NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
TAX COURT OF NEW JERSEY

M AL A S UNDAR **Richard J. Hughes Justice Complex** JUDG E **P.O. Box 975 Trenton, New Jersey 08625** 

**- 0975**  **609 815**

**- 2922, Ext. 54630 Fax 609 376** 

**- 3018**  **March 4, 2021**  **James M. McGovern ,**  **Jr., Esq.**  **Davison, Eastman, Munoz, Paone, P.A. Attorneys for Plaintiff**  **Gene J. Anthony, Esq. Attorneys for Defendant** 
**Re: Ocean Grove**  **Camp Meeting Ass’n of the United Methodist Church v. Township of Neptune**  **Block 148, Lot 1 (54 Pitman Avenue) Docket No. 005650-2018**  **Dear Counsel: This letter**  **is the court’s**  **o pinion deciding**  **the parties ’**  **respective summary judgment**  **motion s**  **filed in the above captioned matter. Defendant’s summary judgment motion**  **seeks affirmance of its denial of**  **local property tax exemption**  **for tax year 2018 on the above captioned property**  **, an administrative office building (Office) owned by plaintiff and l ocated in d**  **efendant taxing district**  **(Township) . The Township**  **argues that**  **p laintiff is not affiliated with any**  **organized religious order or organization**  **, and further**  **uses the Office**  **to process revenue**  **s (the**  **largest being rents and proceeds from summer entertainment**  **). Therefore ,**  **per the Township**  **, the Office**  **is being used in furtherance of plaintiff’s for**

**- profit activities**  **and should be taxed**

**. The**  **motion was supported by depositions of several of plaintiff’s employees (past and pre sent) or**  **other representatives, and certain documents as to plaintiff’s incorporation and ac tivities.**  **Plaintiff’s cross**

**- motion for summary judgment seeks restoration of the**  **Office ’s tax**  **exemption for both tax years 2017 and 2018 (both years being included in plaintiff’s**  **complaint for tax year 2018)**  **. Plaintiff argues**  **that the Office**  **is its administrative building where , in** **2**

**addition to property management, several**  **other activities**  **which are directly in furtherance of its** 

**non- profit, charitable/religious purposes**  **are also being administratively performed** 

**. Its motion**  **was supported by certifications of two of plaintiff’s representatives**  **, with attached documents. For the reasons stated below, the court**  **finds that**  **it cannot decide the merits of the exemption**  **denial for tax year 2017 since plaintiff did not timely challenge the same. The court**  **reverses the tax exemption denial for the Office**  **for tax year 2018 thus grants plaintiff’s cross** 

**** **motion for summary judgment as to this tax year.**
PROCEDURAL HISTORY **Plai ntiff is**  **a federally income tax**

**- exempt entity under I.R.C. §501(c)(3). Until tax year**  **2016, the Office**  **was granted local property tax exemption by the**  **Township. By letter dated November 21, 2016, the**  **Township’s assessor**  **denied tax exemption to**  **the Offic**  **e for tax year 2017. The reason was:**

**The property’s use as of October 1 of the pretax year. The use must be a qualifying exempt use. Property’s use must be an integral part of the**  **exempt organization’s operations, not just a convenience, and reasonably necessary for the proper and efficient fulfillment of the organization’s**  **exempt purposes. Property must be actually used**  **for a permitted or qualifying use pursuant to the statute under which exemption is sought.**  **There was no timely**  **appeal from this tax exemption denial. On March 27, 2018, plaintiff**  **filed a direct**  **complaint challenging**  **the 2018**  **local property**
**tax assessment of $**  **1,057,300 (allocated $515,600 to land and $541,700 to improvements) imposed on the**  **Office on grounds the assessment was in excess of the**  **Office ’s true value** 

**. Plaintiff**  **also alleged that the**  **Office was improperly**  **d enied a tax**  **exemption for tax years 2017**  **and 2018**

**. The Township filed a counterclaim alleging that the**  **Office is not entitled to a tax**  **exemption and that it was under- assessed.** **3** FACTS **The f ollowing f** 

**acts are taken from deposition testimony and certification s**  **of plaintiff’s employees**  **or other representatives, and undisputed documents as to plaintiff’s incorporation, activities, and operations.**  Plaintiff’s Statutory Incorporation **Plaintiff’s history culminating into its incorporation is detailed in**  **Schaad v. Ocean Grove**  **Camp Meeting Ass ’n of the United Methodist Church, 72 N.J. 237, 254** 

**- 58 (1977)**  **and State v.**  **Celmer , 80 N.J. 405, 410** 

**- 13 (1979**  **). Methodist clergymen bought 260 acres of land near the**  **ocean in Ocean Grove to establish camp meeting grounds in 1869. Scha**  **ad , 72 N.J. 254. The**  **organizers incorporated under L.**  **1870, c.**  **157 as the**  **Ocean Grove Camp Meeting Association of the Methodist Episcopal Church**  **1 which retained “**  **title to all the lands . . .” and “sold leaseholds**  **for 99 years, renewable in perpetuity, at a fixed sum down and a stated annual ground rental ” to**  **the residents due “[t]o maintain the special character of the place.” Scha**  **ad, 72 N.J. 254. When incorporated, plaintiff’s purpose was “that of**  **providing and maintaining for the members**  **and friends of the**  **Methodist Episcopal Church a proper, convenient and desirable**  **permanent camp meeting ground and [C]**  **hristian seaside resort .”**  **L. 1870,**  **c. 157 §1. Article II**  **of plaintiff’s By**

**- Laws reiterate the “object” of plaintiff is “to provide and maintain for member**  **s and friends of the United Methodist Church a proper, convenient, and desirable permanent camp** 

**** **meeting ground and Christian seaside resort as provided in the Statute of Incorporat ion.”** 

**1 The name was changed to “**  **The Ocean Grove Camp Meeting Association of The United Methodist Church.”**  **Celmer , 80 N.J.**  **at 410.**  **Another “ Methodist camp meeting association**  **[] . . . w as incorporated as the Camp Meeting**  **Association of the Newark Conference of the Methodist Episcopal Church” in the 1800s, “**  **and maintains a community called Mount Tabor in Morris County.**  **” Schaad , 72 N.J.**  **at 255.** **4**

