Pressler, Long and Gruccio. The opinion of the court was delivered by Pressler, P.J.A.D.
The issue raised by these consolidated taxpayers' appeals from judgments of the Tax Court is whether the local real property assessment of a single-family residential unit that constitutes part of a municipality's "official" affordable housing stock must take into account a deed restriction which, in order to ensure the unit's continuing status as affordable housing, limits its resale value to its initial purchase price plus consumer price index increases. The Tax Court concluded that such a deed restriction has no assessment significance. We disagree and reverse.
The underlying facts, essentially stipulated, are recited in the Tax Court's opinion reported at 10 N.J. Tax. 103 (Tax Ct.1988). Defendant Village of Ridgefield Park is a Bergen County municipality with a population of 12,500, one of the lowest per capita incomes of the county's 70 municipalities and the tenth highest tax rate in Bergen County, a situation largely attributable to the amount of tax-exempt land within its boundaries, mostly state highways. The subject premises are single-family condominium units constructed and sold as part of the Bergen County Housing Authority's affordable housing program.
As we understand the record, the Authority, because of federal restrictions on its financing modalities, operates its affordable housing program through the instrumentality of the Housing Development Corporation of Bergen County (HDC), a nonprofit corporation which it controls. In the early 1980s, HDC acquired several parcels of land in Ridgefield Park on which it constructed condominium projects that were the subject of master deeds complying with the requirements of N.J.S.A. 46:8B-8. After the Authority had made the required determinations of "low or moderate" financial eligibility, plaintiff Wayne Prowitz purchased a unit in the Highland Place project from HDC in 1983 for $42,500, and plaintiffs Denis and Kathleen Dunleavy purchased a unit in the Preston Hill project from HDC in 1981 for $40,000. The master deeds for these
projects, as well as the individual unit deeds, imposed severe restrictions on the purchasers' respective resale rights. Thus, the deeds accorded HDC an exclusive first option to purchase the unit at the original sale price plus a consumer price index factor and further provided that if the option was not exercised, the unit owner would be obliged to sell at that price "to an income eligible family as determined by the Bergen County Housing Authority." Once an eligible purchaser has bought a unit, however, he is entitled to remain in ownership and occupancy even if he thereafter exceeds the income-eligibility limitations necessary for initial purchase.
It is also stipulated that the Authority's affordable housing program antedates the enactment of the Fair Housing Act of 1985, N.J.S.A. 52:27D-301 et seq., the appointment of the Council on Affordable Housing (COAH) as therein required, and the promulgation of regulations by COAH, see N.J.A.C. 5:91 and 5:92. Nevertheless the Authority's guidelines under which it and HDC operate the affordable housing program are generally consistent with the spirit, purpose, policy and provision of the Act and the COAH regulations. Moreover, the parties agree that the units in question are creditable to Ridgefield Park as affordable housing units within the intendment of the Act even though the Village has never been a defendant in Mount Laurel litigation*fn1 or a party to COAH administrative proceedings. Finally, the question of the Village's assessment practice in respect of the affordable housing units was not a matter ever discussed by the Village with the Authority or agreed to by it during the course of its voluntary cooperation with the Authority.
The Village underwent a general reevaluation for tax year 1986. As part of that undertaking, it determined that the affordable housing units should be assessed on the basis of fair
market value without consideration of the deed restrictions on resale. Accordingly, it increased plaintiff Prowitz's total assessment to $86,300 and plaintiffs Dunleavy's total assessment to $84,600. Plaintiffs appealed to the Bergen County Board of Taxation, taking the position that while their respective assessments would have been fair had there been no resale restriction, the restriction reduced the fair market value to the maximum resale price available under the deed formula as of October 1, 1985, in the case of Prowitz, to $46,987, and in the case of Dunleavy, to $46,864. The County Board of Taxation rejected this contention, and plaintiffs appealed to the Tax Court, which affirmed both assessments.
We are persuaded that while the maximum resale price obtainable under the deed restriction does not necessarily define assessable value, the resale restriction nevertheless is a factor that must be considered in fixing the assessment. We start our analysis, as did the Tax Court, with recognition of the constitutional mandate that all real property must be "assessed according to the same standard of value," N.J. Const. (1947), Art. VIII, § 1, para. 1, and of the implementing legislative mandate that that standard is true value. N.J.S.A. 54:4-2.25. The Legislature has, moreover, given substantive content to the true-value standard by requiring the assessor to "determine the full and fair value of each parcel of real property at such price as, in his judgment, it would sell for at a fair and bona fide sale by private contract." It is obvious that full and fair value of these units, as so defined, is substantially affected by their maximum resale price under the deed restriction. The question, then, is whether there is any reason in law for denying this self-evident proposition any assessment relevance. We see none.
We are aware that there are categories of circumstances that reduce the actual value of property without affecting its assessable value. But these are ordinarily circumstances implicating the character, quality and extent of the owner's title and not ...