Court Opinion

ID: 9960838
Source: CourtListenerOpinion
Date Created: 2024-04-17 14:09:28.007295+00
Date Added: 2024-06-11T08:19:55.266718
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-1144-22

OPTIONS IMAGINED, a
New Jersey Nonprofit Corporation,

          Plaintiff-Respondent,

v.

PARSIPPANY-TROY HILLS
TOWNSHIP,

     Defendant-Appellant.
_____________________________

                   Submitted February 27, 2024 – Decided April 17, 2024

                   Before Judges Mayer and Enright.

                   On appeal from the Tax Court of New Jersey, Docket
                   Nos. 010456-2020, 009577-2021, and 007910-2022,
                   whose opinion is reported at 33 N.J. Tax 129 (Tax
                   2022).

                   Inglesino, Wyciskala, Taylor, Grieco & Driscoll, LLC,
                   attorneys for appellant (James L. Esposito, on the
                   brief).

                   Respondent has not filed a brief.

PER CURIAM
      In this one-sided appeal, defendant Parsippany-Troy Hills Township

(Township) challenges an October 31, 2022 Tax Court order denying its motion

for summary judgment and granting summary judgment to plaintiff Options

Imagined, a NJ Nonprofit Corporation (Options), thereby allowing Options a

charitable property tax exemption on its two-bedroom condominium unit

(Subject Property) for tax years 2020 through 2022. We affirm, substantially

for the reasons expressed by Judge Vito L. Bianco in his thoughtful and thorough

published opinion. Options Imagined v. Parsippany-Troy Hills Twp., 33 N.J.

Tax 129 (Tax 2022).

                                       I.

      We summarize the relevant facts from Judge Bianco's published opinion.

            Options is a nonprofit New Jersey corporation and a
            Federal 501(c)(3) organization created in 2015 by
            Joseph DeSimone to provide support services to adults
            with intellectual and developmental disabilities.
            Options is managed by its five-member Board of
            Trustees. . . . DeSimone serves as the President of the
            Board of Trustees.

                  In furtherance of its charitable purposes, Options
            provides various New Jersey Department of Human
            Services, Division of Development Disabilities (DDD)
            recognized services [] to aid the moral and mental
            improvement of men, women, and children, as set forth

                                                                          A-1144-22
                                       2
              in N.J.S.A. 54:4-3.6.[1] Pursuant to Options' amended
              Certificate of Incorporation [(CI)], upon its dissolution,
              its assets will be distributed for tax exempt purposes
              within the meaning of Section 501(c)(3) or be
              distributed by federal, local, or state government for a
              public purpose.

                    The Subject Property is a residential two-
              bedroom condominium unit containing approximately
              1,021 square feet of livable area; it was assessed for

1
    N.J.S.A. 54:4-3.6 states, in part:

              The following property shall be exempt from
              taxation . . . [:] 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 . . . 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;

              [A]ll buildings actually used in the work of associations
              and corporations organized exclusively for . . .
              charitable purposes, provided that if any portion of a
              building used for that purpose is . . . otherwise used for
              purposes which are not themselves exempt from
              taxation, that portion shall be subject to taxation and the
              remaining portion shall be exempt from taxation . . . ;

              [P]rovided, in case of all the foregoing, the buildings,
              or the lands on which they stand, or the associations,
              corporations[,] or institutions using and occupying
              them as aforesaid, are not conducted for profit . . . .

              [N.J.S.A. 54:4-3.6.]

                                                                            A-1144-22
                                          3
            $150,000 for all years under appeal. [2] In September
            2019, Options purchased the Subject Property from . . .
            DeSimone for $220,000. The entirety of the Subject
            Property is exclusively used for independent living and
            rehabilitative services. [3] Since Options purchased the
            Subject Property in 2019, . . . DeSimone's autistic adult
            son was the only resident and lessee of one of the
            bedrooms.[]      However, it is anticipated that an
            additional DDD participant will occupy the second
            bedroom at the Subject Property once [the potential
            participant's] transition plans are complete.[4] . . .

                  Before Options acquired the Subject Property,
            the current resident lived alone at the Subject Property
            and received Section 8 subsidies. [] After the sale to
            Options, . . . DeSimone transferred the Section 8
            housing contract to Options. Additionally, Options
            receives in-home and service funding from various
            sources[,] such as Medicaid Waiver Programs. . . .
            While the Subject Property itself is not yet approved by

2
  "The property tax for the Subject Property for the relevant years is as follows:
$4,626.00 in 2020, $4,756.50 in 2021, $4,894.50 in 2022." Options Imagined,
33 N.J. Tax at 134 n.4.
3
  "The Subject Property has operated at a loss for the preceding three years. "
Ibid. at n.5.
4
  "The DDD's Planning for Adult Life Project assists students with intellectual
and developmental disabilities and their families in transitioning into adulthood.
Transition plans are created when a student moves from the school system into
the adult service system. A transition plan identifies services that aids youth in
achieving their ideal future life goals." Ibid. at n.7.

