On appeal from the New Jersey Tax Court.
Petrella, Shebell and Landau. The opinion of the court was delivered by Petrella, P.J.A.D.
This appeal addresses a recurrent problem regarding the validity of reassessment of real property by tax assessors on sale or transfer in the absence of a district-wide revaluation. At issue are the restrictions imposed by the State and Federal Constitutions and case law.
Plaintiffs Gerald and Juanita Van Decker purchased a small one-family dwelling with a detached one car garage on about one-quarter acre of sloping land near the water at Greenwood Lake in the Township of West Milford, Passaic County on November 2, 1984 for $112,000. Based on their purchase, the Township of West Milford tax assessor increased the assessment on the Van Decker property (listed on the tax maps as block 210, lots 11 and 12) for the tax year 1985 from $31,900 to $44,000. The Van Deckers appealed their increased assessment to the Passaic County Tax Board (Tax Board), which rendered a judgment for the property owners and reinstated the original assessment.*fn1 West Milford appealed the Tax Board's judgment to the Tax Court.*fn2 After a hearing as a small claims matter, judgment was entered by the Tax Court Judge on May 19, 1988
reversing the Tax Board's judgment for the tax year 1985 and reinstating the increased assessment.*fn3
This appeal requires that we address important tax issues touching on spot assessments and constitutional questions which we recently discussed, but were not required to decide, in Schwam v. Township of Cedar Grove, 228 N.J. Super. 522, 527-528 (App.Div.1988), certif. den. 115 N.J. 76 (1989), and Inwood Owners v. Little Falls, 216 N.J. Super. 485, 493-494 (App.Div.1987), certif. den. 108 N.J. 184 (1987).
The Van Deckers argue that the record establishes discriminatory taxation in violation of the uniformity clause of our State Constitution and of the equal protection clause of the Federal Constitution, and that the discriminatory treatment was intentional and systematic. They point out that since state law (N.J.S.A. 54:4-23) requires that all real property be assessed to the person owning it on October 1 of the preceding tax year, the assessor improperly utilized their November 1984 purchase to single out their property for reassessment in 1985. Moreover, the Van Deckers argue that the Tax Court Judge failed to give weight to the presumption of correctness of the County Tax Board judgment, and that his rulings and intervention at trial prevented them from probing the propriety of the assessor's valuation and assessing methods. Although not raised below, the Van Deckers further claim that there was a violation of their rights under the federal Civil Rights Act, 42 U.S.C.A. § 1983.
Numerous documents and exhibits were introduced at trial bearing on the assessing practices in West Milford since the previous revaluation, effective in 1970. Many summaries or abstracts of tax documents were presented. Curiously, although
demanded and promised, the municipality never produced the actual property record cards for most of the properties in block 210, the block in which the Van Decker property is located.
The last district-wide revaluation in West Milford was conducted in 1969 and took effect in 1970. In 1985 there were approximately 12,200 line items on the assessment rolls, including approximately 8,000 primarily single-family dwellings (class two properties), 3,900 parcels of vacant land (class one properties), and the remainder were multi-family residential, commercial and industrial (class four properties), and farm properties. The evidence disclosed, and the judge found, that for the 1985 tax year, which was involved in the trial, the assessor changed 751 assessments, of which 347 changes, including the Van Decker property, were attributable to sales. Changes resulting from added assessments accounted for 213 changes, and the "remaining changes arose from other circumstances not relevant to this proceeding."
At the time the Van Deckers acquired their single-family residence in West Milford on November 2, 1984 for $112,000 their property was assessed for $31,900. Although the effective West Milford tax rate decreased in 1985, the Van Deckers' property tax increased sharply for that year despite the fact that the property had not physically changed. Based on their purchase the tax assessor adjusted the sales price to a valuation of $110,300, to which she applied a ratio*fn4 of 39.89% as the
average ratio, and obtained an assessment value of $44,000. The assessor raised the assessment value of all the properties sold in 1984 where the value was less than the approximate 40% average ratio. It turned out that this produced an increase for all of the 347 sales. Here, since the prior assessment had been $31,900, and the figure derived by applying the ratio to the adjusted sales price was $44,000, the assessment was raised to the latter figure. A similar approach was applied to the other sold properties, but the percentage applied varied slightly depending upon when in the tax year the property was sold. The result was that while many neighbors experienced property tax reductions, the Van Deckers' taxes increased from $2,029.88 in 1984 to $2,341.46 for 1985.
It was proven, and found by the Tax Court Judge, that the West Milford tax assessor had increased tax assessments for each of the 347 taxpayers who had acquired properties in the township in 1984, including the Van Deckers. However, in 1985 neighbors and others who owned real property in the township prior to 1984 were unaffected by these changes, except that their property taxes were lowered. As a result, increased property taxes were paid to the municipality by its newest property owners.
The Van Deckers challenged the assessor's actions as unfair, and appealed to the Passaic County Tax Board. That board reversed the tax assessor's revaluation of the Van Deckers' property, presumably based on a recognition of the proscription against discriminatory procedures, and reinstated the prior assessment. West Milford then appealed the Tax Board's judgment to the Tax Court. It essentially argued, apparently in
reliance on Quinn v. Jersey City, 9 N.J. Tax. 128, 135 (Tax Ct.1987), which we discuss later, that even if the assessing procedure was improper, as long as the assessment fell within the protective range of Chapter 123, N.J.S.A. 54:51A-6, it could not be changed unless the taxpayer could show that the assessment was confiscatory or that "severe, extreme or egregious circumstances" existed. We disapprove of Quinn to the extent it appears to authorize selective increases in assessments for only those properties in a class which had been subject to recent sales.
Here, the Tax Judge's opinion*fn5 considered the issues in the case before him as "the true value of the subject property and whether the original assessment is a discriminatory 'spot' or selective assessment in violation of the uniformity clause of the New Jersey Constitution, Article VIII, § 1, par. 1, and the equal protection clause of the United States Constitution, Amendment XIV, § 1."
At the Tax Court hearing the testimony of the tax assessor who had been in office when the challenged assessment was made was at best unclear. She was the municipality's only witness in its appeal from the Tax Board judgment. Indeed, the Tax Court Judge, in finding that the true value of the subject property on the October 1, 1984 assessing date was $110,300 (adjusted for time), reversed the Tax Board and sustained the assessor, stating: "The assessor's testimony on her assessing practices was frequently unresponsive and shrouded in murky euphemisms." The Tax Court Judge nonetheless found credible her valuation testimony, which "was not severely challenged." The judge generally ruled against plaintiffs on proffers of testimony or documents to establish "some kind of
invidious distinction between the assessment on [the Van Decker] property and the assessment on" various other properties.*fn6
As the Tax Court Judge noted, there was no real issue of true value of the property in the appeal. Based on the property's value he found that the ratio of this property's assessed value to its true value fell "well within the common level range," and he found no discrimination ...