State Licensing Important for Establishing “Completion” Date for Exempt Property

by: Anthony F. Della Pelle
24 May 2013

The New Jersey Tax Court recently invalidated added assessments on newly constructed properties in West Orange used to provide residential care for the elderly. The plaintiff Green Hill, Inc., is a New Jersey not-for-profit that provides care to aged citizens.  Since 1965, it owned a tax-exempt five acre lot with one building, and a neighboring 15 acre lot that was taxed because it was not being utilized for a tax exempt purpose.  However, Green Hill began construction in 2009 on the 15 acre lot for additional housing in support of its tax exempt purpose.  Construction of the homes was complete in April 2011, while Temporary Certificates of Occupancy/Compliance for the four buildings were issued between June 2011 and September 2011.  Green Hill received licensure to operate at the new buildings for its tax exempt purpose on September 1, 2011.  Thereafter the Township of West Orange filed an added assessment on the properties for September through December, to place them on the tax rolls as improved properties, from which Green Hill filed its appeals.  A tax exemption for the 2012 tax year was granted.

At oral argument, Green Hill asserted that the added assessments were improper pursuant to N.J.S.A. 54:4-63.3 and Schizophrenia Foundation of N.J. v. Twp. of Montgomery, 6 N.J. Tax 439 (App. Div. 1984).  The Township argued that the properties should have been assessed as of April 2011 when they were completed, and that Schizophrenia Foundation does not apply because the properties were not being used for their tax exempt purpose as of April 2011.  The court held that a property is complete when it is able to be used for its intended purpose.  Under Schizophrenia Foundation, the court reasoned that the buildings were not complete until they received their licensure from the state that permitted Green Hill to operate as a home for the aged.  The court further found any other potential dates for “completion” irrelevant because the assessor chose August 2011 as the month of substantial completion, and thereby established September 1st under the regulatory scheme as the date of valuation for assessment purposes.

A copy of the Tax Court’s opinion in Green Hill, Inc., v. Twp. of West Orange may be found here.

For more blog posts on added assessments and new construction, please see the following:

Appeals Court Upholds Freeze Act Protection From Added Assessment

Morristown Hotel Wins Freeze Act Application and Refund

Property Owner Keeps Tax Abatement After Municipality Failed to “Turn Square Corners”