On appeal from the final judgments of the Tax Court of New Jersey, whose opinion is reported at 2 N.J. Tax 168 (1981).
Botter, Polow and Brody. The opinion of the court was delivered by Polow, J.A.D.
Plaintiffs are the owners of a 15-story apartment building in Asbury Park. On their tax appeal the Tax Court granted reductions in total assessments for 1977, 1978 and 1979 based upon discrimination. Murnick v. Asbury Park, 2 N.J. Tax. 168 (1981). Although the city filed a notice of appeal from the entire judgment, it has presented no argument with respect to the reduced assessment and tax rebate awarded to plaintiff's for the year 1977. It does challenge the ratios employed by the Tax Court in reducing the assessments for 1978 and 1979 as violations of N.J.S.A. 54:1-35a and N.J.S.A. 54:2-40.4 (chapter 123*fn1).
On this appeal the city does not challenge the Tax Court determination with regard to true value for the years 1978 and 1979. It does challenge the taxpayers' right to receive any relief for the years 1978 and 1979, arguing that the trial judge erred in failing to apply chapter 123 ratios and that chapter 123 ratios would bar relief. The taxpayers insist that the Tax Court judge correctly held that in this case "Chapter 123 fails to provide an adequate and equitable remedy," 2 N.J. Tax. at 191, for 1978 and correctly applied a stipulated ratio which would permit relief for 1979 although it may not be the chapter 123 ratio.
Hence, the basic controversy is whether the provisions of chapter 123 provide the exclusive method for adjudicating a taxpayer's right to discrimination relief. Such relief is available to a property owner whose tax assessment bears a substantially
higher ratio to true value than the "common level range" for other real property within the taxing district. If the Legislature intended chapter 123 ratios to be exclusive, its provisions are mandatory and may not be disregarded in favor of another formula. The city therefore insists that the Tax Court lacked discretion to vary from the chapter 123 ratio for 1978 and that any stipulation to vary from chapter 123 ratios in 1979 "must be declared void and unenforceable as a matter of law."
In In re Appeal of Kents, 2124 Atlantic Ave., Inc., 34 N.J. 21 (1961), the Supreme Court stressed that upon a showing of substantial unequal treatment in the ratio of assessments to true value within a municipality, relief should be available where there is a reasonable basis to compensate the wrong. Id. at 29. Similarly, in Piscataway Assoc., Inc., v. Piscataway Tp., 73 N.J. 546 (1977), the court held that "where a taxpayer's realty is assessed at true value and such assessment is substantially higher than the common level generally applied to other properties, or, in the absence of a common level, than the average ratio of the Director of Taxation, then the taxpayer ordinarily will have shown discrimination and is entitled to relief." Id. at 553-554 (footnote omitted). Still, our courts have long recognized the difficulty in fixing the average or common ratio within a municipality against which a particular taxpayer's assessment to true value ratio is to be measured. "Mathematical perfection in taxation is unobtainable, and hence relief should not be denied merely because the result lacks absolute precision." Kents, supra, 34 N.J. at 32.
N.J.S.A. 54:1-35a(b) fixes a "common level range" of plus or minus 15% of the average ratio determined by the Director of the Division of Taxation. This is the core of chapter 123 which was effective commencing with the tax year 1978. L. 1976, c. 33. For that year, the average ratio to be applied was the unweighted, unclassified, arithmetic average determined by the Director as of October 1 of the pretax year. However, the provision was further amended in 1979 to redefine the chapter 123 ratio as the Director's weighted ratio. The change from the unweighted to
the weighted ratio became applicable for the 1979 tax year. (See Senate, County & Municipal Government Statement, Assembly Bill 1492, L. 1979, c. 51).
For the tax year 1978 the Tax Court judge found that the then applicable statutory provision requiring use of the "unweighted" ratio was "inadequate" to provide relief for the taxpayers. 2 N.J. Tax. at 191. The chapter 123 unweighted ratio was 80% of true value. Id. at 177. Plaintiffs' assessment was determined to be 91% of true value and therefore less than 15% above the "common level range" determined pursuant to the chapter 123 formula. Thus, the taxpayers would not have been entitled to relief under N.J.S.A. 54:1-35a. Id. at 190-191.
However, without statutory authority, the trial judge applied a ratio for the tax year 1978 of 73.42%. The taxpayers' assessment at 91% of true value ratio was then found considerably in excess of the 15% variation ...