Department of Environmental Protection v. Franklin Tp.

• Decision Date: 04 August 1981
• Citation: 3 N.J. Tax 105,437 A.2d 353,181 N.J.Super. 309
• Parties: , 437 A.2d 353 DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff, v. FRANKLIN TP., Union Tp., and Alexandria Tp., Defendants
• Court: New Jersey Tax Court

Page 309

181 N.J.Super. 309

3 N.J.Tax 105, 437 A.2d 353

DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff, v. FRANKLIN TP., Union Tp., and Alexandria Tp., Defendants.

Tax Court of New Jersey

Decided August 4, 1981.

Paul H. Schneider and Alan B. Rothstein, Deputy Attys. Gen., for Plaintiff (John J. Degnan, Atty. Gen. of New Jersey, attorneys).

Thomas J. Cafferty, New Brunswick, for defendant Township of Franklin (Seiffert, Frisch, McGimpsey & Cafferty, New Brunswick, attorneys).

J. Peter Jost, Clinton, for defendant Township of Union.

John R. Lanza, Flemington, for defendant Township of Alexandria (Winget, Keating, Thatcher & Lanza, Flemington, attorneys).

ANDREW, J. T. C.

In these consolidated local property tax matters this court must decide whether rollback taxes under the Farmland Assessment Act of 1964, N.J.S.A. 54:4-23.1 et seq., were properly assessed against property acquired by plaintiff State of New Jersey, Department of Environmental Protection ("Department"). The matters are before the court on motions and cross-motions for summary judgment.

The subject of these cases are 45 parcels of land located in Franklin Township, Somerset County, five parcels located in Alexandria Township, Hunterdon County, and one parcel located in Union Township, Hunterdon County. All parcels were assessed as farmland pursuant to the Farmland Assessment Act at the time they were acquired by Department. Immediately thereafter rollback taxes were assessed against each parcel by the respective townships. The assessments were appealed to the appropriate county tax boards, resulting in affirmances in each case. Appeals of the county board determinations were then filed, as to certain of the parcels, with the Division of Tax Appeals. Those appeals have been transferred to the Tax Court by operation of law. N.J.S.A. 2A:3A-26.

The Franklin Township properties were acquired by Department pursuant to N.J.S.A. 58:21B-1 et seq., for the ultimate construction of the Six-Mile Run Reservoir. Although 45 parcels were acquired, appeals from the county board judgments upholding the rollback assessments were taken to the Division of Tax Appeals only with regard to three parcels. These were Block 57, Lot 28, acquired November 8, 1971; Block 57, Lot 30, acquired January 24, 1972, and Block 74, Lot 14, acquired March 20, 1972. ¹ Rollback taxes were assessed against Block 57, Lot 28, for 1970 and 1971, and against Block 57, Lot 30, and Block 74, Lot 14, for 1970, 1971 and 1972. The record is incomplete as to the dates of acquisition of the other Franklin Township parcels and the years for which the rollback was assessed.

The parties have stipulated that 13 of these parcels did not remain in agricultural or horticultural use, as defined in the Farmland Assessment Act, following their acquisition by Department. As to 31 of the parcels, ² unresolved questions of fact exist as to their continued use as farmland and the nature and amount of income attributable to them. The three parcels for which appeals were filed are among those for which these factual questions remain. Department seeks to overturn the assessments placed on all 45 parcels.

The Alexandria and Union Township parcels were acquired with funds from the New Jersey Green Acres Bond Act of 1971, L.1971, c.165. As noted above, the parcels were assessed as farmland at the time of their acquisition by Department, and rollback assessments were made immediately thereafter. County board judgments were appealed to the Division of Tax Appeals with respect to three of the Alexandria Township parcels. These were Block 17A, Lot 1B, acquired September 10, 1975, and Block 17A, Lots 3 and 15, acquired August 16, 1976. Rollback taxes were assessed, as to Lot 1B, for 1974 and 1975, and as to Lots 3 and 15, for 1974, 1975 and 1976. The two parcels for which appeals were not filed, block 17A, Lots 3A and 14, were acquired July 3, 1975. The record does not indicate the years for which the rollback was assessed on these parcels. It has been stipulated that Lots 3A and 14 were not devoted to agricultural or horticultural purposes after their acquisition. Whether or not the other three lots, for which appeals were filed, were so devoted, remains unresolved.

The Union Township parcel, Block 11, Lot 10Q, was acquired August 20, 1975. It was assessed for rollback taxes for 1973 1974 and 1975. The county board determination affirming the rollback was appealed to the Division of Tax Appeals. The parcel has not been farmed (meaning devoted to an agricultural or horticultural use) subsequent to its acquisition by Department.

