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Township of Mahwah v. Bergen County Board of Taxation

Decided: January 14, 1985.

TOWNSHIP OF MAHWAH, JOANNE MAKELY, FRANK P. KRAUS AND NEILAN BOMAN, PLAINTIFFS-APPELLANTS AND CROSS-RESPONDENTS,
v.
BERGEN COUNTY BOARD OF TAXATION, CRESSKILL BOROUGH, CLOSTER BOROUGH, FORT LEE BOROUGH, DEMAREST BOROUGH, LITTLE FERRY BOROUGH, EUGENE P. BARDEN, ELIAS M. ELIASOF, CHARLES WARK, EDWARD W. JANSEN, AND NICHOLAS CORBISCELLO, DEFENDANTS-RESPONDENTS AND CROSS-APPELLANTS, AND FAIR LAWN BOROUGH, ALPINE BOROUGH, TETERBORO TOWNSHIP, ALLENDALE BOROUGH, HACKENSACK CITY, ENGLEWOOD CLIFFS BOROUGH, RIDGEFIELD PARK BOROUGH, LODI BOROUGH, CARLSTADT BOROUGH, AND FAIRVIEW BOROUGH, DEFENDANTS, AND TEANECK TOWNSHIP AND WERNER H. SCHMID, DEFENDANTS-RESPONDENTS



On appeal from and certification to the Superior Court, Appellate Division, whose opinion is reported at 190 N.J. Super. 84 (1983).

For affirmance in part, reversal in part -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock and Garibaldi. Opposed -- None. The opinion of the Court was delivered by Garibaldi, J.

Garibaldi

[98 NJ Page 271] Like the appeal in Newark Superior Officers Association, et al. v. The City of Newark, et al., and State of New Jersey, Department of Civil Service, et al., 98 N.J. 212 (1984), which we are also deciding today, this case presents the question of whether a statute that relies on population for its classification is special legislation enacted in violation of N.J. Const. (1947), Art. IV, ยง VII, para. 9. The statute in issue is N.J.S.A. 54:4-5, L. 1922, c. 130 (rebate statute), which during the tax years 1974 to 1980 provided a rebate of a portion of a municipality's share of county taxes if the municipality were located in a first-class county with a population in excess of 800,000, and had within its borders 200 acres or more of land used and occupied by a state or county institution. In 1980, the Legislature supplemented this statute by the enactment of N.J.S.A. 54:4-5.2 (L. 1980, c. 1187), approved September 22, 1980, which foreclosed any municipality that had not received the rebate for any year prior to the effective date of this act from receiving the rebate for any prior or future tax year.

The trial court and the Appellate Division held both statutes to be unconstitutional special legislation.

I

The Township of Mahwah (Mahwah) is a municipality in Bergen County. For the tax years in issue, 1974 to 1980, Bergen and Essex Counties were the only first-class counties in the state with populations exceeding 800,000. In each of these years, Essex and Bergen Counties had the highest county budgets and the highest total general property taxes.

Located in Mahwah are Ramapo College owned by the State of New Jersey Department of Higher Education, which consists of approximately 370 acres, and the Bergen County Police and Fire Academy, a county facility consisting of approximately 26 acres.

For each of the years 1972 through 1979, Mahwah filed a petition with the Bergen County Board of Taxation (County Board) requesting a rebate of 1/2 of its county taxes pursuant to N.J.S.A. 54:4-5. For the year 1980 Mahwah filed a complaint directly with the Tax Court seeking payment of a rebate or alternatively a declaration of a tax-exempt status.

The County Board issued judgments for the years 1972 through 1979 denying the relief requested. Mahwah appealed these judgments to the State Division of Tax Appeals, which transferred the appeals to the Tax Court.

Prior to trial in the Tax Court, the court granted a motion made by the New Jersey Attorney General on behalf of the County Board to dismiss the complaints for the years 1972 and 1973 as being filed out of time. In addition to Mahwah and the County Board, permission to intervene was granted to other taxing districts in Bergen County*fn1 as well as to several individual

residents of Mahwah and the other Bergen County municipalities.

Permission was also granted to Cedar Grove to intervene as amicus curiae. Rebates under the rebate statute had been paid to Cedar Grove, located in Essex County, for the years 1923 through 1980, and to Secaucus, located in Hudson County, for the years 1943 through 1965.

