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Salt and Light Co. v. Mount Holly Township

November 8, 1995


The opinion of the court was delivered by: Hamill

In these matters the Salt and Light Company seeks exemption from local property taxes for seven properties in Mount Holly Township. *fn1 Salt and Light claims that the properties qualify for exemption because they are used for the charitable purpose of providing temporary housing and counseling services to the homeless. In addition Salt and Light objects to the township's procedure for revoking the exemptions. Mount Holly maintains that the properties are taxable largely because Salt and Light is compensated on a fee-for-service basis by the State. Mount Holly further argues that the company's sizable net income and sizable cash balance for 1994 demonstrate that Salt and Light operates as a business rather than on a nonprofit basis.

First to be addressed is the manner in which the exemptions were revoked.

During 1994 the Mount Holly assessor determined that Salt and Light's properties did not qualify for tax exemption. The assessor based his determination on answers to a questionnaire sent to all private, charitable and religious organizations in the township. The questionnaires were triggered because the assessor noted that Salt and Light had completed two exemption applications (for properties not involved in these appeals) indicating that the properties were not being leased when the township solicitor knew that this was not the case. When the questionnaires were returned for the seven properties confirming that rent was being received, the assessor returned the properties to the tax rolls for the 1994 tax year.

Salt and Light received notice of the revocations of exemption by way of tax bills issued in October 1994 and appealed the determinations to the Burlington County Board of Taxation. The county board upheld the assessor's revocation of tax exemption but returned the properties to the tax list commencing January 1, 1995, rather than January 1, 1994, as requested by the assessor.

The county board's judgments, rendered on December 15, 1994, and mailed on January 6, 1995, specify that they are with respect to the 1994 tax year and include amended memoranda of judgment explaining that the tax exempt status of the properties is revoked as of 1994 but that the omitted assessments will not be placed on the tax books until January 1, 1995.

Salt and Light appealed to the Tax Court challenging the county board's judgments for the 1994 tax year denying tax exemption beginning with the 1995 tax year.

Mount Holly filed timely counterclaims asserting that the properties should have been returned to the tax list for all of 1994 as requested by the assessor rather than as of January 1, 1995, as found by the county board.

Consistent with the county board's judgments, the properties were assessed as taxable for the 1995 tax year. Salt and Light did not appeal those assessments, apparently in the belief that its appeals of the 1994 judgments sufficed to protect it for the 1995 tax year

There is some question whether the assessor had the authority to revoke the exemptions for the 1994 tax year. *fn2 However, since the county board in fact did not revoke the exemptions for 1994, the question is important only as bearing on whether there is any case properly before me. That is, if the 1994 assessments were improper for procedural reasons, arguably the board should have dismissed on that basis and refused to deal with 1995 since no appeals were before it for that year.

Assuming, without deciding, that the 1994 assessments were procedurally defective and should have been dismissed for that reason, I believe I must nevertheless hear the matters as they pertain to the revocation of exemption for the 1995 tax year. Having received 1994 judgments in its favor that nevertheless revoked its exemptions for 1995, Salt and Light was left with no choice but to appeal the 1995 denials based on the 1994 judgments. Had it not done so, the company would have risked the possibility that any 1995 appeals would have been dismissed on the basis that the company had not timely appealed the 1994 judgments. Due to the peculiar circumstances of this case, I will therefore address the board's judgments on the merits as they pertain to the 1995 tax year.

The applicable exemption statute is N.J.S.A. 54:4-3.6. It includes an exemption for "buildings actually and exclusively used in the work of associations and corporations organized exclusively for ... charitable purposes ...." In addition to the requirements of charitable organization and use, the statute requires that the entity claiming the exemption own the property in question, be authorized to carry out the purposes for which the exemption is claimed, not be operated for profit, and not operate the buildings for which the exemption is claimed on a for-profit basis.

There is no question that Salt and Light meets some of the statutory requirements for exemption. The company's amended certificate of incorporation establishes that it is organized exclusively for charitable purposes. It is equally clear that Salt and Light owns the properties in question, and is authorized to carry out the purposes for which exemption is claimed. The questions to be decided are whether Salt and Light's buildings are used for a charitable purpose and whether the company and the buildings are operated on a nonprofit basis.

Salt and Light was incorporated under the nonprofit corporation law in 1986. The notes to the company's financial statements and the opening paragraph of the company's agreement with residents describe the company as a nonprofit organization that provides emergency housing and a "supportive self-help program for homeless people" including single women and men and families with dependant children. The self-help program includes "assistance in seeking job training, employment, education, transportation, child care, medical services and permanent affordable housing." Salt and Light does not actually provide job training, education, child care, etc. Rather, its staff provides advice and assistance to the residents in obtaining these benefits.

During 1994 Salt and Light operated approximately twenty-four residences for the homeless. The residences were purchased with HUD monies or Federal Home Loan grant monies and renovated through a combination of government grants and funds generated by Salt and Light (presumably foundation grants and charitable contributions). Of the seven properties in Mount Holly at issue in these appeals, four provide housing to single adult males, one provides housing to women with or without children, and two provide housing to families.

Approximately two-thirds of the 127 residents in Salt and Light's program receive public assistance. One type of public assistance is temporary shelter aid for the homeless. Under this program Salt and Light receives $36 per day per single adult, $33 per day for an adult with children, $16 per day for a school age child, and $11 per day for a preschool child. The fees are set by the county and distributed by the municipal welfare director. The remaining one-third of the residents are not eligible for public assistance. To the extent they are able, these residents pay up to 30% of their income to Salt and Light as rent. The rental payments are below market. For example, Salt and Light's executive director testified that one of the properties at issue is currently occupied by a working mother with two children. The woman pays $140 per month in rent, which is 30% of her monthly income, for a two- bedroom house. Under HUD § 8 regulations, 24 C.F.R. § 880.203(a), the market rent in Burlington County, for a two-bedroom house is $680 according to Salt and Light's executive director. In the private market in Mt. Holly, a one-bedroom house can be rented for $400-450 per month. Individuals who have no source of income pay no rent to Salt and Light, and no individual is required to leave a residence due solely to inability to pay.

The maximum stay in Salt and Light Housing is twenty-four months. The maximum period for which the State provides temporary shelter aid to the homeless is five months. N.J.A.C. 10:82-5.10(f). *fn3

Each residence for single adults has a resident manager who receives an apartment rent-free from Salt and Light. The managers are generally individuals who at one time were homeless and went through the company's program. The resident managers are ...

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