North Jersey towns reassess tax-exempt status for hospitals after key ruling

Source: Lindy Washburn, NorthJersey.com, November 23, 2015

Around North Jersey, more than $700 million worth of property goes untaxed because it is owned by non-profit hospitals. That includes hospital campuses on nearly 90 acres in Ridgewood, Hackensack, Teaneck, Englewood, Paterson and Wayne. And it also includes hospital-related properties, such as portions of medical office buildings in Wayne and Paramus, parking garages in Hackensack and an assortment of lots in Paterson. That property, and the potential revenue it could produce if it were assessed property taxes, is getting a close look by leaders of the state and local governments after a precedent-setting Tax Court decision and recent settlement in a case between Morristown and the non-profit Morristown Medical Center. … Morristown Medical, he said, was not entitled to its property tax exemption. It was up to the Legislature to update the 1913 tax law to spell out the conditions that a modern hospital must meet to maintain its exemption, his opinion said. The Legislature appears poised to take up the challenge, possibly before the end of the year. Senate President Stephen Sweeney and Sen. Joseph Vitale, chairman of the Health Committee, are among those who say they are working on legislation to address the issue.

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Not-for-profit hospital will pay up in tax dispute as exemptions draw widespread heat
Source: Lisa Schencker, Modern Healthcare, November 11, 2015

In a closely watched case, a New Jersey hospital has agreed to pay $26 million to the town where it’s located to end a dispute over the hospital’s property tax exemption. The settlement between Atlantic Health System, which owns Morristown Medical Center, and the municipality of Morristown comes after a New Jersey tax judge ruled in June that the hospital should not be exempt, concluding that if all hospitals operate the same way, “then for purposes of the property-tax exemption, modern nonprofit hospitals are essentially legal fictions.” … Under the agreement approved by the town’s council on Tuesday, Morristown Medical Center will pay the town $15.5 million, including $5.5 million in penalties and interest over the next 10 years. Also, starting next year, the medical center will start paying about $1 million in annual taxes on 24% of its property, for the next 10 years.