**Plaintiff’s Mission Statement is “providing opportunities for spiritual birth, growt h and renewal**  **through worship, education, cultural activities and recreation in a Christian seasi de setting.”**  **Twenty**

**- six t**  **rustees manage plaintiff’s affairs. Id.**  **§4. They must be members of the Methodist church.**  **L. 1870,**  **c. 157, §4;**  **Celmer , 80 N.J. at 411 (trustees had to “be and remain**  **members of The United Methodist Church in good and regular standing ”). Associate trust**  **ees should be members of a Christian Church “in good and regular standing.” By** 

**- Laws, Art. III, §4.**  **Honorary trustees can be anyone who is “Christian Clergy or lay person, by reason of his or he r**  **contribution to Christianity, and interest and support of” plaintiff.**  **Id. , Art. III, §10.**  **The Trustees manage the daily operations by serving on the “ Board**  **’ s executive, program**  **and development committees. ”**  **Celmer , 80 N.J. at 412. “The**  **executive committee serves as the administrative arm of the Board, and repr**  **esents the Board in all official matters,” while the**

**“ program committee**  **” is responsible for “organizing religious services and meetings ” for**  **residents, and t he**  **“ development committee is charged with the duty of initiating and**  **implementing financial program s necessary to provide and maintain [Ocean Grove] . . .**  **as a**  **proper, convenient and desirable permanent Camp Meeting Ground and Christian Seaside**
**Resort.” Ibid.**  **(internal quotation marks omitted). Currently, plaintiff is not a church within the conference of Methodist churches, nor**  **under the control of a Bishop of the United Methodist Church. There is no “agreement” betwe en**  **the United Methodist Church and plaintiff, and plaintiff is not considered as a congregat ion of**  **the United Methodist Church. Plaintiff’s incorporating statute a**  **uthorized it to purchase, hold, and/or sell real property, “in fee simple or otherwise” as deemed “necessary, proper or desirable for the pur**  **poses and objects of the corporation.”**  **L. 1870,**  **c. 157, §2. Improvements “deemed necessary or desirable”** **5**

**could also be made by plaintiff. Id.**  **§3. Any real and personal property owned by plaintiff (not to exceed $5,000 in value) is “exempt from all assessment and taxation.”**  **Id. §6. “Any surplus**  **funds remaining . . . after defraying the necessary expenses thereof for improvements or otherwise,” is to be “devoted to such charitable, benevolent or religious objects or purpose**  **” as agreed to by plaintiff’s trustees. Ibid.**  The Office **The Office is a building in the Township. It is used by plaintiff for carrying out**  **a variety of its administrative functions. Eleven full** 

**- time employees work at this space. It has a reception**  **area, a conference room, offices, and a community center. The space within the Off ice is used**  **to hold committee meetings, community meetings (i ncluding Ocean Grove Homeowners’**  **Association), Bible studies, Youth programming, choir rehearsal, religious seminars , marriage**  **conferences, Ocean Grove tent and cottage meetings. Also conducted in the Office are various**  **administrative activities connecte d with plaintiff’s operations and programs conducted by**  **plaintiff’s departments/committees (Program, Operation, Development, Fi nance) and offices**  **(Beach Operations, Ladies Auxiliary, Gospel Music Ministry, Ocean Grove Auditor ium**  **Association, and Ocean Grov e Beautification Program). Each department or office manages and**  **effectuates various activities**  **of plaintiff**

**. For instance, t**  **he Program Department or Committee, is responsible for activities such as Worship in the Grove, Sunday Worship in the Great Auditorium, Children and Teen activiti**  **es, Christian education, performing arts (including children’s shows/plays and music**  **al shows such as Songs on a Summer Afternoon by Broadway performers and Ocean Grove Summer Band;**  **Great Auditorium concerts; Summer Star Classical Music series; Atlantic Wind Ense mble; Navy**  **Band Pop Rock; and Orchestras of St. Peter by the Sea), and community events (Community 6** 

**Day; Victorian Day; Ocean Grove Forever; Giant Craft Fair). The Operati ons Department or**  **Committee ensures the above a ctivities occur, and is responsible for, among others, vendor**  **management, project management, and facilities maintenance. At the Office is whe re employees**  **and committees meet, strategize, manage, coordinate, and execute several aspects of pl aintiff’s**  **acti vities concerning adult and children education and the spread of community awareness of**  **Christian beliefs and values. The Finance Department ensures, among others, processing/collection of the revenue**  **s from all sources. Administration of plaintiff’s rental activities including application**  **s, customer service, invoicing, accounting, and collection of fees and rentals, are conducted at the Off**  **ice by one full** 

**- time employee**  **who uses 20% of his (her)**  **time in conducting the referenced activities,**  **and who**  **has other duties which account for the remainder of the employee’s full time employment**  **. The Finance Department is also responsible for collectin g**  **/processing gifts, grants, donations, and contributions.**  **Al so included is processing of revenues from plaintiff’s bookstore,**  **The Hub, located in the Township. The store sells religious books, artifacts, and other religi ous**  **paraphernalia. Processing/collecting of revenues**  **from all sources are conducted at the Office.** Plaintiff’s Revenue Generating Activities **Plaintiff owns the land in the Township pursuant L.**  **1870, c.**  **157, §2, and leases the same.** 
**See Schaad**  **, 72 N.J. 254. In this endeavor, it receives annual ground rents. The rate is $10.50** 
**per year per**  **residence f**

**or the 99** 

**- year ground leases.**  **2 Per a**  **former employee ,**  **depending on when the lease commenced, the rent could be higher (for instance $50** 

**- $100 if in the 1950s, then**  **up to $400 in more recent years). Plaintiff does not require property owners (ground lessees) t o** 

**2 There was some discrepancy as to the number of ground leases which generated the $10.50 per**  **year rent. One certification stated 2800, another stated 2180, of which 1,180 are residenti al which**  **pay the annual $10.50 ground rent. 7** 

