Aish Hatorah New York, Inc. v. Passaic City

TAX COURT OF NEW JERSEY
Joshua D. Novin Washington & Court Streets, 1st Floor
Judge P.O. Box 910
Morristown, New Jersey 07963
Tel: (609) 815-2922, Ext. 54680
Fax: (973) 656-4305
NOT FOR PUBLICATION WITHOUT THE APPROVAL
OF THE TAX COURT COMMITTEE ON OPINIONS
July 10, 2019
Tova L. Lutz, Esq. Christopher John Stracco, Esq.
Lutz Law Group, LLC Day Pitney LLP
121 Ridge Avenue One Jefferson Road
Passaic, New Jersey 07055 Parsippany, New Jersey 07054-2891
Kenneth Porro, Esq.
Chasan Lamparello Mallon & Cappuzzo, PC
300 Lighting Way, Suite 200
Secaucus, New Jersey 07094
Re: Aish Hatorah New York, Inc. v. Passaic City
Docket Nos. 011591-2015, 013046-2016, 013047-2016, 008779-2017
and 008446 2018
Dear Ms. Lutz, Mr. Stracco, and Mr. Porro:
This letter constitutes the court’s opinion with respect to the motions filed by Aish Hatorah
New York, Inc. (“Aish”) in the above-referenced matters. Aish seeks entry of partial summary
judgment, contending that the property it owned in Passaic City (“Passaic”) was exempt from local
property tax for the 2015, 2016, 2017 years, and a portion of the 2018 year. 1
For the reasons stated below, the court orders the above matters transferred from the court’s
small claims track/division to the standard track/division. Following the transfer, and Aish’s
1
As part of its application, Aish submits that the above-referenced matters may be transferred
by the court from the small claims track/division to the standard track/division for disposition.
1
payment to the Clerk of the Tax Court of any and all additional filing fees associated with said
transfer, the court directs the Clerk of the Tax Court to enter Judgments granting Aish exemption
from local property taxes for the 2015, 2016, 2017 years, and from January 1, 2018 to September
14, 2018.
I. Factual Findings and Procedural History
Pursuant to R. 1:7-4, the court makes the following findings of fact and conclusions of law
based on the pleadings, depositions, affidavits, undisputed statements of fact, and exhibits
submitted by the parties.
Aish is a not-for-profit corporation organized under New York’s Not-For-Profit
Corporation Law, with headquarters at 313 West 83rd Street, New York, New York 10024. 2 On
May 19, 2006, Aish filed a Certificate of Authority with the New Jersey Department of Treasury
to be recognized in New Jersey as a Foreign Non-Profit Corporation. 3
Aish’s Certificate of Incorporation states that it was formed for the purpose of achieving
the following goals:
To develop and broaden the knowledge of Judaism and of its
practices among persons of the Jewish faith, with particular
emphasis and regard to the alienated and those of broad secular
education.
To teach the value of prayer and study of Torah teaching, and its
value and meaning for us today, by analysis, discussion, and
preparation for self-improvement. The personal concerns of each
2
Aish is part of Aish HaTorah (“Aish Global”), “an international Orthodox Jewish outreach
organization established in Jerusalem in 1974, with branches all over the world.” Aish Global is
a self-described provider of “Jewish educational programs and leadership training” with the goal
of “revitaliz[ing] the Jewish people by providing opportunities for Jews of all backgrounds to
discover their heritage in an atmosphere of open inquiry and mutual respect.”
3
Aish’s New Jersey Certificate of Authority recites that its business purpose is “Charitable
(501(c)3).”
2
individual shall receive special attention with the aim of spiritual
self-growth.
To study the religious literature of Judaism as it has developed
throughout the ages, and as it related to the Jew in modern times,
particularly in the land of Israel.
To provide a cultural and social atmosphere of like-minded serious
searchers for the truths found in the Orthodox Jewish faith, wherever
such persons may be found the world-over.
In order to promote its organizational goals and purposes, on or about May 30, 2007, Aish
purchased the properties commonly known as 2 Katherine Avenue, Passaic, New Jersey (“2
Katherine”) and 4 Katherine Avenue, Passaic, New Jersey (“4 Katherine”) (2 Katherine and 4
Katherine shall be collectively referred to herein as the “subject property”). The subject property
are separately assessed and identified on Passaic’s municipal tax map as Block 3309, Lot 19,
Qualifier C0001, and Qualifier C0002. The subject property consist of two “adjoining
condominium homes,” situate on a single corner lot.
Although the subject property are identified on Passaic’s municipal tax roll as two separate
and distinct residential properties, from 2013 to September 2018, Aish operated the subject
property as The Aish Woman’s House (the “Aish House”). 4 The Aish House was “a place to
house and counsel adult unmarried women within a safe, supervised, structured Orthodox Jewish
environment, under the instruction and guidance of a rabbi-in-residence.” Stated differently, it
provided a residential setting for adult unmarried Jewish women to nurture and develop their
understanding of, and faith in Orthodox Judaism through instruction, lectures, prayer services,
communal activities, and spiritual counseling under the supervision and guidance of the “rabbi-
4
On September 14, 2018, Aish sold 2 Katherine and 4 Katherine to Rabbi Joshua Winter.
3
in-residence” and “foster[ed] fellowship among the participants and facilitate[d] their integration
into the greater local Orthodox Jewish community in Passaic.” 5
Because the program participants “lived as secular Jews prior to enrolling in the [Aish]
House, [and] are newcomers to the Orthodox community and way of life,” the program was
“designed to advance in [the participating] women growth in the Orthodox [Jewish] faith,
education, custom, religious law, and observance[s].” The subject property provided an
environment for the participants to: live together, attend evening classes and lectures, pray
together, observe customs and participate in ritual events of Orthodox Judaism, and engage in
communal meals. Additionally, participants “encourag[ed] each other in their faith,” and
“organiz[ed] events that further[ed] the mission of the [Aish] House, maintain[ed] and clean[ed]
their living spaces, and communal space, contribut[ed] to the purchase and preparation of meals,
and connect[ed] with local families within the local Orthodox community, with whom they . . .
share[d] occasional Shabbat meals.” 6
Program participants resided at 4 Katherine, and Rabbi Winter and his family resided at 2
Katherine. 7 In general, lectures, and instruction were conducted at 4 Katherine, and religious
ceremonies, spiritual/life counseling, prayer services, Shabbat services, and holiday rituals were
5
Rabbi Joshua Winter (“Rabbi Winter”) served as Aish House’s “Campus Director” and “rabbi-
in-residence” from 2013 to September 14, 2018, and his wife, Elizabeth Winter, served as “a
counselor, mentor, educator, and spiritual role model as well as an events and programming
coordinator.” Rabbi Winter was ordained as a rabbi in the Orthodox Jewish faith in 2006. On
September 14, 2018, Aish sold and conveyed the subject property to Rabbi Winter.
6
Aish defined Shabbat as the “weekly religious ceremony with prayers, music, and blessings that
is celebrated year round from sunset each Friday through sunset each Saturday.”
7
In opposition to the motions Passaic recited that program participants resided at 2 Katherine and
Rabbi Winter and his family resided at 4 Katherine.
4
observed at 2 Katherine. 8 However, depending on the size and nature of the event, certain lectures
and events were held at 2 Katherine that were “open to the greater Passaic Orthodox community”
to strengthen the program participant’s “sense of fellowship and integration with their peers and
elders in the Orthodox community.”
Rabbi Winter’s duties as “rabbi-in-residence” included “supervis[ing] the [Aish House’s]
environment to ensure it comports with the . . . mission” and with the principles of Orthodox
Judaism. Rabbi Winter was responsible for leading instruction, communal activities, “formal
religious services, counseling with regard to spiritual and religious legal questions, life
coaching/counseling, weekly Shabbat communal meals, and holiday communal meals, and
observance of Jewish holiday rituals.” 9
From the exterior, 2 Katherine and 4 Katherine look like two adjoined single-family
residential structures. Similarly, the interior of 2 Katherine and 4 Katherine are organized much
like any other single-family residence with a kitchen, dining area, living room, bathrooms,
bedrooms, and partially finished basements. However, 4 Katherine was assembled in such a
manner to provide a “classroom” separate from the remainder of the house. 10 All of the furniture
and furnishings in 4 Katherine were supplied by Aish.
Program participants paid tuition to Aish for instruction, programming, room, and board.
