W. Side Cmty. Ctr. v. City of Asbury Park Block 1004, Lot 2
| Decision Date | 27 February 2018 |
| Docket Number | Docket No. 008640-2016 |
| Parties | Re: West Side Community Center v. City of Asbury Park Block 1004, Lot 2; Block 1005, Lot 1; Block 1101, Lot 6 |
| Court | New Jersey Tax Court |
Michael D. Mime, Esq.
3200 Sunset Avenue
Ocean, New Jersey 07712
Harry Haushalter, Esq.
This is the court's decision after trial on the issue of whether the above referenced three parcels ("Subject") should be granted tax exemption for tax year 2016. Plaintiff ("WSCC") claims that exemption is warranted because it is a domestic non-profit entity organized exclusively for tax exempt purposes, the Subject is being used for such purposes, and therefore, is tax-exempt under N.J.S.A. 54:4-3.6.
Defendant ("City") claims that no exemption is warranted for several reasons. The first is that Block 1004, Lot 2 ("Parcel #1") contains a gymnasium (hereinafter "Gymnasium Portion of Parcel #1"), is owned by the City via a final judgment in a tax sale foreclosure action. Therefore, it is already tax exempt. Second, Block 1005, Lot 1 ("Parcel #2"), which is vacant land, is also owned by the City via a final judgment in a tax sale foreclosure action. Therefore, it is also already tax exempt. Third, plaintiff has not proven what its non-profit purpose is. Four, plaintiff has not proven that the remaining portion of Parcel #1 where a three-storied building is located (hereinafter "Building Portion of Parcel #1"), and Block 1101, Lot 6 ("Parcel #3"), which is vacant land and never previously exempt, are being used for any charitable or tax-exempt purpose, and not being conducted for profit.
For the reasons stated below, the court finds that WSCC is a non-profit entity exclusively organized for the tax-exempt purposes of the moral and mental improvement of the local community. However, the portion of the Subject not owned by the City is not entitled to a tax exemption.
WSCC was incorporated in 1942. Its certificate of incorporation states its purpose is to "promote the moral, spiritual, physical, social and mental welfare of the residents of the community," and do all things necessary or incidental to achieve such purposes. By an amendment in December 15, 1988, the entity's name was changed to reflect WSCC's current name.
A certificate from the New Jersey Division of Revenue and the State Treasurer shows that WSCC's registration was revoked January 31, 1994 for failure to file annual reports, which was then reinstated January 26, 1996. As of December 14, 2015 (the date of the Treasurer's certification), WSCC was certified as "as an active business in good standing" with its annual reports remaining "current."
A September 2010 revised copy of the by-laws claims WSCC's purpose to "be a non-profit" entity for "exclusively charitable and educational" purposes. The delineated purposes were
to: (1) "provide recreational, cultural, educational, social and civic activities," and (2) "collaborate" with governmental "agencies to improve the systems for delivering services to the residents of [the City] and neighboring communities." WSCC was run on a non-membership basis by a Board of Trustees, which managed and controlled all the "business, property and affairs" of WSCC, through officers such as a president, secretary and a treasurer, with the president having "general charge and supervision" over WSCC's affairs. No salaries were payable to any trustee or officer, though they could be reimbursed for "reasonable expenses incurred with" the Board's approval. The by-laws also provided for six "standing committees" one of which was for fundraising, another for "program/long range strategic planning." Committee actions were to be recorded and reported to the Board of Trustees. Upon WSCC's dissolution, all debts were to be paid, and the remaining or any portion thereof, could not "be distributed to any Trustee, member of Officer" of WSCC, but had to be "distributed in accordance" with State laws "consistent with" the certificate of incorporation.
The properties in question are as follows:
| Parcel # |
| Identification |
| Street Address |
| Description |
| 1 |
| Block 1004, Lot 21 |
| 115 De Witt Ave |
| Improved |
| 2 |
| Block 1005, Lot 12 |
| 129 De Witt Ave |
| Vacant |
| 3 |
| Block 1101, Lot 6 |
| 118 De Witt Ave |
| Vacant |
Parcel #1 is improved by what used to be a three-storied residence owned by a physician, which the parties referred to as WSCC's "administrative building." This building has a basementthat is used for storage. The first floor has a conference room, an office, a kitchen and a bathroom. Per the assessor, based on his personal observations, the first floor was in "fair condition."
