State Supreme Court sides with housing provider in tax-exemption fight

TRENTON –  The state Supreme Court ruled today in favor of a provider of housing for residents with psychiatric disabilities and against Teaneck in a battle over the provider’s tax-exempt status.

The court ruled Wednesday that Advance Housing has established that it is a not-for-profit corporation, organized exclusively for a charitable purpose, and that the properties for which it seeks tax exemptions are actually used for that purpose.

The court ruled unanimously that Advance Housing, which also provides mental health services and occupational placement programs as it helps people make transitions to independent living, is entitled to tax-exempt status.

Previously, nine Bergen County municipalities had denied Advance Housing property tax exemptions for charitable purposes. Thirty-three of Advance Housing’s clients live and receive services in 14 residences it owns in those towns, the court said.

Approximately 63 other clients receive services from Advance Housing in other residences not under its control. The Tax Court denied Advance Housing’s appeal, the high court said.

The tax court had concluded that the “housing component” in Advance Housing’s program was “not integrated with the counseling and support services.”

According to the tax court, Advance Housing was running “essentially a subsidized housing program for clients who happen to be eligible for [its] supportive and counseling services.”

But in its ruling, the high court today said that “Advance Housing ‘actually’ uses its residences for the charitable purpose set forth in its certificate of incorporation: ‘to promote and provide permanent normalized community living arrangements for psychiatrically disabled individuals.’”

As such, it has satisfied requirements for tax exemptions, the court ruled.

Advance had applied for tax-exempt status for the years 2002-2004, but parties had agreed this ruling also will affect tax years 2005-2009.

According to the court, Advance Housing receives approximately 75 percent of its funding from the state Department of Health and Senior Services, 15 percent from Housing and Urban Development, and the balance from clients’ rents, Medicaid reimbursements, and private donations.

According to the case, in 2005, the cost of maintaining a patient in a state psychiatric hospital was $146,000 per year, in a group home $60,000 per year, and in an  Advance Housing residence $20,000 per year.

The towns that were involved in the case included Teaneck, Bergenfield, Little Ferry, Ramsey, Ridgefield Park, Lodi, Fairview, Leonia, and Hackensack.

State Supreme Court sides with housing provider in tax-exemption fight