On appeal from the Tax Court, whose opinion is reported at 10 N.J. Tax 330 (Tax Ct. 1989).
Petrella, O'Brien and Stern via telephone conference.
[242 NJSuper Page 171] This is an appeal from the determination of the Tax Court dismissing plaintiff's complaint challenging an added assessment based on new improvements. The complaint was prosecuted on behalf of the property owner, New Jersey Foreign Trade Zone Venture (Foreign Trade), by Whittier-Ruhle Millwork Co. (W-R Co.), the tenant who was occupying the most recent addition to the property. W-R Co. constructed a warehouse and distribution building on nine acres of land contained in a much larger lot in Mount Olive Township owned by Foreign Trade. The opinion of the Tax Court is reported in N.J. Foreign Trade Zone Venture v. Mt. Olive Township, 10 N.J. Tax. 330, 334 (Tax Ct.1989), and we refer generally to the facts recited therein.
It appears that there are three separate building sites, all occupied by substantial tenants, and all on one 53.7049 acre lot known as Lot 1, in block 460, on the tax assessment maps of Mount Olive Township. We are informed that despite the fact that there are presently three separate and distinct building sites occupied by different tenants on this lot, the lot has not been subdivided. The taxpayer contends before us, as it did in the Tax Court, that it has a right to contest only the value of the improvements and could limit its expert's appraisal to the building value and the land upon which it rests, the so-called "footprint" of the building. As noted in the reported opinion below, in its expert's appraisal Foreign Trade attributed no value "to the paved parking area, curbing, lighting, railroad siding and miscellaneous land improvements necessary to service the building." 10 N.J. Tax. at 334. Unlike a shopping mall, for instance, the uses are not integrated around common areas or interconnected. As we view it, a large part of the problem in this case could have been avoided if there had been a subdivision of this 53 acre lot to accommodate each separate tenant building site. This would have simplified assessments for the various entities constructed separately on the property.*fn1
There was also testimony in the record to the effect that the individual in the tax assessor's office who had actually assessed the parcel for the municipality had erroneously assumed that the parcel he assessed in 1987 was approximately four acres. Thus, according to him the rest of the parcel (i.e. some 49 acres) was "inadvertently" not assessed. However, the property record card showed that the parcel was 53.7049 acres, a survey of the parcel submitted by the land owner showed that it was 53.7049 acres, and as pointed out by the Tax Court judge, the tax map showed it to be 51.39 acres. 10 N.J. Tax. at 332 n. 1. If
there was an error in only assessing four acres rather than 53 acres, then the omitted assessment statute might be implicated. See N.J.S.A. 54:4-63.31 et seq. We note that the record on this appeal, as supplemented, contains an August 8, 1989 resolution of the Township of Mount Olive authorizing a tax appeal by the municipality to correct omissions in the assessment of the subject tax lot.
We reject Foreign Trade's argument that in the absence of proof of land value, it was permissible to presume that the land assessment was correct "and bring it up to 100% by dividing the land assessment into the equalization ratio." We agree with Judge Lasser's determination that the applicable added assessment statute, N.J.S.A. 54:4-63.3 "requires the valuation of the entire parcel of real property, not just the building or other structures added." 10 N.J. Tax. at 333. It is clear from the testimony that there was an obvious error in the land valuation since even the site owner's expert valued the land in the footprint of the building (some 3.639 acres) at $75,000 per acre,*fn2 while Mount Olive's expert valued the entire nine acres leased by W-R Co. at approximately $383,000 an acre, or $3,450,000. This compared with the 1987 assessment of $232,900, supposedly for the entire 53 acre parcel, which amounted to approximately $4,337 an acre, and reflected a full value of approximately $6,000 an acre, taking into account the common level of assessment of 71.05%.
Foreign Trade was given ample opportunity to introduce additional expert testimony as to the value of the entire parcel, but consistently chose not to produce it. It was content to rely upon the "presumptive correctness" of the assessment. However, it later conceded that the assessment was inadequate. Hence, it should have known that the presumption accorded to
an original assessment under such cases as Glen Wall Associates v. Wall Township, 99 N.J. 265, 273, 491 A.2d 1247 (1985), could not be relied upon in this case. Glen Wall did not establish that the original assessment had to be accepted by the court, only that it was presumed to be valid, absent evidence to the contrary. 99 N.J. at 273, 491 A.2d 1247. In this case, there was clearly evidence to the contrary. The assessment of the parcel was patently "inadequate." The parties in this case failed to appreciate that in order to establish the proper added assessment for the parcel, the Tax Court needed reliable evidence of the value of the entire parcel with all improvements included.
Foreign Trade claims that the Tax Court decision should be reversed because, otherwise, Mount Olive is allowed to recover taxes through an added assessment proceeding which are only recoverable through an omitted assessment proceeding. However, that argument fails to take into account that the statute authorizing added assessments requires a determination of the value of the entire parcel. The lack of information on the value of the entire parcel is due essentially to the position taken by Foreign Trade. Hence, it is through Foreign Trade's action that the judge was unable to determine the parcel's value.
We likewise reject Foreign Trade's argument that the judge erred by not allowing it to "contest the added assessment (occasioned by the construction of a building [as] the improvement without contesting the land)." ...