The second floor has three rooms, all former office spaces. One such room is used by an individual (who officially became a volunteer in 2016) for his private business as a licensed contractor at no rental charge. The individual acts as the building/facilities manager at no cost to WSCC. He initially used the third floor for his business, then from 2014 onwards, used space on the second floor for that same business. This was in return for fixing the roof for free and acting as the building manager. He also performs other free services such as fixing toilets, trying to fix the furnace, and repairing sub-floors and walls. He personally incurred expenses for the parts. Initially, he had separate telephone lines placed in his office space, and was being billed separately, but later began to pay WSCC an agreed-to percentage of the internet/telephone bills and "overages" on other utilities. He conducts his regular business in this space, including meeting clients, and has a key to the building.
According to the assessor's inspection, the second floor was in fair-to-poor condition with some code violation issues. Due to plumbing issues, there were water leakage onto the first floor. To prevent leaks, the water was turned off, making the bathroom a non-operable. There was a deadbolt on the emergency escape. A "Do Not Use" sign was taken down due to the cleaning in preparation for the assessor's inspection. He noted the rooms on the second floor had little furniture/supplies. WSCC disputed the assessor's observations by claiming each room was a class room equipped with a TV, bookshelves, books, tables, a large projection TV, and a drum set, which were set up when the assessor was there for the interior inspection. No photographs were provided by WSCC in this regard.
The third floor is finished. It was previously used by the licensed contractor for his business until 2012. The assessor was not given access to this portion during his inspection. According to WSCC's president for the Board of Trustees, it is being used for WSCC's office work, and for storage of WSCC's books and records.
The Building Portion of Parcel #1 is separated from the Gymnasium Portion of Parcel #1 by a driveway. The assessor's interior inspection showed that the Gymnasium Portion of Parcel #1 to be in very poor condition, with major wear-and-tear issues such as leaking roofs, large part of the floor area covered with tarpaulin, wall cracks and the like.
WSCC's witnesses agreed that the Building Portion of Parcel #1 and the Gymnasium Portion of Parcel #1 were in need of repairs and maintenance, with issues as to roof, water in walls and ceilings, pest infestation, basement flooding, and vandalism. The furnace in the Building Portion of Parcel #1 was not functional, thus, had no heat. The furnace was replaced in 2016 with funds obtained from the City at WSCC's request. WSCC also requested assistance from the City in 2015 due to its "dire need of immediate short-term facility improvements," such as "a new heating system, roof repairs and the refurbishment of [the] gymnasium floor."3 However, WSCC did not receive any citations for municipal safety code violations.
Parcel # 2 is vacant land, and is adjacent to Parcel #1. It is not being used for any purpose and is un-maintained.
Parcel # 3 is vacant land, and located across the street. It was intended to be used as an overflow parking lot, however, is never used due to ample free street parking, and the City's "walkable community" status. It is unpaved and not maintained.
It is undisputed that the Subject has been exempt from local property tax for an extended period of time, starting sometime in 1942. For tax years 2014 and 2015, Parcels #1 and #2 were classified as tax exempt Class 15F property which refers to property exempt for reasons other than those specifically described in the regulations. See N.J.A.C. 18:2.2(q). Parcel #3 was never tax exempt, and has always been taxed as Class 1 property which refers to taxable vacant land. See N.J.A.C. 18:12-2.2(a).
In December of 2014, the City's assessor became aware, through a series of local newspaper articles, that WSCC's federal non-profit status (under I.R.C. §501(c)(3)) was revoked. This instigated his decision to investigate WSCC's non-profit status and use for local property tax exemption purposes. By notice dated March 18, 2013, the IRS stated that, effective May 15, 2012, WSCC's tax exemption status was revoked since it had failed to file an annual information return (federal Form 990) for three consecutive years, and was "no longer tax-exempt," thus, could not receive tax-deductible contributions. WSCC's federal tax exempt status remains revoked.
Since the assessor had already filed a preliminary tax list for tax year 2015 granting an exempt status to the Parcels #1 and #2, he filed tax appeals before the Monmouth County Board of Taxation ("County Board") challenging the exemptions. However, he withdrew the appeals after discussions as to the loss of the federal tax exempt status with Ms. Ross, president of WSCC's Board of Trustees, wherein she assured him that she was addressing that...
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