There are seventy taxing districts in Bergen County. The cost of the Bergen County budget is annually apportioned among the seventy taxing districts in the County through the mechanism of the table of aggregates. N.J.S.A. 54:4-49 to -52. Pursuant to this procedure, the County Board, in annually determining the tax rates under the Local Property Tax Law, N.J.S.A. 54:4-1 to -136, includes in each municipality tax levy sufficient monies to cover that municipality's apportioned share of county taxes. According to Dante Leodori, Tax Administrator of the Bergen County Board, if Mahwah were to receive the rebates it claims under the Rebate Statute for the tax years 1974 to 1980, it would be entitled to $3,807,877.97. This rebate would be credited against Mahwah's current and future years' apportioned share of county taxes. The granting of such a rebate would necessitate that the other sixty-nine municipalities in Bergen County proportionately assume the additional costs of the County budget resulting from the rebate. It is estimated that if all of Mahwah's rebates were granted, the additional tax burden to the other residents of Bergen County would be less than $1 per year per person.

In the tax years 1978 through 1980, Mahwah received from the State payments in lieu of taxes pursuant to N.J.S.A. 54:4-2.2a to -2.2k for having located within its borders Ramapo College. These payments totaled $73,777.77 and $75,670.28, for 1978 and 1979, respectively.

The Tax Court held both N.J.S.A. 54:4-5 and its supplement, N.J.S.A. 54:4-5.2, to be unconstitutional as special legislation. 3 N.J. Tax. 513 (1981). Accordingly, all of Mahwah's claims

were dismissed. In addition, the Tax Court held that for the years 1974 through 1977 Mahwah had established that 200 acres of its land were used and occupied by state and county institutions within the meaning of N.J.S.A. 54:4-5, but that as a result of the payments-in-lieu-of-taxes statute, N.J.S.A. 54:4-2.2a, for the tax years 1978 through 1980, Mahwah did not possess the necessary acreage to qualify under the rebate statute.

The judgment of the Tax Court was affirmed by the Appellate Division "for the reasons stated in the opinion of Judge Evers. 3 N.J. Tax. 513 (1981). See also Newark Superior Officers Ass'n v. Newark, 187 N.J. Super. 390 (App.Div.1982)." Township of Mahwah, et al. v. Bergen County Board of Taxation, 190 N.J. Super. 84 (1983).

Mahwah appealed to this Court as of right pursuant to Rule 2:2-1(a)(1), challenging the Appellate Division judgment that N.J.S.A. 54:4-5 was special legislation and that Mahwah was not qualified for the rebate for the years 1978 through 1980 as a result of the application of N.J.S.A. 54:4-2.2a. The Attorney General, on behalf of the Board, filed a cross-appeal as of right pursuant to Rule 2:2-1(a)(1), challenging the Appellate Division's judgment that N.J.S.A. 54:4-5.2 was invalid. The Borough of Closter and the other intervening Bergen County taxing districts filed a petition for certification and a notice of cross-appeal with this Court seeking review of the holdings that N.J.S.A. 54:4-5.2 was invalid and that Mahwah met the acreage requirements of the statute for the tax years in question. We granted the petition for certification on May 16, 1984, 97 N.J. 595 (1984).

II

N.J.S.A. 54:4-5 in its original form became law in 1922 and provided a rebate of one-half of the county taxes to any taxing district in a county of the first class in which there was located

a state or county institution occupying 200 or more acres of land.

The act's purpose was clearly stated by the Legislature:

This bill is proposed to correct an injustice to the Township of Cedar Grove, wherein the Overbrook Hospital is situated. The township is compelled to furnish tuition to the children of the various officials and attendants employed there, and is also compelled to record the vital statistics and to furnish protection to the inhabitants of said hospital, without receiving a dollar in return. [Statement 3, accompanying P.L.1918, p. 8471; emphasis added.]

Thus, the Legislature originally enacted N.J.S.A. 54:4-5 to prevent the inequity imposed upon Cedar Grove, which had to provide municipal services to Overbrook Hospital (which is the county psychiatric hospital and is now called Essex County Hospital Center) and its employees without receiving any corresponding tax benefit. As we have previously stated, the Legislature's purpose in passing the act was "to compensate some municipalities for revenues they would otherwise receive if the property had not been exempt from taxation, a condition which arose by virtue of public ownership and use." Bergen County v. Paramus, 79 N.J. 302, 309 (1979).

N.J.S.A. 54:4-5 was amended on several occasions. First, by L. 1928, c. 176, para. 1, which provided that municipalities within counties of the first class that have within their boundaries county or state institutions occupying more than 400 acres of land would receive a rebate of three-fourths of the municipality's share of county taxes.