**be of, or follow, plaintiff’s religious affiliation, however, does require compliance with its rules**  **and regulations (such as no alcohol)**  **. Annual ground lease rents for commercial tenants are higher and are at a different rate for condom**  **iniums. 3**  **Plaintiff imposes a charge for lease renewals or property transfers, the latter being $225 per application, and a ground property se**  **arch fee of $50. Tenants or residential owners are responsible for their property’s maintena**  **nce. Local property taxes for such properties are paid by the tenants or residential property owne**  **rs. Plaintiff also receives revenue from leasing tents and cottages ($5,000 to $7,500) during**  **summer so tenters can combine religious worship with enjoyment of nature. Tenters need not be Methodists. However, they are expected to support plaintiff’s mission by making donations,**  **attending worship services, and volunteering. Every summer plaintiff organizes Camp Mee ting**  **Week which offers participants Christian worship and prayer, religious educati on and**  **exploration, recreation, and renewal “along the beautiful New Jersey Shore.” The tents are**  **dismantled after summer. Another source of rental revenue or facility use is rents from leasing rooms or using the**  **space in Grove Hall, which plaintiff deems its Retreat and Conference Center. 4**  **All revenues from rentals are deposited into plaintiff’s general operating account to be**  **used for plaintiff’s operating expenses. Per plaintiff, the approximate ground rent in tot al (for**  **residential , commercial and condominiums) is about $339,000, which is 6.78% of its budget.** 

**3 Plaintiff’s commercial tenants include The Windmill (a hot dog retailer);**  **Ruding and Wood (a furniture renovator, the rear of the property however being used by plaintiff as a garage), and K**  **earny Bank and Emporium. Per the Township’s assessor’s certification, numerous commer**  **cial properties on Main Avenue in Ocean Grove pay “higher and negotiable annual rent and transfer fees,**  **” while an employee testified that some non-residential rents factor in the Consumer Pric**  **e Index. 4**  **The Township denied tax exemption to this property, which plaintiff appealed (Docket Number 013693-2017) and as to which parties also filed motions for summary judgment.** **8**

**Plaintiff sells tickets for concerts it hosts on Saturday nights during summer at the Great**  **Auditorium. 5**  **Concerts in 2017 and 2018 included certain popular singers or**  **bands paying tribute to famous singers or bands, and classical music. Ticket prices for the former ranged f**  **rom $30**

**- $65 per person, while for the latter**  **about $20.**  **No merchandise related to t he bands playing at**  **the concert is sold at the Great Auditorium, and even if sold it would be outside the Gre at**  **Auditorium . Some of plaintiff’s employees and representatives were positive that plainti**  **ff does not receive any portion of the proceeds, while a former employee stated it depended on the**  **contract and there possibly could have been some sharing of revenues. Plaintiff does not advertise**  **t he Great Auditorium as an available venue for entertainment or attractions. R**  **ather, it contacts entertainers a**  **nd pay s them to perform (per plaintiff, such concerts have been declining**  **steadily). Free concerts (Atlantic Wind Ensemble, Ocean Grove Summer Band, organ recitals)**  **and plaintiff’s Sunday and weekday worship are also conducted at the Great Auditorium ever**  **y summer. Plaintiff organizes the annual choir festival (in which choristers**  **from congregations in the tri** 

**- state area participate) and the Sacred Masterworks, another choir perform**  **ance. The Great Auditorium has also on occasion been rented to other spiritual or religious entities suc**  **h as, for example, the Liquid Church, for conduct of that entity’s worship.**  **Plaintiff also raises revenues from beach badge and boardwalk fees. Seasonal beach**  **badges cost $80**

**- $85 with discounts for youths and seniors. Plaint**  **iff raises revenue by sale of its T** 

**- shirts or sweatshirts on the beach. It also receives rent from a vendor of a snack sta**  **nd on the board walk and from**  **a vendor which/who provide**  **s umbrella rentals. All revenues are placed** 

**5 “**  **Permanent tents (actually houses extended in the summer by tents) are clustere d around the Great**  **Auditorium . . . a magnificent pile built in 1894 and now a national landmark, seats 7,000**  **.” Wyzykowski v. Rizas, 254 N.J. Super. 28, 37, n.1**  **(App. Div. 1992) (citation and internal quotation marks omitted).** **9**

**in plaintiff’s Beach Fund. The boardwalk is also used to conduct religious/spiritual wor ship by**  **plaintiff and a local Methodist church, and donations are split between the two.**  **Plaintiff owns and operates a religious bookstore, The Hub. Revenue is generated from sales of sales of boo**  **ks and other religious paraphernalia. Plaintiff charges fees or seeks donations in connection with its various cultura**  **l activities. For instance, in its Independence Day Parade, for** 

**- profits such as food truck vendors pay plaintiff**  **registration fees to c ater to the visitors. Vendors cannot sell any drinks and must obtain general**  **liability insurance naming plaintiff as an “additional insured.” No part of the vendor(s) proceeds**  **is paid to plaintiff. Vendors are required to comply with any local Township laws incl uding**  **obtaining permits. Participants (such as Marching Bands) can “sponsor” the event at varying**  **amounts ($150 to $1,200) or make donations. Plaintiff’s financial statements as of December 2017 show total income of $5,418,010.**  **Of this, revenues from “performances and recreation” was the largest at**  **$1,755,921 . Per**  **plaintiff’s former employee, this line item included income from all activities,**  **“mostly the beach” but also the summer Saturday night concerts. This is followed by “rental a**  **nd property income” at**  **$1,604,826 . Revenues from**  **“contributions and gifts” was**  **$1,117,561 and from**  **“temporarily restricted” gifts w**  **as $277,384. The operating expense for that period was**  **$5,500,361 of which $4,118,885 was for “program services,” $1,049,550 was for “management and general,” and $331,926 was for “fundraising.” Plaintiff had a net loss of**  **$82,351 for the period. Per**  **certification of plaintiff’s Chief Operating Officer, all revenues are use d to further**  **plaintiff’s mission and for operating expenses without any distribution of revenues to it s**  **members akin to profit distribution by a corpora te entity to its**  **shareholders. 10**  ANALYSIS
TAX YEAR 2017 **The Township is correct that the**  **court cannot determine**  **the merits of plaintiff’s**  **allegation in its complaint that the Township improperly denied tax exemption to the Office**  **for tax year 2017. This court has**  **subject matter jurisdiction only over tax years for which a timely**  **complaint has been filed. N.J.S.A. 54:51A-1**  **. Th us**  **, a tax exemption cannot be granted for prior tax years which were not timely appealed.**  **See Boys’ Club of Clifton, Inc. v.**  **Twp. of Jefferson**  **, 72 N.J. 389, 405**  **(1977) ;**  **Ironbound Educ. & Cult. C**  **tr. , Inc. v. City of Newark, 8 N.J. Tax 540,**  **545-46 (Tax 1986) (“plaintiff’ s failure to file an appeal**  **” for a prior tax year “ is fatal to its claim**  **of exemption for that year on any ground.”), aff’d**  **, 220 N.J. Super. 346 (App. Div. 1987 ).** 
EXEMPTION FOR TAX YEAR 2018 (1) Exemption Under L. 1870, c. 157 **As noted above, this law exempts p lainti**  **ff’s real and personal property from “all assessment and taxation,” as long as the “value” does not exceed $5,000.**  **L. 1870,**  **c. 157, §6.**  **Neither party proffered evidence of what the $5,000 value**  **limit translates to for tax year 2018.** 
**P laintiff’s financia**  **l statements as of December 31, 2017 values land owned by plaintiff at $324,413 and buildings at $11,132,019. Other property including equipment is valued at**  **$4,812,568. The depreciation (for depreciable property and equipment) is reported as -$416,086** 

