Court to hear Arts Center tax appeal
Holmdel mayor says rebate should be given to residents
BY TOM CAIAZZA
Staff Writer

The New Jersey Turnpike Authority has filed an appeal with the N.J. Superior Court to overturn a July ruling that lifted PNC Bank Arts Center’s tax-exempt status.

The Arts Center, located in Holmdel since the late 1960s, is owned by the state and had been subsequently exempt from municipal taxation by Holmdel Township.

Tax Court Judge Harold A. Kuskin ruled in favor of Holmdel on the grounds that the current tenant of the Arts Center, Clear Channel, is a multimillion dollar business operating tax free, according to Frederick Rose, Holmdel’s attorney.

The appellate division of the state Superior Court will hear arguments on Feb. 14, according to Rose. A three-judge panel will decide whether or not to uphold the tax court ruling.

The suit has been in litigation since 1996, when the township filed it against the Highway Authority, the state entity that oversaw the Arts Center.

According to Rose, then-Gov. Christine Todd Whitman directed the Highway Authority to privatize the running of the Arts Center in 1995. Clear Channel, a private corporation, leased the Arts Center, which turns a huge profit as a concert venue and concession vendor, selling products such as food and alcoholic beverages. Control of the Arts Center was taken over by the Turnpike Authority in 2003, officially making the agency the defendants in the case.

The ruling awarded Holmdel back taxes from 1996 to the present, and included interest and penalties, Rose said. More importantly, it lifted the tax exempt status of the site, making it a huge ratable for the township.

Township Administrator Chris Schultz said that the township opted not to contest the appeal by the Turnpike Authority, a move Rose said was a way of hedging their bet.

“We wanted to get this decision confirmed,” Rose said of the reason not to contest the appeal.

The case, Rose said, was handled in two parts, the first of which was whether the Arts Center was exempt from municipal tax. That was decided on by the Tax Court ruling. The second stage would decide how much in back taxes would be owed, and how much would be owed in the future.

“How much should be paid has been put off,” Rose said. “It’s going to be a very complicated, long and expensive part of the case.”

The township does not want to devote time, money and legal resources to that aspect of the suit before the tax court ruling is made absolute in an appellate court.

Holmdel Tax Assessor Eldo Magnani said that once a judgment from the appellate division is given, the value of the property will have to be evaluated for each year that the Arts Center was deemed to be a tax ratable.

“Once we get the summary judgment,” Magnani said, “we have to delineate the land and value of the structures.”

Magnani estimated that $350,000 per year in property taxes could be owed to the township.

Either way, Rose believes this case will end up in the New Jersey Supreme Court.

“If the appellate division overturns it, we will take it to the Supreme Court,” Rose said.

Rose expects the same to happen even if the ruling is upheld, and said that this issue is far from resolved.

Mayor Serena DiMaso has plans for the back taxes expected if the judgment goes in Holmdel’s favor.

“I want to make sure that money goes back to the citizens in the form of a rebate,” DiMaso said.