On appeal from the Tax Court of New Jersey whose opinion is reported at 8 N.J. Tax 540 (Tax Ct. 1986).
Petrella, Baime and Ashbey.*fn1The opinion of the court was delivered by Petrella, P.J.A.D.
[220 NJSuper Page 348] The issues involved in this appeal implicate interpretation of the statutory provisions for property tax exemptions due to
either nonprofit status of the property owner under N.J.S.A. 54:4-3.6 or the effect of a historic site designation under N.J.S.A. 54:4-3.52.
Ironbound Educational & Cultural Center, Inc. (Center) filed a local property tax appeal with the Essex County Board of Taxation (Board) regarding the 1984 valuation of its property at Edison Place in Newark. The Center asserted that it was a nonprofit corporation entitled to tax exemption and that it was also exempt as a site which was designated a historic site by the commissioner of the Department of Environmental Protection. The Board denied the appeal and entered judgment in the original assessment amount of $91,600. On an appeal to the Tax Court a partial judgment*fn2 was entered which denied the exemption for the 1984 tax year and entered the assessment as $75,000. After some procedural complications a complaint which challenged only the 1984 assessment was filed with the Tax Court. No complaint was filed in the Tax Court for the tax year 1985. Relief was denied in a reported opinion by Judge Crabtree. Ironbound Educ. & Cultural Center, Inc. v. Newark, 8 N.J. Tax. 540, 542 (Tax Ct.1986).
The essential facts are recited in the Tax Court opinion (8 N.J. Tax. at 541-542). The Center was formed as a nonprofit organization to provide social and community service programs and renovation assistance in the Ironbound section in Newark. The property owned and utilized by the Center was originally a Dutch Reformed Church and Rectory which had been erected in 1848. The Center was incorporated on August 7, 1975 and received tax exempt status from the Internal Revenue Service on October 14, 1976. The building housing the Center was listed in the National Historic Register on March 12, 1979.
On March 20, 1984 the Commissioner of the Department of Environmental Protection*fn3 issued a certificate to the effect that the premises was declared a State historic site. The Commissioner also certified that the historic site was entitled to a tax exemption under L. 1962, c. 92 (N.J.S.A. 54:4-3.52, et seq.)*fn4 This certificate recited that the facility, as a historic site, would be "freely available to all people without discrimination as to race, creed, color or religion subject to reasonable terms and conditions, such as a nominal fee, which will insure the preservation and maintenance of the site."
The building was renovated in 1983 and approximately 35% of the premises was leased to an independent restaurant and catering business which established the International Palace Restaurant and Banquet Hall. The Center receives approximately 8% of its total revenue from rental income from this restaurant business. The Center also holds board meetings, an annual dinner and other functions in the restaurant area of the building.
We agree entirely with Judge Crabtree's well-reasoned analysis and conclusion that the property is not entitled to exemption under N.J.S.A. 54:4-3.6. That statute clearly contemplates that associations and corporations organized exclusively for religious and charitable purposes are exempt only when "actually and exclusively used in the work" of the associations and corporations. See Boys' Club of Clifton, Inc. v. Twp. of Jefferson, 72 N.J. 389, 399 (1977); Princeton University Press v. Princeton Borough, 35 N.J. 209, 216-217 (1961). Under City of Long Branch v. Monmouth Medical Center, 138 N.J. Super. 524 (App.Div.1976), aff'd o.b. 73 N.J. 179 (1977), property is actually and exclusively used in the work of an association or corporation if the property is reasonably necessary
for one of the purposes enumerated in N.J.S.A. 54:4-3.6. 138 N.J. Super. at 532. The Tax Court judge emphasized that the restaurant operates as a commercial venture, and not as a nonprofit, charitable organization. Ironbound Educ. & Cultural Center, Inc. v. Newark, supra, 8 N.J. Tax. at 542. By virtue of this operation, the Center is no longer using its building exclusively for religious and charitable purposes. The Center is thereby precluded from claiming an exemption pursuant to N.J.S.A. 54:4-3.6.
We turn now to the Center's argument that under L. 1984, c. 176 (N.J.S.A. 54:4-1.10, effective November 2, 1984) it is entitled to at least partial exemption of ...