Our nonprofit client New Jersey Community Development Corporation (NJCDC) is dedicated to revitalizing the City of Paterson by running first-rate schools, creating affordable housing, offering job-training and youth-development programs, and providing various other services for residents. In 2016, Lowenstein helped NJCDC rescue a preschool for more than 250 low-income children by purchasing the property from a nonprofit in bankruptcy.
NJCDC did this by creating a subsidiary to buy and hold the property, a common practice with financial and legal benefits. After learning that the City of Paterson had placed the property on its tax rolls, the subsidiary applied for the standard property-tax exemption available to schools under the law. Because the new subsidiary was not established as a nonprofit, however, the city denied the exemption, threatening to impose a substantial financial burden that could again threaten the preschool’s existence.
Working with NJCDC, Lowenstein helped address the issue with the city government. The firm redrafted the subsidiary’s organizational documents to highlight its nonprofit purpose and submitted a detailed letter to the mayor and the city’s lawyer analyzing the relevant law and explaining why the property qualifies for the exemption. The firm then negotiated directly with city officials, persuading them that the property should be exempt.