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City of Newark of the County of Essex v. Block 1861

September 27, 2010


On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. F-26185-07.

Per curiam.


Submitted September 15, 2010

Before Judges Gilroy and Ashrafi.

Appellant Yes Lord Ministries, Inc., appeals from an order of the Chancery Division granting summary judgment to the City of Newark (the City) on its foreclosure complaint for failure to pay property taxes. We affirm.

In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46-2(c) that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). On this appeal, we review the facts most favorably to appellant.

Appellant is a religious organization qualified for exemption from payment of taxes under federal law, 26 U.S.C. § 501(c)(3). Its primary location is 574 13th Avenue, Newark.

In 2004, appellant purchased for more than one million dollars a vacant warehouse with office space located at 605-611 Central Avenue in Newark, which property is designated on the City's tax map as Block 1861, Lot 24. The building is more than 20,000 square feet in area and was formerly used for storage of vehicles and other equipment by a telephone company. The warehouse space is alleged to be structurally intact, but the offices at the front of the building are completely unusable because of roof leakage and dangerous wiring. Appellant purchased the property intending to renovate it for church activities, but financial obstacles have delayed any renovation work.

In 2007, the City brought a complaint against the warehouse property under the In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 to -104.75, because appellant had not paid property taxes to the City. The City claimed delinquent taxes and redemption fees of more than $120,000. Appellant filed an answer denying the City's complaint. In response to the City's interrogatories, appellant stated that the "premises is not being used currently pending funding for renovations."

Appellant's application to the City for exemption from property taxes was denied on January 14, 2008. On appeal to the Essex County Board of Taxation, a judgment was entered on June 26, 2008, reducing the assessment of the property from $994,200 to $618,300 but making no further determination regarding exemption.

At the trial call of the foreclosure action in the Chancery Division, counsel for appellant and the City agreed that the case could be resolved by means of stipulated facts and cross-motions for summary judgment. Subsequently, each party filed a motion for summary judgment seeking a ruling of law with respect to whether the property was exempt from property taxes. In its submissions, appellant now alleged that the warehouse portion of the property was being used for meetings of men's and women's auxiliary groups related to church activities and for other prayer services, but it was not open to the public for regular church services. Appellant provided documentation to corroborate these contentions.

After considering the parties' submissions, the Chancery Division granted the City's motion and denied appellant's cross-motion for summary judgment. In an oral opinion, the court concluded that the property was not exempt from taxation because appellant did not have a certificate of occupancy authorizing its use for religious or any other activities, and it was not then open to the public for religious uses and activities. This appeal followed.

Our State Constitution authorizes the Legislature to determine by general laws what properties shall be exempt from taxation. N.J. Const., art. VIII, § 1, ¶ 2. The Legislature has adopted statutes making all real property subject to local property taxation unless expressly made exempt by statute. See N.J.S.A. 54:4-1; Hunterdon Medical Ctr. v. Twp. of Readington, 195 N.J. 549, 553 (2008). Categories of properties that are exempt are listed in N.J.S.A. 54:4-3.6. The list includes "all buildings actually used in the work of associations and corporations organized exclusively for religious purposes, including religious worship, or charitable purposes," provided that any part of the property that is leased for profit-making purposes or is otherwise not in use for religious or charitable purposes is not exempt. Ibid.

To prove entitlement to exemption, a property owner must establish that: (1) the owner is organized exclusively for a recognized tax-exempt purpose; (2) the property must be actually and exclusively used for the tax-exempt purpose; and (3) the owner's operation and use of the property must not be for profit. Hunterdon Medical Ctr., supra, 195 N.J. at 561; Paper Mill Playhouse v. Millburn Twp., 95 N.J. 503, 506 (1984); Roman Catholic Archdiocese of Newark v. City of E. Orange, 18 N.J. Tax 649, 653 (App. Div. 2000). In this case, the City did not contest that ...

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