NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A

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G OURMET DINING, LLC, Plaintiff

- Appellant,

v. UNION TOWNSHIP and NEW JERSEY EDUCATIONAL FACILITIES AUTHORITY, Defendants

- Respondents, and KEAN UNIVERSITY, Defendant

- Appellant.

________ ______________________

Argued April 2, 2019

– Decided May 31, 2019 Before Judges Yannotti, Rothstadt and Natali. On appeal from the Tax Court of New Jersey, Docket Nos. 16504

- 2013 and 12334

- 2014. Robert F . Giancaterino argued the cause for appellants (Skoloff & Wolfe, PC, attorneys; David B. Wolfe, Barbara A. Schw eiger and Rebecca L. Hutcheon, on the briefs). APPROVED FOR PUBLICATION May 31, 2019 APPELLATE DIVISIONA

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- 17T3 2 Robert F. Renaud argued the cause for respondent Union Township (Renaud D eAppolonio, LLC, attorneys; Robert F. Renaud and Adam J. Colicchio, on the brief). Jamie M. Zug, Deputy Attorney General, argued the cause for respondent New Jersey Educational Facilities Authority (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorn ey General, of counsel; Jamie M. Zug, on the brief). The opinion of the court was delivered by YANNOTTI, P.J.A.D. Gourmet Dining, LLC , operates a restaurant in a building on the campus of Kean University (the University) in the Township of Union (the Township)

. The Tax Court held that the premises w here Gourmet Dining operates the
restaurant are subject to local p roperty taxes. Gourmet Dining and the University appeal from the Tax Court's judgment affirming the assessments and the court's order denying the ir motion for reconsideration. For the reasons that follow, we reverse.
I. In 2004, the University establish ed a program to meet the State's need for qualified science and mathematics teachers and scientific researchers, and decided to construct a building on its campus to house the program. The University finance d the construction of the building through the N ew JerseyA

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- 17T3 3 Education al Facilities Authority ( the Authority), an entity a u thorized to finance the construction of facilities by public institutions of higher education in this State. See N.J.S.A. 18A :72A

- 5(k). The Universi ty and the Authority entered in to a Lease and Agreement, dated December 1, 2005 (the Financing Agreement). In the Financing Agreement, t he Authority agreed to issue tax

- exempt bonds and provide the proceeds from the sale of the bonds to the University for the construction of the b uilding. To ensure repayment of the principal and interest on the bonds, the University agreed to convey title to the property to the Authority

. In exchange, the Authority agreed to lease the property to the University for a period of thirty years, or until the bonds are fully paid, at which time the Authority would re

- convey title to the University. The University constructed the building with funds provided by the Authority pursuant to the Financing Agreement. The building is known as the New Jersey Center f or Science, Technology and Mathematics (NJCSTM). The
NJCST M was ready for use in September 2010. It included space for a full

scale restaurant , which is open to the public. In June 2010, the University's Board of Trustees ( the Board) adopted a resolutio n, which authorized the Kean University Foundation, Inc. ( the Foundation) to complete the restaurant project and engage an experiencedA

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- 17T3 4 manager to operate the restaurant. The Board's resolution stated that "a minimum of [ten] percent of the restaurant's gr oss revenues [shall] annually be allocated for scholarship purposes within the Foundation." In October 2011, t he University and the Foundation entered into a Management Agreement, which granted the Foundation the "exclusive right to operate, manage and con trol" the restaurant for a ten

- year period. The Management Agreement authorized the Foundation to subcontract its rights to

a person or entity with extensive experience and expertise in the restaurant and catering business. That same month , the Foundatio n and Gourmet Dining entered in to a Management Subcontract Agreement (MSA), which grants Gourmet Dining "the exclusive right to operate, manage and control" the restaurant facility in the NJCSTM for a ten

- year period. The MSA designates Gourmet Dining as the "exclusive manager" of the restaurant, and states that it has responsibility for "all reasonable, necessary and advisable management and operational services[.]" Under the MSA, Gourmet Dining has sole responsibility for hiring employees and for all ex penses related to the restaurant facility, including food costs, inventory expenses, salaries, maintenance, and normal janitorial services. In exchange for these responsibilities, Gourmet Dining agreed to payA

