Atlantic City Casino Ass'n v. City of Atlantic City

• Decision Date: 15 July 1985
• Citation: 217 N.J.Super. 277,525 A.2d 1109
• Parties: ATLANTIC CITY CASINO ASSOCIATION and Great Bay Hotel & Casino, Inc., t/a Sands Hotel & Casino, Plaintiffs-Respondents, v. CITY OF ATLANTIC CITY, William G. Ferry, Tax Assessor of Atlantic City, and Alberta Watkins, Tax Collector of Atlantic City, Defendants-Appellants, and Irwin I. Kimmelman, Attorney General of the State of New Jersey, and Atlantic County Board of Taxation, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 277

217 N.J.Super. 277

525 A.2d 1109

ATLANTIC CITY CASINO ASSOCIATION and Great Bay Hotel &amp Casino, Inc., t/a Sands Hotel & Casino Plaintiffs-Respondents, v. CITY OF ATLANTIC CITY, William G. Ferry, Tax Assessor of Atlantic City, and Alberta Watkins, Tax Collector of Atlantic City, Defendants-Appellants and Irwin I. Kimmelman, Attorney General of the State of New Jersey, and Atlantic County Board of Taxation Defendants-Respondents.

Superior Court of New Jersey, Appellate Division.

Argued June 5, 1985.

Decided July 15, 1985.

Saul A. Wolfe, for defendants-appellants (Skoloff & Wolfe, attorneys).

Edward G. Rosenblum, for plaintiffs-respondents Atlantic City Casino Association and Great Bay Hotel & Casino, Inc., t/a Sands Hotel & Casino (Rosenblum & Rosenblum, P.A., attorneys).

Before Judges FRITZ, GAULKIN and LONG.

The opinion of the court was delivered by

GAULKIN, J.A.D.

Chapter 67 of the Laws of 1984 permitted Atlantic City to defer implementation of a revaluation of real property for the 1984 tax year and further granted authority to the State Treasurer to extend the "temporary moratorium" for the 1985 tax year upon the request of Atlantic City. Plaintiffs brought this action in lieu of prerogative writs to declare the legislation unconstitutional. In an oral ruling later supplemented by a written opinion, the trial judge found the statute unconstitutional as "an improper interference by the Legislature with the court," as "special legislation" and as "an unconstitutional delegation of authority to the executive branch of government." 204 N.J.Super. 652, 499 A.2d 1049. Atlantic City and its impleaded officials appeal. ¹

I.

The factual and procedural background is undisputed. Atlantic City had not undergone a complete revaluation of its real estate since 1962. Since that time patterns of assessment had become nonuniform, in substantial disarray and at widely varying ratios assessed to true value. As of October 1, 1976, just prior to the November 2, 1976 approval of the casino gaming referendum ( N.J. Const. Art. IV, § VII, par. 2D), the Director of the State Division of Taxation determined that the aggregate true value of real property in Atlantic City was slightly more than $336 million. As set forth in the certification of City Tax Assessor Ferry, the passage of the casino referendum exacerbated the local assessment problems:

Subsequent to the approval of the casino referendum, there was considerable speculative activity in the real estate market in Atlantic City in terms of the potential location of sites for casino hotels and for other speculative investment. By October 1, 1978, even though no new casino hotels had been built and the only casino that was operating was Resorts in the rehabilitated Haddon Hall, the Director found that value had risen increased [sic ] by more than 35% to almost $480,000,000. By October 1 of 1979, the Director found that the aggregate true value of real property in the City had almost doubled within one year to just under $932,000,000. On October 1, 1980, the Director of Taxation found that the value had again doubled within the preceding twelve months to more than $1,864,000,000. By October, 1981, the Director found that aggregate true value had increased by almost $800,000,000 to more than 2.6 billion dollars.

The increase of almost 2.3 billion dollars in the value of real property in the City of Atlantic City reflected the accelerated demand for housing as casino employees arrived in the municipality seeking adequate housing, creating a shortage and driving the market up for a brief period of time in certain areas of the City beyond fair market value. Speculative purchases in the Inlet section of the City created the impression of values which were unwarranted as later sales transactions established.

On November 15, 1978 the Atlantic County Board of Taxation ordered Atlantic City to undertake a complete revaluation of all real property within the city. The city failed to comply with that order and, by order entered on May 29, 1980 in a Law Division prerogative writs action entitled Wilczynski v. Ferry (Dkt. No. L-63650-78), the city was directed to comply with the County Board's order. On November 18, 1980, on the city's application in Wilczynski, the Law Division deferred the city's obligation to implement revaluation until the 1983 tax year.

