Borough of Hamburg v. Trustees of the Presbytery
28 N.J. Tax 311
N.J. Tax Ct.2015Background
- The Trustees of the Presbytery of Newton (Presbytery), a 501(c)(3) religious organization, owns a church and an adjacent manse in Hamburg (Subject Property); the Presbytery holds title and individual congregations do not own the buildings.
- Regular worship and residential occupancy ended in 2010; water was shut off in 2011 and the property was later listed for sale, though some limited religious activity and access continued.
- The manse has been used primarily for storage of Presbytery and church records; the church sanctuary houses religious artifacts (pulpit, organ, font, hymnals, etc.).
- The Foundation for Peace, a 501(c)(3) charity closely partnered with the Presbytery, used the church and manse to store goods shipped several times yearly for charitable missions abroad.
- The Borough’s assessor denied tax-exempt status for 2013; the Sussex County Board of Taxation granted exemption under N.J.S.A. 54:4-3.6, and the Borough appealed to the Tax Court.
- The Tax Court affirmed the County Board, holding the Subject Property was "actually used" for religious/charitable purposes and therefore tax-exempt under N.J.S.A. 54:4-3.6.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Subject Property is "actually used" for religious purposes under N.J.S.A. 54:4-3.6 | Borough: Decline in worship and residential use, limited activity, and principally storage/sale listing show insufficient religious use | Presbytery: Storage of religious artifacts/records and use by Foundation for Peace advance religious and charitable mission; property remains reasonably necessary | Held: Property is actually used; storage of religious artifacts/charitable goods and limited religious activity satisfy the use test |
| Whether a manse used only for storage can qualify for exemption | Borough: Parsonage exemption inapplicable because no residential occupancy; storage-only manse insufficient | Presbytery: Even absent parsonage occupancy, residences may qualify if actually used for religious purposes (storage of records and charitable goods) | Held: Manse use for records and occasional storage meets actual-use standard and is exempt |
| Whether courts must apply a minimum "quantum of use" before granting exemption | Borough: Implicitly urges a stricter quantum-of-use standard given minimal services | Presbytery: No minimum activity threshold; property need only be "reasonably necessary" for the exempt purpose | Held: Court declined to adopt a minimum-activity requirement; uses the "reasonably necessary" standard from precedent |
| Whether storage for an affiliated charity (Foundation for Peace) qualifies as a charitable/religious use | Borough: Storage for charity not shown to be integral or substantial enough to support exemption | Presbytery: Foundation’s storage furthers Presbytery missions and is continuous and substantial | Held: Storage for the Foundation is a valid charitable purpose advancing Presbytery mission and supports exemption |
Key Cases Cited
- Paper Mill Playhouse v. Millburn Twp., 95 N.J. 503 (1984) (sets three-part test for tax exemption: organization, actual use, and profit)
- New Jersey Carpenters Apprentice Training & Educ. Fund v. Borough of Kenilworth, 147 N.J. 171 (1996) (tax exemptions construed strictly against claimants)
- Boys’ Club of Clifton, Inc. v. Twp. of Jefferson, 72 N.J. 389 (1977) ("necessary" means not absolutely indispensable for exemption analysis)
- Hackensack City v. Bergen County, 405 N.J. Super. 235 (App. Div. 2009) (addressed sufficiency of storage use for governmental exemption; discussed for analogy to storage-based claims)