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- 17T3 5 the Foundation an annual management fee of $25 0,000 for the first nine years of the Agreement, and $500,000 for the tenth year. Gourmet Dining also agreed to pay the Foundation 12.5 percent of the gross revenues derived from the operation of the restaurant, which is called Ursino Steakhouse & Tavern (Ursino) . The restaurant opened for business in October 2011. By letter dated August 27, 2012, the Township 's Tax Assessor advised Gourmet Dining that the Township would be assess ing Gourmet Dining local property taxes for the restaurant facility becaus e it is operating the restaurant on property leased from the University and the subject property is not exempt from local property taxes. The Tax Assessor stated that Gourmet Dining would be required to pay property taxes on the "restaurant portion" of th e building for 2011 and 2012. Gourmet Dining did not challenge the property tax assessment s for 2011
or 2012 , but later filed petitions of appeal with the Union County Board of Taxation (Tax Board) challenging the assessments for 2013 and 2014. The
Tax Board dismissed the petitions, and Gourmet Dining filed timely complaints with the Tax Court, challenging the Tax Board's judgments. Thereafter, the Township filed a motion for summary judgment, arguing that Gourmet Dining was required to pay local prope rty taxes on the portion of the NJCSTM where it operates the restaurant. Gourmet Dining filed a cross

-A

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- 17T3 6 motion for summary judgment and argu ed that it is exempt from local property
taxes on various grounds. The University joined in the cross

- motion. The T ax Court required that the University and the Authority be joined as necessary parties to the litigation

. Thereafter, the Tax C ourt filed an order dated March 14, 2018, which granted the Township's motion and denied the cross - motion , for the reasons
stat ed in a written opinion that is reported a s Gourmet Dining, LLC v. Union Twp. , 30 N.J. Tax 381 (Tax 2018 ). Gourmet Dining thereafter filed a motion fo r reconsideration of the court's order

. The court filed an order dated May 3 1,
2018 , denying reconsidera tion. This appeal followed.
II. On appeal, Gourmet Dining and the University argue that the Tax Court erred by granting the Township's motion for summary judgment. They contend the court should have granted the cross - motion for summary judgment because the premises in the NJCSTM where Gourmet Dining operates the
restaurant are not subject to local property taxes. We note initially that when reviewing a trial court's order granting or denying summary judgment, we apply the same standard that governs th e trial
court. Lee v. Brown , 232 N.J. 114, 126 (2018 ) (citing Steinberg v. Sahara Sam's Oasis, LLC , 226 N.J. 344, 349

- 50 (2016)). Summary judgment shall beA

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- 17T3 7 granted when there is no genuine issue of material fact and the moving party is entitled to judgme nt as a matter of law. R . 4:46

- 2(c). Here, the material facts are not in dispute, and the question raised on appeal is whether the court erred by finding as a matter of law that the property at issue is subject to local property tax. We review the tria l court 's leg al determination de novo. Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh , 224 N.J. 189, 199 (2016). In doing so , we owe the trial court no deference on its "interpretation of the law and the legal consequences that fl ow from established facts."
M analapan Realty v. Twp. Comm. , 140 N.J. 366, 378 (1995 ). Gourmet Dining and the University first argue that the premises in the
NJCSTM where the restaurant operates are exempt from local property taxes under N.J.S.A. 54:4

- 3 .3. The statute provides in pertinent part that the property of the State, its counties and municipalities, and their agencies and authorities, are exempt from local property taxes when the property is "used for public purposes." Ibid. The statute does n ot define the term "used for public purposes , " but the statutory language requires "something more than ownership." C ty

. of Bergen v. Borough of Paramus , 79 N.J. 302, 306 (1979). " [I] n addition to publicA

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- 17T3 8 ownership there must be public use." Id. at 307. Our Supreme Court has explained that:

[t]he concept of public purpose is a broad one. Generally speaking, it connotes an activity which serves as a benefit to the community as a whole, and which, at the same time is directly related to the functions of g overnment. Moreover, it cannot be static in its implications. To be serviceable it must expand when necessary to encompass changing public needs of a modern dynamic society. Thus it is incapable of exact or perduring definition. In each instance where the test is to be applied the decision must be reached with reference to the object sought to be accomplished and to the degree and manner in which the object affects the public welfare. [ City of Newark v. Essex Cty. Bd. of Taxatio n , 54 N.J. 171, 187 (196 9 ) ( quoting Roe v. Kervick , 42 N.J. 191, 207 (1964)).] Here, the Tax Court correctly found that the subject property falls within the purview of N.J.S.A. 54:4

