Advance Hous. Inc. v. Twp. of Teaneck

Decision Date04 October 2011
PartiesADVANCE HOUSING, INC. and Advance Housing 2000, Plaintiffs–Appellants,v.TOWNSHIP OF TEANECK, Borough of Bergenfield, Borough of Little Ferry, Borough of Ramsey, Borough of Ridgefield Park, Borough of Lodi, Borough of Fairview, Borough of Leonia, City of Hackensack, Defendants–Respondents.
CourtNew Jersey Superior Court


Joel M. Ellis argued the cause for appellants (Kates Nussman Rapone Ellis & Farhi, LLP, attorneys; Mr. Ellis, Michael B. Kates, Hackensack, and Joshua K. Givner, Pleasantville, on the brief).

William F. Rupp, Hackensack, argued the cause for respondent Township of Teaneck (Ferrara, Turitz, Harraka & Goldberg, P.C., attorneys; Mr. Rupp, on the brief).Harry D. Norton, Jr., argued the cause for respondent Borough of Ramsey (Norton, Sheehy, Higgins & Rosa, P.C., attorneys; Mr. Norton, of counsel; Neil A. Tortora, West Paterson, on the brief).William R. Betesh, Ridgefield Park, argued the cause for respondent Village of Ridgefield Park (Durkin & Boggia, attorneys; Mr. Betesh, on the brief).Durkin & Boggia, Ridgefield Park, attorneys for respondent Borough of Bergenfield, join in the brief of respondents Village of Ridgefield Park, Borough of Ramsey and Township of Teaneck.Dennis A. Maycher argued the cause for respondent Borough of Fairview (Law Offices of Dennis A. Maycher, attorneys; Mr. Maycher and Jason L. Bittiger, Garfield, on the brief).Joseph G. Monaghan, Hackensack, argued the cause for respondent Borough of Little Ferry (Mr. Monaghan joins in the brief of the Borough of Ramsey).Donald J. Lenner argued the cause for respondent City of Hackensack (Mr. Lenner joins in the brief of the Borough of Ramsey).Scott G. Sproviero, attorney for respondent Borough of Lodi, joins in the brief of all respondents.Kenneth H. Zimmerman, Roseland, argued the cause for amici curiae The Judge David L. Bazelon Center and the Office of the Public Defender (Lowenstein Sandler PC and Yvonne Smith Segars, Public Defender, attorneys; Mr. Zimmerman, Brian A. Silikovitz, Thomas S. Dolan, Isaac R. Hirsch, and Rebecca H. Estelle, Assistant Deputy Public Defender, on the brief).Amicus Curiae National Council for Community joins in the brief of The Judge David L. Bazelon Center and the Public Defender.Before Judges CARCHMAN, MESSANO, and WAUGH.

The opinion of the court was delivered by


Plaintiffs Advance Housing, Inc. (Advance Housing), and its subsidiary Advance Housing 2000, Inc. (Advance 2000), appeal the September 2, 2009 judgment of the Tax Court denying them real property tax exemptions under N.J.S.A. 54:4–3.6 for tax years 2002 through 2004 for properties they own in nine municipalities in Bergen County. We reverse.


We discern the following facts and procedural history from the record on appeal.


Advance Housing is a non-profit corporation that provides affordable, supportive housing and services for people with severe and persistent psychiatric disabilities. According to its by-laws, Advance Housing was organized, among other reasons, [t]o promote and provide permanent normalized community living arrangements for psychiatrically disabled individuals in Bergen County, New Jersey” and [t]o promote and provide decent, affordable housing for low-income and moderate-income families or family members who are psychiatrically disabled.” Its certification of incorporation contains similar language.

Advance 2000's by-laws provide that it was organized

[t]o [provide] elderly or disabled persons with housing facilities and services specifically designed to meet their physical, social and psychological needs, and to promote their health, security, happiness and usefulness in longer living, the charges for such facilities and services to be predicated upon the provision, maintenance and operation thereof on a nonprofit basis.

Its certification of incorporation contains similar language.

Plaintiffs describe supportive housing as a more cost-effective alternative to group homes as a vehicle to effectuate the de-institutionalization of people with significant psychiatric disabilities. Plaintiffs also describe it as a more cost-effective approach to addressing the needs of the homeless with those disabilities, who would otherwise require more expensive periodic hospitalization or might become involved with the criminal justice system.

