Ciba Specialty Chem. Corp. v. Twp. of Dover Ciba Specialty Chem. Corp.

• Decision Date: 14 February 2019
• Docket Number: Docket No.: 004486-2010,Docket No.: 004487-2010,Docket No.: 003624-2014,Docket No.: 001913-2015,Docket No.: 005340-2008,Docket No.: 006367-2013,Docket No.: 002155-2011,Docket No.: 003686-2017,Docket No.: 001986-2005,Docket No.: 002037-2012,Docket No.: 003054-2016,Docket No.: 001501-2006,Docket No.: 005635-2004,Docket No.: 003458-2007,Docket No.: 001627-2018,Docket No.: 005210-2009
• Parties: Re: CIBA Specialty Chemical Corp. v. Township of Dover CIBA Specialty Chemical Corp. v. Township of Toms River BASF Corp. v. Township of Toms River
• Court: New Jersey Tax Court

Re: CIBA Specialty Chemical Corp.
v.
Township of Dover

CIBA Specialty Chemical Corp.
v.
Township of Toms River

BASF Corp.
v.
Township of Toms River

Docket No.: 005635-2004
Docket No.: 001986-2005
Docket No.: 001501-2006
Docket No.: 003458-2007
Docket No.: 005340-2008
Docket No.: 005210-2009
Docket No.: 004487-2010
Docket No.: 004486-2010
Docket No.: 002155-2011
Docket No.: 002037-2012
Docket No.: 006367-2013
Docket No.: 003624-2014
Docket No.: 001913-2015
Docket No.: 003054-2016
Docket No.: 003686-2017
Docket No.: 001627-2018

TAX COURT OF NEW JERSEY

February 14, 2019

Hon. Mary Siobhan Brennan, J.T.C. JUDGE

Philip J. Giannuario Esquire
Garippa, Lotz & Giannuario
66 Park Street
Montclair, New Jersey 07042

John F. Casey, Esquire
Chiesa, Shahinian & Giantomasi P.C.
One Boland Drive
West Orange, New Jersey 07052

VIA eCourts

Dear Mr. Giannuario and Mr. Casey:

This constitutes the court's opinion in the second of four trial phases in the above-referenced matters.

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These appeals challenge the local property tax assessments on a 1,211¹ acres tract of land in Toms River Township, Ocean County, New Jersey, formerly known as Dover Township ("Municipality"). Between 1952 and 1996, industrial activities occurring on the developed sections of the land caused soil and groundwater contamination, so much so that the land and its improvements were placed on the Superfund National Priorities List in 1983. Remediation has been ongoing, continues to date, and is anticipated to continue for decades.

The first trial phase was held in November of 2017. In that proceeding, the court determined that the valuation of the property must be based upon its existing industrial zoning.² The Municipality's zoning ordinance is set forth as an attachment to this opinion.³

This second phase of the trial focuses on the number of usable acreages during 2004 through 2018 tax years and the number of acres with future development potential within its current zoning. The Taxpayer and the Municipality agree that a portion of the property cannot be developed for reasons associated with environmental contamination. Where the parties differ on development potential arises from the Taxpayer's argument that future development of the clean portions of the property will be largely prohibited based on regulations established by the Coastal Area Facilities Review Act ("CAFRA").

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For the reasons set forth below, the court finds that for the 2004 through 2018 tax years, the entire 1,211 acres was development-prohibited due to its designation as a Superfund site and the accompanying institutional controls in place. During those years, the highest and best use of the property as both vacant and improved was its existing interim and impaired use as remedial land⁴ with future anticipated unrestricted development potential for 790 acres, and restricted, limited, or prohibited development potential for the remaining 421 acres.

While there is documented presence of threatened and endangered ("T&E") species and habitat on the property that will undoubtedly trigger extensive CAFRA regulatory review, the proofs presented at trial were insufficient to establish by a preponderance of the evidence that future development of any portion of the unrestricted 790 acres would be prohibited by the United States Environmental Protection Agency ("USEPA") or the New Jersey Department of Environmental Protection ("NJDEP"). The proofs, in fact, suggest that the Taxpayer anticipates and is preparing for the development of the unrestricted 790 acres as depicted on various land use planning maps. As to the remaining 421 acres, which represent a specific and well-delineated portion of the property, environmental conditions and institutional controls such as deed restrictions will limit or prohibit any future development of those acres.

The Superfund designation of the Taxpayer's property results in a determination of value based on the expectation of future development and use at the conclusion of remediation and the delisting from the National Priorities List. The evidence presented during trial suggests that the value to be attributed to the future development potential of the property during the fifteen years

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at issue is influenced by a multitude of ever-changing factors, some positive and some negative. Valuation of the property will require annual consideration of the status of the remediation, the anticipated cost of continued cleanup, the stigma associated with the contamination, the presence of T&E species and habitat requiring mitigation or accommodation, the location and size of the property, anticipated and actual subdivision, and anticipated deed restrictions to name just a few. Valuation, however, is not currently before the court.