**w hile the “accumulated depreciation” is** 

**- $8,941,300. However, the court cannot speculate that**  **the net amount (value less depreciation), in fact,**  **exceed s**  **the $5,000 value limit in the 1870 law. Without evidence that the**  **Office is worth less than what $5,000**  **would be worth as of**  **October 1, 2017 ( the**  **assessment date for tax year 2018), the court is hesitant to use the 1870 law’s tax exemption provision as the basis for deciding the instant summary judgment motions** 

**. 11** 

(2) Exemption Under Federal Income Tax Laws **That plaintiff enjoys a federal income tax exemption as an I.R.C. §501(c)(3) organiz ation**  **does not provide a basis to exempt the Office under our local property tax law. See**  **Black United Fund of N**  **.J. , Inc. v.**  **City o f**  **E. Orange , 17 N.J. Tax 446, 455**  **(Tax 1998) (“ entitlement to a §**  **501(c)(3) exemption . . .does not mean that the entity is entitled to an exemption under New**  **Jersey law”), aff’d**  **, 339 N.J. Super. 462 (App. Div. 2001). (**  3) Exemption under N.J.S.A. 54:4-3.6
**N.J.S.A. 54:4 -3.6**  **exempts buildings which are used for certain specified purposes,**  **and the supporting land (not exceeding 5 acres). An exemption is afforded to** 

**all buildings actually used in the work of associations and corporations organized exclusively for the moral and mental improvement of men,**  **women and children, provided that if any portion of a building used for that purpose is leased to profit** 

**- making organizations or is otherwise used**  **for purposes which are not themselves exempt from taxation, that portion shall be**  **Office to taxation and the remaining portion only shall be exempt.**  **[Ibid. ] (hereinafter “MMI Clause”).**  **The same statute also exempts from tax all buildings actually used in the work of associations and corporations**  **organized exclusively for religious purposes, including religious worship, or charitable purposes, provided that if any portion of a building u**  **sed for that purpose is leased to a profit-making organization or is otherwise used**  **for purposes which are not themselves exempt from taxation, that portion shall be**  **Office to taxation and the remaining portion shall be exempt from**  **taxation, and provided further that if any portion of a building is used for a different exempt use by an exempt entity, that portion shall also be exempt**  **from taxation. [Ibid.**  **] (hereinafter “Religious/Charitable Clause”) Further,**  **“the buildings, or the lands on which they stand, or the . . . corporations . . . using and occupying them,” should not be “conducted for profit**  **.” Ibid.**  **But if t he building and land**  **is “used for charitable, benevolent or religious purposes” and the “charitable, benevol**  **ent or 12** 

**religious work therein carried on is supported partly by fees and charges received from or on**  **behalf of beneficiaries using or occupying the buildings ,”**  **the exemptio n is not destroyed**  **provi ded**  **the “building is wholly controlled by and the entire income therefrom is used for said charitable, benevolent or religious purposes.”**  **Ibid. The**  **corporate claimant must be the property** 
**owner, incorporated**  **or organized under New**  **Jersey laws , and should be**  **“authorized to carry out the purposes on account of which the exemption is claimed.” Ibid.**  **Our Supreme Court summarized the above as requiring satisfaction of three criter ia for**  **an entity to qualify for tax exemption :** 

**(1) it must be organized exclusively for the [statutorily allowed tax exempt**  **purpose]; (2) its property must be actually and exclusively**  **6 used for the tax** 

**- exempt**  **purpose; and (3) its operation and use of its property must not be conducted for profit.**  **[Paper Mill Playhouse v. Twp. of Millburn, 95 N.J. 503, 506 (1984).] (i)**  **Organization Criteria The Township argues that plaintiff is not a religious institution or a church but an**  **independent affiliate, which exists and operates**  **without any control by or direction from the**  **United Methodist Church or any other Higher Order. Therefore, the Township contends,**  **it is not organized for any specific tax** 

**- exem**  **pt purpose. Plaintiff co unters**  **that the**  **special legislation, its**  **mission statement, charter ,**  **and By**

**- Laws**  **, are sufficient evidence that its incorporation fits**  **into either the Religious/Charitable Clause or the MMI Clause. The court agrees**  **with plaintiff. Because plaintiff was incorporated by statute, there is no need for it to possess an**  **independent Articles of Association. Th**  **at special legislation**  **is the basis for Plaintiff**  **’s claim that it w**  **as created exclusively for religious purposes and in its further ance thereof.**  **Plaintiff ’s** 

**6 The Legislature subsequently deleted the exclusivity of use requirement** 



### .**13**

**By**

**- Laws, which were adopted in 1980, also**  **reiterates plaintiff’s religious**  **purposes which were**  **recited in the 1870 legislation. Plaintiff’s independence from**  **, control by, or direction from the United Methodist**  **Church or any other higher religious order does not require a conclusion that plaintiff is no longer**  **organized exclusively for religious purposes. It still aligns itself with Methodis t faith and beliefs.**  **Its By**

