In these consolidated local property tax matters this court must decide whether rollback taxes under the Farmland Assessment Act of 1964, N.J.S.A. 54:4-23.1 et seq., were properly assessed against property acquired by plaintiff State of New Jersey, Department of Environmental Protection ("Department"). The matters are before the court on motions and cross-motions for summary judgment.
The subject of these cases are 45 parcels of land located in Franklin Township, Somerset County, five parcels located in Alexandria Township, Hunterdon County, and one parcel located in Union Township, Hunterdon County. All parcels were assessed as farmland pursuant to the Farmland Assessment Act at the time they were acquired by Department. Immediately thereafter rollback taxes were assessed against each parcel by the respective townships. The assessments were appealed to the appropriate county tax boards, resulting in affirmances in each case. Appeals of the county board determinations were then filed, as to certain of the parcels, with the Division of Tax Appeals. Those appeals have been transferred to the Tax Court by operation of law. N.J.S.A. 2A:3A-26.
The Franklin Township properties were acquired by Department pursuant to N.J.S.A. 58:21B-1 et seq., for the ultimate construction of the Six-Mile Run Reservoir. Although 45 parcels were acquired, appeals from the county board judgments upholding the rollback assessments were taken to the Division of Tax Appeals only with regard to three parcels. These were Block 57, Lot 28, acquired November 8, 1971; Block 57, Lot 30, acquired January 24, 1972, and Block 74, Lot 14, acquired March 20, 1972.*fn1 Rollback taxes were assessed against Block 57, Lot 28, for 1970 and 1971, and against Block 57, Lot 30, and Block 74, Lot 14, for 1970, 1971 and 1972. The record is incomplete as to the dates of acquisition of the other Franklin Township parcels and the years for which the rollback was assessed.
The parties have stipulated that 13 of these parcels did not remain in agricultural or horticultural use, as defined in the Farmland Assessment Act, following their acquisition by Department. As to 31 of the parcels,*fn2 unresolved questions of fact exist as to their continued use as farmland and the nature and amount of income attributable to them. The three parcels for which appeals were filed are among those for which these factual questions remain. Department seeks to overturn the assessments placed on all 45 parcels.
The Alexandria and Union Township parcels were acquired with funds from the New Jersey Green Acres Bond Act of 1971, L. 1971, c. 165. As noted above, the parcels were assessed as farmland at the time of their acquisition by Department, and rollback assessments were made immediately thereafter. County board judgments were appealed to the Division of Tax Appeals with respect to three of the Alexandria Township parcels. These were Block 17A, Lot 1B, acquired September 10, 1975, and Block 17A, Lots 3 and 15, acquired August 16, 1976. Rollback taxes were assessed, as to Lot 1B, for 1974 and 1975, and as to Lots 3 and 15, for 1974, 1975 and 1976. The two parcels for which appeals were not filed, block 17A, Lots 3A and 14, were acquired July 3, 1975. The record does not indicate the years for which the rollback was assessed on these parcels. It has been stipulated that Lots 3A and 14 were not devoted to agricultural or horticultural purposes after their acquisition. Whether or not the other three lots, for which appeals were filed, were so devoted, remains unresolved.
The Union Township parcel, Block 11, Lot 10Q, was acquired August 20, 1975. It was assessed for rollback taxes for 1973, 1974 and 1975. The county board determination affirming the rollback was appealed to the Division of Tax Appeals. The parcel has not been farmed (meaning devoted to an agricultural or horticultural use) subsequent to its acquisition by Department.
Several arguments were offered by Department in support of its claim that rollback taxes should not have been assessed against any of the subject parcels in these circumstances. The primary contentions are that rollback taxes were not meant to apply to acquisitions by the Department of Environmental Protection for reservoir, recreation or open space conservation purposes, and that the payments in lieu of taxes provided for in the reservoir and Green Acres legislation were meant to be the sole obligation of the Department to the exclusion of rollback taxes. In the Franklin Township case it is also asserted that Department property acquired for public water supply purposes is statutorily exempt from taxation. See N.J.S.A. 54:4-3.3. The townships assert that the acquisition of these properties by Department for reservoir and Green Acres purposes constitutes a change in use of the land sufficient to trigger the rollback provisions of the Farmland Assessment Act. In addition, they maintain that imposition of the rollback is entirely consistent with the "in lieu" payment plans devised by the Legislature.
Preliminarily, the court is faced with a question of jurisdiction. Department did not file appeals to the Division of Tax Appeals as to 42 of the Franklin Township parcels and as to two of the Alexandria Township parcels. The deadline for such appeals which has long since passed, was December 1 following the rendering of the judgment by the county board or within three months from the time the county board judgment was rendered, whichever date was later. N.J.S.A. 54:4-63.23.
