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Disabilities Resource Center/Atlantic and Cape May, Inc. v. City of Somers Point

371 N.J. Super. 1, 851 A.2d 792 (App. Div. 2004)

TAXATION; EXEMPTIONS—Non-profit organizations that train the “feeble minded” need not maintain both a training and research facility to qualify for a property tax exemption; fulfilling only one purpose is sufficient.

A nonprofit organization provided residential services to people with disabilities in a community-based group home. Among the services provided was training in basic life skills. The organization applied for a real property tax exemption. The tax assessor and the county board of taxation denied the request. On appeal, the tax court held that the property was entitled to a tax exemption, specifically because the property was owned by a qualified organization and was exclusively utilized for the purposes of training the “feeble minded.”

There are four elements one must satisfy in order to be qualified for such a tax exemption pursuant to the applicable statute: the property must be owned and used by a nonprofit corporation; the property must be used in connection with its curriculum, work, care, treatment, and study of feeble-minded people, the corporation must conduct and maintain research or professional training facilities for the care and training of feeble-minded people; and the buildings or lands occupied by the organization cannot be operated for profit.

On appeal, the municipality argued that the facility should not have received the exemption because the corporation did not maintain both a research and a training facility. The Court held that, under the applicable statute, the organization was not required to operate both a research and a training facility, just one of the two. While facilities that merely rent out dwellings to a disabled population are not entitled to the exemption, that was not the case here. This organization had a sizable and well-trained staff dedicated to the care and training of the residents, and it conducted on-site training for its staff and trained its residents in the basic skills of daily life.

The municipality also argued that because the language of the statute required that the subject property be used “in connection with [the organization’s] curriculum, work, care, treatment, and study of the individuals,” the organization was required to provide all of the listed functions because the word “and” and not “or” was used. The Appellate Division disagreed, finding that this analysis was overly formalistic. According to the Court, one must first look to a statute’s plain language to derive its meaning. Doing that, it held that an organization’s facility would be exempt as long as it could show that it conducted and maintained research or professional training facilities for the care and training of its residents.

The Court opined that even if the municipality’s readings of the statute were correct, the record still supported the conclusion that the facility’s personnel at the facility engaged in activities that would have qualified as the “study” of residents. For each resident there was a technical document that contained substantial information relating to his or her abilities. The document also included specific goals to be pursued in order to maximize the individual’s progress. The progress of each resident was monitored and the goals were reviewed and modified regularly. Therefore, even if the Court had concluded that study of the residents was a statutory requirement of the exemption, the record adequately supported a conclusion that the organization complied with such an obligation.

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