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Disabilities Resource Center/Atlantic And Cape May, Inc. v. City of Somers Point

July 08, 2004


On appeal from the Tax Court of New Jersey,Atlantic County, Docket No. 002725-2000.

Before Judges Newman, Fall and Hoens.

The opinion of the court was delivered by: Hoens, J.A.D.


Submitted April 19, 2004

Defendant City of Somers Point appeals from the decision of the Tax Court determining that property owned by plaintiff Disabilities Resource Center/Atlantic and Cape May, Inc. is exempt from property taxes pursuant to N.J.S.A. 54:4-3.6. We affirm.

The facts which gave rise to the dispute and to the decision of the Tax Court are as follows. Plaintiff is a nonprofit organization that provides vocational, respite, family support and residential services to people with mental retardation and other disabilities. As a part of its work, plaintiff owns and operates residential, community-based group homes where individuals with the disabilities it serves live in structured, supervised settings. Significant to this appeal, plaintiff owns a ranch style house located on a parcel of property in Somers Point which plaintiff is utilizing as a group home. The home has three bedrooms, one and one-half bathrooms, a kitchen, a dining room, a living room, a room referred to by plaintiff as the training room, and a Florida room. The training room is generally used for purposes of training the staff members, but is also used for working with the disabled individuals who live in the home. The home does not have a formal classroom and does not include a formal research facility. Plaintiff does not operate any professional training facilities separate from the group homes.

The day-to-day operation of the home is overseen by Betty Spence, a college-educated employee of plaintiff, who serves as the Residential Supervisor and Training Coordinator. Her duties include training the staff members in crisis management, health and safety, first aid and CPR, all of which is performed on- site. In addition to Ms. Spence, eight other full-time employees and one part-time employee work at the group home. Each of these employees is a high school graduate who has also completed additional training in a variety of subjects including administration of medications, crisis management, health and safety instruction, empowerment and stress training, appropriate documentation of medication administration, reporting and preventing abuse and neglect, first aid and CPR. One of the employees has also been certified by the Board of Nursing as a homemaker/health aide.

Among the services provided to the residents at plaintiff's facility are training in basic life skills development, arts and crafts, and, to the extent possible, assistance with individual financial and budget management. These services vary among the specific individuals who reside in the group home in accordance with each resident's Individual Habilitation Plan (IHP). The IHP for each resident includes specific goals and objectives developed jointly by plaintiff's staff, the resident, the resident's family members, and representatives of the State of New Jersey. The progress of each resident is monitored and the IHP is modified as needed. The residents, all of whom were institutionalized at some point prior to their move into plaintiff's facility, all of whom were described as being"low functioning," and most of whom are largely non-verbal, receive services during the daytime in the nature of work-like programs in sheltered workshops operated by other agencies.

All of the funding for the operation of the group home is provided through the State of New Jersey, Department of Human Resources, Division of Developmental Disabilities. Plaintiff obtained all of the required licenses from the State in connection with its operation of the proposed group home and is subject to on-going oversight by the State. Plaintiff began to serve individuals in the Somers Point facility in 1999.

In October 1999, plaintiff filed an application with the Tax Assessor of the City of Somers Point seeking a tax exemption for the subject property in accordance with the procedures set forth in N.J.S.A. 54:4-4.4. On December 27, 1999, the City TaX Assessor notified plaintiff that the request for an exemption had been denied. Plaintiff then filed an appeal with the Atlantic County Board of Taxation. Based on plaintiff's request that the Board affirm the City's assessment without prejudice in order to permit the parties to proceed in the Tax Court, the Board issued its judgment on June 30, 2000, affirming the assessment and the determination that the property was not exempt. Plaintiff thereafter filed its complaint in the TaX Court, seeking an exemption for the property. Cross-motions for summary judgment were denied and the matter proceeded to a plenary hearing. Following that hearing, the Tax Court judge determined that the property was entitled to a tax exemption pursuant to N.J.S.A. 54:4-3.6.

Initially, three alternative grounds for tax exemption pursuant to the statute were asserted and considered. Two of them, namely the"moral and mental improvement" exemption and the"charitable" exemption, were rejected by the court prior to the plenary hearing for technical reasons not germane to this appeal. The plenary hearing proceeded based only on the so- called"feeble minded" exemption which was the sole focus of the Tax Court judge's decision. In short, the Tax Court judge reasoned that because the property was owned by a qualified nonprofit organization and was exclusively utilized for the purposes of training of the"feeble minded", it was entitled to a tax exemption.

On appeal, defendant argues that the Tax Court judge erred in two respects. First, defendant contends that the judge erred in determining that the evidence in the record demonstrated that the activities taking place in the group home qualify as"professional training" within the meaning of the statute. Second, defendant asserts that the judge erred in holding that plaintiff need not also demonstrate that the residents were being studied in order to qualify for the tax exemption. We disagree with both contentions.

It is well established that all real property within the jurisdiction of the State is presumed to be taxable, absent an exemption. See Weymouth Tp. v. Mem'l Park Family Practice Ctr., Inc., 7 N.J. Tax 589, 592 (Tax 1985). It is equally well established that the burden of proving that a tax exemption applies is on the claimant. See Presbyterian Homes of the Synod of New Jersey v. Division of Tax Appeals, 55 N.J. 275, 283 (1970). The issue before us, then, is whether the record demonstrates that this applicant has established that it is entitled to a tax exemption by virtue of its operation of a facility falling within the so-called"feeble minded" exemption as described in the statute relating more generally to taX exemptions for property of nonprofit organizations. See N.J.S.A. 54:4-3.6.

In relevant part, that statute provides as follows: all property owned and used by any nonprofit corporation in connection with its curriculum, work, care, treatment and study of feeble minded, mentally retarded or idiotic men, women, or children shall also be exempt from taxation, provided that such corporation conducts and maintains research or professional training facilities for the care and ...

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