New Jersey Apartment Ass'n, Inc. v. Director, Div. of Local Government Services, Dept. of Community Affairs
| Decision Date | 29 September 1997 |
| Citation | 304 N.J.Super. 445,701 A.2d 452 |
| Parties | NEW JERSEY APARTMENT ASSOCIATION, INC. and Lismarc Realty Management Corp., Receiver for Dakota Real Estate Co., Plaintiffs-Appellants/Cross-Respondents, and Society Hill Apartment Association, L.P., Plaintiff/Intervenor, v. DIRECTOR, DIVISION OF LOCAL GOVERNMENT SERVICES, DEPARTMENT OF COMMUNITY AFFAIRS, State of New Jersey, Defendant-Respondent/Cross-Appellant, and Tax Collector, Township of Washington, County of Gloucester, Defendant-Respondent. |
| Court | New Jersey Superior Court — Appellate Division |
Helen A. Nau, Roseland, for appellants/cross-respondents (Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer and Gladstone, attorneys; Charles X. Gormally, of counsel; Ms. Nau, on the brief).
Daniel P. Reynolds, Deputy Attorney General, for respondent/cross-appellant Director, Division of Local Government Services, (Peter Verniero, Attorney General, attorney; Joseph A. Yannotti, Assistant Attorney General, of counsel; Mr. Reynolds, on the brief).
Joseph A. Alacqua, Turnersville, for respondent Tax Collector, Township of Washington, County of Gloucester, joins in the brief of respondent/cross-appellant Director, Division of Local Government Services.
Before Judges SHEBELL, D'ANNUNZIO and COBURN.
The opinion of the court was delivered by
COBURN, J.A.D.
This appeal involves interpretation of the Tenants' Property Tax Rebate Act, N.J.S.A. 54:4-6.2 to -6.13 (the "Rebate Act"), consideration of its constitutionality, and evaluation of the validity of a rule, N.J.A.C. 33-3.8(a) and (b), promulgated by the Director of the Division of Local Government Services, which interpreted the Rebate Act in a manner which is argued to be inconsistent with the Supreme Court's construction of this legislation in Cold Indian Springs Corp. v. Township of Ocean, 81 N.J. 502, 410 A.2d 652 (1980).
The action was filed in the Law Division pursuant to the Declaratory Judgment Act, N.J.S.A. 2A:16-50 to -62, by New Jersey Apartment Association, Inc., an organization which represents the interests of landlords, and by Lismarc Realty Management Corp. ("Lismarc"), the receiver for Dakota Real Estate Co., the owner of an apartment complex in the Township of Washington which was sold to plaintiff/intervenor, Society Hill Apartment Association, L.P., on April 13, 1993. The matter was determined below on motions for summary judgment. The Law Division invalidated the rule but rejected plaintiffs' interpretation of the Rebate Act and upheld its constitutionality. Plaintiffs filed a notice of appeal 1 and the Director filed a cross-appeal seeking to sustain the rule. We affirm.
The undisputed facts show that the aggregate local property tax assessment in 1990 for the Lismarc property (consisting of four individually taxed lots) was $24,718,700. The Washington Township assessor revised the aggregate assessment for 1990 and 1991 to $21,000,000. Tax appeals were filed for the 1991 and 1992 tax years. The cases were settled and judgments were entered reducing the aggregate assessments for those years to $19,000,000. For the 1991 tax year, the judgment was entered by the Tax Court (where the appeal had been filed) on March 31, 1993. For the 1992 tax year, the judgments were entered by the Gloucester County Board of Taxation on May 21, 1992. In accordance with the Freeze Act, N.J.S.A. 54:3-26 and N.J.S.A. 54:51A-8, the tax assessor reflected the aggregate assessment for 1993 at the $19,000,000 value based on the 1992 tax year judgments. Thereafter, the Washington Township tax collector mailed tenant rebate notices to the property owner for the year 1993. These notices reflected the base year as 1990 (when the aggregate assessment was $24,718,700) and employed the 1993 current assessment of $19,000,000 as the basis for calculating the tenant rebate.
