This case involves a challenge to the intermunicipal taxsharing formula embodied in the Hackensack Meadowlands Reclamation and Development Act, L. 1968, c. 404. The Act as amended appears as N.J.S.A. 13:17-1, et seq. and the taxsharing formula is found in Article 9, N.J.S.A. 13:17-60 to -76. The purpose of the legislation is set forth in N.J.S.A. 13:17-1, which provides:
It is hereby declared that there are approximately 21,000 acres of salt water swamps, meadows and marshes which are commonly known as meadowlands, in the lower Hackensack river basin; that extensive portions of this area have so far resisted comprehensive development because of their low elevation, exposure to tidal waters, unfavorable soil composition, and, in some instances, their distribution among many municipalities; that this land acreage is a land resource of incalculable opportunity for new jobs, homes and recreational sites, which may be lost to the State through piecemeal reclamation and unplanned development; that much of this acreage may be subject to redevelopment under section 3, Article VIII, of the State Constitution; that the orderly, comprehensive development of these areas, due to their strategic location in the heart of a vast metropolitan area with urgent needs for more space for industrial, commercial, residential, and public recreational and other uses, can no longer be deferred; that insofar as meadowlands are State-owned lands they are an asset of the fund for the support of free public schools whose integrity may not be impaired; that while the State, in the name of the people, has an obligation to assert its interests in meadowlands that are clearly State-owned, it has an equal obligation to establish a framework within which private owners may assert their interests and take title to meadowlands that are privately-owned; that these areas need special protection from air and water pollution and special
arrangements for the provision of facilities for the disposal of solid waste; that the necessity to consider the ecological factors constituting the environment of the meadowlands and the need to preserve the delicate balance of nature must be recognized to avoid any artificially imposed development that would adversely affect not only this area but the entire State; that it is the purpose of this act to meet the aforementioned needs and accomplish the aforementioned objectives by providing for a commission transcending municipal boundaries and a committee representing municipal interests which will act in concert to reclaim, plan, develop and redevelop the Hackensack meadowlands; and to safeguard fully the interests of the fund for the support of free public schools, all to the extent and manner provided herein.
The boundaries of the Hackensack Meadowlands District are set forth in N.J.S.A. 13:17-4 and they embrace parts of 14 municipalities in Hudson and Bergen Counties.
The Act is administered by the Hackensack Meadowlands Development Commission (HMDC), created by N.J.S.A. 13:17-5. The powers of the HMDC, set forth in N.J.S.A. 13:17-6, include the power to purchase or lease lands, including land under water or riparian lands, the power to adopt a master plan for the physical development of all lands within the district, and the power, either through contracts with developers or by its own employees, to undertake improvement projects in aid of reclamation, development or redevelopment of land within the district. The HMDC is specifically directed by N.J.S.A. 13:17-9 to adopt a master plan for the physical development of all lands in the district. By the terms of N.J.S.A. 13:17-11 the master plan may provide for residential, commercial, industrial, agricultural and park uses; it may also provide for transportation, streets, parking, freight facilities, airports, harbors, channels, wharves and other like matters. The plan may also address housing, residential standards, redevelopment, rehabilitation and conservation.
The plan may also include codes and standards covering land use, comprehensive zoning, subdivisions, building construction and design, housing and the control of air and water pollution and solid waste disposal. Significantly, no constituent municipality may enact or enforce any code inconsistent with the
HMDC master plan in so far as it pertains to land within the district.
Article 9, the subject matter of this litigation, deals with intermunicipal tax sharing, the program whereby the financial benefits and liabilities of meadowlands development are shared equitably among the constituent municipalities. The statutory implementation of the tax-sharing program is embodied in N.J.S.A. 13:17-60 to -76. The linchpin of the program is the intermunicipal account, established by N.J.S.A. 13:17-66. Through a 25-step formula, HMDC calculates the annual amount payable to the account by each constituent municipality and the annual amount due to each municipality from the account.
Plaintiffs, the Town of Secaucus and the Township of North Bergen, are the most substantial net contributors to the intermunicipal account, i.e., their payments to the account significantly exceed their credits from the account. Five other municipalities also make net payments but not on the scale of the payments made by plaintiffs. The remaining seven municipalities, all defendants in this action, as well as the HMDC, are net recipients.