**- Laws (as of 2015) continue to reiterate plaintiff’s religious missions and goals, and i**  **ts committees are tasked with the same religious responsibilities as stated in**  **Celmar**

**. As plaintiff’s**  **former employee confirmed, plaintiff still**  **defines itself as Methodist**  **and its Trustee and Board**  **members are Methodists or p**  **astors, which inidcated plaintiff’s continued connection with the**  **Methodist Church. Evidence before the court shows that plaintiff continues to adhere to its original purpose**  **of “ providing and maintaining for the members and friends” of the Methodist beliefs and**  **Christian faith, a permanent camp**  **meeting ground to encourage, foster, maintain and renew**  **religious and spiritual way of life. Tents are erected every summer at plaintiff ’s campgrounds**  **in the Township for these purposes including meditation in ,**  **and with nature. Tenters visit and stay every summer at plaintiff’s campgrounds. That plaintiff welcomes people**  **of any branch of Christianity as tenters, and to its worships and services does not foreclose a concl**  **usion that plaintiff**  **’s organizational purpose and primary objective continues to be influenced by religious beliefs and teachings in its efforts to promote, serve, and further its members’ and the**  **public’s spiritual and religious needs.**  **P laintiff continues to conduct regular**  **worships, services, and Bible studies in alignment with the Methodist faith. In summer**  **, during the “tent” months, these**  **activities are even more frequent. The Bishop for the United Methodist Church has preac hed at** **14**

**plaintiff’s property and can appoint or**  **remove plaintiff’s current Chief Operating Officer who**  **used to be a pastor at a United Methodist Church. The court therefore does not view plaintiff’s independent status (i.e., with no formal**  **association to the United Methodist Church or any other organi**  **zed religion ) as failing**  **satisfaction of Criteria 1. 7**  **See e.g. Fountain House of N**  **.J. , Inc. v. T**  **wp. of Montague, 13 N.J.**  **Tax 387, 400**

**- 01 (Tax 1993) (generally, the “purposes stated in a corporation’s certificate of**  **incorporation are reflective of purposes (intent) at the time of incorporation” whi ch can change**  **“over the course of time” and what is relevant are the “purposes pursued by a corporation” and**  **“the facts and circumstances surrounding the corporation’s operations . . . as of the applicabl e**  **assessment date”). While the Township maybe skeptical that plaintiff’s mission statement is so**  **broad as to be of no as sistance in deciding Criteria 1, the court views such statement as plaintiff’s**  **continued goals and objects in keeping with the 1870 special legislation. None of plaintiff’s employees or representative**  **s who were deposed disagreed with plaintiff’s mission o r expressed**  **disagreement with the same vis -à-**  **vis plaintiff’s activities. Therefore, plaintiff pass**  **es the Criteria**  **1 test under the Religious/Charitable Clause. The**  **above facts also**  **permit satisfaction of Criteria 1 of**  **a tax**  **exemption under the MMI Clause. The MMI “classification**  **has been applied to various public and civic organizations, which directly serve the public by contributing to the educational, cultural and spirit**  **ual development in society in general.”**  **Phillipsbu rg Riverview Org** 

**. , Inc. v. Town of Phillipsburg**  **,**

**7 In 1968, law was enacted to address the United Methodist Church.**  **See N.J.S.A. 16:10A** 

**- 1 to 10A** 

**** **15. This law allowed “all religious corporations or churches” which were known as, among ot hers,** 

**“‘ The Methodist Church**  **,’ . . . ‘Methodist Episcopal Church**  **,’**

**. . . and all**  **. . . associations or other organizations directly connected therewith**  **” to change their name to “The United Methodist Church.” N.J.S.A**  **. 16:10A**

**- 1. However, the statute does not impair, “limit, change, affect**  **or alter any other existing right, power, property, obligation, liability or duty of any such religious corporation or**  **church.” Ibid. 15** 

**26 N.J. Tax 167, 176 (Tax 2011) (citation omitted), aff’d**  **, 27 N.J. Tax 188 (App. Div. 2013). Plaintiff’s object and purpose is to better people’s spiritual well-being, and this i**  **t attempts to do through worship, education, community awareness, and its annual summer tent camps.**  **Therefore, plaintiff would pass the Criteria 1 test under the MMI Cl ause.**  **(ii) Use**  **Criteria The Township argues that the**  **Office is used**  **to process revenues from plaintiff’s**  **activities which are secular**  **or for**

**- profit**  **, thus is**  **a taxable**

**. Per the assessor,**  **the Office**  **is a “business revenue processing”**  **building for plaintiff’s activities which are all “revenue oriented . . . no**  **different than any other operating management company” with “its second major source of income [] from rentals as a real estate holding company.” And because plaintiff**  **takes no responsibility for maintaining any rented property, it is, the assessor certifie**  **s, no different than a real estate holding company.**  **Further, the assessor certifies, the largest source of revenue is from**  **“performances a**  **nd recreation ,” the former conducted at the Great Auditorium using secular**  **entertainment bands such as “rock groups playing often offensive music in violation to normal canons of religion.” The “religious music occasionally played there” does not alter t**  **h e fact that**  **raising revenue is why the Great Auditorium is used, per the assessor. Other revenue sources**  **such as annual Independence Day parades are secular, per the Township,**  **therefore the Office**  **which processes revenues from these activities should be t axable, with the same result for**  **revenues from beach badges and fees for use of plaintiff’s boardwalk since those charges are no**  **different from any public or private beach therefore, derived from for- profit activities.**  **Plaintiff does not dispute that it ra ises or attempts to raise revenue through various means**  **including organizing entertainment and recreation for the community. However, it ar gues, these**  **efforts are in furtherance of its mission to provide recreation along with rel igion in a seaside** **16**

**setting . It also notes that it is not in the business of making profits or income, therefore, does**  **not conduct activities for profit, and that administration of leases is only a small portion of**  **plaintiff’s administrative tasks, a majority of which are in connection with its spiritua l mission.**  **The Township’s argument blurs Criteria 2 and 3 in that it is arguing that because plainti ff**  **is engaged in non**