According to Rabbi Winter, “[t]he tuition varie[d] from participant to participant based on various
8
During oral argument, Aish’s counsel explained that under the principles of Orthodox Judaism
it would have been inappropriate for the rabbi-in-residence to counsel the female program
participants at 4 Katherine, thus all individual spiritual/life counseling occurred at 2 Katherine.
9
Rabbi Winter stated that about 20 people attended each Shabbat service, which included program
participants, the rabbi’s family, and members of the Passaic Orthodox Jewish community.
10
One of the interior photographs of 4 Katherine depicts a classroom setting with multiple chairs
organized in a row with a table located at the front of the room.
5
circumstances.” Tuition and room and board expenses ranged from $510 to $700 per month, and
program participants stayed, “on average, about 1 year.” According to Rabbi Winter, tuition was
necessary to cover programming costs. However, “[n]eed based scholarships” were available to
program participants from “Orthodox Jewish foundations and private donors.” To enroll in the
program, applicants were required to complete an application, participate in an interview process,
and typically, visit the subject property to ensure that the program was “a good fit” with the
applicant. The Aish House accommodated approximately seven to nine program participants at a
time. From 2013 to 2018, the program served approximately fifty participants.
In June 2007, Aish applied to Passaic for local property tax exemption by filing an Initial
Statement of Organization Claiming Property Tax Exemption (“Initial Statement”). On December
17, 2007, Passaic’s municipal tax assessor denied Aish’s application stating that “[a] charitable
teaching organization does not qualify for the allowance of parsonages, according to N.J.S.A. 54:4-
3.6” (the “Denial Letter”). 11
In or about March 2015, Aish filed a Petition of Appeal with the Passaic County Board of
Taxation (the “Board”) contesting the subject property’s 2015 local property tax assessment. In
filing the Petition of Appeal, counsel for Aish handwrote “EXEMPTION” on the top of the front
page of each Petition of Appeal. 12 The Board entered judgments with the notation “Dismissal
without Prejudice Hearing Waived.” Accordingly, on June 23, 2015, Aish filed a “Complaint
11
Aish submits that, on or about June 10, 2015, it filed another Initial Statement of Organization
Claiming Property Tax Exemption. According to Aish, it received no response to the June 10,
2015 application from Passaic. Passaic maintains that its tax assessor’s file does not contain the
June 10, 2015 application. However, resolution of this issue is not material to the court’s decision
in these matters.
12
Passaic did not dispute that Aish’s 2015 Petition of Appeal contained the word “Exemption.”
Instead, Passaic submitted the certification of its municipal tax assessor stating that “the only
submitted documents [in] the tax assessor’s records,” were the Initial Statement and Denial Letter.
6
Small Claims” and Case Information Statement with the Tax Court for the 2015 year contesting
the Board’s judgments. The June 23, 2015 Tax Court Case Information Statement states
“Exemption claimed? x Yes No type.” 13
On October 8, 2015, in support of its 2015 local property tax appeal, Aish forwarded a
letter to Passaic’s municipal tax assessor regarding the “Exemption Appeal” and enclosed “a
summary of details . . .” that it may rely on at trial. The summary detailed Aish’s organization,
purposes, and its use of the subject property. 14
On or about March 28, 2016, Aish filed a Petition of Appeal with the Passaic County Board
of Taxation (the “Board”) contesting the subject property’s 2016 local property tax assessment. In
filing the Petition of Appeal, counsel for Aish handwrote “EXEMPTION” on the top of the front
page of each Petition of Appeal. 15 The Board entered judgments with the notation “Dismissal
without Prejudice Tax Court pending.” Accordingly, on September 16, 2016, Aish’s counsel filed
two “Complaint[s] Small Claims” and Case Information Statements with the Tax Court for the
2016 tax year contesting the Board’s judgments. The September 16, 2016 Case Information
Statements state “Abatement/Exemption: No.” 16
13
On July 23, 2015, in response to a Deficiency Notice issued by the Tax Court Management
Office, Aish filed an Amended Complaint and Amended Case Information Statement. The July
23, 2015 Case Information Statement states that “Exemption claimed? Yes x No type.”
14
The summary also included a copy of the Initial Statement of Organization Claiming Property
Tax Exemption dated June 10, 2015.
15
Passaic did not dispute that Aish’s 2016 Petition of Appeal contained the word “Exemption.”
Instead, Passaic submitted the certification of its municipal tax assessor stating that “the only
submitted documents with the tax assessor’s records,” were the Initial Statement and Denial Letter.
16
Aish subsequently filed Petitions of Appeal with the Board and complaints with the Tax Court
for the 2017 and 2018 tax years. The contents of Aish’s 2017 and 2018 Petitions of Appeal were
not provided to the court, however Aish’s 2017 and 2018 Tax Court complaints recite that tax
appeals involving the subject property are pending for the 2016 and 2017 tax years.
7
By letter dated June 16, 2016, Passaic’s counsel served on Aish’s counsel a demand for
“interrogatories to be served on Taxpayer for Exemption Case” regarding Aish’s 2015 local
property tax appeal. The interrogatories annexed to Passaic counsel’s cover letter were titled
“Standard Interrogatories For Exemption Case.”
On or about March 9, 2017, Passaic’s counsel forwarded a letter to Aish’s counsel arguing
that Aish, and the subject property’s use, did not satisfy the criteria for local property exemption
with respect to the 2015 and 2016 tax years.
By letter dated April 14, 2017, Aish’s counsel served “Certified Answers to Standard
Interrogatories, Standard Exemption Interrogatories and supporting documentation” on Passaic’s
counsel. Aish’s counsel’s letter offered further arguments in support of its 2015 and 2016 local
property tax exemption claims in response to Passaic’s counsel’s March 9, 2017 letter.
Aish argues in support of its motions seeking partial summary judgment that the criteria
for exemption from local property tax under N.J.S.A. 54:4-3.6 have been satisfied. Ash submits
that it is organized exclusively as a New York not-for-profit corporation with goals of broadening
knowledge of Orthodox Judaism, teaching the value of prayer and study of the Torah, studying the
religious literature of Judaism, and providing a cultural and social environment for like-minded
individuals devoted to exploring the truths of the Orthodox Jewish faith. Moreover, it contends
that it operates, and operated the Aish House, as a non-profit program devoted to furthering those
religious and moral and mental improvement goals. Thus, Aish argues that the subject property is
exempt from local property tax under the following provisions of N.J.S.A. 54:4-3.6: (1) as
“buildings actually used in the work of . . . corporations organized exclusively for religious
purposes, including religious worship, or charitable purposes;” (2) as “buildings actually used in
the work of . . . corporations organized exclusively for the moral and mental improvement of men,
8
women and children;” (3) as “the buildings, not exceeding two, actually occupied as a parsonage
by the officiating clergymen of any religious corporation of this State, together with the accessory
buildings located on the same premises;” and (4) as “buildings actually used for colleges, schools,
academies or seminaries.” 17
In response to Aish’s motions, Passaic initially filed a “Request for the Court to View the
Property.” 18
In opposition to the motions, Passaic charges that issues of material fact exist and that Aish
failed to demonstrate that the subject property met the standards for local property tax exemption.
Specifically, Passaic maintains that Aish is not a religious corporation, but rather a “charitable
teaching organization [and] does not qualify for the allowances of parsonages” under N.J.S.A.
54:4-3.6. Further, Passaic contends that 4 Katherine is not “actually used for religious purposes”
or for the moral and mental improvement of the program participants, and that 2 Katherine is not
“a parsonage,” nor is it reasonably necessary to further the objectives of Aish. Rather, Passaic
maintains that 4 Katherine is a “student dorm” and 2 Katherine is simply “Rabbi Winter’s
residence.” Passaic also maintains that the primary use of the subject property is residential in
nature and the program participants’ monthly tuition payments to Aish constitute rent. Moreover,
Passaic argues that 2 Katherine and 4 Katherine are not integrated components, necessary for the
proper operation of one another. Finally, Passaic asserts that the subject property is not actually
17
Aish did not claim in its initial moving papers that the subject property was exempt from local
property tax as a school, academy or seminary under N.J.S.A. 54:4-3.6. However, it raised that
argument in subsequent briefs in response to Passaic’s arguments.
18
On February 19, 2019, the court denied Passaic’s request for the court to conduct an inspection
of the subject property, placing a statement of reasons on the record. However, the court afforded
Passaic additional time to submit opposition to the motions, to conduct an inspection of the subject
property, to take photographs of the subject property, and to submit said photographs in support
of its opposition.
