lots for which plaintiff seeks tax exemption, improved by a theater building and parking lot,*fn1 are located in the Cultural C zone, defined in the local zoning ordinance as "an area devoted to cultural activities intended to enhance the quality of life in the region" in which permitted uses include "theaters, libraries, museums and similar cultural centers."
The principal activity conducted on the premises is the presentation of musical and dramatic productions, known by plaintiff as its "major productions." The major productions are primarily shows which have been successfully presented on the New York and London stages. Paper Mill Playhouse negotiates directly with the playwrights or their representatives to obtain copyrighted material. It stages its own productions, locates its own actors and actresses through its permanent casting office located in New York City, and contracts with nationally and internationally known stars to lead its casts. In addition to a fixed compensation, the stars frequently receive a percentage of net receipts. ...