In the briefs submitted in the Franklin Township case it is "stipulated" that the action is to be treated as though appeals were filed as to all 45 parcels. Department's brief in the Alexandria Township case contains a request that the two unappealed parcels be included in the action (the township's brief is silent on this point). None of the briefs, however, offer any authority that would support the assumption of jurisdiction by this court in the absence of a timely appeal.
The question of jurisdiction was touched upon briefly at oral argument.*fn3 Counsel for Department in the Franklin Township case explained that in an effort to avoid the necessity of a county board hearing as to each of the 45 parcels, a stipulation was entered before the Somerset County Board of Taxation that the board would be governed by the decision of the Division of Tax Appeals regarding the three parcels that were appealed. Counsel was of the opinion that such a stipulation established jurisdiction as to all the properties, including those for which an appeal to the Division was not filed.
I cannot agree that jurisdiction can be conferred on the court from the consent of the parties by way of a stipulation before the county board of taxation. These matters were transferred to the Tax Court from the Division of Tax Appeals. The timely filing of a petition of appeal with the Division was essential for that tribunal to have jurisdiction of the appeal. Prospect Hill Apts v. Flemington, 172 N.J. Super. 245, 247, 1 N.J. Tax. 224, 226-27, 411 A.2d 737 (Tax Ct.1979), and cases cited therein. The parties' attempt to avoid repetitious hearings before the county board was understandable. However, the proper procedure should have been for the county board to enter dismissals without prejudice as to the 42 parcels in order to permit expeditious appeals to the Division of Tax Appeals. The filing of an appeal to the Division for each parcel, within the time prescribed by statute, had to be accomplished in order to create jurisdiction.
Counsel for Department in the Alexandria Township case contended at oral argument that the decision in Newark v. Essex Cty. Bd. of Tax., 110 N.J. Super. 93, 264 A.2d 461 (Law Div.1970), overruled on other grounds, 72 N.J. 389, 405, 371 A.2d 22 (1977), stands for the proposition that when an issue is being actively litigated, whenever it has arisen, the court may consider all such cases even though appeals have not been filed. Without considering the accuracy of that statement, it is apparent that the procedural pattern presented in Newark, is different from that herein. That matter was before the court on a complaint in lieu of prerogative writs filed by the City of Newark on March 5, 1970 against the Essex County Board of Taxation and the 21 other municipalities of Essex County. It dealt with a claim by the City of Newark for the allowance of credits in 1970 for county taxes paid during 1960-1969 pursuant to N.J.S.A. 54:4-49. Following an appeal to the Essex County Tax Board, Newark sought relief in Superior Court rather than before the Division of Tax Appeals, which latter procedure was the normal course of appeal provided by N.J.S.A. 54:2-35. The court determined that, in view of the public interest involved and the fact that primarily legal questions were presented, an application of the doctrine of exhaustion of administrative remedies should be waived. The court relied upon R. 4:69-5, which provides:
Except where it is manifest that the interest of justice requires otherwise, actions under R. 4:69 [actions in lieu of prerogative writs] shall not be maintainable as long as there is available a right of review before an administrative agency which has not been exhausted.
This aspect of the decision in Newark is inapposite to the jurisdictional question posed here. The exhaustion rule does not come into play in this matter. There was no attempt made here to preserve an appeal by the filing of a complaint with some tribunal other than the Division of Tax Appeals. Here there was a complete failure to preserve appeals as to 42 of the parcels in Franklin Township and two of the parcels in Alexandria Township. In Newark a complaint was filed, apparently within the prescribed time limit, see R. 4:69-6, in Superior Court. The decision of the Law Division to retain jurisdiction in that case despite the failure to exhaust administrative remedies does not support the assumption of jurisdiction by this court in the instant matter in the absence of any filing within the time limits set by law. Cf. Boys' Club of Clifton, Inc. v. Jefferson Tp., 72 N.J. 389, 405, 371 A.2d 22 (1977); Bergen Cty. v. Paramus, 79 N.J. 302, 399 A.2d 616 (1979); New Jersey Turnpike Auth. v. Monroe Tp., 2 N.J. Tax. 371 (Tax Ct.1981).
I find, therefore, that this court does not have jurisdiction to entertain appeals by the Department of Environmental Protection with respect to 42 parcels of land in Franklin Township and two parcels in Alexandria Township for which appeals to the Division of Tax Appeals were never filed.
