Bill Seeks to Re-establish Tax-exempt Status of Non-profit Hospitals

COURT HOUSE – A decision by the Tax Court of New Jersey, in 2015, in a single case, held that a non-profit hospital could not retain its property tax exemption, given that the hospital comingled non-profit and for-profit services throughout its health care delivery process.
That decision opened up litigation across the state, as dozens of hospitals had their status challenged by host municipalities seeking to gain financial support for the municipal services used by the hospital.
Assembly Speaker Craig Coughlin is one of the sponsors of a bill that seeks to rectify the situation by re-establishing the tax-exempt status of non-profit hospitals, while requiring the hospitals to pay a per bed fee to the host municipality.
The bill also limits certain third-party property tax appeals, and establishes a Non-profit Hospital Community Service Contribution Study Commission. For those hospitals with a satellite emergency center, a daily fee would be imposed as well.
The bill, still in committee, may not have enough time left in this legislative session to be adopted and signed by the governor. Coughlin has stated that he would reintroduce it in the next session, if necessary.
A statement from Cape Regional Health System said that no legal action has been filed to challenge its tax-exempt status. Cape Regional operates the only non-profit hospital in the county, with approximately 16 acres of tax-exempt property in Middle Township, including a 147-bed hospital.
The health system’s statement said that it pays Middle Township approximately $350,000 a year in taxes related to “not for profit and for-profit properties in the Township.”