**- religious revenue raising activities, by extension, the**  **Office which is used to**  **process revenues from those activ ities, is also used for secular, for** 

**- profit activities, and therefore,**  **the Office**  **is taxable (a loose analogy to the**  **“ fruit of a poisonous tree**  **” evidence exclusionary**  **principle or to the proximate cause principle under civil law**  **) . This basis for taxing the**  **Office is**  **problematic because the properties on which these activities are conducted are either already**  **being taxed**  **by the Township (properties**  **subject to ground leases)**  **or are currently tax exempt (the Great Auditorium; boardwalk**  **). Second, t**  **here is no evidence that the Office**  **or any portion thereof is being leased to any for-**  **profit entity. Third, it is undisputed that**  **the Office is actually used for carrying out several of plaintiff’s**  **administrative tasks directly associated with its activities, almost all of which are in co nnection**  **with its spiritual goals and charitable mission. All such activities are performed by p laintiff’s**  **employees and committee members as authorized by plaintiff’s By**

**- Laws. The employees and**  **committees meet, strategize, manage, coordinate, and execute several aspects of plainti ff’s**  **activities concerning adul t and children education, and with the spread of community awareness**  **of Christian beliefs and values, at the Office. In addition to a variety of ad ministrative activities,**  **which includes hosting/developing recreation and entertainment activities, plainti f**  **f’s finance committee also performs duties concerning plaintiff’s revenues.** 
**T hat the largest source of revenue was from “programs and recreation” and “rental and**  **property” income per plaintiff’s**  **December 2017 financial statements**  **, does not automatically 17** 

**mean that the largest amount of time, effort, and space in the Office was dedica ted to the**  **furtherance of**

**only these two activities. As plaintiff pointed out, rental activities consumed only**  **20% of one employee’s time, who was tasked with other responsibi lities as well.**  **The exemption under either the MMI Clause or the Religious/Charitable Clause requi res**  **that the property be “actually used in the work of” the entity organized for that tax**

**- exempt**  **purpose. N.J.S.A. 54:4**

**- 3.6 (emphasis added). Based on the facts and evidence provided, the**  **court is satisfied that the Office**  **meets this qualification. The court finds that the Office**  **is integral**  **and essential to the performance and furtherance of plaintiff’s activities which are undertaken to**  **promote its spiritu al and benevolent goals. Just because plaintiff is not organized as a for-**  **profit entity does not mean that it should conduct its affairs inefficiently without planning or**  **organization. Evidence demonstrates that plaintiff is actively involved in promotin g several**  **activities in furtherance of its religious mission and endeavor to foster spiritu al faith and belief,**  **and to promote community outreach and well**

**- being. Using the**  **Office as its administrative office**  **to bring it all together is therefore also in f urtherance of plaintiff’s objectives. This concept was**  **well**

**- captured by the Kansas Supreme Court when it noted that administrative offices of a**  **Methodist Church should be tax exempt because they are “an integral, essential and absolutely**  **necessary part of**

**the ” the church’s beneficial**  **act s.**  **Board of Trustees v. Cogswell, 473 P.2d 1,**
**10-11 (Kan. 1970). To tax such offices “would be to ignore the obvious necessity for the**  **administrative function . . . refute the involvement of the executive official in the delivery of**  **socially beneficial services, and . . . discourage the development of well organized institutions**  **serving society through the most effective management techniques. ”**  **Ibid. It should also**  **be noted that our precedent even allows an exemption for property which is actually used for a tax** 

**- exempt purpose, if it is “**  **reasonably necessary ”**  **to carry out the purposes** **18**

**of the entity**

**. See**  **City of Long Branch v. Monmouth Med. Ctr., 138 N.J. Super. 524, 532 (App. Div. 1976). “**  **[R] easonably necessary**  **” does not equate to**  **“ absolutely indispensable.**  **” Boys’ Club of Clifton, Inc., 72 N.J.**  **at 401.**  **When the issue is whether a building is reasonably necessary for the tax** 

**- exempt purpose, the use of that building should be evaluated in terms of how it serves**  **the particular organization. Id.**  **at 401 -02**  **. All the facts explicated above allow this court to find that the**  **Office is also reasonably necessary to carry out plaintiff’s activities. Thus, the**  **Office satisf**  **ies Criteria 2 of the exemption requirement, especially when considered with the r easoning**  **in the next point where the court concludes that plaintiff’s revenue raising activit ies are not**  **conducted for profit. (iii)**  **Conducted for Profit Criteria**  **The thrust of the Township’s argument is that plaintiff ’s largest revenue source,**  **“programs and recreation” followed by “rental and property income,” is income from secular**  **, for** 

**- profit activities. Therefore, it contends, plaintiff fails Criteria**  **3 of the Paper Mill**  **test, therefore, the**  **Office where the revenues from these two activities is processed, is taxable.**  **Plaintiff does not dispute the facts of its activities and revenues raised there from. It**  **vehemently objects to the Township’s characteri zation of its activities as being commercially**  **motivated with no consideration of its centuries**

**- old religious, charitable, and benevolent mission**  **and purpose which was publicly proclaimed by no less than our Legislature. The court agrees with plaintiff** 

**. That some**  **of the Saturday night entertainers during summer are not, or do not advertise themselves as religious or faith** 

**- based**  **(although some singers were born** 

**- again Christians, or were Christians willing to sing Christian songs)**  **; do not restrict**  **their performances to churches or other religious organizations ;**  **and are classified as rock, pop, jazz, or doo** 

**- wop in music genres, does not mean that plaintiff’s hosting of these entertainers** **19**

**equates to commercial ,**  **profit**

**- making activities. While some plaintiff’s employees**  **or representatives**  **stated that they personally found lyrics of some songs by these performers**  **morally or spiritually unsavory, they also**  **testified that the purpose of offering such entertainment once a week (Saturday nights) during summ**  **er was family friendly and solely**  **in furtherance of plaintiff’s mission**  **- to attract youth and members to join and experience**  **plaintiff’s s**  **piritual**

  ** based beliefs, to educate** **, and to spread awareness of plaintiff amongst the community and public.** 
**As a**  **form er pastor and ex** 

