Are Hospital Exemptions in Jeopardy?

Yet another Tax Court decision applying N.J.S.A. 54:4-3.6 (the Exemption Statute) was issued that should give pause to New Jersey’s Medical Centers.  Before the court in AHS Hospital Corp v Town of Morristown, were cross-motions for summary judgment, pretrial motions seeking to dispose of the case by means in lieu of a lengthy trial.  Morristown succeeded in securing a favorable decision on its issues but the Hospital did not.  As summarized by the Tax Court’s website:


“The court found that portions of buildings owned by Morristown Hospital and used as offices and a café were not exempt from local property taxes as hospital purpose properties because the spaces were used by private physicians and other private third parties for profit making purposes.  The court also found that there exists a genuine issue of material fact as to whether the use or operation of the remainder of the subject property was conducted for profit.”



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Rooftop Solar Panels - Green in More Ways Than One

A recent article in the Newark Star-Ledger highlighted the influx of solar energy projects in New Jersey and the financial incentives driving those projects.  Notable aspects of the article include:

  • The Board of Public Utilities ("BPU") developed a solar renewable-energy certificate program ("SREC") to create a marketplace for solar energy producers to trade energy with utilities.
  • Commercial installations account for 57 percent of the SRECs, or 84.32 megawatts, with 22 percent of the SRECs being generated by residential installations, and the balance from municipalities and schools.
  • Nearly $3 billion dollars have been granted to qualified applicants under the Section 1603 Payment in Lieu of Tax Credit programs.  Of that, $27 million dollars has been paid for 52 solar projects in New Jersey -- an average of more than a half million dollars for each project
  • In December 2009, Federal Express completed a 2.42 megawatt rooftop solar array at its distribution hub in Woodbridge, New Jersey.
  • In Edison, a food storage warehouse recently installed a system that will provide 45 percent of the plant's energy needs per year.

While time is running short, it is not too late to consider your rooftop for a solar panel installation.  The Stimulus Act requires that the project commence construction in 2010 in order to claim the 30% payment. 

New Jersey Appellate Division upholds "Area in Need of Redevelopment Designation"

In the New Jersey Appellate Division case of Suburban Jewelers vs. City of Plainfield, the Appellate Division upheld Plainfield's redevelopment designation of a portion of Plainfield's Central Business District. A number of commercial property owners appealed the City's redevelopment designation contending that the designation adversely affected their properties. The property owners argued that the City failed to make the constitutionally required finding of "blight", the findings were based upon a net opinion, and the City planning board failed to consider the benefits of the present uses of the properties.  In addition they argued that the trial court failed to consider the opinion of another judge in the same vicinage. The court rejected all the arguments advanced by the property owners. 

The Court found:

1. Gallenthin principles must be followed in determining whether an area is blighted.

2. The City's planning consultants did a thorough review of the area investigating the conditions of each property including any deterioration, use, occupancy and vacancy of each property, site characteristics including drainage, operations, parking, and lighting, tax payment history, police incidents and crime rate, and any unsafe conditions and code violations relating to  each property.

3. The City's determination that the study area is in need of redevelopment  comes invested with  a presumption of validity.

4.  While a net opinion is not adequate, the City's report contained detailed factual findings rather than a mere recitation of the statutory criteria and met the "substantial evidence standard" because the report discussed specific conditions of each property and explained in detail why those conditions rose to the level of obsolescence etc. and explained why those conditions were detrimental to the safety, health and welfare  of the community. Those conditions were found to have a detrimental effect on surrounding property.

5. The Court reaffirmed the Gallenthin standard that " while the meaning of blight has evolved and broadened it still has a negative connotation and retains its essential characteristic: deterioration or stagnation that negatively affects surrounding properties."

6.  The Court did not require the planning board to consider the benefits of the current uses of the study area.

Accordingly this case upholds a redevelopment designation when there is a proper study and reinforces that the redevelopment decision is subject to a presumption of validity which will be upheld so long as the decision is supported by substantial credible evidence.  



The Time of the Application Rule - The New Standard for Land Development Applications

On May 5, 2010, Governor Christie signed legislation that represents a shift in the long-standing right of a municipality to amend or alter its land development regulations after an applicant has filed a land development application. The legislation, S-82, modifies the development application process under the Municipal Land Use Law to afford significant benefits to developers. 

S-82, commonly referred to as the “time of application” or “time of decision” legislation, provides that a land development application will be governed by the municipal development regulations in effect at the time that the application is submitted, and any provisions of any ordinance adopted subsequent to the submission date are not applicable to the application filed prior. However, the new legislation does not extend to ordinances that are adopted relative to health and public safety, and thus an applicant will continue to be subject to the reach of such ordinances to the extent applicable. The legislation affects development applications submitted on or after May 5, 2011, which gives municipalities time to update their Master Plans and zoning ordinances in anticipation of the new procedures.  


Although the legislation does not guarantee in any way that an application will be granted, it clarifies the development regulations by which the application will be examined.   As Governor Christie noted, “[t]his legislation makes common sense changes to improve the application process and move New Jersey in the right direction of providing a friendlier environment for job creation, while keeping safeguards for public health and safety in place." 


A copy of the legislation can be viewed by clicking on the following link.  

Financial Incentives for Solar Energy - Section 1603 In a Nutshell

By now, much has been written about the American Reinvestment and Recovery Act of 2009.  In fact, this legislation has spawned such abbreviations and acronyms such as:  ARRA, the Recovery Act, or quite simply, the "Stimulus".  Whichever your preference, the purposes of this legislation included the preservation and creation of jobs, the promotion of economic recovery in the near term, and the investment in infrastructure that will provide long-term benefits. 

Of the Recovery Act's initiatives, most people are familiar with the $8,000 homebuyer credit that just expired on April 30, 2010 or a deduction for sales taxes on qualifying new car purchases.  For the real estate development community or proponents of renewable energy, one of the Recovery Act's mandates has generated (no pun intended) little press but packs a big punch. 

Section 1603 of the Recovery Act appropriated grant monies to reimburse qualified applicants for up to 30% of the construction costs for specified renewable energy property.  Provided that the property is placed into service by the termination date provided in the Recovery Act, the Treasury Department will pay the credit amount to applicant within 60 days of the date the application is deemed complete.  Applicants can also assign their rights to the payment to a bank or financial institution. 

But, the window is rapidly closing on this extraordinary financial opportunity.  The application filing deadline expires on October 1, 2011.  However, construction on a project must commence in 2010 in order to qualify for the Section 1603 payment, even though the application may not be submitted.