Rahway is among a dozen towns in the state challenging the amount of the property tax-exemption of hospitals within their borders.

The suit stems from a $15.5-million settlement reached last year between Morristown and Morristown Medical Center after almost a decade of litigation over the hospital’s property tax  exemption. The town argued that the health system relies on for-profit doctors and other facilities outside of its nonprofit purposes, such as gift shops, restaurants and cafes.

Martin Allen, who represents Morristown against Atlantic Health System, owners of the Morristown Medical Center, told NJ Advance Media that he has filed tax appeals on behalf of Belleville, Freehold, Long Branch, New Brunswick, Rahway, Raritan Township and Summit. Rahway is challenging the tax-exempt status of the 147-bed Robert Wood Johnson University Hospital on Stone Street.

The state last year passed legislation (S. 3299) that would have imposed a daily per-bed fee on hospitals of $2.50, and $250 per day ($91,250 annually) for each satellite emergency care facility, with revenue going to municipalities. Gov. Chris Christie, however, did not sign the measure and it died when the legislative session ended in January. That would have meant an estimated $134,138 annually based on the 147 beds at RWJUH in Rahway, not including any satellite emergency care facilities.

In November, City Council approved a $40,000 professional services contract (AR-233-15) with Allen’s Warren-based law firm, DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum, P.C., to provide “special counsel services.”

Rahway and Rahway Hospital Foundation collectively own 22 lots, including the flagship 7.6-acre property at 865 Stone St., assessed at $22.845 million. In all, the 22 lots total 14.7 acres and are assessed at $26.1 million (according property records I compiled into a spreadsheet). Seven of the 22 lots are not tax-exempt and so pay property taxes, a total of $54,000 last year. Based on the 2015 tax rate of $6.317 per $100 of assessed value, the 22 lots would pay $1.65 million if they were not tax-exempt.

In its most recent nonprofit tax form (2013), Rahway Hospital reported total revenue of $101 million against $97 million in expenses, with total net assets of almost $29 million.