Plaintiffs contend that the Rebate Act requires exclusion of all tax appeal judgments from tenant rebate calculations. Therefore, they claim that in this case the tax collector should have based the rebate notice on the $21,000,000 assessment established voluntarily by the tax assessor for the 1991 and 1992 tax years instead of on the $19,000,000 assessment resulting from the consent judgments on the property owner's tax appeals for those years. That position was clearly rejected by the Supreme Court in Cold Indian Springs Corp., supra, 81 N.J. at 511-12, 410 A.2d 652, and does not require further legal analysis. 2
Plaintiffs also contend that the 1991 amendment of the Rebate Act which increased the tenants' rebate from sixty-five percent to one hundred percent of any refund resulting from a tax appeal constitutes a taking of property without due process of law.
Plaintiffs further argue that the 1991 amendment of the Rebate Act which introduced the concept of a "floating" base year, N.J.S.A. 54:4-6.3(c), deprives them of equal protection under the law.
Finally, plaintiffs contend the Rebate Act violates Article VIII, § 1, p 1(a) of the New Jersey Constitution which requires uniform rules for real property assessment and taxation.
The Director contends that the Law Division erred in finding N.J.A.C. 33-3.8(a) and (b) inconsistent with the Rebate Act as interpreted by the Court in Cold Indian Springs Corp.
The Rebate Act is Cold Indian Springs Corp., supra, 81 N.J. at 507-08, 410 A.2d 652 (footnote omitted). The formula established by L. 1977, c. 81 set the tenants' rebate share at sixty-five percent of the property tax reduction. The 1991 amendment (L. 1991, c. 65, § 1) increased the tenants' share to one hundred percent, but otherwise left the applicable section of the statute to read as it had when the Court decided Cold Indian Springs Corp.:
b. "Property tax reduction" means the difference between the amount of property tax paid or payable in any year on any qualified real rental property, exclusive of improvements not included in the assessment on the real property for the base year, and the amount of property tax paid in the base year, but such calculations for the property tax reduction shall exclude reductions resulting from judgments entered by county boards of taxation, the tax court, or by courts of competent jurisdiction. "Property tax reduction" shall also include any rebate or refund of school property taxes which may be provided pursuant to P.L. 1976, c. 113. "Property tax reduction" shall not include any amount in excess of that which is identified herein. Any such amount shall be retained by the property owner.
[ N.J.S.A. 54:4-6.3b (emphasis added) (footnote omitted).]
The other important change in the statutory scheme introduced by L. 1991, c. 65, § 1 was the redefinition of the base year. In 1977, the base year was defined with reference to the effective date of the act (August 17, 1976) this way:
c. "Base year" means, for qualified real rental property rented or leased or offered for rent or lease on the effective date of this act, the calendar year prior to the year in which this act takes effect, and for qualified real rental property which is first rented or leased or offered for rent or lease after the effective date of this act, the calendar year in which it is first offered for rent or lease.
This section, establishing the so-called "floating" base year, now reads (with reference to the act's effective date of March 15, 1991) as follows:
c. "Base year" means for qualified real rental property rented or leased or offered for rent or lease on or after the effective date of this act, the tax year prior to any year in which the property tax on that property is decreased from the 1990 tax year or decreased from any tax year since the 1990 tax year, whichever tax year results in the largest property tax decrease.
The Director's rule under consideration here was promulgated with an effective date of November 16, 1992, and provides the following in pertinent part:
(a) The property tax reduction shall take into account judgments entered by a county tax board, the State tax court, or any other court of competent jurisdiction that take effect on or before the date on which the extended tax duplicate is closed for the tax year.
(b) Tax appeals from any prior year pending on or before the date on which the extended tax duplicate is closed for the tax year, shall be excluded from the calculation for the tax year.
[N.J.A.C. 5:33-3.8 (a) and
(b).]
Since the validity of N.J.A.C. 5:33-3.8(a) and (b) impacts on plaintiffs' constitutional arguments, we will resolve that question first. The Director claims that the rule was adopted in accordance with Cold Indian Springs Corp.'s construction of N.J.S.A. 54:4-6.3b. The difficulty with that position, at least from our point of view as an intermediate appellate court, is that the critical statutory language has not been amended since the Supreme Court decided that case. Then, as now, the Rebate Act provides that "such calculations for the property tax reduction shall exclude reductions resulting from judgments entered by" the appropriate adjudicatory agencies or courts. The Supreme Court held:
[The act] ... does exclude from the calculations for the property tax reduction in a rebate year, reductions in assessments for that year resulting from tax appeal judgments. Accordingly, for the tax year or years in which the appeal is pending, any reduction would be excluded from the computation. However, assessments for subsequent tax years would reflect the reduction obtained by the tax appeal judgment and to that extent such reductions would be subject to the rebate provisions of the act.
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