On certification to the Superior Court, Appellate Division, whose opinion is reported at 235 N.J. Super. 1 (1989).
For affirmance -- Chief Justice Wilentz, and Justices Stein, Handler and Garibaldi. Concurring in result -- Justices Clifford, Pollock and O'Hern. The opinion of the Court was delivered by Garibaldi, J. Chief Justice Wilentz and Justices Handler and Stein join in this opinion. Justice Pollock has filed a separate concurring opinion in which Justice Clifford joins. Justice O'Hern has filed a separate concurring opinion.
The Township of West Milford (Township) tax assessor increased the appraised valuation to reflect the purchase price of the single-family home that Gerald and Juanita Van Decker had purchased in 1984. The tax assessor also increased the appraised valuation of each of the three hundred forty-six other properties that had been sold in the Township during 1984. At issue is whether the practice of reassessing only properties that were the subject of a recent sale while leaving undisturbed the appraised valuations of properties in the same class that have not been sold constitutes selective or spot assessment that violates the uniformity clause of the New Jersey Constitution, Art. VIII, § 1, para. 1, and the equal protection clause of the fourteenth amendment. We hold that it does.
Moreover, it is axiomatic that no statute can sanction an unconstitutional practice. N.J. State League of Municipalities v. Kimmelman, 105 N.J. 422, 522 A.2d 430 (1987). Accordingly, the Township's reliance on the "protective range" of Chapter 123, N.J.S.A. 54:51A-6, to permit its discriminatory-assessment practice is without merit. Therefore, we do not address any issue relating to the scope of and the procedures under Chapter 123.
The facts are undisputed.
The Van Deckers purchased a single family dwelling in West Milford on November 2, 1984 for $112,000. At the time of their purchase the property was assessed for $31,900. Solely as a result of their purchase of the property, the West Milford Tax Assessor (tax assessor) increased the assessed value of the property for 1985 from $31,900 to $44,000. Specifically, the tax assessor adjusted the sales price of $112,000 to $110,300 and then applied a ratio of 39.89% to the adjusted sales price to result in the increased assessment of $44,000. The average ratio for West Milford as determined by the Director of the
Division of Taxation pursuant to Chapter 123 (N.J.S.A. 54:1-35a) for 1985 was 41.46%. The upper limit of the common level was 47.68% and the lower limit was 35.24%. Although the West Milford tax rate effectively decreased for the year 1985 because of the increased assessment, the Van Deckers' real-estate taxes increased from $2,209.88 in 1984 to $2,341.46 in 1985.
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 one-family residential dwellings, 3,900 vacant-land parcels and the remainder consisting of multi-family residential, commercial, industrial, and farm properties. Of those 12,200 line items the assessor changed 751 assessments; 347 changes, including the Van Deckers, were attributable solely to sales, 213 concerned added assessments for new construction, and the remaining changes "arose from other circumstances not relevant to this proceeding."
The Van Deckers challenged the tax imposed on their property on the ground that they had been intentionally discriminated against. They charged that the Township by taxing them on the basis of the current value of their property while not reappraising the true market value of other property in the same class imposed a greater tax burden on them than on similarly-situated property owners.
The Township, however, argued that even if it had discriminated against new owners, the Van Deckers were not entitled to any relief. Specifically, the Township relied on Chapter 123, which requires that for a taxpayer to claim relief from a tax assessment, the assessment-to-value ratio on that taxpayer's property must exceed the common level by 15%. The Township had raised the taxes on the Van Deckers' property as a result of their recent purchase, but had done so within the Chapter 123 parameters. Thus, the Township argued, as long as its assessment fell within the common-level range of Chapter 123,
it was permissible even if the assessment had been imposed in a discriminatory manner.
The Van Deckers first appealed to the Passaic County Board of Taxation, which rendered judgment for the Van Deckers and reinstated their 1984 tax assessment. West Milford then appealed to the Tax Court, which reversed the County Tax Board's judgment and reinstated the increased assessment. The Tax Court found that the increased assessment on the Van Deckers' property was "directly attributable to [their] purchase." The Court also found that the tax assessor had increased the assessments for each of the 346 other taxpayers who had acquired properties in the Township in 1984, but all the increased assessments, including the Van Deckers, fell within the protective range of Chapter 123.
The Tax Court adopted the logic proposed by the Township: Yes, there was spot assessment, but the Township's assessing practices were permissible so long as the increased assessments fell within the common-level range established by Chapter 123 of plus or minus 15% of the average assessment rate for that district. Moreover, the Tax Court found that Chapter 123 was the "exclusive remedy for assessment discrimination except for extreme, severe or egregious circumstances or unless the application of Chapter 123 still leaves the taxpayer with a confiscatory assessment." Additionally, the court indicated that independent of the Chapter 123 remedy, to prove a constitutional violation a taxpayer would have to show that his or her property has been deliberately and systematically overassessed.
The Van Deckers appealed to the Appellate Division, which reversed the Tax Court and reinstated the original 1984 assessment. In a decision reported at 235 N.J. Super. 1, 561 A.2d 607 (1989), the Appellate Division declared that the West Milford practice of raising the assessments only of recently-sold homes denied taxpayers the protection of the State and federal Constitutions. The court took judicial notice that that practice resulted in unequal treatment. The Appellate Division overruled
Quinn v. Jersey City, 9 N.J. Tax. 128 (1987), and Tall Timbers Inc. v. Vernon Twp., 5 N.J. Tax. 299 (1983), to the extent that the holdings in those cases were inconsistent with its finding of unlawful spot assessing.
The Appellate Division then held that Chapter 123 "is not automatically applicable to situations where the Tax Board has reversed an assessor's assessment." 235 N.J. Super. at 15, 561 A.2d 607. The Court relied on its finding that judgments of county tax boards are presumptively correct. Hence, on appeal from a county tax board judgment a taxing district "has the burden of proof not only of market value, but of the absence of a common level to trigger provisions of Chapter 123." Ibid. In other words, the Appellate Division held that municipalities can use Chapter 123's protective range as a shield against a county tax board judgment rendered in favor of a taxpayer only if they prove to the Tax Court that no common-level assessment rate exists.
The Township filed a petition for certification, which we initially denied but then on motion for reconsideration granted. 11 ...