Giant Realty, LLC v. Borough

• Decision Date: 28 April 2022
• Docket Number: 001063-2014
• Parties: GIANT REALTY, LLC, Plaintiff v. LAVALLETTE BOROUGH, Defendant
• Court: New Jersey Tax Court

GIANT REALTY, LLC, Plaintiff v. LAVALLETTE BOROUGH, Defendant

No. 001063-2014

Tax Court of New Jersey

April 28, 2022

Michael I. Schneck for plaintiff (Schneck Law Group, LLC attorneys).

Dominic P. DiYanni, for defendant (Eric M. Bernstein &amp Associates, LLC, attorneys).

FIAMINGO, J.T.C.

This matter is before the Tax Court on plaintiff's motion for application of the provisions of N.J.S.A. 54:51A-8 (the "Freeze Act") to tax years 2015 and 2016. Defendant municipality opposes the application asserting that there was a change in value subsequent to the 2014 tax year. The court finds that defendant failed to make a prima facie showing that a substantial and meaningful change in value occurred between the base year 2014 and freeze years 2015 and 2016. Accordingly, the court finds that the Freeze Act applies to both years 2015 and 2016.

FACTUAL AND PROCEDURAL BACKGROUND

Giant Realty, LLC ("plaintiff") timely filed a direct appeal in the Tax Court challenging the 2014 tax year local property tax assessments on the real property located in the Borough of Lavallette ("defendant") designated as lots 1, 2, 3, 4, 5, and 6 in block 21 on the official tax map of defendant municipality (collectively the "subject property"). After a trial on the issue of valuation, the court entered judgment on March 20, 2020, reducing the 2014 tax year assessment for each of the subject lots ("2014 Judgment"). The original assessments and the judgments entered by the court with respect to each of the subject lots^[1] was as follows:

Tax Lot Original Assessment Judgment

1 $1, 250, 000.00 $810, 833.00

2 $1, 187, 500.00 $810, 833.00

3 $1, 187, 500.00 $810, 833.00

4 $1, 250, 000.00 $810, 833.00

5 $1, 000, 000.00 $810, 8330.00

6 $1, 000, 000.00 $810, 834.00

On May 14, 2020, plaintiff filed a motion for relief under the Freeze Act to apply the judgment to tax years 2015 and 2016. Defendant filed opposition and the motion was heard before the Tax Court Judge who heard the trial testimony. On August 12, 2020, an order was entered denying plaintiffs motion without prejudice.^[2] On October 6, 2021, plaintiff refilled a motion seeking Freeze Act protection identical to the motion filed on May 14, 2020. Defendant filed opposition stating, "[d]efendant shall be relying upon its previously filed opposition to the Freeze Act motion filed by taxpayer's counsel which is already uploaded on e-courts for this [d]ocket." No additional certifications or argument was filed by defendant.

LEGAL ANALYSIS

The Freeze Act provides in pertinent part,

Where a judgment not subject to further appeal has been rendered by the Tax Court involving real property, the judgment shall be conclusive and binding upon the municipal assessor and the taxing district, parties to the proceeding for the assessment year and for the two assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. The conclusive and binding effect of the judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has been put into effect. If as of October 1 of the pretax year, the property in question has been the subject of an addition qualifying as an added assessment, a condominium or cooperative conversion, a subdivision or a zoning change, the conclusive and binding effect of such judgment shall terminate with said pretax year.

[N.J.S.A. 54:51A-8(a)]

The Freeze Act is intended "to prevent 'the repeated yearly increases in the assessed value of property, not related to or justified by any changes increasing its market value and resulting in harassment of the taxpayer, subjecting him to the trouble and expense of annual appeals to the county tax board.'" AVR Realty Co. v. Cranford Twp., 316 N.J.Super. 401, 405-06 (App. Div. 1998), certif. denied, 160 N.J. 476 (1999) (quoting Newark v. Fischer, 8 N.J. 191, 200 (1951). The Freeze Act is self-executing. AVR Realty Co. v. Cranford Twp., 294 N.J. Super 294, 299 App. Div. 1996), certif. denied 148 N.J. 460 (1997).

The statute thus provides a clear and unequivocal mandate to taxing districts. They must accord the taxpayer the benefit of the Tax Court judgment for the two tax years following the last year encompassed by the judgment--that is, the base year--unless there has been a general revaluation or a change of value of the subject property prior to the assessment date for a "freeze" year.

[Id. at 298].

