For reversal -- Justices Mountain, Pashman, Clifford and Schreiber. For affirmance -- Chief Justice Hughes, Justice Sullivan and Judge Conford. The opinion of the court was delivered by Schreiber, J. Conford, P.J.A.D., Temporarily Assigned, dissenting. Chief Justice Hughes and Justice Sullivan join in this opinion.
Appellants, Piscataway Associates, Inc., Kaplen, Geiger, Chandler Associates, and Chandler and Piscataway Associates, Inc., owners of a garden apartment complex in the respondent Township of Piscataway, have appealed from a judgment of the Appellate Division holding that they had not established that the 1973 tax assessment on their property was unduly discriminatory and therefore invalid. The appeal was filed as of right, the appellants asserting that a substantial constitutional question was involved. N.J. Const., Art. VI, § V, par. 1(a); R. 2:2-1(a).
This procedure was improper and in disregard of the guidelines enunciated in Tidewater Oil Co. v. Mayor and Council of Carteret, 44 N.J. 338 (1965).
In Tidewater we pointed out that to justify an appeal as of right "there must appear indication of true merit from the constitutional point of view, i.e. that the issue tendered is not frivolous and has not already been the subject of a conclusive judicial determination." Id. at 342. That standard is not satisfied in this case. The issues here involve an analysis of a particular factual situation and application of those facts to statutory and constitutional criteria under established principles. A case falling into this classification is not appealable as of right. We would customarily dismiss proceedings when a petition for certification has not been filed in accordance with the procedure outlined in Tidewater, 44 N.J. at 344. However, after examining the case, we find that the general public
importance of the questions presented warrants their being considered and accordingly have granted certification nunc pro tunc. R. 2:12-1 and R. 2:12-4.
In In re Appeal of Kents 2124 Atlantic Ave., Inc., 34 N.J. 21 (1961), Chief Justice Weintraub wrote for a unanimous court that, upon a showing of substantial unequal treatment in assessments of real property within a municipality, caused by a failure to comply with the law, relief should be granted to the taxpayer where there is a reasonable basis for compensating the wrong. Id. at 29. These requirements have been met here.
The sole issue before us is the taxpayers' claim of discriminatory tax treatment for the year 1973. The facts are essentially undisputed. The Township had revalued all property within the municipality and new assessments became effective for the tax year 1965. The 1965 tax rolls were continued by the assessor through 1972. The assessor, finding that the State Director of Taxation's average sales ratio*fn1 on October 1, 1972 was about 33%, then multiplied each assessment uniformly throughout the municipality by three. He used the resultant figure, believing that it represented the full true value for the year 1973.
The garden apartment complex owned by the appellants was constructed between 1966 and 1970 and located on 76 acres of land in the Township of Piscataway. The property had been assessed, based upon 1965 values, at $4,808,300 in 1971 and 1972. In 1973 the assessment was raised to $15,031,200. The State Division of Tax Appeals found that its true value for 1973 was $13,065,243. The Appellate Division concurred, holding that sufficient credible evidence existed in the record to justify that result. We have, therefore,
an adjudicated specific finding that the 100% true value of the land and building for 1973 was $13,065,243.
The Director's average sales ratios for 1973, on the basis of 242 sales, was 76.44%, that is, the assessments were approximately equal to three-fourths of the sales prices. Of that number, 38 sold at prices equivalent to or higher than 90% of their assessed values. But over 200 sales were made at amounts less than 90% of the assessed value and 166 at less than 80%. There having been an adjudication that the petitioners' property was evaluated at 100% of true value for 1973 and there having been actual sales of a substantial number of properties in the Township demonstrating that the assessed values were on the average approximately 25% less than true value, the Division of Tax Appeals was satisfied that discrimination had been proven.
The Appellate Division disagreed. It found that the common level of assessments made in 1965 continued through 1972, that the township board of assessors assessed at 33% of true value for the year 1972, a year in which the Director's ratio was 32.39%; and that multiplying each assessment by three for the year 1973 maintained that uniformity. It concluded that a common level of assessment existed in 1973 and that the taxpayer had not shown that its property had not appreciated in value since 1965 to the same extent as other properties in the municipality.
When the revaluation was made in 1965, a common level of assessment existed throughout the municipality. The carrying over of assessments thereafter assumed that the percentage increase in value of each property remained the same. Although each year assessors should review and, where appropriate, change valuations, we recognize the impracticality and difficulty of fulfilling that duty. We have accordingly accepted the efficacy of a general revaluation for the years immediately succeeding its effective date. Thus in Tri-Terminal Corp. v. Bor. of Edgewater, 68 N.J. 405 (1975), cert. den., 425 U.S. 958, 96 S. Ct. 1739, 48 L. Ed. 2d 203 (1976), we accepted the general revaluation
effective for 1969 during 1971 and 1972. However, the vitality of this assumption dissipates with the passage of time. The Handbook for New Jersey Assessors (rev. ed. 1965) notes the problem:
If trends of property value were uniform throughout the taxing district, little attention would have to be paid to them, once all assessments were made on an equitable basis. Unfortunately, this almost never is the case. A great number of economic, social, and governmental influences will affect the properties within a taxing district in varying degree. In order to keep assessments equitable, the assessor must keep in constant touch with changing conditions. [ Id. § 903.1 at 217]
Property values in a municipality as large as Piscataway will probably not increase at the same rate in all neighborhoods. We are cognizant, too, of other factors which may affect the value of particular properties, such as municipal rent control. (Piscataway has adopted such an ordinance.) Here, nine years had elapsed since the last revaluation, and the presumption that the values of all properties rose at the same or similar rate has been substantially undercut. In 1965 the properties were assessed at 100% of true value. Impairment of the uniformity of the 1965 assessments by 1971 and 1972 due to the uneven effect of economic forces on the various properties is reflected in the Director's sales ratios in those years. The bulk of the sales varied over a 20% spread in the relationship of assessment to value. In those years most sales fell between the 20% and 40% level.
When the municipality multiplied each assessment by three, it aggravated the disparity, and the common level created in 1965, which had been affected due to the uneven inflationary effect over eight years, was further weakened. The following table graphically demonstrates this impact:
VALUE TO SALE PRICE NUMBER OF ...