9
being used for religious purposes because no “land use approval for any type of religious
operations” was secured, there is no signage, nor any off-street parking and “there are at least three
(3) synagogues in close proximity to the subject property and are all within walking distances.
Those synagogues possess actual posted religious services and regular hours of worship.” In
support of its opposition to Aish’s motions, Passaic submitted fifty-two photographs of the exterior
and interior of the subject property.
During oral argument, Passaic raised several new arguments, asserting that deficiencies
existed with respect to Aish’s pleadings requiring denial of its motions. Accordingly, the court
afforded Passaic an opportunity to brief those arguments and for Aish to respond to those
arguments. In its supplemental brief, Passaic argues that R. 8:11(a)(2) deprives the court of
jurisdiction in these matters because “[c]ases raising exemption or abatement issues are not eligible
for the small claims division.” R. 8:11(a)(2). Because Aish’s complaints were characterized as
small claims, and assigned to the small claims division, Passaic contends that no local property tax
exemption claims may be pursued, and that Aish is limited to its claims regarding the subject
property’s valuation. 19 Additionally, Passaic maintains that Aish’s failure to file a further or Initial
Statement of Organization Claiming Property Tax Exemption with Passaic’s tax assessor for the
2015, 2016, 2017, and 2018 tax years precludes granting a local property tax exemption.
In response, Aish submits that at all times these matters have been “litigated . . . as an
exemption case” and Passaic “cannot be heard to claim it has suffered any prejudice because of
any technical issues with the forms of Aish’s pleadings.” Moreover, as no trial has been conducted
in these matters and thus, no closure of the proofs, R. 8:11(a)(e) affords the court authority, in its
19
Although not addressed in its supplemental briefs, during both the first and second oral
argument Passaic argued that Aish’s complaints were also defective because a count for local
property tax exemption was not asserted under the “four corners” of the document.
10
discretion, to retain these matters in the small claims division/track or to transfer these matters to
the standard division/track. Finally, Aish maintains that the filing of a further or an Initial
Statement of Organization Claiming Property Tax Exemption is not a prerequisite to the granting
of a local property tax exemption under N.J.S.A. 54:4-3.6. As such, Aish maintains that it satisfied
all conditions for exemption under N.J.S.A. 54:4-3.6, and thus, is entitled to an exemption from
local property taxes for the 2015, 2016, and 2017 years, and a portion of the 2018 tax year.
II. Conclusions of Law
A. Summary judgment
Summary judgment “'serve[s] two competing jurisprudential philosophies’: first, ‘the
desire to afford every litigant who has a bona fide cause of action or defense the opportunity to
fully expose his case,’ and second, to guard ‘against groundless claims and frivolous defenses,’
thus saving the resources of the parties and the court.” Globe Motor Co. v. Igdalev, 225 N.J. 469,
479 (2016) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 541-42 (1995)).
R. 4:46-2 outlines the circumstances under which summary judgment should 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.]
In Brill, our Supreme Court adopted the federal approach to resolving motions for summary
judgment, in which “the essence of the inquiry [is] whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party must
prevail as a matter of law.” 142 N.J. at 536 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986)). In conducting this inquiry, the trial court must engage in a “kind of weighing
11
that involves a type of evaluation, analysis and sifting of evidential materials.” Ibid. The standard
established by our Supreme Court in Brill is as follows:
[W]hen deciding a motion for summary judgment under R. 4:46-2,
the determination whether there exists a genuine issue with respect
to a material fact challenged requires the motion judge to consider
whether the competent evidential material 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 fact finder to resolve the alleged disputed issue in favor of
the non-moving party.
[Id. at 536.]
In considering all of the material evidence before it with which to determine if there is a
genuine issue of material fact, the court must view most favorably those items presented to it by
the party opposing the motion and all doubts are to be resolved against the movant. Ruvolo v.
American Casualty Co., 39 N.J. 490, 491 (1963). A court charged with “deciding a summary
judgment motion does not draw inferences from the factual record as does the factfinder in a trial,
. . . [i]nstead, the motion court draws all legitimate inferences from the facts in favor of the non-
moving party.” Globe Motor Co., 225 N.J. at 480 (internal citations omitted). Thus, the moving
party bears the burden “to exclude any reasonable doubt as to the existence of any genuine issue
of material fact” with respect to the claims being asserted. United Advertising Corp. v. Borough
of Metuchen, 35 N.J. 193, 196 (1961).
“By its plain language, R. 4:46-2 dictates that a court should deny a summary judgment
motion only where a party opposing the motion has come forward with evidence that creates a
‘genuine issue as to any material fact challenged.’” Brill, 142 N.J. at 529. However, when the
party opposing the motion merely presents “facts which are immaterial or of an insubstantial
nature, a mere scintilla, fanciful, frivolous, gauzy or merely suspicious,” then an otherwise
meritorious application for summary judgment should not be defeated. Judson v. Peoples Bank
12
and Trust Co., 17 N.J. 67, 75 (1954). Hence, “when the evidence is so one-sided that one party
must prevail as a matter of law. . . the trial court should not hesitate to grant summary judgment.”
Brill, 142 N.J. at 540 (quoting Liberty Lobby, Inc., 477 U.S. at 252).
The court in applying the foregoing standards to Aish’s motion, and having reviewed the
pleadings, deposition, undisputed statements of material fact, affidavits and exhibits submitted, the
court concludes that no genuine issues of material fact are in dispute and thus, this matter is ripe
for summary judgment.
B. Notice-pleadings
New Jersey is a notice-pleading state, requiring only that a general statement of the claim
need be pleaded. Printing Mart v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989); see also
Velop, Inc. v. Kaplan, 301 N.J. Super. 32, 56 (App. Div. 1997), appeal dismissed, 153 N.J. 45(1998). The pleadings must include a statement of facts that will “fairly apprise the adverse party
of the claims and issues to be raised at trial.” Jardine Estates, Inc. v. Koppel, 24 N.J. 536, 542
(1957).
Although Passaic did not argue in either its initial or supplemental briefs the alleged failure
of Aish to plead a claim for local property tax exemption, Passaic raised such arguments during
oral argument. 20 R. 8:3-4(c) requires that “[a] claim for exemption shall be specifically pleaded.”
The rules applicable to civil proceedings also require that certain claims or defenses be specifically
pled. See R. 4:5-4. Thus, in addressing Passaic’s argument the court must first conduct an inquiry
of “the complaint in depth and with liberality to ascertain whether the fundament of a cause of
20
Passaic did not cross move for dismissal of Aish’s complaints under R. 4:6-2(e) or R. 8:3-4(c),
rather Passaic asserted that R. 8:3-4(c) precluded the court from granting Aish’s motions for partial
summary judgment.
13
action may be gleaned even from an obscure statement of claim. . . .” Di Cristofaro v. Laurel
Grove Memorial Park, 43 N.J. Super. 244, 252 (App. Div. 1957).
When evaluating whether a complaint reasonably affords an adverse party of notice that a
claim has been asserted, the court must accept as true the facts alleged in the complaint and accord
plaintiff every favorable inference of fact. Craig v. Suburban Cablevision, 140 N.J. 623, 625-26
(1995); Independent Dairy Workers Union of Hightstown v. Milk Drivers and Dairy Employees
Local No. 680, 23 N.J. 85 (1956). Thus, when applying this analysis, our rules require that “[a]ll
pleadings shall be liberally construed in the interest of justice.” R. 4:5-7. The test for determining
the adequacy of the pleading is whether a cause of action is suggested by the facts. Velantzas v.
Colgate-Palmolive Corp., 109 N.J. 189 (1998).
Moreover, appeals to the Tax Court of county tax board judgments, under N.J.S.A. 54:3-
21, are de novo and the Tax Court's authority to determine the assessment of a property “is not
boundless. . . It must . . . be consistent with the issues as framed by proper pleadings or settled
presumptive rules reflecting the underlying policy that governmental action is valid.” F.M.C.
Stores Co. v. Morris Plains Borough, 100 N.J. 418, 430-431 (1985) (citing Pantasote Co. v. Passaic
City, 100 N.J. 408, 413 (1985)). See also N.J.S.A. 2B:13-3(b). Ultimately, under the “de novo
review, the Tax Court may determine a true value different from the original assessment, the
County Board's assessment, or the taxpayer's valuation.” Pantasote Co., 100 N.J. at 416.
