This matter started on October 1, 2005, after the defendant, the Township of Randolph, denied the plaintiff, the Chabad of Randolph, a parsonage exemption for the residence occupied by the plaintiff’s rabbi. The defendant denied plaintiff’s application due to alleged zoning violations and the belief that the plaintiff did not otherwise qualify for a parsonage exemption.

Subsequently, on appeal, the County Tax Board affirmed the defendant’s decision to deny the plaintiff’s parsonage exemption.

Afterwards, the plaintiff then appealed to the Tax Court of New Jersey where the Tax Court reversed the County Tax Board’s decision. At trial, the Tax Court judge concluded that the plaintiff carried its burden of proving that the rabbi’s Chabad-owned residence was entitled to a parsonage exemption under N.J.S.A. 54:4-3.6, which exempts from taxation “the buildings, not exceeding two, actually occupied as a parsonage by the officiating clergymen of any religious corporation of this State.”

The defendant then appealed the Tax Court’s decision to the Appellate Division. On appeal, the Appellate Division agreed with the Tax Court entirely and held that: “The evidence overwhelmingly supports the conclusion that his residence is a ‘parsonage’ within the meaning of N.J.S.A. 54:4-3.6.” As a result, the plaintiff will not have to pay any property taxes for the property used by the plaintiff’s rabbi as his residence.

To read the full Appellate Division decision, please click the words Property Tax Appeals.

(i) Assessment maintenance: An assessor proposing to revise and update assessments because he or she has reason to believe that property comprising a part of a taxing district has been assessed at a value lower or higher than is consistent with the purpose of securing uniform taxable valuation of property according to law for the purpose of taxation, or is not in substantial compliance with the law, and that the interests of the public will be promoted by reassessment of such property, shall make a reassessment of the property in the taxing district not in substantial compliance….

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3. The following are the criteria to be considered by the county board and Division of Taxation in determining whether to approve a compliance plan.

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(viii) Assessed value changes due to clerical, typographical, transpositional, physical descriptive or mathematical errors, added assessments, omitted assessments, omitted added assessments, exemptions, demolitions, governmentally imposed restrictions, planning board, and/or zoning board of adjustment approvals, approved revaluations, site contamination, removal of contaminated soil and property remediation; and storm, cyclone, tornado, earthquake, fire, flood, hurricane, vandalism, or other casualty, qualified farmland, subdivisions, mergers and changes resulting from appeals or settlement agreements, do not require the filing of a compliance plan.

The Plaintiffs argued that “property remediation” in section (i)(3)(viii) should be read in conjunction with the preceding language “soil contamination” to except from the compliance plan requirement only property remediation undertaken in connection with contaminated soil, and should not include remediation that they contend amounts to “a concentrated catching-up on deferred maintenance.”

The Appellate Division agreed with the Judge Menyuk, judge of the Tax Court of New Jersey, who found that the remedial work was not simply deferred maintenance but effected physical changes at the conclusion of the remedial work that increased the value of the condominium units from the prior assessment, which reflected only partial improvements to the properties while they were in a state of ongoing remediation. Consequently, the Appellate Division affirmed that the substantial remediation of the subject properties constituted an exception to the requirement of a compliance plan stated in N.J.S.A. 54:4-23.