Court Opinion

ID: 9863447
Source: CourtListenerOpinion
Date Created: 2023-09-25 05:21:40.510869+00
Date Added: 2024-06-11T11:47:58.673083
License: Public Domain

Justice RIVERA-SOTO,
dissenting.
Although the legal analysis advanced by the majority as governing the question on appeal is unquestionably correct, I must respectfully disagree with the conclusions the majority reaches.
The majority concludes that “the commingling of effort and entanglement of activities and operations by [plaintiff International Schools Services, Inc. (ISS) ] and its profit-making affiliates was significant and it was substantial.” Ante at 25, 21 A.3d at 1179. It further claims that “all of the benefit in the form of direct and indirect subsidies flowed one way: irom the exemption claimant *26ISS to the for-profit entities.” Id. at 25, 21 A.3d at 1179. In my view, the limited findings in this record do not support those conclusions.
The relevant template used to contrast and compare between commingled for-profit as opposed to not-for-profit activities is set forth in Paper Mill Playhouse v. Millburn Township, 95 N.J. 503, 510-11, 472 A.2d 517 (1984), where the various profits/losses for the non-for-profit’s commingled activities are presented graphically. That device provides an accurate analytical tool that allows for an informed decision on this topic; then, and only then, may a reasoned and informed conclusion be reached as to whether the claimed commingling is substantial or merely de minimus. Yet, a graph of that type — or, for that matter, any objective, quantifiable comparison between for-profit and not-for-profit activities — is glaringly missing from the majority’s consideration. Despite that absence, the majority nevertheless concludes that the commingling here, whatever it may have been, “was significant and it was substantially;]” that unsupported conclusion wrongfully results in the needlessly broad denial of the entirety of ISS’s property tax exemption on all of its realty, and not just on that portion of the realty used for profit-making purposes. See N.J.S.A 54:4-3.6 (providing 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 subject to taxation and the remaining portion only shall be exempt”).
The want of quantifiable “hard” data as to the extent of the commingling between ISS and its for-profit affiliates renders it, at the very least, premature to pronounce that the mere fact of commingling dooms the real estate tax exempt status of an otherwise obviously deserving entity. And, in that context, innuendo that ISS’s “investments” in those for-profit affiliates — either by the provision of a line of credit that no one has demonstrated was financially unsound, the allowance of below-market rent to a start-up affiliate also serving ISS’s core constituency in an area ISS does not reach, or by the provision of the services of its *27executives that no one has shown to have been to the detriment of ISS — is precisely that: innuendo, a poor and wholly inadequate substitute for adequate proofs.
Distilled to its essence, the majority’s conclusion is based on three unquantified facts: that ISS provided a line of credit to its for-profit affiliates; that ISS rented space to those for-profit affiliates at a below-market rate; and that ISS executives also served functions for the for-profit affiliates. In the majority’s view, those facts provide the level of commingling needed to void a real estate tax exemption. But, without more, those bare facts alone cannot sustain the majority’s conclusions. No doubt, if, instead of providing an interest-bearing credit line to an affiliate, ISS had invested its funds with a commercial bank and secured a rate of return therefrom, would anyone claim that ISS’s tax-exempt status was at risk simply because it had engaged in a profit-making endeavor by prudently investing its funds? Likewise, if, instead of providing services to an ISS affiliate, ISS’s officers and directors on their own time had engaged in for-profit activities, would anyone dare claim that ISS should thereby lose its real estate tax exemption? Finally, the notion of providing below-market rent to a start-up — whether affiliated or not — is a commonplace in our economy, and a beneficial one at that; it is by no means nearly as nefarious as the majority would have it.
In the final analysis, the relevant difference for real estate tax exemption purposes lies not in the fact of the commingling — which is undisputed here — but in the quantum of that commingling. Because no real effort has been made to place the amount and extent of that commingling in a meaningful and proper context, I see no reason to deny this otherwise worthy charitable institution the entirety of the real estate tax exemption our laws, as a matter of legislative and public policy grace, allow. I, therefore, respectfully dissent.
For affirmance — Chief Justice RABNER and Justices LONG, LaVECCHIA, ALBIN, and HOENS — 5.
For reversal — Justice RIVERA-SOTO — 1.