With these principles in mind, the court discerns from its review of Aish’s petitions of
appeal, complaints, and case information statements, the undisputed material facts identified in
Aish’s motions, the communications between Aish and Passaic’s municipal tax assessor, and the
communications between Aish’s counsel and Passaic’s counsel, that the local property tax
14
exemption cause of action was raised, and that Passaic had actual notice that Aish’s cause of
actions contested the subject property’s local property tax exemption.
Here, Passaic was on actual notice of Aish’s 2015 local property tax exemption claim by
virtue of the filed June 23, 2015 Case Information Statement which reflected that “Exemption
claimed? x Yes No type.” Moreover, according Aish every favorable inference of fact,
Aish’s 2015 and 2016 petitions of appeal to the Board contained the handwritten word
“EXEMPTION” along the top of each Petition of Appeal. In filing its 2015 and 2016 Tax Court
complaints, Aish challenged the Judgments of the Board which affirmed the subject property’s
2015 and 2016 local property tax assessments, and thus, declined to grant the subject property
exemption from local property tax.
Additionally, on October 8, 2015, in support of its 2015 local property tax exemption
appeal, Aish forwarded a letter to Passaic’s municipal tax assessor regarding the “Exemption
Appeal” and enclosed “a summary of details . . .” that it may rely on at trial. The summary detailed
Aish’s organization, purposes, and use of the subject property. The summary also included a copy
of the Initial Statement of Organization Claiming Property Tax Exemption dated June 10, 2015.
Significantly, during the court’s March 22, 2016 trial call calendar, counsel represented to
the court that the tax appeals in these matters arose from whether the subject property was exempt
from local property tax. Moreover, by letter dated June 16, 2016, Passaic’s counsel served on
Aish’s counsel a demand for “interrogatories to be served on Taxpayer for Exemption Case” with
respect to Aish’s 2015 local property tax exemption appeal. The interrogatories annexed to Passaic
counsel’s cover letter were titled “Standard Interrogatories For Exemption Case.” Further, by
letter dated March 9, 2017, Passaic’s counsel forwarded a letter to Aish’s counsel arguing that
Aish and the subject property did not satisfy the criteria for local property exemption with respect
15
to the 2015 and 2016 matters. Additionally, by letter dated April 14, 2017, Aish’s counsel served
“Certified Answers to Standard Interrogatories, Standard Exemption Interrogatories and
supporting documentation” on Passaic’s counsel. Aish’s counsel’s April 14, 2017 letter further
offered arguments in response to Passaic’s counsel’s March 9, 2017 letter.
Considering the above facts and evidence, the court finds that Aish afforded reasonable
notice to Passaic of its local property tax exemption claims and Passaic possessed actual
knowledge that Aish claimed the subject property was exempt from local property tax under
N.J.S.A. 54:4-3.6 during all tax years at issue. Accordingly, insofar that Passaic argues that R.
8:3-4(c) requires the denial of Aish’s motions, the court respectfully declines to afford it such
relief.
C. Small claims division
Here, Aish filed complaints and case information statements in each of the above matters
identifying these matters as “Smalls Claims.” Accordingly, these matters were assigned to the Tax
Court’s small claims division/track. 21
Pursuant to R. 8:11(a)(2), the Tax Court’s small claims division is authorized to hear “all
local property tax cases in which the property at issue is a class 2 (1-4 family residence) or a class
3A (farm residence) and all other local property tax cases in which the prior year’s taxes for the
subject property were less than $25,000.” R. 8:11(a)(2); see also N.J.S.A. 2B:13-14. 22 However,
under R. 8:11(a)(2), local property tax exemption matters may not be heard in the small claims
21
Aish did not file a case information statement for docket no. 008779-2017.
22
“Hearings in the Small Claims Division shall be informal, and the judge may receive evidence
as the judge deems appropriate for a determination of the case, except that all testimony shall be
given under oath.” N.J.S.A. 2B:13-15.
16
division. R. 8:11(a)(2) expressly provides that “[c]ases raising exemption or abatement issues are
not eligible for the small claims division.” R. 8:11(a)(2). Significantly though, R. 8:11 is not a
mechanism intended to impact the substantive claims or defenses of litigants, rather, it is designed
as a tool to limit expenses, simplify discovery rules, pretrial conferences, and trial. 23 See Schumar
v. Bernardsville, 347 N.J. Super. 325, 336 (App. Div. 2001) (concluding that “[a]lthough discovery
in a small claims matter is limited by R. 8:6-1(a)(4), this rule does not limit a party's offers of proof
at trial.”)
Thus, our court rules afford the court with authority to transfer a matter from the Tax
Court’s small claims division/track to the standard division/track, “if it appears at any time before
the close of proofs that a parcel of property under appeal is not within the jurisdiction of the small
claims division. . . .” R. 8:11(e).
Here, the evidence presented in these matters demonstrates that Aish contests the subject
property’s local property tax exemption, and the accuracy of the assessments levied on the subject
property for the 2015, 2016, 2017 and 2018 years. Thus, these matters do not meet the threshold
for small claims classification under R. 8:3-4(d)(2). Although Passaic has highlighted and the
court observes the numerous clerical deficiencies contained in Aish’s pleadings, the court is
satisfied based on the record before it that Aish’s petitions of appeal, complaints, case information
statements, correspondence, and appearances before the court afforded notice to Passaic that these
matters involved local property tax exemption claims. Accordingly, to address the merits of Aish’s
motions for partial summary judgment, the court exercises the discretion accorded it under R.
23
A number of benefits are conferred on the small claims division litigants. Namely, the
complaint filing fee is $50.00 in the small claims division instead of the customary $250.00.
Additionally, discovery is more circumscribed and must be completed within 75 days instead of
the standard 150 days. See R. 8:6-1(a)(4); R. 8:6-1(a)(6)(i).
17
8:11(e), and transfers the above matters to the court’s standard track. The court leaves the
computation of the additional filing fees due and owing from Aish, as a result of this transfer, to
the Clerk of the Tax Court.
D. The filing of an initial or further tax exemption statement
A municipal tax assessor is required to obtain, on or before November 1st of each pre-tax
year, an initial statement, and on or before November 1st of every third succeeding year, a further
statement, from each organization claiming a property tax exemption in the taxing district, on such
forms as promulgated by the Director of the Division of Taxation. See N.J.S.A. 54:4-4.4. N.J.S.A.
54:4-4.4 provides, in part, that:
[O]n or before November 1 of each year, said assessor shall obtain
an initial statement, if one has not theretofore been filed. When an
initial statement has theretofore been filed, then not later than
November 1 [of the pre-tax year], . . . and thereafter not later than
November 1 of every third succeeding year, said assessor shall
obtain a further statement under oath from each owner of real
property for which tax exemption is claimed, provided, however,
that nothing herein contained shall require a further statement to be
filed in the same year in which an initial statement shall have been
filed, but that the further statement shall thereafter be filed at the
time and in the years hereinabove required for the filing of further
statements.
[Id.]
However, the statutory criteria for exemption from local property tax requires only that: (i)
the claimant own the property and be organized exclusively for religious, moral and mental
improvement, or charitable purposes; (ii) the property must be actually used and reasonably
necessary for the tax exempt purpose; and (iii) the operation and use of the property must not be
conducted for profit. See Paper Mill Playhouse v. Millburn Twp., 95 N.J. 503, 506 (1984);
Hunterdon Med. Ctr. v. Readington Twp., 195 N.J. 549, 561 (2008). Thus, a property’s tax exempt
18
status is determined by its ownership and use and not by the owner’s compliance with exemption
claim procedures. Wellington v. Hillsborough Twp., 27 N.J. Tax 37 (Tax 2012).
Therefore, the failure to file an initial or further statement of tax exemption under N.J.S.A.
54:4-4.4 does not vitiate the exemption claim because the filing requirement under N.J.S.A. 54:4-
4.4 is not a condition precedent to the grant of an exemption under N.J.S.A. 54:4-3.6. See Blair
Academy v. Blairstown Twp., 95 N.J. Super. 583, 591 (App. Div. 1967), certif. denied, 50 N.J.
293 (1967); Atlantic County New School, Inc. v. City of Pleasantville, 2 N.J. Tax 192, 197 (Tax
1981). 24 Stated differently, a claimant’s failure to comply with the triennial filing requirement has
no effect upon the claimant’s entitlement to an exemption. West Orange Twp. v. Joseph Kushner
Hebrew Academy, 13 N.J. Tax 48 (Tax 1993). Nonetheless, if the property fails to qualify for
exemption under N.J.S.A. 54:4-3.6, by virtue of its ownership and/or use as of October 1st of the
pre-tax year, the property is not entitled to exempt status for the tax year in question.