I. FINDINGS OF FACT

A. Subject Property and Assessments Under Appeal

The property was initially owned and operated by the Toms River Chemical Company, which eventually merged into the Ciba-Geigy Corporation.⁵ In April 2009, BASF Corporation acquired the assets and business from CIBA Specialty Chemical Corporation and accepted responsibility for environmental remediation. For efficiency and clarity, the court will refer to the property owner at all points in time as "Taxpayer."⁶

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B. Subject Property and Assessments Under Appeal

In 1952, the Municipality was mostly rural in nature. Over the decades that have followed, the Municipality has undergone significant development, and it serves as the county seat for Ocean County. The Taxpayer's property is currently the largest undeveloped tract in the Municipality. It is bordered by large residential tracts to the north and south, and the West Dover Elementary School is adjacent to it. Toms River is located along the eastern border. To the southeast is the junction of State Highway 37 and Oak Ridge Parkway ("County Route 527"), and it is in close proximity to the Garden State Parkway.

The property is identified as Block 411, Lot 6⁷ on the Municipality tax map for years 2004 through 2014, and Block 411, Lot 6.01⁸ for years 2015 through 2018 ("Subject Property"). For the tax years in question, the Subject Property was assessed as follows:

Tax Year	Land	Improvements	Total
2004	$20,219,500	$409,800	$20,629,300
2005	$20,219,500	$409,800	$20,629,300
2006	$20,219,500	$409,800	$20,629,300
2007	$20,219,500	$409,800	$20,629,300
2008	$20,219,500	$409,800	$20,629,300
2009	$80,459,000	$1,000	$80,460,000
20109	$79,926,300	$500,000	$80,426,300

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2011	$57,500,000	$500,000	$58,000,000
2012	$41,500,000	$500,000	$42,000,000
2013	$14,700,000	$27,300,000	$42,000,000
2014	$41,500,000	$500,000	$42,000,000
2015	$41,500,000	$500,000	$42,000,000
2016	$41,500,000	$500,000	$42,000,000
2017	$41,500,000	$500,000	$42,000,000
2018	$41,500,000	$500,000	$42,000,000

The Director's (Chapter 123) ratio for the Municipality for each year under appeal was as follows:

Tax Year	Average Ratio
2004	60.25%
2005	51.43%
2006	44.23%
2007	38.71%
2008	37.40%
200910	100.00%
2010	102.01%
2011	101.08%
2012	102.58%
201311	101.08%
2014	80.48%
2015	88.42%

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2016	86.78%
2017	83.70%
2018	83.42%

C. Historical Use of Property

Taxpayer first opened its plant in 1952 and became a major employer of local residents. Taxpayer was perceived as a true community partner, sponsoring its own Boy Scout troop and fire department.¹²

Despite the large size of the property, only 320 acres were developed. The developed portion was used for manufacturing operations, waste treatment, disposal activities, and administrative and laboratory facilities. The manufacturing facility was composed of numerous buildings, an industrial wastewater treatment plant, and a lined reservoir for emergency storage of treated and untreated wastewater.

From 1952 until 1988, Taxpayer manufactured a variety of synthetic organic pigments, organic dyestuffs and intermediates, and epoxy resins. Taxpayer disposed of chemical wastes on-site in several locations, including a 5.2 acre drum disposal area (containing approximately 100,000 drums); a 3.9 acre lime sludge disposal area (used for disposal of inorganic wastes); a 12

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acre filtercake disposal area (which received sludge from the wastewater treatment); five backfilled lagoons comprising 8.5 acres; and a calcium sulfate disposal area.

The drum disposal area and lime sludge disposal area were closed and capped in 1978. Additionally, at about the same time, the filtercake disposal area was also closed and covered with soil. Over time, groundwater contamination migrated from these inactive disposal sites in an easterly direction toward the Toms River.

The USEPA began investigating the landfill in 1980. The landfill was reportedly leaking as early as 1981, precipitating remedial measures by the State of New Jersey ("State") including the issuance of a Consent Order forcing Taxpayer to close part of the landfill and monitor groundwater and leachate.

While the manufacturing facility was in operation, it also generated liquid waste. The liquid waste was treated on-site in a wastewater treatment plant before discharge to the Atlantic Ocean. Wastewater was funneled from the plant to the Atlantic Ocean off of Ortley Beach in Ocean County by means of a pipeline. In 1984, a break in the ocean outfall pipeline raised concerns about what contaminants might be in the wastewater. In 1991, the New Jersey Legislature ordered the shut-down of the pipeline.

In 1984, after discovering that the Taxpayer was illegally disposing of drums containing liquids and hazardous waste in the landfill, the State ordered Taxpayer to remove 14,000 drums. In 1985, leaking equalization basins associated with the wastewater treatment plant led Taxpayer to close the basins and begin remediation of the contaminated...