Paterson Getting $6MM In Property Taxes From St. Joseph’s Hospital

by: Anthony F. Della Pelle
2 Dec 2020

The City of Paterson recently entered into an agreement with St. Joseph’s Hospital which settled a pending property tax dispute between the parties dating back to 2016.

The settlement results from the City’s actions to remove St. Joseph’s historic property tax exemption, and to place the hospital’s properties on the City tax rolls after a landmark Tax Court decision in 2015 vitiated most of Morristown Medical Center’s historic tax-exempt status. After the Morristown decision, towns across New Jersey began to assess hospital properties, but in Paterson, St. Joseph’s had not paid any taxes to the City and took the position in its pending tax exemption case that its charitable purpose and activities entitled the hospital to maintain its tax exemption.

St. Joseph’s owns more than thirty properties in Paterson, assessed at nearly $190 million, according to public records, that would ordinarily result in annual property taxes of more than $7 million.  But, due to the pending dispute, the City has apparently approved a settlement which would instead provide $6 million total over the next five years from St. Joseph’s.  It is presently unclear whether the settlement includes back taxes and interest for the tax years 2016 to 2020, as the appeal dates back to 2016.

A recent article on has further details about the settlement.

Bringing hospital properties onto the tax rolls in the past several years has caused varied results and controversy around New Jersey, as municipal officials look to the influx of new tax ratables to meet budget deficits, and hospitals are being lauded for being good community partners.  However, because these assessments in many cases do not tax the “full” market value of all of the improvements in recognition of the hospital’s entitlement to exemption for purely non-profit/charitable or non-commercial uses on their properties, critics of these settlements have suggested that the towns and cities are not paying their fair share because they are only getting taxed at a fraction of the full assessment.

In an effort to clarify these issues and to have a fair and “predictable” system on a statewide basis, the New Jersey Legislature is considering a new law that would address the tax-exempt status of hospitals. The bill, A-1135, was approved by the State Assembly in September.  This legislation would require hospitals to pay annual community service contributions to offset the costs of public safety, such as local police and fire departments in the municipalities. Any pre-existing financial agreements between hospitals and municipalities would remain in force until the expiration of those agreements. The bill has not yet been signed into law, however, as there is a companion bill, S-357, which remains pending in committee review in the State Senate.