The purpose of intermunicipal tax sharing and its role in the Act's implementation are set forth in N.J.S.A. 13:17-60:
(a) The Legislature hereby finds and declares that a vital component of any comprehensive plan for the development of the meadowland district, is a program whereby the financial benefits and liabilities of each constituent municipality, are clearly established and equitably distributed. Article 9 of this act provides for such a program, by the creation of an intermunicipal account, and specifically provides that each constituent municipality will be guaranteed, in perpetuity, against loss of its present existing tax ratable values within the meadowland district occurring by reason of the acquisition of taxable real property, through purchase, eminent domain or gift, by a governmental body or agency to be used for a public purpose, to the extent that such loss of existing tax ratable values is not offset by increased true value of the remaining taxable real property within the district, and will equitably share in the new financial benefits and new costs resulting from the development of the meadowland district as a whole. This article further provides that the Hackensack Meadowlands Development Commission shall not be able to receive any funds from the intermunicipal account.
(b) The Hackensack Meadowlands Development Commission shall, in 1974, and every year thereafter, submit a report to the Meadowlands Municipal Committee and the Legislature, relating to the operations of the intermunicipal account in the prior year, and shall recommend, when it deems necessary, such amendments to this article as it may deem necessary, to carry out the legislative intent herein stated.
The intermunicipal account established by N.J.S.A. 13:17-66 to reallocate municipal tax revenues among the constituent municipalities is the focus of the tax-sharing formula. Each municipality's affirmative obligation to pay is computed according to the formula set out in N.J.S.A. 13:17-67(b). A municipality's payment obligation is subtracted from the sum of all payments due the municipality to determine the "meadowlands adjustment payment" for that municipality. N.J.S.A. 13:17-74(a). If the sum of payments due to a municipality exceeds its affirmative obligation, payment is made to that municipality from the intermunicipal account and the meadowlands adjustment appears in the municipality budget under "miscellaneous revenues anticipated." N.J.S.A. 13:17-74(b). If, on the other hand, a municipality's affirmative obligation exceeds payments due to it, then the municipality must enter the amount of such excess as a special line item appropriation in its budget and pay the excess to the intermunicipal account in three installments. N.J.S.A. 13:17-74(c).
Each constituent municipality's payment obligation is determined by a formula involving four terms requiring definition:
(a) "Adjustment year" -- the year in which obligations to, and payments from, the intermunicipal account are payable. N.J.S.A. 13:17-61(a).
(b) "Base year" -- calendar year 1970. N.J.S.A. 13:17-61(e).
(c) "Comparison year" -- the second calendar year preceding the adjustment year. N.J.S.A. 13:17-61(f).
(d) "Apportionment rate" -- the total property tax levied by a municipality in the comparison year for local, school, veteran and senior citizen purposes divided by the aggregate true value (assessed value divided by the average assessment ratio promulgated for the municipality by the Director, Division of Taxation pursuant to N.J.S.A. 54:1-35.1) of all taxable real property other than Class II railroad property located in the municipality both within and without the meadowlands district. N.J.S.A. 13:17-61(g).
Except for the compounding effect of the meadowlands adjustment payment, to be addressed below, each constituent municipality's annual apportionment rate is based essentially upon those expenses, other than the cost of county government, which tax rates are designed to cover.
Each municipality's obligation to pay to the intermunicipal account is based upon the application of its apportionment rate for the comparison year to the excess of the aggregate true value of taxable real property in the district portion of municipality in the comparison year 0 over the aggregate true value of such property in the base year. N.J.S.A. 13:17-67. In 1973, the first adjustment year, each constituent municipality's obligation to the account was 10% of the product of the apportionment rate times such excess, increasing by 4% increments each year until 1983 when the debit was 50%, where it remained until the adjustment year 1989. Finally, the total amount of tax sharing payment obligations is apportioned among the constituent municipalities in the same ratio as the number of meadowlands acres within each municipality bears to the total number of acres in the meadowlands district. N.J.S.A. 13:17-72(a). This is known as the apportionment payment. If a municipality's tax sharing obligation, computed in accordance with N.J.S.A. 13:17-67, exceeds the municipality's apportionment payment calculated pursuant to N.J.S.A. 13:17-72(a), the ...