Kevin Martone, Advance Housing's former President and Chief Executive Officer, certified that approximately seventy percent of plaintiffs' clients “had been institutionalized for significant periods of time; [and that] all others had a history of psychiatric hospitalization, homelessness or were at risk of homelessness due to their psychiatric disability.” Plaintiffs contend that their model of supportive housing “blends comprehensive, flexible services with affordable, lease-based housing.” They rely primarily on grants from governmental and charitable sources to cover the costs of the services and housing they provide.

The services offered by Advance Housing include supportive counseling and intervention; medication monitoring and education; vocational training and guidance; budgeting assistance; coordination of benefits and entitlements; transportation to medical and other appointments; nursing assessments and medical follow-up; assistance with meal planning and food shopping; crisis intervention; assistance and training in apartment maintenance; assistance with activities of daily living such as personal hygiene, grooming, cooking, cleaning, and paying bills; and linkage to and communication with other services such as day programs and Social Security. Martone estimated that ninety-nine percent of these services take place in the client's residence.

The frequency of services provided by Advance Housing varies from person to person. Some clients are seen every day, while others are seen once a week. In addition, Advance Housing's case managers have telephone contact with clients, as well as their service providers, physicians, and benefit agencies.

Advance Housing provides supportive services and counseling for the residents of all the properties at issue, as well as residents of housing not provided by either plaintiff. It has approximately 105 clients receiving supportive services, thirty-five of whom reside in the fourteen properties involved in this appeal.1 Advance Housing assists prospective clients in obtaining housing from third-parties if it is unable to provide housing itself or through Advance 2000.

Advance Housing obtained funding to purchase the subject properties from a variety of sources, including the United States Department of Housing and Urban Development (HUD), the Division of Mental Health Services in the New Jersey Department of Health and Senior Services, and county-run programs. Additional funding was obtained through private donations. For example, a single-family house in Little Ferry was received as a donation.

Although Advance Housing owns some of the subject properties directly, it created Advance 2000 to acquire and own the remaining properties in order to comply with HUD's requirements concerning the acquisition of housing using HUD funding. The Internal Revenue Service has exempted both Advance Housing and Advance 2000 from federal income taxation.

When a client obtains housing directly from plaintiffs, a market rent is established for each unit in compliance with HUD's Section 811 Supportive Housing Program. See 42 U.S.C.A. § 8013; 24 C.F.R. §§ 891.100 to .865. However, the rent actually paid by the client is limited to thirty percent of the client's adjusted income, with the remaining rent coming from HUD or other available funding sources. The rent covers expenses associated with operating the rental unit. If a client is unable to make a rental payment, Advance Housing seeks alternative funding. The lease provides that residents can be evicted if they violate terms of the lease, including non-payment of rent. However, no tenant has ever been evicted by Advance Housing or Advance 2000.

To be eligible for housing and related services, each client must demonstrate a need for supportive housing. Consequently, each individual receiving housing and related services has a psychiatric diagnosis. Because HUD also provides funding for those who require supportive housing but do not require additional services, it mandates that residents cannot be required to accept any supportive service as a condition of occupancy. 42 U.S.C.A. § 8013(i)(2)(c). Consequently, plaintiffs' leases do not mandate that the client actually participate in counseling services. Nevertheless, according to Martone, all of Advance Housing and Advance 2000's tenants actually receive services from Advance Housing.

Advance Housing can terminate clients from the program if they require a higher level of services, such as twenty-four-hour on-site care, or if they no longer require supportive housing. Narcotics use is also grounds for termination, but no tenant has been evicted for that reason.

According to Martone, some clients would be at risk for homelessness without supportive housing. Others might be placed in more costly levels of care, such as group homes or institutions. In Martone's opinion, the overall quality of life of those clients would decrease, while the use of public resources such as “police, fire[fighters], ambulances, and emergency rooms” would increase. There would also be a potential risk to the public if such individuals stopped taking their medications. Martone estimated that institutional care costs $120,000 to $146,000 per client each year, and that group homes providing twenty-four-hour care cost from $60,000 to $85,000 per year. Advance Housing's program costs approximately $20,000 per year.

According to Mary Rossettini, Advance Housing's President and Chief Executive Officer, the two elements of its program, “housing and services, cannot...

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