**- Chief Operating Office of plaintiff, in charge of overseeing the day** 

**** **to -day operations of plaintiff**  **, testified :**  **Q: Would you consider the Beach Boys or Doo**

**- wop concerts as religious?** 

**. . . A: I would say from the way I looked at it . . .**  **the goal was to reach people. All people. All generations. And in doing so it was doing whatever we**  **could to bring people in and get engaged in what’s happening. And I believe there are different levels of intent maybe with different . . .**  **programs that were provided. I know with Sunday morning, Sunday evening . . . worship service . . . [was] a preaching service. Opportunities**  **for people to personally make a decision to come to spiritual birth.**

**. . . The mid week program . . . provided cultural programs where the music . .**  **. might be more Mozart and . . . other kind of classical . . . type music and the goal was to reach people and get people engaged and hopefully to**  **come back to something else and so I think the purpose of the Saturday nights was simply that. Was to get people there, exposed to the Camp**  **Meeting at that level and hopefully engage in other levels with the hope that they would come into a deeper relationship with Christ . . . .**  **Q: What would be the purpose to allow a rock group to go to the auditorium in relationship to spiritual rebirth or consistency or anything else?**  **A: Exposure and opportunity. I began every Saturday night program with a welcome, announcements . . . and I would open every single one of those**  **Saturday nights wit h a prayer.**  **Q: No matter what group was there? A: No matter what group was there.**  **The Assistant Finance Director testified similarly in her deposition: Q: Doo**  **-wop groups from the fifties, does that promote the mission? A: In my opinion, ultimately yes in a way it does. We have an opportunity**  **to minister with people, to meet with them. People from all walks of life 20**  **that may have never been in our auditorium, seen the facilities we have, might never have stepped foot in Ocean Grove and that is absolutely an**  **opportunity for us to meet with people face**

**- to** 

**- face and minister with them,**  **to then, pray with them. Perhaps for the first time in their lives. This intent in offering entertainment to attract the community**  **, especial ly youth,**  **is not repugnant to plaintiff’s mission. Any religious associations or church**  **w ould logically attract the**  **people to experience or be part of the association or church if it can offer something youth identify with. Music is undisputedly one such tool.**  **That the lyrics of each song performed (or to be performed) by a band is not scrutinize d**  **or vetted by plaintiff’s committee to ensure that the entertainment content is “clean ” is not fatal.**  **Performers are made aware about plaintiff’s mission befo re being hired. Each concert hosted by**  **plaintiff at the Great Auditorium is prefaced with a prayer in public by plaintiff’s representative.**  **If a performer did something opposed to plaintiff’s beliefs, as testified by plainti ff’s former**  **employee (performe r**  **made remarks about atheism), the performer will not be invited again. While plaintiff can hope that the bands understand plaintiff’s spiritual mission and t**  **herefore are**  **expected to be family** 

**- friendly in their performances, plaintiff cannot be expected to control the**  **performers lyrics or impromptu stage utterances. Tax exemp**  **tions should be strictly construed, however,**  **this does not mean that the construction should be unreasonable such that it**  **confines**

**me thods used to attract members or participants to plaintiff’s faith and beliefs so**  **lely to formal religious services**  **and wors**  **hips , or**  **religious performances**  **/entertainment offered only to the congregation or the followers of plaintiff’s Christian beliefs** 

**. Plaintiff’s incorporating statute**  **was entirely cognizant of plaintiff not being a traditional church in terms of buildi ngs or**  **worship services, thus, recognized its purpose as “providing and maintaining for the members and fri**  **ends of**  **the Methodist**  **Episcopal Church a proper, convenient and desirable permanent camp meeting**  **ground and [C]**  **hristian seaside resort .”**  **L. 1870,**  **c. 157 §1.**  **The phrase “**  **and seaside resort”**  **and 21** 

**“for members and friends” in the statue**  **would be meaningless if plaintiff was not allowed to use the seaside setting to garner followers by using methods such as summer entertainment**  **and beach recreation, in**  **addition to using campgrounds. The court therefore finds that the Township’s insistence that Saturday night sum**  **mer performances by non** 

**- religious groups, and due to certain purportedly offensive lyrics in some**  **songs, renders plaintiff as using the Great Auditorium (and by extension the Office**  **), for the conduct of**  **secular for** 

**- profit activities is not meritorious.**  **This is especially where the Great Auditorium is used for numerous free concerts, choir festivals, Sunday and weekday w**  **orship by plaintiff or other**  **religious entities, throughout the week each summer and purely for worship/religious activities after summer. The argument also lacks merit**  **when n o attempt**  **is being made by the Township to address**  **taxability of the Great Auditorium. The court is therefo**  **re unpersuaded**  **that the Office**  **should be taxable simply because it processes revenues/expenses**  **in connection with the Saturday night summer “secular” concerts held at**  **the Great Auditorium. The court is also unpersuaded that the Office is taxable because it**  **is used to process rents and manage plaintiff’s rental activities. R**  **egardless of the annual ground lease amounts, it is**  **undisputed that buildings**  **leased by plaintiff to com**  **mercial tenants pay local property tax to the**  **Township. Also undisputed is that r esidential**  **properties are similarly taxed to the property**  **owners. No tenant or homeowner pays any tax to plaintiff in this regard. There was no evidence to show that plaintiff is leasing properties to commercial or for** 

**- profit entities as to which no**  **loca l property tax was being paid.**  **I ndirectly tax**  **ing the**  **Offic e**  **when local property tax is being**  **collected from the tenants or owners of properties subject to ground lease(s),**  **is unwarranted. If**  **the Township has evidence that plaintiff is renting real property to a for**

**- profit, and that rented**  **property is not taxed, it should attempt to directly tax that property, not indirectly deny tax 22** 

**exemption to the Office**  **where the revenue is processed** 

**. This is especially where the ground**  **rents are used to help fund ministries which need to be subsidized since children’s program costs**  **are high and Christian programming is free, and the ground rents ” ensure**  **[] that Ocean Grove**  **will be preserved**

**and continue to create a religious seaside community.” It is unclear whether the Township is claiming that**  **revenues from the summer tent rentals renders plaintiff’s use of the campgrounds as conducting a for** 