                                                                            A-1144-22
                                        4
            the DDD, the DDD has issued a Notice of Intent to
            License.[5]

                   Options, however, is approved and recognized by
            the DDD to provide services and support to adults with
            intellectual and developmental disabilities enrolled in
            various Medicaid Waiver programs. Options provides
            twenty-four-hour support services at the Subject
            Property to enable DDD participants to live in the
            community. The current resident is enrolled in [the
            Community Care Program (CCP) 6] and receives
            funding through programs administered by the DDD. [7]
            The current resident is cared for fulltime by four trained
            Options individual support employees at the Subject
            Property as outlined in his approved New Jersey
            Individual Service Plan (ISP). [8] Individual support
            services are direct aid to individuals in achieving an
            independent lifestyle.        These services include
            assistance in performing everyday tasks, such as the
            development of social skills and basic self-care.

5
  "Once the Subject Property is licensed by DDD, funding will be received in
the form of Supportive Housing Vouchers from the Supportive Housing
Alliance." Id. at 135 n.10.
6
   The CCP is a Medicaid waiver program whose "services are available to
eligible adults with intellectual and developmental disabilities . . . living in
licensed or unlicensed settings or with their families."
7
  "The DDD developed and operates two Medicaid waiver programs: (1) The
Supports Program (SP) and (2) [t]he [CCP]. The CCP is a DDD initiative that
permits New Jersey to receive a federal match on a variety of approved waiver
programs and supports Medicaid beneficiaries to live in the community and
avoid institutionalization." Ibid. at n.11.
8
   "Each CCP participant must have an Individualized Service Plan (ISP)
developed according to the standards specified in the CCP policy manual and
the Support Coordination Orientation." Ibid. at n.12.

                                                                          A-1144-22
                                        5
            Options provides individual support services only to
            CCP participants in the Subject Property as well as
            other locations within twenty-one counties in New
            Jersey.    The DDD listed Options as a Support
            Coordination (SC) agency, specifically as a released
            agency.[9] Support Coordination is a DDD funded
            service that assists DDD participants in gaining access
            to needed programs and State plan services.

            [Id. at 133-36.]

      Notably, Options' amended CI states, in part:

            The [c]orporation is formed and shall be operated
            exclusively for the charitable, religious, educational,
            and scientific purposes of improving the lives of
            persons with intellectual and developmental disabilities
            by (i) providing services and support to persons with
            intellectual and developmental disabilities; . . . and (iii)
            conducting any other activities and performing any
            other acts which may be necessary or appropriate for
            the furtherance, accomplishment or attainment of the
            above-mentioned purposes. Notwithstanding any other
            provision contained in this [CI], the Corporation is
            organized and shall be operated exclusively for
            charitable, religious, educational[,] and scientific
            purposes within the meaning of Section 501(c)(3) of the
            Code and the purposes and powers of the Corporation
            are limited to the extent necessary to qualify the
            Corporation as an organization described in Section
            501(c)(3) of the Code. In addition, the Corporation is
            organized exclusively for charitable purposes and for

9
  "Released agencies are agencies authorized to have their SC approve their own
service plans because they met a minimum standard of delivering quality service
plans. Therefore, released agencies do not have to submit service plans to the
DDD for review and approval." Ibid. at n.13.

                                                                           A-1144-22
                                         6
             the moral and mental improvement of men, women[,]
             and children, as set forth in N.J.S.A. 54:4-3.6.

      Beginning in 2019, and continuing into 2021, Options filed three

applications for tax exempt status for tax years 2020, 2021, and 2022; the

Township's Tax Assessor denied each application. Options timely appealed

from these denials to the Morris County Board of Taxation; the Board denied

each appeal.

