Tax Court stops Grinch who tried to steal tax exemption from local charity

by: Richard De Angelis
29 Dec 2014

In these consolidated tax appeals, the Tax Court recently dismissed the City of Hackensack’s challenge to the decision by the Bergen County Board of Taxation awarding an exemption from local property taxes for three properties owned by affiliates of Community Housing in Partnership, commonly referred to as CHIP.

CHIP and its affiliates provide housing and other programs to homeless adolescents and recovering addicts.  Two of the three properties at issue in these appeals provide housing to CHIP’s clients.  These properties are supervised by trained personnel who assist also in getting residents to off site location for other programs provided by CHIP.  Funding for this housing is provided through various State and local agencies, federal and private grants.  A third property at issue in these appeals is used as an administrative office for all of the programs run by CHIP.

The city’s primary argument in challenging the exemptions was that the property owner’s were not organized exclusively for charitable purposes.  The City’s position was based solely on what it deemed to be ambiguous language in CHIP’s Certificate of Incorporation.  Specifically, the Certificate of Incorporation stated that CHIP is authorized to provide housing to “other consumers,” which the City argued, is in and of itself, not a charitable purpose.  The Certificate of Incorporation also authorized CHIP to engage in other not-for-profit activities, which may not be charitable.

Despite what the court agreed was “broad language” in the Certificate of Incorporation, the Court concluded that CHIP was organized exclusively for charitable purposes.  Interestingly, the court reached its conclusion on CHIP’s motion for a directed verdict at the close of the City’s trial proofs. Thus, it was through the evidence introduced by the City that the court was able to establish that the property owners were organized exclusively for charitable purposes and rejected the municipality’s position and upheld the exemptions.

Fortunately for CHIP, the Grinch was not able to steal its exemption.

A copy of the tax Court’s decision in City of Hackensack v. Community Housing Partnership may be found here