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Plushanski v. Union Township

September 29, 1980




This matter involves the application of a rollback tax assessment on land located in Union Tp., Hunterdon County. The rollback tax was imposed by judgments of the Hunterdon County Board of Taxation, which judgments were contested by taxpayers.

Prior to 1976 taxpayers owned two parcels of vacant land, Block 4, Lot 5, containing approximately 13 acres, and Block 5, Lot 3, containing approximately 99 acres. These parcels were assessed as farmland pursuant to The Farmland Assessment Act, N.J.S.A. 54:4-23.1 et seq. In 1976 and 1978 plaintiffs subdivided and sold one lot from the 99 acre tract (Lot 3-1) and four lots from the 13 acre tract (Lots 5-2, 5-3, 5-4 and 5-5).

The change from farmland use of Lots 3-1, 5-2 and 5-3 occurred in 1976 and of Lots 5-4 and 5-5 in 1978. The parties stipulated that the provisions of N.J.S.A. 54:4-23.8, imposing rollback taxes, are applicable to these five lots for the year of change and for the two years preceding the year of change. The taxpayers question the valuation and assessment method employed by the assessor.

The assessor followed the four step rollback tax assessment procedure as set forth in N.J.S.A. 54:4-23.8. The steps are to ascertain:

(1) The full and fair value of such land under the valuation standard applicable to other land in the taxing district not assessed as farmland. This determination is referred to hereafter as "non-farmland value". Taxpayers' challenge of the rollback tax is principally directed to the assessor's determination of the non-farmland value.

(2) The amount of the land assessment for the particular tax year by multiplying the non-farmland value by the county percentage level as determined by the County Board of Taxation in accordance with ยง 3 of P.L. 1960, Chapter 51 (c. 54:4-2.27). Taxpayers also contend that a percentage level other than the county percentage level should be applied.

(3) The amount of the additional assessment of the land for the particular tax year by deducting the amount of the actual assessment on the land for that year from the amount of the land assessment determined under (1) and (2) hereof; and

(4) The amount of the rollback tax for that tax year by multiplying the amount of the additional assessment determined under (3) hereof by the general property tax rate of the taxing district applicable for that tax year.

The taxpayers do not challenge the assessor's actions with respect to the third and fourth steps.

In 1972 the J.M. Cleminshaw Company conducted a revaluation of all properties located in Union Twp. The revaluation was adopted for the tax year 1973. Large unsubdivided tracts in Union Twp. were valued by Cleminshaw using the homesite approach. The homesite approach considers the potential building lots in a tract having the road frontage and area required by the township zoning ordinance as an element in the valuation of the entire tract. Cleminshaw determined the fair market value of each potential homesite and uniformly deducted a vacancy factor of 25% from the homesite value to adjust the value of the land to its existing undeveloped and unsubdivided state. Additional deductions were made if warranted by the topography of each homesite. A separate per acre value was assigned to all other land in the tract not having the road frontage and acreage necessary for homesite development.The value of homesite lots when added to the value of the other land resulted in the total non-farmland value of the tract for assessment purposes.

This appraisal method resulted in a non-farmland valuation of $42,250 for the 13 acre tract for the year 1973 (4 lots at $13,000 each less 25% or $39,000 plus $3,250 for backland). The 99 acre tract was also determined to have four lots meeting zoning requirements for separate lots at $13,000 per lot. The total non-farmland value of these four lots was $39,000 after the vacancy discount. The remaining backland was valued at $56,088, for a total non-farmland value for the year 1973 of $95,088.

The tax assessor testified that he had used the homesite approach to determine the non-farmland value of the five subject lots as the first step in determining the rollback tax. He stated that this method was consistent with assessment procedures used for other vacant land in the taxing district. Taxpayers' expert valued these parcels at $26,500 and $198,000, respectively, solely on an acreage basis, using $2,000 per acre.

The assessor's figures and taxpayers' figures for the "non-farmland value" of the new lots are as follows:

Taxpayers' value

Rollback Years based on $2,000

Block Lot Area "Non-Farmland" Assessment peracre

1976 1975 1974

5 3-1 1.844 ac. $14,000 $7,800 $7,800 $3,688

4 5-2 1.667 ac. $13,200 $7,800 $7,800 $3,334

4 5-3 1.666 ac. $13,200 $7,800 $7,800 $3,320

1978 1977 1976

4 5-4 1.71 ac. $12,600 $9,450 $9,450 $3,428

4 5-5 1.65 ac. $12,500 $9,375 $9,375 $3,318

Although rollback taxes were assessed against the purchaser of the homesite lots, plaintiffs have assumed contractual liability for ...

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