FOR THE MENTALLY DISABLED

In our winter 2010 Legal Update, we reported on a state tax court decision eliminating real property tax exemptions for certain private, not-for-profit companies.

In the case of Advance Housing Inc. versus Township of Teaneck, a New Jersey Appellate Court has reversed the State Court determination, finding that a non-profit organization that provides housing and counseling services to people with psychiatric disabilities should be granted property tax exemptions.  The Court reviewed the New Jersey Statutes Section 54:4-3.6 dealing with the definition of a charitable organization that is exempt from property taxation.

The lower Tax Court Judge had stated that the company has no “institutional aspect”, has no “hospital purpose”, and he found it significant that the people residing in the housing are not required to undergo counseling.  The Appeals Court addressed the Tax Court ruling by stating “To the extent he meant that the services had to be provided in an ‘institutional setting’ we disagree”, and the Appeals Court was not troubled by the fact that the company also provides counseling and supportive services to others who are not residents of the group home.

These cases are always fact sensitive.  The Tax Court ruling that has been reversed was a particularly troublesome ruling.  As we reported in our Legal Update article, the State has incentivized institutions to place more residents in local group home settings, by shutting down many of the institutions!  Bona fide group homes that provide these services cannot exist if they are required to pay real property taxes.  With all due respect to the Tax Court Judge, we think the Appellate Court got this one right.

Stuart D. Liebman, Esq.