      Between September 2020 and June 2022, Options filed three complaints

with the Tax Court of New Jersey, requesting a charitable tax exemption for the

Subject Property for tax years 2020, 2021, and 2022. In March 2022, the

Township filed a motion for summary judgment "to dismiss Options' appeals

[from] the Morris County Tax Board's denial of the Subject Property's charitable

property tax exemption for . . . the [tax] years at issue." Id. at 133. In July 2022,

Options cross-moved for summary judgment, renewing its request for a property

tax exemption for the three tax years at issue. 10

10
   When the Township initially moved for summary judgment, it did so for tax
years 2020 and 2021. Id. at 129, 132 n.1. After Options cross-moved for
summary judgment, "[b]oth parties . . . confirmed [to Judge Bianco] that . . .
consideration of . . . . [the cross-applications] should be for all years under
appeal[,] as the material facts pertaining to all years [we]re the same." Ibid.

                                                                              A-1144-22
                                         7
      In August 2022, Judge Bianco heard argument on the parties' cross-

applications and reserved decision. On October 31, 2022, he entered an order

denying the Township's summary judgment motion and granting Options' cross-

motion for summary judgment.        The judge also directed the Township to

"provide [Options] with a refund of all tax overpayments made for the 2020,

2021, and 2022 tax years, plus statutory interest."

      In a written opinion accompanying the October 31 order, Judge Bianco

found "Options [wa]s organized in furtherance of its [CI]," and thus, was entitled

to charitable property tax exemptions for the tax years at issue. Id. at 133. In

support of this determination, the judge referred to the three-prong test

enunciated in Paper Mill Playhouse v. Millburn Township, 95 N.J. 503, 506

(1984) and Borough of Hamburg v. Trustees of Presbytery of Newton, 28 N.J.

Tax 311, 318 (Tax 2015) regarding "whether a property qualifies for [a tax]

exemption under N.J.S.A. 54:4-3.6."11 Options Imagined, 33 N.J. Tax at 137.

11

            The Supreme Court of New Jersey has set forth three
            criteria for whether a property qualifies for exemption
            under N.J.S.A. 54:4-3.6: (1) the owner of the property
            must be organized exclusively for the tax-exempt
            purpose; (2) the property must be actually used for the
            exempt purpose; and (3) the operation and use of the
            property must not be conducted for profit.

                                                                            A-1144-22
                                        8
After noting the parties agreed that only "the second prong of the Paper Mill

[Playhouse] test" was at issue, "i.e., whether the Subject Property [wa]s actually

used in furtherance of its organizational purpose," the judge observed that "the

Township focused its argument on whether Options satisfied its charitable

purpose by providing services to the public, given that . . . DeSimone's son was

the only former and current resident of the Subject Property." Id. at 138.

      Turning to the second prong of the Paper Mill Playhouse test, Judge

Bianco found Options "satisfied all the requirements for [a] tax exemption" for

the three years at issue because "[i]t [wa]s clear the Subject Property was used

to provide the current resident with housing and DDD approved support

services." Id. at 139. Judge Bianco also rejected the Township's argument "that

because the Subject Property [wa]s not available to the public but rather,

available only to the son of Options' President, Options d[id] not render a

charitable benefit to the public." Ibid. The judge reasoned the Tax Court

"previously recognized that property used to house and provide substantial

supportive services that encourage an independent lifestyle me[t] the standard

for [a] property tax exemption under N.J.S.A. 54:4-3.6." Ibid.

      Additionally, Judge Bianco found:

            [Hamburg, 28 N.J. Tax at 318 (citing Paper Mill
            Playhouse, 95 N.J. at 506).]
                                                                             A-1144-22
                                        9
            The Subject Property is reasonably necessary and
            integral to the care and well-being of the current
            resident and provides him with the ability to lead an
            independent lifestyle within the community. The
            current resident receives assistance with community-
            based activities and aid in performing everyday tasks.
            Furthermore, Options is not limited to only housing . . .
            DeSimone's son. An additional DDD participant is
            anticipated to reside in the Subject Property and receive
            similar support services . . . . When . . . DeSimone's
            son is no longer a resident, the Subject Property will
            continue to be reasonably necessary and integral to the
            care of other DDD participants. Both bedrooms . . . can
            continue to be leased by DDD participants in need of
            housing and supportive aid.             Accordingly, . . .
            Options . . . satisf[ies] the requirements of the use test.

            [Id. at 139-140.]

      Next, Judge Bianco found the Subject Property was used for a public

purpose, even if not "open to the general public and utilized by more than one

individual at any given time." Id. at 140. Further, he concluded "Options [wa]s

absorbing some costs that the taxpayers would otherwise have to bear by caring

for an individual with developmental disabilities." Id. at 141. Moreover, he

found "Options offer[ed] housing and supportive services to individuals who

might otherwise be institutionalized at a higher cost to the public[,] and

provide[d] them with a safe setting in which to thrive." Ibid.