Several arguments were offered by Department in support of its claim that rollback taxes should not have been assessed against any of the subject parcels in these circumstances. The primary contentions are that rollback taxes were not meant to apply to acquisitions by the Department of Environmental Protection for reservoir, recreation or open space conservation purposes, and that the payments in lieu of taxes provided for in the reservoir and Green Acres legislation were meant to be the sole obligation of the Department to the exclusion of rollback taxes. In the Franklin Township case it is also asserted that Department property acquired for public water supply purposes is statutorily exempt from taxation. See N.J.S.A. 54:4-3.3. The townships assert that the acquisition of these properties by Department for reservoir and Green Acres purposes constitutes a change in use of the land sufficient to trigger the rollback provisions of the Farmland Assessment Act. In addition, they maintain that imposition of the rollback is entirely consistent with the "in lieu" payment plans devised by the Legislature.

Preliminarily, the court is faced with a question of jurisdiction. Department did not file appeals to the Division of Tax Appeals as to 42 of the Franklin Township parcels and as to two of the Alexandria Township parcels. The deadline for such appeals which has long since passed, was December 1 following the rendering of the judgment by the county board or within three months from the time the county board judgment was rendered, whichever date was later. N.J.S.A. 54:4-63.23.

In the briefs submitted in the Franklin Township case it is "stipulated" that the action is to be treated as though appeals were filed as to all 45 parcels. Department's brief in the Alexandria Township case contains a request that the two unappealed parcels be included in the action (the township's brief is silent on this point). None of the briefs, however, offer any authority that would support the assumption of jurisdiction by this court in the absence of a timely appeal.

The question of jurisdiction was touched upon briefly at oral argument. ³ Counsel for Department in the Franklin Township case explained that in an effort to avoid the necessity of a county board hearing as to each of the 45 parcels, a stipulation was entered before the Somerset County Board of Taxation that the board would be governed by the decision of the Division of Tax Appeals regarding the three parcels that were appealed. Counsel was of the opinion that such a stipulation established jurisdiction as to all the properties, including those for which an appeal to the Division was not filed.

I cannot agree that jurisdiction can be conferred on the court from the consent of the parties by way of a stipulation before the county board of taxation. These matters were transferred to the Tax Court from the Division of Tax Appeals. The timely filing of a petition of appeal with the Division was essential for that tribunal to have jurisdiction of the appeal. Prospect Hill Apts v. Flemington, 172 N.J.Super. 245, 247, 1 N.J.Tax 224, 226-27, 411 A.2d 737 (Tax Ct.1979), and cases cited therein. The parties' attempt to avoid repetitious hearings before the county board was understandable. However, the proper procedure should have been for the county board to enter dismissals without prejudice as to the 42 parcels in order to permit expeditious appeals to the Division of Tax Appeals. The filing of an appeal to the Division for each parcel, within the time prescribed by statute, had to be accomplished in order to create jurisdiction.

Counsel for Department in the Alexandria Township case contended at oral argument that the decision in Newark v. Essex Cty. Bd. of Tax., 110 N.J.Super. 93, 264 A.2d 461 (Law Div.1970), overruled on other grounds, 72 N.J. 389, 405, 371 A.2d 22 (1977), stands for the proposition that when an issue is being actively litigated, whenever it has arisen, the court may consider all such cases even though appeals have not been filed. Without considering the accuracy of that statement, it is apparent that the procedural pattern presented in Newark, is different from that herein. That matter was before the court on a complaint in lieu of prerogative writs filed by the City of Newark on March 5, 1970 against the Essex County Board of Taxation and the 21 other municipalities of Essex County. It dealt with a claim by the City of Newark for the allowance of credits in 1970 for county taxes paid during 1960-1969 pursuant to N.J.S.A. 54:4-49. Following an appeal to the Essex County Tax Board, Newark sought relief in Superior Court rather than before the Division of Tax Appeals, which latter procedure was the normal course of appeal provided by N.J.S.A. 54:2-35. The court determined that, in view of the public interest involved and the fact that primarily legal questions were presented, an application of the doctrine of exhaustion of administrative remedies should be waived. The court relied upon R. 4:69-5, which provides:

Except where it is manifest that the interest of justice requires otherwise, actions under R. 4:69 (actions in lieu of prerogative writs) shall not be maintainable as long as there is available a right of review before an administrative agency which has not been exhausted.

This aspect of the decision in ...