The issue of whether a property qualifies for an exemption is separate and distinct from
whether or not a taxpayer files an application for tax exemption (including the initial statement or
further statements) under N.J.S.A. 54:4-4.4. Thus, Passaic’s argument that Aish’s failure to file
an initial or further statement claiming tax exemption precludes entry of partial summary judgment
is without merit. In sum, Aish’s failure to file an application for exemption does not vitiate its
exemption claims.
24
In support of its position Aish submitted an unreported opinion, Oorah, Inc. v. Lakewood Twp.,
2017 WL 6421062 (Tax 2017). However, “no unpublished opinion shall constitute precedent or
be binding upon any court.” R. 1:36-3. See Trinity Cemetery Association, Inc. v. Township of
Wall, 170 N.J. 39, 48 (2001) (concluding that an unreported decision serves no precedential value
and cannot reliably be considered part of our common law).
19
E. Local property tax exemption
Unless expressly exempted by our Legislature, “[a]ll property real and personal . . . shall
be subject to taxation annually. . . .” N.J.S.A. 54:4-1. Our State’s Constitution expressly limits
the Legislature’s authority to grant an exemption from local property tax, providing in part, that
“[e]xemption from taxation may be granted only by general laws.” N.J. Const. art. VIII, § 1, ¶ 2.
Thus, the grant of a local property tax exemption represents a significant departure from the
principles of equality of treatment and the duty to share the tax burden. Moreover, when affording
statutory exemptions our Legislature “must base [them] on the property’s use, not the owner’s
identity.” Holmdel Twp. v. New Jersey Highway Authority, 190 N.J. 74, 87 (2007). 25
Because exemption statutes represent a deviation from the principle that all property
owners must equally shoulder their fair portion of the local property tax burden, our courts have
demanded that exemption statutes be strictly construed. Princeton Univ. Press v. Princeton
Borough, 35 N.J. 209, 214 (1961); Boys' Club of Clifton, Inc. v. Jefferson Twp., 72 N.J. 389, 398
(1977); New Jersey Carpenters Apprentice Training & Educ. Fund v. Borough of Kenilworth, 147
N.J. 171, 177-78 (1996). “[A]ll doubts are resolved against those seeking the benefit of a statutory
exemption.” Chester Borough v. World Challenge, Inc., 14 N.J. Tax 20, 27 (1994) (citing Teaneck
v. Lutheran Bible Inst., 20 N.J. 86, 90 (1955)). Accordingly, the burden rests with the claimant to
prove entitlement to local property tax exemption. Princeton Univ. Press, 35 N.J. at 21; New
Jersey Carpenters Apprentice Training & Educ. Fund, 147 N.J. at 177-78.
25
The “tax status of property is fixed as of the assessing date.” Atlantic County New School, Inc.
v. Pleasantville City, 2 N.J. Tax 192, 195-96 (1981); see also City of Jersey City v. Montville
Twp., 84 N.J.L. 43, 44-45 (Sup. Ct. 1913), aff'd, 85 N.J.L. 372 (E. & A. 1913)). Thus, questions
of local property tax exemption or valuation are determined as of October 1st of the pretax year.
See N.J.S.A. 54:4-23; Catholic Relief Services, U.S.C.C. v. South Brunswick Twp., 9 N.J. Tax 25,
27 (Tax 1987), aff’d, 9 N.J. Tax 650 (App. Div. 1987). Here, the relevant valuation or assessing
dates are October 1st, of 2014, 2015, 2016, and 2017.
20
Although the claimant shoulders a heavy burden when seeking an exemption, the rationale
or “raison d’etre for [affording taxpayers] statutory exemptions from taxation is the benefit
conferred upon the public by such religious, charitable or other similar institutions and the
consequent relief, . . . of the burden imposed on the state to care for and advance the interest of its
citizens.” Grace & Peace Fellowship Church, Inc. v. Cranford Twp., 4 N.J. Tax 391, 399 (Tax
1982) (emphasis in original). In New Jersey, the grant of a local property tax exemption is viewed
as a quid pro quo, for the taxpayer’s performance of a public service. See Roman Catholic Diocese
of Newark v. Borough of Ho-Ho-Kus, 42 N.J. 556, 566 (1964) (“The exemption is granted by the
State because of the contribution of the exempt facility to the public good.”); Society of Holy Child
Jesus d/b/a Oak Knoll School v. City of Summit, 418 N.J. Super. 365, 373 (App. Div. 2011) (the
“legislative design of the [s]tatute has been long-recognized as a ’concession . . . [is] due as quid
pro quo for the performance of a service essentially public, and which the State is hereby relieved
. . . from the necessity of performing.”) (citation omitted); Carteret Acad. v. State Bd. of Taxes &
Assessment, 102 N.J.L. 525, 528 (Sup. Ct. 1926) (“[T]he concession is due as quid pro quo for the
performance of a service essentially public, and which the state thereby is relieved . . . from the
necessity of performing.”), aff’d, 104 N.J.L. 165 (E & A 1927); Grace & Peace Fellowship Church,
Inc., 4 N.J. Tax at 399 (“The exemption is granted in recognition of the benefit which the public
derives from the fulfillment of the exempt organization’s activities and objectives.”).
However, in applying these principles, the court should not distort the language of the
statute or the legislative intent behind it. “The rule of strict construction must never be allowed to
defeat the evident legislative design.” Boys' Club of Clifton, Inc., 72 N.J. at 398. The construction
of a statute, while strict, must be reasonable and consistent with the underlying legislative intent.
International Sch. Servs., Inc. v. West Windsor Twp., 412 N.J. Super. 511, 524 (App. Div. 2010).
21
In enacting N.J.S.A. 54:4-3.6, our Legislature afforded the following uses of property an
exemption from local property tax:
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 purposes which
are not themselves exempt from taxation, said portion shall be
subject to taxation and the remaining portion only shall be exempt;
. . . 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 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; all
buildings actually used in the work of associations and corporations
organized exclusively for religious purposes, including religious
worship, or charitable purposes, provided that if any portion of a
building used for that purpose is leased to a profitmaking
organization or 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,
and provided further that if any portion of a building is used for a
different exempt use by an exempt entity, that portion shall also be
exempt from taxation; . . . all buildings owned or held by an
association or corporation created for the purpose of holding the title
to such buildings as are actually and exclusively used in the work of
two or more associations or corporations organized exclusively for
the moral and mental improvement of men, women and children; . .
. the buildings, not exceeding two, actually occupied as a parsonage
by the officiating clergymen of any religious corporation of this
State, together with the accessory buildings located on the same
premises.
[Ibid.]
Thus, when examining whether religious, moral and mental improvement, and charitable
organizations are entitled to a local property tax exemption our courts have adopted a three-prong
test: “‘(1) [the owner of the property] must be organized exclusively . . . for the [exempt purpose];
(2) its property must be actually . . . used for the tax-exempt purpose; and (3) its operation and use
of its property must not be conducted for profit.’” Hunterdon Med. Ctr., 195 N.J. at 561 (quoting
22
Paper Mill Playhouse, 95 N.J. at 506)). 26 The foregoing tests will be referred to by the court as:
(1) the “organization test;” (2) the “actual use test;” and (3) the “profit test.”
Aish argues that it is a corporation organized exclusively: (i) for religious purposes; and
(ii) for the moral and mental improvement of men, women and children, thereby satisfying the
organization test. Moreover, it submits that it is a charitable, non-profit entity and that its
operations are not conducted for profit, thereby satisfying the profit test. Thus, Aish contends that
only the issue before the court is the actual use of the subject property, which it maintains it
satisfied, thereby entitling it to partial summary judgment, granting an exemption under N.J.S.A.
54:4-3.6. Conversely, Passaic charges that based on the evidence presented Aish has failed to
satisfy the organization test, the profit test and the actual use test, and thus, summary judgment is
not warranted.
It is well-settled that the “finding as to exemption . . . [is] based upon an investigation of a
number of factors,” consequently, the court will evaluate each prong of the exemption test against
the pleadings, depositions, affidavits, exhibits, and undisputed material facts to gauge whether
Aish has satisfied the criteria. Pingry Corp. v. Hillside, 46 N.J. 457, 463 (1966).
