Day Pitney's Pro Bono Tax Team Wins NJ Supreme Court Appeal Involving Religious Use

On July 15, the New Jersey Supreme Court issued its much awaited decision in Christian Mission John 3:16 v. Passaic City. The court granted certification on an appeal from the Appellate Division, which affirmed a decision of the Tax Court rejecting a property tax exemption for a church in the City of Passaic. The lower courts denied the exemption on the grounds that: (1) the religious use was not allegedly substantial enough,(2) a certificate of occupancy had not been issued, (3) the property was not opened to the public, and therefore, the property had not been used for an exempt use.

The firm, as co-counsel with the Lutz Law firm, petitioned the New Jersey Supreme Court for certification on behalf of the plaintiff Christian Mission, alleging that it was: (1) unconstitutional for the assessor to inquire as to the "quantum of religious use," (2) requiring religious institutions to be open to the public was likewise unconstitutional, (3) the lack of a certificate of occupancy cannot be the basis of denying a property tax exemption, and (4) the property was used for an exempt religious use.

In a 7-0 decision, the New Jersey Supreme Court reversed the Appellate Division's affirmance of the Tax Court's denial of the property tax exemption, determining that there was evidence that the property could have been used in the manner to satisfy the actual religious use requirement, and remanded the matter to the Tax Court for further proceedings. In so doing, the court found that the lack of a certificate of occupancy was not a bright line to deny a property tax exemption, but only a factor to be considered. The court also held that the public good served in exchange for a tax exemption does not demand that the facility or services rendered by the exempt institution be available to the general public.

The New Jersey Supreme Court refrained from ruling as to the permissibility of a quantum of religious use analysis for determining whether a property owner is entitled to a religious tax exemption for a property. In so doing, the court concluded that the Appellate Division did not engage in a quantum of use analysis, and therefore, the court didn't have to address the issue.

Chris Stracco, together with co-counsel Tova Lutz, argued the matter before the New Jersey Supreme Court on April 28. Sarah Langstedt and Erin Hodgson assisted, and worked on the Petition for Certification and accompanying briefs. Mark Salah Morgan and Mike Fialkoff also submitted a brief on behalf of amici Coptic Archdiocese of North America, advocating plaintiff's position. The win was covered by The Record and Law 360 (subscription).