Tax-Exempt Hospitals Face Payments to Host Towns in New Jersey

New Jersey’s nonprofit hospitals, which have long enjoyed a tax exemption, would have to make payments to their host communities to cover the cost of municipal services under a bipartisan measure making its way through the state legislature.

Lawmakers are responding to a June court ruling which found that the 40-acre Morristown Medical Center owed local property taxes because of “blurred lines” between its nonprofit and for-profit businesses. The 687-bed hospital’s owner agreed in November to pay the town $15.5 million over the next decade.

The decision opened the door for other municipalities that host nonprofit businesses, including hospitals and universities, to challenge their tax-exempt statuses.