1. Organization test
The court finds that Aish is a corporation, satisfying the organization test as: (a) a
corporation organized exclusively for religious purposes; and (b) as a corporation organized
exclusively for the moral and mental improvement of men, women and children. Specifically, as
evidenced by its organizational documents, Aish’s mission is dedicated exclusively to developing
26
Depending on the provision under N.J.S.A. 54:4-3.6 for which exemption is sought, the
organization may, or may not, be required to be exclusively organized for the exempt purpose.
Here, Aish claims exemption as a religious corporation, and as a corporation organized for the
moral and mental improvement of women, requiring exclusive organization; and as a school,
academy or seminary, not requiring exclusive organization.
23
and broadening a knowledge of Orthodox Judaism among persons of the Jewish faith, teaching the
value of prayer and study of the Torah, 27 with a particular focus on self-improvement and spiritual
growth, studying Judaic religious literature and its relation to modern times, and fostering a social
and cultural environment regarding truths of the Orthodox Jewish faith worldwide. The programs,
platforms, and services offered by Aish, including the Aish House, are geared towards promoting
those very goals and objectives.
Passaic’s argument that Aish is a “charitable teaching organization,” and thus cannot also
be a corporation organized exclusively for religious purposes, or a corporation organized
exclusively for the moral and mental improvement of men, women and children, misconstrues the
statutory exemption criteria, and does not create a genuine issue of material fact. 28 N.J.S.A. 54:4-
3.6 contains no requirement that a corporation organized exclusively for religious purposes be
dedicated entirely to matters of religious worship, prayer and liturgy. Notably, the statute does not
place any limitation or restriction on what activities comprise religious purposes, but rather broadly
expresses that religious purposes include religious worship or charitable purposes. See N.J.S.A.
54:4-3.6; see also Roman Catholic Archdiocese of Newark v. East Orange City, 18 N.J. Tax 649,
655 (App. Div. 2000) (concluding that “[w]e perceive no need . . . to decide whether religious
worship services which are conducted in a manner that is not reasonably calculated to attract
attendance by members of the public would be sufficient to qualify the church properties for tax
exemption under N.J.S.A. 54:4-3.6 even if those properties were not being used for other religious
27
Torah is defined as “the body of wisdom and law contained in Jewish Scripture and other sacred
literature and oral tradition.” MERRIAM-WEBSTER ONLINE DICTIONARY, https://www.merriam-
webster.com/dictionary/Torah (last visited on July 9, 2019).
28
Under N.J.S.A. 54:4-3.6, finding that an entity is organized exclusively for religious purposes
does not preclude a finding that the entity is also organized exclusively for the moral and mental
improvement of men, women and children.
24
purposes.”); Borough of Hamburg v. Trustees of Presbytery of Newton, 28 N.J. Tax 311, 323 (Tax
2015) (concluding that “[a]s for worship services, there is no requirement in N.J.S.A. 54:4-3.6 that
worship services must be offered in order to qualify for exemption.”); Mesivta Ohr Torah of
Lakewood v. Lakewood Twp., 24 N.J. Tax 314, 330 (Tax 2008) (concluding that the “’guaranties
[sic] of the Free Exercise Clause of the federal constitution and the religious freedom clauses of
our State constitution restrict inquiry into what is an organized religion, who is a member of its
clergy and what constitutes a 'congregation' of a religious body.’ Courts must therefore proceed
with caution when determining whether a congregation exists for purposes of N.J.S.A. 54:4-3.6.”)
(internal citations omitted)).
Moreover, N.J.S.A. 54:4-3.6 does not prohibit an entity organized exclusively for the moral
and mental improvement of men, women and children from engaging in matters of self-
improvement and spiritual growth based exclusively on religious principles, teachings, and tenets.
Rather, the statute mandates only that the corporation or association be “organized exclusively for
the moral and mental improvement of men, women and children.” N.J.S.A. 54:4-3.6.
In Girls Friendly Soc. of Pennsylvania v. Cape May City, 26 N.J. Tax 549, 555 (Tax 2012),
the Tax Court was faced with determining whether a “Christian retreat house,” providing a one-
week retreat for group members during summer months for girls ages eight to thirteen, was entitled
to exemption under N.J.S.A. 54:4-3.6. The entity, who owned the property was a religious
corporation devoted to providing “a program for girls within the Episcopal Church whose members
accept the Christian faith and seek in the fellowship of worship, study, work and play to serve God
and extend his kingdom.” Id. at 554. Thus, the organization fostered fellowship among women
and young girls under the principles and guidance of the Episcopal Church. Additionally, the
retreat house afforded part-time employment opportunities for teenage group members, aged
25
fourteen to eighteen, to learn “about service, community, team work and responsibility.” Id. at
556. However, when the retreat house was not occupied by group members, it was intermittently
occupied by individuals and other groups who paid a fee for use and occupancy. In granting the
property an exemption from local property tax under N.J.S.A. 54:4-3.6, the court highlighted that
the taxpayer, “while clearly having a religious foundation as a result of its affiliation with the
Episcopal Church, is truly a hybrid organization that also seeks to attend to the moral and mental
improvement of the girls and women that it serves.” Id. at 564.
Thus, an entity organized exclusively as a religious corporation and guided by religious
principles, teachings, tenets, and canons, may also be organized exclusively to benefit the moral
and mental improvement of men, women and children, when the purposes, goals, and efforts of
such organization are founded on religious teachings and beliefs. In sum, Passaic’s argument that
a corporation organized exclusively for religious purposes must exclusively engage in matters of
worship, prayer and liturgy, or that a corporation organized exclusively for the moral and mental
improvement of men, women and children cannot be organized for religious purposes,
misconstrues the express statutory language under N.J.S.A. 54:4-3.6.
Here, the court finds that Aish is such a hybrid entity, organized exclusively as a religious
corporation, to wit, devoted to broadening knowledge, understanding, and observance of Orthodox
Judaism. Central to Aish’s organizational purpose is creating an atmosphere for like-minded
individuals to delve into programs focused on self-improvement and spiritual growth through a
dialogue, discussion and observance of Orthodox Judaic teachings, principles, and literature.
Accordingly, the court is satisfied that Aish is: (a) a corporation organized exclusively for religious
purposes; and (b) a corporation organized exclusively for the moral and mental improvement of
men, women and children. The purposes of the organization, as identified in its Certificate of
26
Incorporation “clearly comports with the legislative design . . .” of the statute. Schizophrenia
Foundation of New Jersey v. Montgomery Twp., 6 N.J. Tax 594, 601-02 (Tax 1984).
2. Profit test
Under N.J.S.A. 54:4-3.6, “[the owner’s] operation and use of its property must not be
conducted for profit.” See Paper Mill, 95 N.J. at 506. However, an organization’s “nonprofit
charitable organization pursuant to I.R.C. § 501(c)(3), is not, in and of itself, enough to qualify . .
. for property tax exemption under N.J.S.A. 54:4-3.6.” Essex Properties Urban Renewal
Associates, Inc. v. City of Newark, 20 N.J. Tax 360, 368 (Tax 2002). See Black United Fund v.
East Orange, 17 N.J. Tax 446 (Tax 1998); Pompton Lakes Senior Citizens Housing Corp. v.
Pompton Lakes Bor., 16 N.J. Tax 331 (Tax 1997); Third Ave., Inc. v. City of Asbury Park, 16 N.J.
Tax 174, 182 (Tax 1996).
The buildings, land, and institution may not be conducted for profit. See Paper Mill, 95
N.J. at 506. However, that does not mean that an otherwise charitable, benevolent, or religious
use becomes a non-qualifying for-profit use if the use “‘is supported partly by fees and charges
received from or on behalf of beneficiaries using or occupying the buildings . . . provided, [that]
the building is wholly controlled by and the entire income therefrom is used for said charitable,
benevolent, or religious purposes. . . .” Girls Friendly Soc. of Pennsylvania, 26 N.J. Tax at 571.
“Even where a particular operation has produced a profit, the tax exempt status has not been lost
when the excess funds have been applied to carry out the organization's beneficent policies.” Boys'
Club of Clifton, Inc., 72 N.J. at 403-404; see also Kimberley School v. Town of Montclair, 2 N.J.
28 (1949); Trenton v. N.J. Div. of Tax Appeals, 65 N.J. Super. 1 (App. Div. 1960).