- 3.3 because it is either the University's or the Authority's property

. 1 Gourmet Dining , 30 N.J . Tax at 410. The court found, however, that Gourmet Dining and the University failed to establish the property was used for " public purpose s" in the relevant tax years. Ibid. The

1 We note that the University's agreement with the Authority required the University to transfer title to the NJCSTM to the Autho rity, and the Authority would lease the property to the University. For reasons not clear from this record, the University did not transfer title to the Authority until 2015. In either case, the subject property is owned by either a State University or t he Authority.A

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- 17T3 9 court essentially found that the evidence shows that the subject property is being used for a private, rather than a public purpose. We di sagree with the court's conclusion.
In a certification submitted to the Tax Court , Philip Connelly, the University's Vice President for Administration and Finance and Executive Vice Presi dent of Operations , stated that the NJCSTM building was intended and ultimately designed to be a visual landmark, that would provide space for many of the University's needs. He stated that the building was intended to show that the University is "a forwa rd

- looking, world

- class institution with
state

- of

- the

- art facilities[.]" Connelly also asserted that the Board's goals for the restaurant "were multi

- faceted." He stated the University wanted to have a restaurant that could generate income for its scholar ship programs , and an in

- house caterer for events that required more upscale food than its dining services customarily offer. He explained that p resence of "a relatively upscale and critically

acclaimed restaurant facility at the NJCSTM would serve as a v isible sign to the wider public of [the University's] emergence as [a] forward

- thinking, top

notch university with state

- of

- the

- art facilities." Connelly further commented that since the restaurant began operations in December 2011, it has generated more than $377,000 for scholarships t heA

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- 17T3 10 Foundation has awarded to University students. The restaurant provided more than $134,000 in 2012 and more than $128,000 in 2013 for the scholarship programs. Connelly stated, "These are significa nt amounts, and the mon ey the
restaurant has generated for [the University's] scholarships has enabled [the University] to attract quality students who otherwise may not be able to afford to attend [the University], and who are an asset to [the University] academically, among ot her ways." Connelly also stated that the restaurant has been "a valuable tool" for communicating with the public "about its successes and the opportunities it offers in order to attract quality students." He noted that the restaurant had received critica l acclaim in certain publications with wide circulation, thereby "garnering attention for [the University] as well." In addition, Connelly asserted that the restaurant has attracted many visitors to the campus, and these visitors might not otherwise have known of the University. Connelly further commented that the restaurant will purchase produce grown on the University's property, and provide food

- scrap waste that will be use d in the University's composting laboratory. F aculty and students used the fin ished compost in on

- going research. Nick Davidson, manager of the restaurant in 2013, also submitted a certification to the trial court, in which he stated that students frequently comeA

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- 17T3 11 to the restaurant for lunch and often partake of the "bar menu," whi ch is a less expensive option for students

. Parents of the University's students also are regular patrons of the restaurant. Davidson also stated that d uring his time at the restaurant, about eighty

- five percent of its employees were students of the Univ ersity. In its opinion on the summary judgment motions, the Tax Court recognized that operating a dining hall, cafeteria, or other food service establishment for students, administrators, and others is a recognized purpose of a public university or co llege. Gourmet Dining , 30 N.J. Tax at 404. The
court noted, however, that Ursino is not one of the six dining service locations available to students or other members of the University community, and the
restaurant is not generally available under the Un iversity's traditional meal plans. Id. at 403

- 04. The court reasoned that Ursino is no different from any other restaurant, bar, or tavern in the Township. We are convinced, however, that the court took an unduly narrow vi ew of the facts . The restaura nt is unique because it is located on - campus. The record shows that the University's students and their parents regularly dine at the restaurant. Moreover, the University view s the
restaurant as an important recruiting tool for students and faculty.A

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- 17T3 12 Alth ough the restaurant is not part of the University's traditional meal plan , Ursino is different from other restaurants, bars, or taverns in the Township because it provides students, other members of the University community, and visitors to the campus an a lternative d ining experience. The
restaurant offers an alternative approach to on

