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A long-standing property tax dispute between local governments and not-for-profit hospitals inched closer to a resolution Thursday when the Assembly passed A-1135.

The bill, according its sponsor Assembly Speaker Craig Coughlin, would establish a fair and predictable system for payments.

The dispute stems from a court decision in 2015 that determined nonprofit hospitals are ineligible for a property tax exemption typically applied to nonprofit organizations because it’s difficult to distinguish between the parts of a hospital’s property that are nonprofit and those that are for-profit.

Under the legislation, hospitals would be required to pay annual community service contributions to offset public safety costs, such as local police and fire services in the municipalities. Pre-existing financial agreements between hospitals and municipalities would remain in force until expiration of those agreements.

NJBIA supports the bill, which is awaiting action in the Senate.

“Since the court ruling, nonprofit hospitals across the state have been engaged in lengthy lawsuits with municipalities over property taxes,” said NJBIA Chief Government Affairs Officer Chrissy Buteas. “This cycle of litigation has created large legal bills for hospitals, towns and taxpayers, and taken up a lot of time and resources.

“This legislation will take away the uncertainty created by the Tax Court decision and offer taxpayers, municipalities, hospitals and patients a statewide, comprehensive solution,” she said.
“It will protect the property tax exemption of nonprofit hospitals, providing voluntary payments to fund critical community services, and put a stop to expensive lawsuits.”

Taxation & Economic Development News

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