Remaining for decision are Department's appeals regarding three of the parcels in Franklin Township, three parcels in Alexandria Township, and the one Union Township parcel. There are no unresolved issues of material fact in the Union Township case. It is conceded that Block 11, Lot 10Q, in Union Township was not farmed subsequent to its acquisition by Department, and therefore was not "actively devoted" to agricultural or horticultural purposes as defined in the Farmland Assessment Act. That appeal is thus ripe for summary judgment. R. 4:46-2; Judson v. Peoples Bank and Trust Co. of Westfield, 17 N.J. 67, 73-75, 110 A.2d 24 (1954). However, issues of material fact remain regarding each of the three parcels in both Franklin Township and Alexandria Township. The parties have not been able to stipulate whether the requirements for farmland assessment as set forth in the farmland assessment legislation were satisfied in the years in which the rollback was assessed. Nevertheless, depending upon the outcome of certain legal issues to be discussed hereafter, resolution of these factual matters may be unnecessary. Only if the court disagrees with Department's contentions that it is entitled to judgment as a matter of law, and disagrees with the defendant townships' legal arguments, must the factual issues be reached. If it is determined that either party is entitled to judgment as a matter of law, resolution of the factual matters will not be needed. The court will therefore proceed to the merits of each case. Judgment will be reserved on the Franklin and Alexandria Township cases if a factual hearing proves necessary.
Department's first contention is that the rollback provisions of the Farmland Assessment Act were not intended to apply to land acquisitions by the Department of Environmental Protection for public water supply purposes or for public recreation and conservation purposes. Conversely, the townships maintain that the very acquisition of these properties by Department for purposes other than the agricultural or horticultural uses delineated in the Farmland Assessment Act constitutes a change in use mandating imposition of rollback taxes.
Department relies heavily upon the history of the Farmland Assessment Act, which will be briefly reviewed here. The act has its genesis in the decision of our Supreme Court in Switz v. Kingsley, 37 N.J. 566, 182 A.2d 841 (1962). In 1960 the Legislature passed chapter 51 of the Laws of 1960, relating to the taxation of real and personal property for the use of local government. Section 23 of the act accorded preferential treatment to agricultural interests in the taxation of real property. That section provided:
In the assessment of acreage which is actively devoted to agricultural use, such value [taxable value] shall not be deemed to include prospective value for subdivisions or nonagricultural use.
The court determined that this provision was violative of Art. VIII, § 1, par. 1, of the New Jersey Constitution, which commands that all real property be assessed according to the same standard of value and at the same rate of tax of the taxing district in which the property is located. Switz v. Kingsley, supra at 585, 182 A.2d 841.
Following the Switz decision alternative means were sought by which to afford the New Jersey farmer some relief from local property taxation. The Governor's Farmland Assessment Committee was appointed to make a study and develop recommendations regarding the assessment of farmland in the State. In a report dated March 20, 1963, it recommended an amendment to the Constitution "to require the Legislature to enact laws to provide that land actively devoted to agriculture or horticulture be assessed at values on this use only." Report of Governor's Farmland Assessment Committee (March 20, 1963). In the development of its recommendations the Committee considered
(a) the desirability of continuing the family farm in New Jersey and the farmer's problem; (b) the interests of the municipalities and the problems of the assessors; and, finally, (c) the interests of all the people of New Jersey in maintaining "open" space, the beauty of our countryside and in the availability of agricultural products fresh from the farm.
The Committee's recommendations were followed, and a constitutional amendment permitting the separate assessment of land actively devoted to agricultural or horticultural use was proposed in Senate Concurrent Resolution 16 (1963). The statement accompanying the proposal considered the amendment to be "essential to encourage the retention of agriculture as an industry in the state and to preserve agricultural lands in an open space condition." See East Orange v. Livingston Tp., 102 N.J. Super. 512, 534, 246 A.2d 178 (Law Div. 1968), aff'd o.b. 54 N.J. 96, 253 A.2d 546 (1969). The primary objective was "to save the 'family farm' and to provide farmers with some economic relief by permitting farmlands to be taxed upon their value as on-going farms and not on any other basis." Ibid. The proposed amendment carried at the general election held November 5, 1963.
Chapter 48 of the Laws of 1964, N.J.S.A. 54:4-23.1 et seq., became the implementing legislation. The act is limited in its application to land that is actively devoted*fn4 to agricultural or horticultural use. Land is deemed to be in agricultural use when devoted to the production for sale of plants and animals useful to man. N.J.S.A. 54:4-23.3. Land is deemed to be in horticultural use when devoted to the production for sale of fruits, vegetables, and nursery, floral, ornamental and greenhouse products. N.J.S.A. 54:4-23.4. In addition, land devoted to and meeting the requirements and qualifications for payments pursuant to a soil conservation program under an agreement with an agency of the Federal Government is deemed to be in agricultural or ...