Here, the court is satisfied based on the evidence presented, that Aish is not a profit-making
entity and its funding is used to advance its non-profit goals and mission. Moreover, the Aish
27
House was not a program conceived to generate a profit, but rather was designed with the mission
of furthering Aish’s purposes including, broadening knowledge of Orthodox Judaism, teaching the
value of prayer and study of the Torah, and advancing in the unmarried adult women enrolled in
the program, individual self-improvement and spiritual growth through a dialogue and the
observance of Orthodox Judaic customs, religious laws, and teachings. Moreover, based on the
court’s review of the Aish House’s profit and loss statements, it operated at a substantial operating
loss for the 2014, 2015, 2016, 2017, and 2018 years. Thus, it can hardly be said that the purpose
and goal of the Aish House was to generate a profit. Finally, as stated above, Aish is organized in
New York as a not-for-profit corporation, and in New Jersey as a foreign non-profit corporation
having “charitable” business purposes. 29
Passaic argues that Aish in its operation of the Aish House was motivated by the collection
of rent, rather than by the desire to provide housing for its program participants. Moreover, Passaic
contends that the program participants’ tuition payments constituted rent, thereby rendering Aish
House a profit-making entity. However, no evidence exists in the record supporting Passaic’s
claims. Additionally, Passaic has offered no evidence that the entire income received by Aish
House from the program participants was not being used to further Aish’s non-profit mission, goals
and objectives.
In Pingry Corp., faced with the issue of whether buildings used to house faculty of a country
day school, and whether the school’s concomitant receipt of rental payments from the faculty to
occupy those buildings precluded exemption from taxation, our Supreme Court concluded that
receipt of rent does not necessarily invalidate an otherwise exemption-qualified property. 46 N.J.
29Following initial oral argument and in response to Passaic’s supplemental brief, on or about
May 16, 2019, Aish furnished the court with financial statements including, the Aish House’s
profit and loss statements, Aish’s IRS Forms 8879-EO, and IRS Forms 990, among others.
28
at 463. The court observed that a “finding as to exemption or not has been based upon an
investigation of a number of factors including the following: absence of a profit-making
arrangement in the rental contract; desirability of providing available housing at or near the school
and whether the provision of housing for its faculty is reasonably designed to further the
educational purposes of the school.” Ibid. When the “landlord-tenant relationship is secondary to
the primary purpose of providing the housing for the faculty on the campus site and no profit is
possible, an exemption can be justified.” Ibid. The Court emphasized that the rent being charged
was insufficient to offset the maintenance costs of the residences and that Pingry actually used the
residences as an enticement to offer “the desired personnel low rent residences near the school” to
become affiliated with the school. Thus, the residences were entitled to tax exemption. Id. at 465.
Similarly, in Blair Academy, 95 N.J. Super. at 588-589, the court addressed whether houses
occupied as residences of the school faculty and administrators, as well as the school’s golf course
and tennis courts were exempt from taxation under N.J.S.A. 54:4-3.6. The court found that the
school faculty used their residences for student consultations and other school purposes and
therefore, were exempt from taxation. In addition, the court determined that the school officials
were required to be available on a 24-hour a day basis, responsible for financial affairs and
maintenance of the properties, and attending to all business needs, and thus their residences were
exempt from taxation. Ibid. Moreover, the court found that the school’s golf course and tennis
courts, utilized by school teams and the student body, but which also afforded members of the
public the right to play for a fee or to participate in a summer clinics, were exempt from taxation.
The court keenly observed that “no profit motive or profit making” activity is engaged in by the
school in making the facilities available and thus, “is a de minimis operation which does not
materially affect Blair’s nonprofit status.” Id. at 590.
29
In Mesivta Ohr Torah of Lakewood, 24 N.J. Tax at 321, the court concluded that the
taxpayer maintained a house of worship, specifically, an Orthodox Jewish synagogue and
congregation. Moreover, the homes owned by the taxpayer and rented to, and occupied by its two
rabbis, one whom served as congregational leader, and the other whom served as assistant rabbi,
were not profit centers for the congregation. The court found that the congregation’s “primary
purpose . . . [of acquiring the properties] was to provide housing to its officiating clergymen and
that [the congregation’s] collection of rent . . . does not vitiate the exemption. . .” Id. at 337.
Moreover, the court concluded that the congregation’s goal and “motivation in obtaining the
properties was to ensure the continued service of the Rabbis. . . . Ibid. Notably, the court
emphasized that “[w]hile the exemption is intended to provide financial assistance to religious
organizations that provide housing to officiating clergymen, the Legislature did not condition the
exemption on the religious organization not collecting rent. . . .” Id. at 338.
Based on the court’s review of Aish’s organizational documents, the Aish House’s profit
and loss statements for the tax years at issue, the exhibits, the certifications and supplemental
certifications of Rabbi Winters, and the program participants’ Tuition and Programming
Agreement, the court concludes that Aish’s operations and its use of the Aish House was not
conducted for the purpose of generating a profit. Instead, the primary focus of Aish and the Aish
House was to provide an environment for the “spiritual, mental, and moral improvement” of the
program participants “designed to advance . . . growth in the Orthodox faith, education, custom,
religious law, and observance[s].” The tuition payments were designed to defray costs associated
with operating and maintaining the Aish House, including programming and instruction costs.
Moreover, Aish’s landlord-tenant relationship with program participants was secondary to its
primary goal of providing housing for program participants in a setting that strictly followed the
30
teachings, rules, rituals, and observances of the Orthodox Jewish faith. In sum, the court concludes
that Aish and the use of the subject property as the Aish House was not conducted for profit and
satisfies the profit test.
3. Actual use test
In order to be afforded an exemption from local property tax under N.J.S.A. 54:4-3.6, the
property be actually used for the exempt purpose. However, N.J.S.A. 54:4-3.6 imposes no bright-
line test on the quantum of the use. Roman Catholic Archdiocese of Newark v. East Orange City,
18 N.J. Tax at 655; Trustees of Presbytery of Newton, 28 N.J. Tax at 319. Rather, the test for
determining whether a property is actually used for a tax exempt purpose is “whether the property
is ‘reasonably necessary’ for such [tax exempt] purposes.” City of Long Branch v. Monmouth
Med. Ctr., 138 N.J. Super. 524, 532 (App. Div. 1976), aff'd o.b., 73 N.J. 179 (1977). See also
Boys' Club of Clifton, Inc., 72 N.J. at 401; Hunterdon Med. Ctr., 195 N.J. at 553; Tenacre Found.,
69 N.J. Super. at 565; St. Ann's Catholic Church v. Hampton Borough, 14 N.J. Tax 88, 93 (Tax
1994); Roman Catholic Archdiocese of Newark v. East Orange City, 18 N.J. Tax at 653; Girls
Friendly Soc. of Pennsylvania, 26 N.J. Tax at 568.
When applying this standard, our Supreme Court has cautioned that the term “necessary”
should not be interpreted as “absolutely indispensable.” Boys’ Club of Clifton, Inc., 72 N.J. at
401. Thus, our courts have focused on whether the property at issue was “reasonably necessary
for the proper and efficient operation of” the exempt purpose; Monmouth Med. Ctr., 138 N.J.
Super. at 533; and whether the property was “essential to the maintenance” of the institution, Blair
Academy, 95 N.J. Super. at 589. In sum, when conducting this inquiry, the court must consider
31
how the use of the property serves the needs or furthers the purposes of the organization.
Here, the court is presented with two separately assessed, but “adjoining condominium
homes,” situated on a single corner lot, 2 Katherine and 4 Katherine. 4 Katherine is where
program participants resided, received instruction, participated in evening classes, attended
lectures, attended organized events, and shared communal space with other unmarried adult
women committed to learning, developing, and broadening their understanding of the religious
laws, rituals, and beliefs of the Orthodox Jewish faith. 2 Katherine is where the program’s “rabbi-
in-residence” resided with his family, there program participants also received instruction on
various aspects of Orthodox Judaism, attended lecturers, attended events, participated in organized
prayer services, engaged in communal activities, received counseling with regard to spiritual and
religious matters, and attended weekly Shabbat meals, holiday meals, and other Orthodox Jewish
community centered events.
Aish submits that 2 Katherine and 4 Katherine were collectively one unit, integral and
necessary to the successful operation of the program. According to Aish, a “home to house the
rabbi-in residence and participants of the program is reasonably necessary for the operation of the
program and furthers Aish’s organizational goals. This is, functionally, one house providing space
for program participants and their teacher/mentor/religious leader to accommodate 24/7 access to
one another.” 30 Thus, Aish argues that the Aish House was actually used and was reasonably
necessary to further Aish’s primary mission, goals and objectives.
Conversely, Passaic maintains that the two properties were “not integrated components”
necessary for the operation of one another. It argues that 2 Katherine was a “student dorm” or a
30
Alternatively, Aish argues that 2 Katherine should be considered a parsonage under N.J.S.A.