- campus dining, which traditionally has been limited to meal plans and cafeterias. As we noted previously, the concept of a public purpose "must expand when necessary to

enc ompass changing public needs of a modern dynamic society." City of Newark , 54 N.J. at 187 (quoting Roe , 42 N.J. at 207). The Tax Court also found that although Gourmet Dining pays annual management fees to the Foundation, which are used for University

sc holarships, the payment of the fees does not warrant the conclusion that the subject property is being used for a public purpose. Gourmet Dining , 30 N.J. Tax at 407. The court stated that a private, for

- profit entity should not be entitled to a local pro perty tax exemption merely because part of its gross revenue stream is paid to a public entity and then allocated t o that public entity's purpose. Ibid.
However , the record shows that the restaurant is not merely providing a revenue stream to the Unive rsity that is used for general purposes

. The restaurant provides revenues that are specifically earmarked for scholarshipsA

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- 17T3 13 for University students. Indeed, the Board, in its resolution authorizing the Foundation to complete the restaurant project at t he NJCSTM, expressly required that at least ten percent of the restaurant's revenues must be allocated to University scholarships. Th e Foundation's use of the revenue derived from the restaurant for scholarships provides further support for the conclusion th at the subject property is being used for a public purpos e . The Tax Court also rejected the contention that the use of the subject property is for a public purpose because the University claims the restaurant raises the University's public profile. Id

. at 408, 410. In doing so, the court erred by substitut ing its judgment for the University's Board, which believes that having a critically

- acclaimed, upscale restaurant on campus enhances the public's perception of the University as a forward

- looking in stitution, and thereby serves as an important recruiting tool for students and faculty. Furth er more , in determining whether the subject premises are used for a public purpose, the Tax C ourt gave little weight to the evidence showing that in 2013, approx imately eighty

- five percent of the restaurant's emp loyees were University students. The court also discounted the evidence that the restaurant will use produce grown on the University's property and will provide compostable waste for the University's scien ce program , where it will be used for research by faculty and students.A

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- 17T3 14 Standing alone, e ach of these factors would not be sufficient to establish that the property is being used for a public purpose ; however, when all of the relationships between the re staurant and the University are considered, they warrant the conclusion that the subject property is being used for a public
purpose. We therefore conclude the subject property is exempt from local property taxation under N.J.S.A. 54:4

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I II. Gourmet Dining and the University further argue that the Tax Court erred by finding that Gourmet Dining is subject to local property taxes under
N.J.S.A. 54:4

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. The statute provides in pertinent part that

[w] hen real estate exempt from taxation is leased to an other whose property is not exempt, and the leasing of which does not make the real estate taxable, the leasehold estate and the appurtenances shall be listed as the property of the lessee thereof, or his assignee, and assessed as real estate. [ Ibid. ]
He re, the court found that the Township had established that the MSA is "functionally a lease." Gourmet Dining , 30 N.J. Tax at 424. Gourmet Dining and the University contend , however, that the evidence does not support that conclusion.

" [ A ] lease is a gr ant of exclusive possession to use the land for any lawful purpose, subject to reservation of a right of possession in the landlordA

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- 17T3 15 for any purpose or purposes 'not inconsistent with the privileges granted the
tenant.'" Sandyston Twp. v. Angerman , 134 N.J . Super. 448, 451 (App. Div. 1975) (quoting 3 Thompson on Real Property § 1032 (1959)); see also Thiokol Chem. Corp. v. Morris Cty. Bd. of Taxation , 41 N.J. 405, 417 (1964). Determining whether an agreement is a lease depends upon "the legal effect of its provisions." Angerman , 134 N.J. Super. at 451. "The difference between a lease and license or similar limited status . . . is that a lease gives exclusive possession of the premises against all the world, including the owner, while a license confers a privilege to occupy under the
owner." Thiokol Chem. Corp. , 41 N.J. at 417. "A license or similar status is generally revocable at the pleasure of the owner and gives occupancy so far as necessary to engage in the agreed acts or the performance of agreed services and no further," whereas " a lease gives the right of exclusive possession for all purposes not prohibited by its terms." Ibid. As we have explained, in the Management Agreement, the University granted the Foundation "the exclusive right to oper ate, manage and control . . . the Facility," which is defined as the restaurant and catering operations located
in the NJCSTM. The Management Agreement grants the Foundation the "exclusive right to operate, manage and control" the restaurant, not the
prop erty.A

