Property Tax Exemption for Housing Providers

Currently, some municipalities are trying to deny supportive housing properties exemption from local property tax on the basis that the agency is a "conduit" for public funds -- since the agency buys property with government, it is not entitled to an exemption, since property purchased directly by the government would not be tax-exempt.

A recent opinion of the New Jersey Supreme Court Appellate Division reversed that trend, finding that the taxpayer, Southern Jersey Medical Centers, Inc., was a charity under NJSA 54:4-3.6, and therefore exempt from real estate taxation even though 85% of its funding came from the state and federal government.

The Appellate Division found that because Southern Jersey Medical Centers provides a service to the town, they are not merely a conduit for public funds, but that they earn their state and federal funds through the services they provide to persons without sufficient income to pay themselves.

This opinion provides a solid basis for supportive housing providers to argue for total exemption from property taxes or to negotiate payment with a municipality. In Southern Jersey Medical Centers, Inc. vs. City of Pleasantville, Docket No. A-4969-00T3, the Township has filed an appeal, but it is not known whether the New Jersey Supreme Court will take up the appeal. A copy of the document can be found on the Rutgers School of Law website.