April 2, 2019
appeal from the Tax Court of New Jersey, Docket Nos.
16504-2013 and 12334-2014.
F. Giancaterino argued the cause for appellants (Skoloff
& Wolfe, PC, attorneys; David B. Wolfe, Barbara A.
Schweiger and Rebecca L. Hutcheon, on the briefs).
F. Renaud argued the cause for respondent Union Township
(Renaud DeAppolonio, LLC, attorneys; Robert F. Renaud and
Adam J. Colicchio, on the brief).
M. Zug, Deputy Attorney General, argued the cause for
respondent New Jersey Educational Facilities Authority
(Gurbir S. Grewal, Attorney General, attorney; Melissa H.
Raksa, Assistant Attorney General, of counsel; Jamie M. Zug,
on the brief).
Judges Yannotti, Rothstadt and Natali.
Dining, LLC, operates a restaurant in a building on the
campus of Kean University (the University) in the Township of
Union (the Township). The Tax Court held that the premises
where Gourmet Dining operates the restaurant are subject to
local property taxes. Gourmet Dining and the University
appeal from the Tax Court's judgment affirming the
assessments and the court's order denying their motion
for reconsideration. For the reasons that follow, we reverse.
2004, the University established a program to meet the
State's need for qualified science and mathematics
teachers and scientific researchers, and decided to construct
a building on its campus to house the program. The University
financed the construction of the building through the New
Jersey Educational Facilities Authority (the Authority), an
entity authorized to finance the construction of facilities
by public institutions of higher education in this State.
See N.J.S.A. 18A:72A-5(k). The University and the
Authority entered into a Lease and Agreement, dated December
1, 2005 (the Financing Agreement).
Financing Agreement, the Authority agreed to issue tax-exempt
bonds and provide the proceeds from the sale of the bonds to
the University for the construction of the building. To
ensure repayment of the principal and interest on the bonds,
the University agreed to convey title to the property to the
Authority. In exchange, the Authority agreed to lease the
property to the University for a period of thirty years, or
until the bonds are fully paid, at which time the Authority
would re-convey title to the University.
University constructed the building with funds provided by
the Authority pursuant to the Financing Agreement. The
building is known as the New Jersey Center for Science,
Technology and Mathematics (NJCSTM). The NJCSTM was ready for
use in September 2010. It included space for a full-scale
restaurant, which is open to the public.
2010, the University's Board of Trustees (the Board)
adopted a resolution, which authorized the Kean University
Foundation, Inc. (the Foundation) to complete the restaurant
project and engage an experienced manager to operate the
restaurant. The Board's resolution stated that "a
minimum of [ten] percent of the restaurant's gross
revenues [shall] annually be allocated for scholarship
purposes within the Foundation."
October 2011, the University and the Foundation entered into
a Management Agreement, which granted the Foundation the
"exclusive right to operate, manage and control"
the restaurant for a ten-year period. The Management
Agreement authorized the Foundation to subcontract its rights
to a person or entity with extensive experience and expertise
in the restaurant and catering business.
same month, the Foundation and Gourmet Dining entered into a
Management Subcontract Agreement (MSA), which grants Gourmet
Dining "the exclusive right to operate, manage and
control" the restaurant facility in the NJCSTM for a
ten-year period. The MSA designates Gourmet Dining as the
"exclusive manager" of the restaurant, and states
that it has responsibility for "all reasonable,
necessary and advisable management and operational
the MSA, Gourmet Dining has sole responsibility for hiring
employees and for all expenses related to the restaurant
facility, including food costs, inventory expenses, salaries,
maintenance, and normal janitorial services. In exchange for
these responsibilities, Gourmet Dining agreed to pay the
Foundation an annual management fee of $250, 000 for the
first nine years of the Agreement, and $500, 000 for the
tenth year. Gourmet Dining also agreed to pay the Foundation
12.5 percent of the gross revenues derived from the operation
of the restaurant, which is called Ursino Steakhouse &
Tavern (Ursino). The restaurant opened for business in
letter dated August 27, 2012, the Township's Tax Assessor
advised Gourmet Dining that the Township would be assessing
Gourmet Dining local property taxes for the restaurant
facility because it is operating the restaurant on property
leased from the University and the subject property is not
exempt from local property taxes. The Tax Assessor stated
that Gourmet Dining would be required to pay property taxes
on the "restaurant portion" of the building for
2011 and 2012.
Dining did not challenge the property tax assessments for
2011 or 2012, but later filed petitions of appeal with the
Union County Board of Taxation (Tax Board) challenging the
assessments for 2013 and 2014. The Tax Board dismissed the
petitions, and Gourmet Dining filed timely complaints with
the Tax Court, challenging the Tax Board's judgments.
the Township filed a motion for summary judgment, arguing
that Gourmet Dining was required to pay local property taxes
on the portion of the NJCSTM where it operates the
restaurant. Gourmet Dining filed a cross- motion for summary
judgment and argued that it is exempt from local property
taxes on various grounds. The University joined in the
cross-motion. The Tax Court required that the University and
the Authority be joined as necessary parties to the
the Tax Court filed an order dated March 14, 2018, which
granted the Township's motion and denied the
cross-motion, for the reasons stated in a written opinion
that is reported as Gourmet Dining, LLC v. Union
Twp., 30 N.J. Tax 381 (Tax 2018). Gourmet Dining
thereafter filed a motion for reconsideration of the