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- 17T3 16 Similarly, in the MSA, the Foundation granted Gourmet Dining the "exclusive right to operate, manage and control" the Facility, which is defined as the restaurant and catering operations in the NJCSTM. The MSA does not expressly grant Gourmet Dini ng a possessory interest in the property as lessee.
As we have noted, t he MSA is an agreement to manage and operate the restaurant and the catering operations on the property. Furthermore, t he MSA is for a term of ten years, unless it is terminated earli er for cause. U nder the MSA, Gourmet Dining is required to pay annual management fees , but t he MSA does not refer to the payments as rent. These and other provisions of the MSA show that the parties intended the agreement to be one for the management and operation of the restaurant, rather than a lease of the property. Indeed, there is no provision in the MSA that expressly grants Gourmet Dining a possessory interest in the premises, as lessee. Had the parties intended to create a landlord

- tenant relat ionship, they could readily have done

so. We therefore conclude that the evidence does not support the Tax Court's conclusion that Gourmet Dining ha s the " functional " equivalent of a lease of the subject property

. The Agreement is one for the management and operation of a restaurant, not a lease.A

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- 17T3 17 IV

. G ourmet D ining and the University furt h e r argue that the Tax Court erred by finding the property is not exempt fr om taxation under N.J.S.A. 54:4

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. This statute provides in pertinent part, that

[t]he fol lowing property shall be exempt from taxation under this chapter: all buildings actually used for colleges, schools, academies or seminaries, provided that if any portion of such buildings are leased to profit

- making organizations or otherwise used for pur poses which are not themselves exempt from taxation, said portion shall be subject to taxation and the remaining portion only shall be exempt [

. ] [ Ibid. ] The Tax Court determined that Gourmet Dining had a leasehold interest in the restaurant space , whic h was not exempt from taxation under the statute. Gourmet Dining , 30 N.J. Tax at 413. It is undisputed that the property is part of the University and Gourmet Dining is a profit

- making entity. However, as we have determined, Gourmet Dining is entitled to an exemption from property taxes under N.J.S.A. 54:4

- 3.3 because it is using the University's property for a public purpose. Moreover, as we have found, the MSA is an agreement to manage and operate the restaurant , not a lease. Therefore, Gourmet Dining is not subject to local property taxation under
N.J.S.A. 54:4

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- 17T3 18 V. Gourmet Dining and the Universi ty also contend that the subject premises are exempt from local property taxes under N.J.S.A. 18A:72 A

- 18 because the NJCSTM , including the restaurant sp ace therein , is an Authority "project" and Gourmet Dining is the Authority 's "agent." The Authority's enabling statute provides in pertinent part that "neither the [A ]uthority nor its agent shall be required to pay any taxes . . . in respect of a project . . . acquired

or used by the [A] uthority or its agent[.]" N.J.S.A. 18A:72 A

- 18. The Tax Court found the evidence does not establish that by managing and operating the restaurant, Gourmet Dining was acting as the Authority 's "agent." Gourmet Dining , 30 N.J. Tax at 418. The court stated that there was "no relationship, contractual or otherwise, between Gourmet Dining and [ the Authority ]" and there was no indication "that any third party relied on any alleged apparent authority they perceived Gourmet Din ing to possess on behalf of [the Authority] ." Ibid.
"A n agency relationship is created when one party consents to have another act on its behalf, with the principal controlling and directing the acts of the agent." Sears Mortg. Corp. v. Rose , 134 N.J. 326, 337 (1993). An agency relationship also may be created if a third party relies on one party's "apparent authority" to act on behalf of the principal. Id. at 338. The c ourtA

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- 17T3 19 correctly determined that here , there was no agency relationship between
Gour met Dining and the Authority. Gourmet Dining and the University note that in the F inancing
A greement, the Authority authorized the University to construct an d develop the NJCSTM building. They contend that under the Financing A greement , the University a cted as the Authority 's "agent." The Authority may have designated the University as its agent for the purpose of constructing the building, but the evidence does not support the conclusion that Gourmet Dining was acting as the Authority's agent in it s management and operation of the restaurant. The Tax Court correctly found a reasonable fact finder could not infer that in i ts management and operation of
U rsino, Gourmet Dining was act ing as an agent for the Authority

. Gourmet Dining , 30 N.J. Tax at 4 18. Reversed and remanded for entry of an order granting summary judgment in favor of Gourmet Dining and the University.