Riverview Medical Center. (Photo by Brian Donohue. Click to enlarge.)
By BRIAN DONOHUE
On one hand, the Borough of Red Bank gets a decent chunk of change: $1.2 million this year and $230,000 a year for properties that had been paying zilch in property taxes. On the other hand, if the six properties the borough had filed 54 tax appeals against were forced to pay the same rate as homeowners, they’d be forking over roughly $2 million every year by our calculations.
So is the borough’s settlement of nine years of tax battles with Riverview Medical Center passed last week a good deal for taxpayers? Or were we taken to the cleaners?
The answer, it seems, is complicated. Very.
51-53 Mechanic Street, which along with 103 East Front Street (picture below), will begin paying property taxes under the settlement.
At some point in a nine-year tax battle – with state laws and court rulings tilting the playing field first in one side’s favor and then to the other – it just makes sense to compromise and settle a case like this, says Jay Soled Director of the Rutgers University Masters in Taxation program.
“I can’t tell you who blinked first here and if this compromise is worthy,” Soled said. But if the battles in state tax court were to continue, the borough could wind up with a ruling giving them nothing. At the very least, he said, “Everyone would lawyer up and it would take anywhere from seven to ten years to resolve.”
That is kind of what was already happening. 
Under NJ law, not-for-profit organizations historically have not had to pay property taxes to the municipality in which they sit.
The borough had filed tax appeals against hospital operator Hackensack Meridian Health each of the past nine years, attempting to remove the tax exempt status of six properties owned by Riverview assessed at about $117 million. The borough argued in filings with NJ state tax court that they were not eligible for not-for-profit tax exemption, filings show.
They are, along with their 2024 assessments as listed by the Monmouth County Board of Taxation:
- 103 East Front Street, (currently a vacant lot) $3.07 million;
- 81 East Front Street, (Jane H. Booker pavillion) $20 million
- 33 East Front Street, (office building) $2.2 million);
- One Riverview Plaza, (the main hospital building) $88 million
- 51-53 Mechanic Street (warehouse/office) $1.8 million
- 48 East Front Street, (Booker Dialysis Center) assessed at $2.59 million
The Borough filed the first appeals against the six properties in state tax court 2016, according to documents filed in state tax court.
It looked like a good time to strike.
A year earlier, a landmark court ruling in a case in Morris County declared hospitals could not claim property tax exemptions if any for-profit activity took place there and the two uses could not be disentangled.
In that case, Morristown Medical Center was forced to pay the town of Morristown $15.5 million in back taxes and property taxes on 24 percent of its property annually.
A wave of tax filings by municipalities against not-for-profits followed, including Red Bank, as cash-strapped towns sought more money from hospitals and other tax-exempt properties.
About thirty municipalities filed tax appeals against their local hospitals, according to Linda Czipo, president and CEO of the New Jersey Center for Nonprofits.
“That kind of opened the floodgates,” Czipo said.
But in 2021, the state legislature tightened the law to protect nonprofits, restoring their exemptions if even a portion of a given property is used for charitable purposes. It also set up a framework for community service contributions like the one that emerged in the Riverview settlement.
Red Bank continued filing the appeals on the six properties for three more years. But sticking with the case and waiting for a judge’s ruling became more of a gamble in the new legal landscape.
“It gave (hospitals) a little bit of comfort that they weren’t going to be challenged as much as they had been right after the 2015 ruling,” Czipo said. “It definitely helped.”
Red Bank’s settlement is exactly the kind of compromise envisioned by lawmakers when they passed the 2021 law, providing what Czipo described as “more clarity” for both sides in place of endless litigation.
In addition to the one time and annual payments agreed to in the Riverview settlement, two properties, 51-53 and 103 East Front Street, will go on the tax rolls. That means nine of the hospitals 16 properties are now paying property taxes.
The tax appeals were just the latest chapter in years-long tussles with the hospital over how much it pays the borough for services.
In 2020, the Borough reached a settlement with the hospital which it agreed to pay $850,000 for water and sewer usage the town contended in a lawsuit was worth at least $5.3 million.
The town had sued Riverview in 2019, alleging it had installed a hidden, illegal water hookup to the Blaisdell Pavilion when the addition was built in 1984.
Emails to Borough Manager Jim Gant and a subsequent email to Gant, the mayor and borough attorney seeking comment on the new settlement or to confirm the figures used in this story went unreturned.
As the Borough Council prepped for its unanimous vote approving the settlement last week, Mayor Billy Portman said the deal had been reached in part through a meeting between borough and hospital officials including himself, Gant, and council members Laura Jannone and David Cassidy.
“We were pretty happy with it,” Mayor Billy Portman said of the settlement. “Happy to put that to bed and happy to have a little money in our coffers.”
Before the vote, councilman Ben Forest said. “I’m glad this is behind us, and I want to thank the staff for overseeing this complicated process. I know that we’ve been struggling with for some time and I’m always happy to see progress. There’s compromises and reason here. “
redbankgreen editor Brian Donohue may be reached via email at [email protected] or by calling or texting 848-331-8331 or yelling his name loudly as he walks by. Do you value the news coverage provided by redbankgreen? Please become a financial supporter if you haven’t already. Click here to set your own level of monthly or annual contribution.
