Township of Berkeley Heights v. County of Union

311 N.J. Super. 577, 710 A.2d 1028 (App. Div. 1998)
  • Opinion Date: May 18, 1998

PROPERTY TAXES; PUBLIC USE—A public entity involved in the sale of property previously devoted to a public use is entitled to a reasonable period of time to consummate the sale during which the tax exempt status of the property continues.

Union County owned a hospital which was exempt from real property taxes because it was used for a public purpose. In 1985, the county contracted to sell the property to a private party. Title did not close until ten years later. The county contended that the property did not lose its tax exempt status until title closed. The municipality contended that, since all patients were removed ain 1991, taxation of the property should have been permitted as of the beginning of 1993. Property used for public purpose is entitled to continued tax exempt status for a reasonable period of time while it is being readied for transfer. The dispute centered on the question of when a “reasonable” time expired.

Based on the testimony, the Court found that because of the presence of various environmental and other problems, closing was delayed until June, 1995, despite all of the county’s efforts to close earlier.

Generally speaking, public purpose 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 government. Case law liberally construes the concept of “public purpose” with respect to the time reasonably needed to ready, for use, land purchased for public purpose. With that in mind, the Court saw no reason why found the same liberal approach should be not used at the end of the life cycle of a property.