In L. 1932, c. 128 the Legislature limited the definition of institutions to those institutions "other than park commission, or lands owned or occupied by any park commission." No sponsor's statement is available for this amendment. However, as indicated above, the purpose of the original bill was to provide relief for municipalities in counties that were burdened in various ways by the maintenance of county or state institutions within their boundaries. In contrast, the inclusion of a park commission or lands owned or occupied by any park commission would not constitute a similar burden on the host

municipality. Whereas the existence of Overbrook Hospital in Cedar Grove required that Cedar Grove furnish municipal services (police, fire, etc.) as well as tuition to the children of the various officials and attendants employed there, see Sponsor's Statement to L. 1922, c. 130, supra, vacant land held by a park commission would not result in similar financial burdens to the municipality. Therefore, the Legislature's limitation of the definition of institutions furthers the original purpose of N.J.S.A. 54:4-5.

Accordingly, prior to February 21, 1969, the rebate statute applied to any county of the first class and provided tax relief to municipalities within such a county that met the statutory criteria. First class counties are defined as those counties that have a population in excess of 600,000. N.J.S.A. 40A:6-1.

In 1968 the statute was amended to limit the rebate to municipalities located in counties of the first class with a population over 800,000. L. 1968, c. 467. As a result of this amendment, Hudson County was no longer a qualifying county. However, the 1970 census revealed that Bergen County, a first class county, had a population in excess of 800,000. Therefore, Bergen and Essex were the only two counties qualifying under the statute.

During the tax years in issue, N.J.S.A. 54:4-5 provided that

[a] taxing district in a county of the first class having in excess of 800,000 population in which there has been located a State or county institution other than a park commission or lands owned or occupied by a park commission occupying more than 200 acres and not in excess of 400 acres of land, in the aggregate, shall have remitted or rebated by the county treasurer a sum equal to 1/2 of the county tax rate applied to the entire amount of ratables remaining subject to taxation. A taxing district in such a county of the first class in which there has been located a State or county institution other than a park commission or lands owned or occupied by a park commission occupying in excess of 400 acres of land, in the aggregate, shall have remitted or rebated by the county treasurer a sum equal to 3/4 of the county tax rate applied to the entire amount of ratables remaining subject to taxation.

N.J.S.A. 54:4-5 was amended again by the enactment of N.J.S.A. 54:4-5.1 (L. 1980, c. 24) to provide that only non-parkland properties could be considered in determining the required

acreage. In 1980, nine municipalities in Essex County maintained parkland that exceeded 200 acres. Essex County, because of a change in the form of its government, directly took ownership of parkland, which had previously been owned by a park commission. Since the literal language of N.J.S.A. 54:4-5 disqualified only parkland owned by a park commission from satisfying the acreage standard, the Legislature amended the statute to resolve an ambiguity and preclude any parkland, regardless of the form of ownership, from constituting qualifying acreage under the statute. See L. 1980, c. 24. As a result of this amendment, Cedar Grove became the only municipality in Essex County that met the criteria of the rebate statute.

In 1980, N.J.S.A. 54:4-5 was further supplemented by the enactment of N.J.S.A. 54:4-5.2 (L. 1980, c. 118):

No taxing district which has not actually received a remission or rebate of county taxes pursuant to R.S. 54:4-5 for any full tax year occurring prior to the effective date of this act, shall receive a rebate or remission under that section for the current tax year or any other tax year whether occupying prior to or after the effective date of this act. Nothing contained in this act shall affect any remission or rebate of county taxes to be received pursuant to that section by any taxing district which actually received a remission or rebate for a full tax year occurring prior to the effective date of this act.

This supplement provided that a municipality, which had previously not been a recipient of the rebate, was no longer eligible for the rebate, while a municipality, which had previously qualified for the rebate, was not to be affected by this supplement as long as it continued to meet the qualifications of N.J.S.A. 54:4-5. Since no Bergen County municipality had received a rebate of county taxes, the enactment of N.J.S.A. 54:4-5.2 precluded Bergen County municipalities from qualifying for the rebate. The elimination of Secaucus by Hudson County's failure to meet the population requirement meant that Cedar Grove was the only municipality qualified to receive the rebate.

After the release of the Tax Court opinion in this case, the Legislature, in direct response to that decision, repealed both N.J.S.A. 54:4-5 and its supplement, N.J.S.A. 54:4-5.2. It substituted

a general statute that applies to any taxing district and expresses the land size restriction in percentage rather than acreage terms. L. 1982, c. 36; N.J.S.A. 54:4-5a. As stated in the Senate County and Municipal Government Committee Statement to N.J.S.A. 54:4-5a,

This legislation would not be confined to counties of any particular population size or class. However, the land area restrictions in the bill are such that only Cedar Grove in Essex county would qualify. Cedar Grove has been receiving a rebate of county taxes since 1923.

The statute phases out the rebate payments and terminates in its entirety in 1987.*fn2

III

Before we reach the question of the constitutionality of the statute, we first address the issue of whether Mahwah has met the ...


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