54:4-3.6.
32
“residence of a group of young women” and was not actually used for any religious or moral and
mental improvement purposes, and that 4 Katherine constituted the residence of a rabbi.
When evaluating whether a residential property qualifies for exemption under the religious,
moral and mental improvement, and charitable exemptions, the court must first determine whether
the residence is “predominantly used as an integral part of the operation of the exempt
organization, rather than being primarily a convenience to the tenant. . . .” Clinton Twp. v. Camp
Brett-Endeavor, Inc., 1 N.J. Tax 54, 60 (Tax 1980). Only after the court is satisfied that the
residence is integral to the operation of the organization, must the court turn to a determination of
whether it is “reasonably necessary for the proper and efficient operation of the exempt
organization.” Ibid. See also City of Long Branch v. Ohel Yaacob Congregation, 20 N.J. Tax
511, 523 (Tax 2003), aff’d, 21 N.J. Tax 268 (App. Div. 2003); St. Ann’s Catholic Church v.
Borough of Hampton, 14 N.J. Tax 88, 99 (Tax 1994); Pompton Lakes Senior Citizens Hous. Corp.
v. Pompton Lakes Borough, 16 N.J. Tax 331, 338 (Tax 1997); Girls Friendly Soc. of Pennsylvania,
26 N.J. Tax at 566.
Based on the undisputed material facts, deposition and affidavits, the court concludes that
2 Katherine and 4 Katherine are integral to the operation of the Aish House. The interrelationship
between the rabbi-in-residence and the program participants, and significantly, the supervision
required by the rabbi-in-residence of the residence and program participants, is central to enabling
the Aish House to function in accordance with Orthodox Jewish beliefs and principles. Moreover,
the location and proximity of the program participants to the rabbi-in-residence is fundamental to
the efficient operation of the Aish House program.
The Aish House was conceived to provide an atmosphere for unmarried adult Jewish
women to nurture and develop their faith in Orthodox Judaism, in a supervised and structured
33
environment with other like-minded individuals. The program operated under the guidance and
instruction of an ordained Orthodox Jewish “rabbi-in-residence,” who was charged with the
responsibility to ensure that the Aish House was maintained, that the program participants
observed, and that the program complied with all applicable laws of Orthodox Judaism. According
to Aish, the presence of an Orthodox Jewish “rabbi-in-residence” in close proximity to the program
participants was fundamental to the program’s efficacious operation, not only to regularly ensuring
that the program participants were receiving instruction, living, and observing Orthodox Jewish
customs, but due to the religious beliefs of the Orthodox Jewish faith, which prohibits travel by
vehicle during the weekly observance of Shabbat and on other religious holidays. Moreover, the
instruction and interaction with the rabbi-in-residence was fundamental to instilling in the program
participants the ideals and principles of Orthodox Judaism including its laws, beliefs, customs, and
rituals, which was Aish’s goal and mission.
Additionally, because the program participants had chosen to leave behind secular lives, a
central theme of the program was offering program participants mentoring, counseling, and
spiritual and personal guidance to facilitate their integration into the local Orthodox Jewish
community. As expressed by Aish, the Aish House program was designed “as a spiritual, mental
and moral improvement program . . . provid[ing] an experience that enables the [program
participants] to grow in Orthodox faith, education, custom, religious law and observance.”
Thus, for the above-stated reasons, the court finds that 2 Katherine and 4 Katherine were
both integral and reasonably necessary for Aish’s proper and efficient operation of the Aish House,
joined in an assembly, relationship and/or collaboration of religious and spiritual enlightenment,
activities, supervision, and instruction for program participants. Therefore, the court find that Aish
and the Aish House satisfy the actual use test.
34
4. Land use
Passaic asserts that the subject property is not actually being used for religious purposes
because no “land use approval for any type of religious operations” was secured, there is no
signage, nor any off-street parking and “there are at least three (3) synagogues in close proximity
to the subject property and are all within walking distances. Those synagogues possess actual
posted religious services and regular hours of worship.”
Aish does not dispute that it did not seek land use approval for any type of religious
operations for the tax years under appeal. Moreover, Aish does not contend that there is signage
affixed to the subject property, no off-street parking, nor exterior items of religious representation
on the land for the subject property. 31 However, Aish argues that its failure to obtain land use
approval, affix signage, and secure off-street parking are not conditions precedent to the grant of
local property tax exemption under N.J.S.A. 54:4-3.6.
As stated above, residential property is actually used for a tax-exempt purpose when it is
“predominantly used as an integral part of the operation of the exempt organization, rather than
being primarily a convenience to the tenant . . .” and is “reasonably necessary for the proper and
efficient operation of the exempt organization.” Camp Brett-Endeavor, Inc., 1 N.J. Tax at 60. In
evaluating whether a building is reasonably necessary for the tax-exempt purpose, the court should
evaluate use of the building in terms of how it serves the particular organization. Boys’ Club of
Clifton, Inc., 72 N.J. at 401-02. However, N.J.S.A. 54:4-3.6 “clearly and unambiguously” imposes
no requirement that “the property be [put to] a lawful use under the municipality’s zoning
31
Aish disputes Passaic’s assertion that there is no posting of religious services, contending that
services are posted on its website and on flyers distributed throughout the Passaic Orthodox Jewish
community. However, resolution of this issue is not material to the court’s decision in these
matters, as the posting of religious services is not a condition, nor a requirement for exemption
under N.J.S.A. 54:4-3.6.
35
ordinance in order to qualify for tax exemption.” Society of the Holy Child Jesus v. City of
Summit, 418 N.J. Super. 365, 386 (App. Div. 2011).
In Society of the Holy Child Jesus, our Appellate Division observed that N.J.S.A. 54:4-3.6
does not have an underlying land use objective, rather it operates to “compensate the taxpayer for
‘the contribution of the exempt facility to the public good.’” 418 N.J. Super. at 380 (quoting
Borough of Ho-Ho-Kus, 42 N.J. at 566). The benefit conferred by the exempt organization’s
performance of a public service does not change merely because of the location of the facility. Id.
at 382-83. Thus, if a taxpayer satisfies the requirements under N.J.S.A. 54:4-3.6, “it is entitled to
the exemption from real property taxes even if the use of the property does not comply with [a]
municipal zoning ordinance.” Id. at 368.
Here, as expressed above, the court finds that Aish has satisfied the statutory criteria for
exemption from local property tax and thus, issues of zoning, signage, and off-street parking are
inapposite to the court’s determination whether the subject property is exempt from taxation.
Finally, to the extent that Passaic in its supplemental brief renewed its request for the court
to conduct an inspection of the subject property, the court denies such request for the same reasons
expressed in the court’s February 19, 2019 bench opinion in these matters.
III. Conclusion
Accordingly, after having considered the briefs, exhibits, undisputed material facts,
pleadings, deposition, and affidavits, the court finds that Aish is a corporation organized
exclusively: (a) for religious purposes; and (b) for the moral and mental improvement of men,
women and children, thereby satisfying the organization test. Aish is a charitable, non-profit entity
and its operations, including the Aish House, are not conducted for profit, thereby satisfying the
profit test. And finally, 2 Katherine and 4 Katherine were integral and necessary for Aish’s
36
operation of the Aish House, and therefore reasonably necessary for Aish’s religious purposes and
moral and mental improvement purposes. Therefore, the court finds that Aish has satisfied the
requirements for exemption under N.J.S.A. 54:4-3.6. 32
As such, the court orders the above matters transferred from the court’s small claims
track/division to the standard track/division. Following the transfer, and Aish’s payment to the
Clerk of the Tax Court of any and all additional filing fees associated with said transfer, the court
directs the Clerk of the Tax Court to enter Judgments granting Aish exemption from local property
taxes for the 2015, 2016, 2017 years, and from January 1, 2018 to September 14, 2018. 33
Very truly yours,
Hon. Joshua D. Novin, J.T.C.
32
Having concluded that Aish satisfied the criteria for exemption under N.J.S.A. 54:4-3.6 as: (1)
“buildings actually used in the work of associations and corporations organized exclusively for
religious purposes, including religious worship, or charitable purposes;” and (2) “buildings
actually used in the work of associations and corporations organized exclusively for the moral and
mental improvement of men, women and children,” the court need not address the balance of the
arguments raised by Aish in its motions.
33
The court reaches no conclusion with respect to the subject property’s ownership, organization,
profit, or actual use after September 14, 2018.
37