                                                                          A-1144-22
                                       10
      Finally, Judge Bianco rejected as "unfounded" the Township's argument

that Options was not entitled to a charitable tax exemption because "Options

was not created to provide residential services." Id. at 142. The judge noted:

            While Options' [CI] does not explicitly state that its
            creation is to provide residential services, it broadly
            outlines that [its] primary purpose is to provide services
            and support to persons with intellectual and
            developmental disabilities as well as conducting any
            other activity necessary in achieving its charitable
            purpose.

                   The court is satisfied that the support services
            Options provides at the Subject Property are necessary
            in achieving its charitable purpose. The current
            resident, and potentially future residents, receive the
            daily supportive aid necessary to lead an independent
            lifestyle.

            [Id. at 142-43.]

                                       II.

      On appeal, the Township reprises many of the arguments it presented to

Judge Bianco. It contends: (1) "Options . . . is not entitled to an exemption

from local property tax under N.J.S.A. 54:4-3.6 because it does not satisfy the

three-prong test applied to charitable organizations"; (2) "Options . . . does not

actually use the Subject Property for any of the organization's enumerated

charitable purposes and, therefore, does not satisfy the second prong of the Paper

Mill Playhouse test"; (3) "owning [or] providing residential housing is not part

                                                                            A-1144-22
                                       11
of[,] nor reasonably related to Options['] . . . charitable purpose"; (4) "housing

should not be considered one of Options['] . . . charitable purposes[,] given [it]

is not licensed to provide such services in the State of New Jersey"; (5) "there

is no quid pro quo between Option[s'] . . . use of the [Subject Property] and any

public provided service, which further undermines any contention that the

[Subject Property] is actually used for a charitable purpose"; and (6) "the factual

distinctions between recently published Tax Court decisions and the case at bar

underscore the reasons why Options['] . . . use of the [Subject Property] cannot

be considered charitable under N.J.S.A. 54:4-3.6." These arguments fail.

      "An appellate court accords a highly deferential standard of review to

[T]ax [C]ourt decisions." N.J. Tpk. Auth. v. Twp. of Monroe, 30 N.J. Tax 313,

318 (App. Div. 2017). We "will not disturb a [T]ax [C]ourt's findings 'unless

they are plainly arbitrary or there is a lack of substantial evidence to support

them' because '[t]he judges presiding in the Tax Court have special expertise.'"

Ibid. (third alteration in original) (quoting Glenpointe Assocs. v. Teaneck, 241

N.J. Super. 37, 46 (App. Div. 1990)). However, we "review de novo a [T]ax

[C]ourt's legal decisions." Ibid. (citing Toll Bros. v. Twp. of W. Windsor, 173

N.J. 502, 549 (2002)).

      "'In New Jersey, all real property is subject to local property taxation . . .

unless its use has been exempted' by legislation." Christian Mission John 3:16

                                                                             A-1144-22
                                       12
v. Passaic City, 243 N.J. 175, 185 (2020) (omission in original) (quoting

Hunterdon Med. Ctr. v. Twp. of Readington, 195 N.J. 549, 553 (2008)); see also

N.J.S.A. 54:4-1.     "Statutory exemptions from taxation should be 'strictly

construed against those invoking the exemption.'" Advanced Hous., Inc. v. Twp.

of Teaneck, 215 N.J. 549, 566 (2013) (quoting Hunterdon Med. Ctr., 195 N.J. at

569). Therefore, "an entity seeking a tax exemption has the burden of showing

its entitlement to the exemption."           Ibid.   However, "this 'rule of strict

construction must never be allowed to defeat the evident legislative design.'"

Ibid. (quoting N.J. Carpenters Apprentice Training & Educ. Fund v. Borough of

Kenilworth, 147 N.J. 171, 177-78 (1996)).

      "Real property owned by a non-profit, charitable organization, which is

used exclusively for charitable purposes—'as defined by law'—is specifically

exempted from taxation under the New Jersey Constitution. The 'law' governing

property tax exemptions is contained in N.J.S.A. 54:4-3.6."          Id. at 566-67

(quoting N.J. Const. art. VIII, § 1, ¶ 2).

      To qualify for a property tax exemption under N.J.S.A. 54:4-3.6, an entity

seeking the exemption "must satisfy the statutory three-[prong] test that flows

from N.J.S.A. 54:4-3.6," as set forth by the Supreme Court in Paper Mill

Playhouse and its progeny. Id. at 567. The statutory exemption allowed under

N.J.S.A. 54:4-3.6 is provided by the State as a "quid pro quo in recognition 'of

                                                                             A-1144-22
                                        13
the contribution of the exempt facility to the public good.'" Christian Mission,

243 N.J. at 185 (quoting Roman Cath. Diocese of Newark v. Borough of Ho-

Ho-Kus, 42 N.J. 556, 566 (1964)). The exemption is permitted even if such use

"is available to or most immediately benefits only some narrow segment of the

general public." Ibid.