Pursuant to the orders entered in Wilczynski, Atlantic City retained an independent revaluation concern to prepare a line-by-line item revaluation of all real property in the city. That revaluation, which purported to establish true values as of October 1, 1982, was delivered to the city tax assessor just prior to his filing the 1983 tax list with the County Board. Upon his review of the materials received, however, the assessor came to the conclusion that they "required substantial adjustments to accurately reflect the value of real estate in the City of Atlantic City as of October 1, 1982."

On June 3, 1983 the Legislature enacted L. 1983, c. 202:

Notwithstanding any provisions of law or any judicial order to the contrary, no city of the fourth class having a population in excess of 40,000 shall be required to implement a revaluation of real property for the tax year 1983. The determination of a city not to implement a revaluation pursuant to this act shall not prevent the city from conducting and implementing any partial or complete reassessment of real property in the city during the time covered by the act.

A companion provision, L. 1983, c. 203, permitted any county board of taxation having jurisdiction over a municipality which determined not to implement a revaluation under Chapter 202 to revise the tax list for 1983 by deleting the new values and substituting the 1982 tax list as revised to reflect certain changes.

As a result of the moratorium effected by L. 1983, c. 202, the Atlantic City assessor had an opportunity to further analyze the revaluation work product and in November 1983 came to the conclusion "that approximately 5,000 additional changes in the revaluation list would be necessary to improve the revaluation work product." His opinion then was that implementation of the revaluation "would be even more inequitable than the updated existing tax list." By February 1984, however, he

made approximately 3,000 changes in the tax list and concluded that, while substantial further work was required in the implementation of the revaluation program and that the assessments produced by the revaluation as revised by me fell far short of achieving the revaluation objective, the implementation of the revaluation would have certain benefits for the City that might on balance slightly outweigh the inequities still existing in the revised revaluation work product.

Indeed, in January 1984 the assessor submitted the revised revaluation to the County Board as his assessment list and duplicate together with an affidavit "affirming that for the tax year 1984 he had put into operation a district wide adjustment of real property taxable valuations" which reflected market value as of October 1, 1983.

On February 3, 1984 the County Board certified and delivered to the tax collector the revised revaluation tax list. The aggregate assessed value resulting from the revaluation was incorporated by the County Board into its 1984 county equalization table on February 28, 1984. On May 16, 1984 the County Board certified the general tax rate of Atlantic City at $1.733 per $100 of assessed valuation.

Before the city tax collector sent out his bills, however, L. 1984, c. 67, the subject of this litigation, was approved on July 2, 1984:

BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:

1. Notwithstanding the provisions to the contrary of any law, rule, regulation or judicial order, no city of the fourth class having a population in excess of 40,000, according the latest federal decennial census, shall be required to implement a revaluation of real property for the 1984 tax year. The determination of a city not to implement a revaluation pursuant to this act shall not prevent the city from conducting and implementing any partial or complete reassessment of real property in the city during the time covered by this act.

2. At the request of a municipality that, pursuant to section 1 of this act, does not implement a revaluation of real property for the 1984 tax year, the State Treasurer shall have the authority to extend the temporary moratorium of the implementation of the revaluation for the 1985 tax year, upon the Treasurer's determination that an extension of the moratorium is in the best interest of the municipality. The municipality shall make its request for the extension to the State Treasurer on or before January 1, 1985. The Treasurer shall inform the municipality of his decision on or before January 31, 1985.

By resolution dated July 30, 1984 Atlantic City determined not to implement the revaluation for the tax year 1984 and the assessor thereupon filed with and certified to the County Board his 1983 assessment list, with some 1,200 revisions ("moratorium tax list"), in substitution for the revaluation tax list previously submitted to and certified by the County Board. The County Board in turn, on August 7, 1984, decertified the revaluation tax list for Atlantic City and certified in its place the moratorium tax list. In the same resolution the County Board readopted the Atlantic County Equalization Table and, based upon the valuations contained in the moratorium tax list, certified a new tax rate for the city of $3.906 per $100 of assessed valuation.

Plaintiffs then filed this action challenging L. 1984, c. 67 on October 5, 1984.

II.

The trial judge found Chapter 67 unconstitutional as a legislative "usurpation of the function of the judiciary" because it "operates to affect the result of a judicial proceeding in which a final judgment has been entered." As New Jersey...