Procedurally, where the judgment for the base year becomes final after the assessment is fixed for the freeze years, a taxpayer must file a motion to obtain Freeze Act relief.^[3] See Curtiss Wright Corp. v. Wood-Ridge Boro., 4 N.J. Tax 68 (Tax 1982). Thus, plaintiff here has moved for application of the Freeze Act in this matter for the two years following entry of judgment.

In opposition defendant asserts that there has been a change in value of the subject property which occurred after the assessment dates such that the 2014 Judgment is not conclusive and binding to the freeze years. In cases where a municipality opposes a motion for Freeze Act application by asserting a change in value,

a municipality must make a prima facie showing that there was a change in the property's value between the assessment dates for the base year and freeze years and that: '"(1) the change in value result[ed] from an internal or external change; (2) the change materialized after the assessing date of the base year; and (3) the change substantially and meaningfully increased the value of the property."' AVR Realty Co. v. Cranford Township, 316 N.J.Super. 401, 407, 720 A.2d 434 (App. Div. 1998), certif. denied, 160 N.J. 476, 734 A.2d 791 (1999) (AVR Realty II). If the municipality makes this prima facie showing, it is entitled to a plenary hearing regarding the applicability of the Freeze Act. Ibid.; see also Entenmann's, Inc. v. Totowa Borough, 19 N.J. Tax 505, 515 (Tax 2001); Rockstone Group v. Lakewood Township, 18 N.J. Tax 117, 120-21 (Tax 1999).

[Coastal Eagle Point Oil Co. v. Twp. of W. Deptford, 353 N.J.Super. 212, 218 (App. Div. 2002)].

Changes in value may occur as a result of an internal change or an external change. "[I]nternal changes consist of capital improvements that substantially and meaningfully increase the value of the subject property, while external changes consist of extreme economic changes or zoning changes in close proximity to the property that increase its value." 160 Chubb Props., LLC v Twp. of Lyndhurst, 30 N.J. Tax 613 (Tax 2018).^[4]

Defendant asserts an external change occurred due to the issuance of a permit by the New Jersey Department of Environmental Protection pursuant to the provisions of the Coastal Area Facility Review Act, N.J.S.A. 13:19-1 to -51 ("CAFRA"), permitting development of the subject property. CAFRA's purpose is the protection of "the unique and fragile coastal zones of the State." In re Egg Harbor Associates (Bayshore Centre), 94 N.J. 358, 364 (1983). Accordingly, "CAFRA grants broad authority to the DEP to protect the environment and to regulate land use within the coastal area for the general welfare." Matter of Cape May Cty. Mun. Utils. Auth., 242 N.J.Super. 509, 514 (App. Div. 1990).

As explained in Siegel v. N.J. Dep't. of Envtl. Prot., 395 N.J.Super. 604, 615 (App. Div. 2007)

In enacting CAFRA, the Legislature found

that certain portions of the coastal area are now suffering serious adverse environmental effects resulting from existing facility activity impacts that would preclude or tend to preclude those multiple uses which support diversity and are in the best long-term, social, economic, aesthetic and recreational interests of all people of the State.

[N.J.S.A. 13:19-2.]

The Legislature balanced, however, its desire to address the adverse environmental effects of coastal area development with recognized economic considerations for those who inhabited the coastal areas, noting CAFRA was intended to also

encourage the development of compatible land uses in order to improve the overall economic position of the inhabitants of that area within the framework of a comprehensive environmental design strategy which preserves the most ecologically sensitive and fragile area from inappropriate development and provides adequate environmental safeguards for the construction of any facilities in the coastal area.

[Ibid.]

A CAFRA permit is required to develop property subject to its provisions. Nonetheless, "as a general matter, CAFRA 'regulations do not preempt local zoning authority.'" Bubis v. Kasin, 184 N.J. 612, 630 (2005) (quoting Lusardi v. Curtis Point Prop. Owners Ass'n, 86 N.J. 217, 229 (1981)). To develop a property subject to CAFRA one must also obtain approval from local zoning authorities before any development may commence. See Ferraro v. Zoning Bd. of Adjustment, 119 N.J. 61 (1990). Thus, while impactful and a necessary precursor to development, the issuance of a CAFRA permit does not constitute final approval for development.

A CAFRA permit was issued on September 22, 2015, authorizing "the construction of four new single family dwellings and associated development." Counsel argues that issuance of the CAFRA permit resulted in the subject property being developable subject to local zoning and building laws. Because the subject property was previously undevelopable as a "dune," counsel argues that there was an external increase in value upon issuance of the CAFRA permit. Counsel further argues that "the progression of the CAFRA permitting process and the ultimate approval" resulted in a change in value, such that the anticipatory issuance of the permit positively...