      "[W]hether property is devoted to charitable purposes depends upon the

facts or circumstances of each case." Advanced Hous., Inc., 215 N.J. at 568

(quoting Presbyterian Homes of Synod v. Div. of Tax Appeals, 55 N.J. 275, 285

(1970)). "[A] sometimes stated justification for charitable tax exemptions is that

if the charitable work were not being done by a private party, it would have to

be undertaken at public expense." S. Jersey Fam. Med. Ctrs., Inc. v. City of

Pleasantville, 351 N.J. Super. 262, 272 (App. Div. 2002) (quoting Presbyterian

Homes, 55 N.J. at 285).

      Next, it is well settled that although we generally defer to the Tax Court's

expertise in our review of factual findings, we review de novo its decision on

summary judgment, applying the same standard governing the trial court.

Christian Mission, 243 N.J. at 184. Thus, we consider "whether the competent

evidential materials presented, when viewed in the light most favorable to the

non-moving party in consideration of the applicable evidentiary standard, are

sufficient to permit a rational factfinder to resolve the alleged disputed issue in

                                                                             A-1144-22
                                       14
favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J.

520, 523 (1995).

      Summary judgment must be granted "if the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact challenged and

that the moving party is entitled to a judgment or order as a matter of law." R.

4:46-2(c). "If there is no genuine issue of material fact, we must then 'decide

whether the trial court correctly interpreted the law.'" DepoLink Ct. Reporting

& Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013)

(quoting Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div.

2007)).

      Applying these principles, we perceive no basis to second-guess Judge

Bianco's factual findings. Moreover, we are persuaded his legal conclusions are

sound and consistent with applicable law. Accordingly, we affirm the October

31, 2022 order, substantially for the reasons expressed by the judge in his written

opinion. We add the following brief remarks.

      As already mentioned, the parties disputed only the second prong of the

three-prong test enunciated in Paper Mill Playhouse, that is, whether the Subject

Property was "actually. . . used for the tax exempt purpose."          Paper Mill

Playhouse, 95 N.J. at 506.      A Tax Court addressing this prong "evaluates

                                                                             A-1144-22
                                       15
whether the property is 'reasonably necessary' for such tax[]exempt purposes."

Twp. of Green v. Life with Joy, Inc., 32 N.J. Tax 580, 594-95 (Tax 2022)

(quoting Roman Cath. Archdiocese of Newark v. City of East Orange, 18 N.J.

Tax 649, 653 (App. Div. 2000)). "When applying this test, the Court has held

that 'necessary' is not interpreted to mean 'absolutely indispensable.'" Id. at 595

(quoting Boys' Club of Clifton, Inc. v. Twp. of Jefferson, 72 N.J. 389, 401

(1977)). Also, "the use test does not impose a quantum of use." Id. at 598.

      Here, in addressing whether the Subject Property was actually used for a

tax-exempt purpose, Judge Bianco noted that Options' trained staff provided a

CCP participant (who "receive[d] funding through programs administered by the

DDD") "twenty-four-hour support services at the Subject Property." Options

Imagined, 33 N.J. at 135. Further, the judge found that Options' services "enable

DDD participants to live in the community" and Options' "[i]ndividual support

services are direct aid to individuals in achieving an independent lifestyle." Ibid.

Moreover, the judge concluded that once "DeSimone's son [wa]s no longer a

resident, the Subject Property w[ould] continue to be reasonably necessary and

integral to the care of other DDD participants." Id. at 140. Additionally, Judge

Bianco found that absent Options providing such comprehensive housing and

services to its resident, as well as to future residents, the cost of such care would

be shouldered by society, and likely at a significantly higher level. Id. at 141-

                                                                              A-1144-22
                                        16
42. Under these circumstances, we reject the Township's argument that the

judge erred in finding the Subject Property was "actually used in furtherance of

Options' charitable purpose and . . . thus[,] exempt from taxation pursuant to

N.J.S.A. 54:4-3.6 for the tax years at issue." Id. at 143. We therefore affirm the

October 31, 2022 order for the reasons expressed in Judge Bianco's

comprehensive written opinion.

      To the extent we have not addressed the Township's remaining arguments,

we conclude they lack sufficient merit to warrant further discussion in a written

opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

                                                                            A-1144-22
                                       17