**- profit endeavor. If it is, then**  **no attempt is**  **being made by the Township to address any denial of tax exemption for the campgrounds**  **. T herefore, it is difficult to agree that the Office should be taxable because it**  **processes revenues received and expenses incurred in connection the annual summer tents . In**  **any event, those rentals are directly in connection with plaintiff’s religious a ctivities** 

**. The Township notes that t**  **he largest source of revenue (for the period ending December**  **31, 2017) is from “performance and recreation” followed by “rental and property income ,**  **” therefore, it must be true that plaintiff is engaging in secular for** 

**- profit activities. The court is** 
**unpers uaded. While these activities do raise significant revenue for plaintiff, the fact**  **s as a whole evidence that these activities are undertaken in furtherance of plaintiff’s**  **spiritual mission and goals, not as a sacrifice to those spiritual goals. P**  **laintiff ’s third largest source of revenue per its**  **financial statements provided to the court, is contributions and gifts ($1,117,561 excluding**  **“temporarily restricted” gifts of $277,384), which weakens the Township’s inferentia l argument** 

**. Pl**  **aintiff’s revenues fro m community** 

**- based outreach**  **events such as the annual Independence Day parade does not make the**  **Office taxable simply because for** 

**- profit food truck**  **vendors pay plaintiff registration fees to cater to the visitors. Other than a small registration fee,**  **plain tiff does not receive any portion of the vendor(s) proceeds. It is even unclear whether the**  **se vendors are located on Township owned streets or plaintiff’s property. They are certainly not** **23**

**using the**  **Office . Further, the parade “sponsorship”**  **is a form of fund raiser. It is not a for** 

**- profit**  **activity. Note that the application**  **states that since “[e]very group or participant in the parade**  **affects the message conveyed” by plaintiff, plaintiff can “refuse partici pation to any group or**  **unit whose intended or a nticipated message would conflict with [plaintiff’s] communicative**  **purposes.” The application also notes plaintiff’s mission of “Spiritual Birth, Grow th, Renewal.”**  **Deposition testimony of plaintiff’s employees also shows that these activities are undoubt**  **edly civic but with the underlying intent of spreading community and public awareness of plaintiff**  **’s religious and spiritual Christian mission.**  **Plaintiff’s trustees and committee members march in the parade.**  **Its youth is involved in organizing and running the event. Therefore, the revenues**  **from the parade, similar to revenues from the summer concerts, do not equate to conduct of for**  **profit activity by plaintiff at the Office** 

**. Plaintiff’s hosting of community related events only establish that it endeavors**  **to exist in a harmonious relationship with the community and with the summer shore visitors**  **. While its activities may be**  **viewed as secular (since plaintiff welcomes people of any religion to experienc e**  **spirituality through the Bi b**  **le), the court does not find it abhorrent to**  **plaintiff’s religious and**  **spiritual mission**

**of enriching the public through Christianity in a seaside setting. See e.g.**  **Walz**
**v. Tax Comm ’n**  **, 397 U.S. 664, 6 87-88 (1970) (**  **two secular purposes for exempting religious organizations from property taxation**  **are : (1) they**  **“ contribute to the well** 

**- being of the community**  **in a variety of nonreligious ways, and thereby bear burdens that would otherwise eithe r have to**  **be met by general taxation, or be left undone, to the detriment of the community”**  **and (2) “**  **they uniquely contribute to the pluralism of American society by their religious activities**  **” )**  **(Brennan, J., concurring).**  **Thus, church facilities are used not only for religious worship and study, but**  **also for activities beneficial to t he community as a whole, such as gatherings to participate in** **24**

**Boy Scout activities, to promote anti**

**- poverty causes, to discuss public issues, or to listen to**  **chamber music. Id. at 688.**  **Most importantly, all revenues are deposited in the general operati**  **ng account and spent or used for plaintiff’s operating expenses. Plaintiff’s financial statements**  **show $4,118,885 as being spent for “Program Services.”**  **As noted above, plaintiff is involved in several benevolent** 
**programs , adult and youth based.**  **This is in accord with plaintiff’s incorporating statute. See**
**L. 1870,**  **c. 157, §6 (“Any surplus funds remaining . . . after defraying the necessary expenses**  **thereof for improvements or otherwise,” is to be “devoted to such charitable, benevol ent or**  **relig ious objects or purpose” as agreed to by plaintiff’s trustees). It also accords w**  **ith N.J.S.A.**
**54:4- 3.6 that the tax exemption is not destroyed if “charitable, benevolent or religious work**  **” conducted in a building used for these purposes, and “is supported**  **partly by fees and charges received from or on behalf of beneficiaries using or occupying the buildings**  **,” provided the “building is wholly controlled by and the entire income therefrom is used for said charitabl**  **e, benevolent or religious purposes.”**  **Plain tiff’s 2017 financial statements do not evidence any**  **revenues being diverted to its Trustees or members (outside of salaries and pension pl ans).**  **Rather, they show that all incoming revenues, including gifts, donations, charitable contributions are used to**  **meet operating expenses, management expenses, and funding of various endowments or specific funds.** 
CONCLUSION **For the aforesaid reasons, denial of tax exemption for the Office simply because it i s**  **being used as an administrative office to process revenues garnered by plaintiff in furthe rance of**  **its mission is thus unwarranted whether under Criteria 1, 2 or 3 of Paper Mill**  **. Therefore, t he**  **court reverses the Township’s denial of tax exemption for the**  **Office for tax year 2018**  **. Because 25** 

**both parties raised the issue of valuation in their respective pleadings (complaint a nd**  **counterclaim), the court will enter an Order and a Final judgment only as to the exem ption issue**  **by granting plaintiff’s cross**

**- motion for summary judgment for 2018.**  **Th e tax exemption issue**  **will not impact or affect the valuation issue**  **which can therefore proceed independent of, and**  **without impact on the above**

**- decided exemption issue. Therefore, there is no reason to cause**  **delay in issuing a final judgment as to the tax exemption issue**  **for purposes of R.**  **4:42-2. Very Truly Yours,** 

**Mala Sundar, P.**  **J.T.C.**