On appeal from the Tax Court of New Jersey, whose opinion in Inmar is reported at 7 N.J. Tax 482 (1985).
J. H. Coleman, R. S. Cohen and Gruccio. The opinion of the court was delivered by Coleman, J.h., J.A.D.
These cases present the troublesome question previously undecided in this State, whether commercial landowners are entitled to have the assessed value for municipal realty taxes reduced by the cost of cleaning up hazardous waste and materials to make the property environmentally safe. The judge in each case assumed, without deciding, that the assessed valuation may be reduced by the cleanup cost. In both cases the judges concluded, however, that the taxpayer failed to establish the cleanup cost as of the assessment dates. Hence, tax abatement was disallowed. We now affirm and hold that a commercial taxpayer is not entitled to a reduction in the assessed value based upon the cost required to make the property environmentally safe.
I. Inmar Associates, Inc. v. Borough of Carlstadt.
Inmar Associates, Inc. (Inmar) owned 5.938 acres of land in a heavy industrial area of the Borough of Carlstadt. As of October 1, 1982, the relevant assessment date, the land was assessed for $655,200 and the improvements were assessed for $48,200.*fn1 The assessment was affirmed by the Bergen County Board of Taxation. Inmar then filed an appeal with the Tax
Court seeking a determination of the true value of the property for assessment purposes. Both sides presented expert testimony as to true value. Both experts relied exclusively upon the market sales approach to valuation. The experts agreed that the property was contaminated by toxic substances as of the assessment date which made the property difficult, if not impossible to sell.
Scientific Chemical Processing, Inc. (SCP) received a temporary authorization from the Department of Environmental Protection (DEP) on May 9, 1978 to use the property to transfer, store, reprocess, reclaim, blend and treat solid and hazardous waste. Consequently, it stored hazardous chemicals and substances in above ground tanks while waiting to be recycled. Some of the waste and chemicals to be used in the recycling process leaked from tanks and contaminated the ground. SCP's operation was closed down by DEP's order of March 27, 1980 because SCP's temporary operating authorization issued by DEP pursuant to N.J.S.A. 13:1E-11 had expired on April 30, 1979 and permanent registration pursuant to N.J.S.A. 13:1E-15 had been denied.
The judge concluded that the presumption of correctness of the assessor and the County Board of Taxation had not been rebutted. See generally, Aetna Life Ins. Co. v. Newark, 10 N.J. 99, 105 (1952). The Borough did not establish the value because its expert utilized sales of properties that were not comparable to the taxpayer's property. The judge also found that the taxing district's expert made specific adjustments to the perceived comparable properties to make them similar to the taxpayer's property but gave no justification for the adjustments contrary to Schmertz v. Dover Tp., 4 N.J. Tax 145, 150 (Tax Ct.1982). The judge further found that the Borough's expert utilized properties for comparison which were not contaminated by toxic wastes. For the same reasons, he concluded that the Borough had failed to establish true value by a preponderance of the evidence.
Similarly, the judge found that Inmar did not establish true value. Inmar's expert fixed the value of the land at $742,250 and then deducted $450,000 as cleanup cost based upon an August 31, 1984 cleanup contract to satisfy the demands of DEP. That contract price did not include the cost of cleaning up polychlorinated biphenyl (PCB) from the site. No remedial investigation or feasibility study was conducted to determine the extent of contamination. The judge found that the 1984 cleanup contract was insufficient to establish cleanup costs as of the October 1, 1982 assessment date, and that it could not have been foreseen on October 1, 1982 that DEP would enter a cleanup order as the result of litigation instituted in May 1983. Hence, the judge found that "neither party has established the true value by a preponderance of the evidence." He therefore affirmed the County Board of Taxation's assessment of the land. We agree that Inmar failed to establish the cleanup cost of the property as of October 1, 1982, but under our decision that issue is not relevant.
II. GAF Corp. v. Borough of South Bound Brook
The parties stipulated in the Tax Court that the commercial property in question had a fair market value of $1.6 million as of the October 1, 1983 assessment date if the property were not contaminated with hazardous materials. The contamination was not disputed. Plaintiff sought a tax abatement based upon a reduction in the assessed value by the cost of rendering the property environmentally ...