The fine print: What’s taxable at Morristown Medical Center

BRUSHING UP ON HIS DENTAL ROUTINE: Community Health Day 2015 in Morristown. Photo by Bill Lescohier
BRUSHING UP ON HIS DENTAL ROUTINE: Community Health Day 2015 in Morristown. Photo by Bill Lescohier
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Tuesday’s landmark tax settlement between Morristown Medical Center’s  parent company and the town was driven by a judge’s finding that the nonprofit hospital harbors many taxable enterprises.

So what, exactly, is taxable?

According to the settlement, approximately one-quarter of the property will be taxed at an assessed value of $40 million for the next decade, yielding annual tax payments of $1.05 million.

The taxable portion amounts to 444,000 square feet, and includes:

  • Spaced leased to private physicians and doctors groups.
  • Privately operated restaurants and cafés.
  • Gift shops.
  • Spaces used by private doctors/ groups to deliver emergency room-, radiology- , anesthesiology- and pathology services.
  • The Visitors Garage (also called the East Garage) — which Judge Vito Bianco had exempted in his 88-page decision in June.
  • The West Garage; factor this in, and it’s more like 40 percent of Morristown Medical Center is being taxed, according to town Attorney Vij Pawar.

Is Morristown Medical Center still a nonprofit hospital?

“Neither party admits or denies the Property’s status as taxable and/or exempt,” according to the agreement, which “merely represents… [the] settlement and compromise” of the hospital’s tax appeals.

BRUSHING UP ON HIS DENTAL ROUTINE: Community Health Day 2015 in Morristown. Photo by Bill Lescohier
A settlement calls for more local services from Atlantic Health, pictured here hosting Community Health Day 2015 in Morristown. Photo by Bill Lescohier

After 2025, and completion of all stipulated payments from the Atlantic Health System, hospital and town officials discuss a “municipal service fee” or a “payment in lieu of taxes.”

The town retains the right to reassess the property, as it would any other property, to reflect changes that might enhance its value and tax liability.

If the state enacts legislation to alter tax exemptions, resulting in greater tax liability, Atlantic Health is on the hook for the higher amount.

And if the settlement payments are higher than what the Legislature eventually may require, Atlantic Health still must honor the accord.

For the next decade, Atlantic Health also has agreed to provide community health services to the town. These include:

  • Assisting the town and other health and service organization in compiling a community health needs assessment every three years
  • Assisting in creation of an implementation plan to prioritize those community needs and identify how to serve them
  • Meeting annually with local police and fire officials to promote collaboration and training to enhance “life safety and security”
  • Working with town officials to “promote desirable community and economic development”

The deal was negotiated for the town by the law firm of former Governor and state Sen. Donald DiFrancesco — DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum. Martin Allen signed the accord for the firm.

McCarter & English represented Atlantic Health. Attorney Susan Feeney signed the settlement.

 

 

3 COMMENTS

  1. A few questions:
    Will property taxes be lowered on the rest of the property owners in Morristown who have been subsidizing the non-profit for so many years?
    For many years over the past two decades one thrid of Morristown’s municipal budget went for debt service. Property owners had tax increases forced on them as a result. If the town starts receiving over $ 1,000,000 from the hospital corporation each year,can any of that money go back to the other property owners in the form of a tax reduction? Instead of the town seeking new ways to spend it? Would that not be fair?

  2. They hospital just purchased 55 Madison ave in Morristown NJ. The property is the site of a large home on ” mansions row” on Madison ave .
    Since the early 1970’s it has been a large commercial building with a large parking Lot. My question is , will this property be extended tax exempt status if it is requested?

  3. Good to see a reasonable compromise in which both sides benefit. Hopefully, this will improve future relationships with AHS and restore at least some of the trust that lost after past their actions.

    Do these figures factor in the impact of the hospital takeover of most of the former office buildings on the other side of Madison Avenue?

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