On Appeal from the Tax Court of New Jersey, reported at 6 N.J. Tax. 481 (Tax Ct. 1984).
Pressler, Dreier and Gruccio. The opinion of the court was delivered by Pressler, P.J.A.D.
Plaintiff Village Supermarkets, Inc. appeals from the dismissal by the Tax Court of its consolidated complaints by which it challenged a 1979, 1980 and 1981 real property tax assessment of the defendant Township of Orange. The primary question raised by this appeal is whether a so-called net lessee, who is contractually obligated to assume the full tax burden for the property, is a "taxpayer" within the intendment of N.J.S.A. 54:3-21 and therefore entitled to prosecute an appeal from the assessment.
The controversy involves a multi-tenanted shopping center consisting of several buildings constructed on property which is assessed as a single parcel. Although the assessor's property record card shows a separate valuation for each building, the actual assessment has a single "buildings" component and the tax bill is so issued. Plaintiff is the tenant, under a 50-year
lease,*fn1 of one of the buildings in which it operates a Shop-Rite supermarket. The property was owned during the tax years here in question by Centre Properties Company, which transferred title to Mutual of New York during the pendency of the litigation. Plaintiff's lease requires it to pay a proportionate share of the real estate taxes assessed against the property, calculated as follows:
(a) An amount equal to the real estate tax attributable to the assessed valuation of the building and improvements to be erected by the Tenant, plus,
(b) An amount equal to the real estate tax attributable to the assessed valuation of the demised land without the building, plus,
(c) An amount equal to the real estate taxes assessed against the Shopping Center for the land and improvements, exclusive of the land and buildings occupied by Tenants, and multiplied by a fraction the numerator of which is the square footage of the floor area of the Tenant's building, and the denominator of which is the total square footage of the floor area of all stores in the Shopping Center determined as of the commencement of the lease year.
It appears that all other shopping center tenants are also obliged by their respective leases to pay a proportionate share of real estate taxes. The owner, although remaining primarily liable to the taxing authority, is thus fully and effectively relieved of the actual obligation for the local tax burden.
Plaintiff appealed to the Essex County Board of Taxation from both the 1979 and 1980 assessments. Each appeal was filed in its own name and each sought relief from the total assessment of $5,077,800, consisting of a land assessment of $1,344,000 and a building assessment of $3,733,800. Each appeal was dismissed by the County Board without prejudice and each order of dismissal noted the owner's objection to the petition of appeal and plaintiff's lack of status as a taxpayer within the meaning of N.J.S.A. 54:3-21. Plaintiff filed a complaint in the Tax Court on December 10, 1979 in respect of the 1979 assessment and another on November 6, 1980 in respect of the 1980 assessment. On July 24, 1981, this time in the name of Centre Properties, it filed a direct appeal with the Tax Court
from the 1981 assessment, which was the same as the prior years. Centre Properties then filed a motion in the action seeking leave to intervene in order to apply for consolidation of all three complaints and for their dismissal. The actions were ...