Conford, Kilkenny and Leonard. The opinion of the court was delivered by Kilkenny, J.A.D.
[104 NJSuper Page 148] North Jersey District Water Supply Commission (hereinafter Water Commission) appeals from two judgments of the State Division of Tax Appeals (hereinafter State Division) fixing the assessed valuations for the
year 1964 of certain lands owned by the Water Commission and located in Clifton. One tract, known as Block 353, Lot 10, has been valued by the State Division at $151,200, the same as the city's original assessment. The other tract, Block 353, Lots 60A-62A-65C, has been valued by the State Division at $38,000, as compared with the city's $43,000. There is no cross-appeal by the city.
The Water Commission urges two grounds for reversal. It argues: (1) The premises are tax exempt, and (2) they were not valued according to their actual use.
The Water Commission is a public water supply agency. It is organized and operates pursuant to R.S. 58:5-1 et seq. Its Wanaque reservoir is located in the boroughs of Wanaque and Ringwood, in Passaic County. The reservoir's lands and protective area comprise approximately 6,300 acres. Extending for 18 miles from the reservoir through a number of municipalities is a right-of-way used for large transmission aqueducts. Lot 10 in Clifton is used primarily for a "balancing tank" for the purpose of equalizing water pressures through the pipelines leading to various municipalities. It is not a collecting reservoir or source of water supply, but it is an appurtenance to the transmission system. The tank holds 15 million gallons of water.
Clifton did not assess the improvements. It did assess the lands where the balancing tank is located, and it assessed the lands in its city which constitute part of the right-of-way for the large aqueducts of the transmission system.
From 1961 through 1963, Lot 10, consisting of 7.56 acres, was assessed at an average of $1,650 per acre. The other three plots, consisting of 1.9 acres, were assessed at an average of approximately $1,200 per acre. The assessments for 1964, now under review, averaged $20,000 and $21,500 per acre respectively. The Water Commission did not challenge the city's right to assess these lands for tax purposes, or the amount of the assessed valuations, for many years prior to 1964 because of the relatively small amount of taxes involved.
The substantial increases in the 1964 assessed valuations prompted the instant appeals.
The city's right to assess the lands of the Water Commission is based upon R.S. 54:4-3.3, which provides as follows:
"The lands of counties, municipalities, and other municipal and public agencies of this State used for the purpose and for the protection of a public water supply, shall be subject to taxation by the respective taxing districts where situated at the taxable value thereof without regard to any buildings or other improvements thereon, in the same manner and to the same extent as the lands of private persons, but all other property so used shall be exempt from taxation." (Italics ours)
The Water Commission concedes that its watershed lands are taxable because they are used "for the purpose and for the protection of a public water supply." (Emphasis added.) But it contends that the taxing statute, supra, does not authorize the taxing of its lands used for the transmission and distribution of water. It asks us to draw a distinction between lands used for the purpose and protection of a "public water supply," expressed in the tax-allowing statute, and lands used in connection with a ...