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City of East Orange v. Township of Livingston

May 26, 1995

CITY OF EAST ORANGE, PLAINTIFF,
v.
TOWNSHIP OF LIVINGSTON, DEFENDANT.



The opinion of the court was delivered by: Crabtree

These are consolidated local property tax cases, wherein plaintiff seeks direct review of the 1991, 1992 and 1993 assessments on its property located in Livingston, New Jersey. The property consists of 36 separately assessed contiguous parcels (some consisting of two or more lots) which, in the aggregate, comprise the East Orange Water Reserve. *fn1

The aggregate assessments were as follows:

1991 $9,479,000

1992 $9,541,300

1993 $9,541,300 *fn2

The property, the site of a large, underground aquifer serving as a water supply for residents of East Orange, contains approximately 1,422 acres in Livingston, *fn3 of which 731 are wetlands.

The lands in question have been the subject of judicial review on two prior occasions. The earlier case was In re Appeal of East Orange. 80 N.J. Super. 219 (App.Div. 1963), involving tax year 1957, wherein the court approved of a valuation approach which divided the acreage into various categories based upon elevation above sea level and their condition as wooded, cleared or under water. The municipality's expert ignored value per acre and used a method which assumed prospective uses to include two public golf courses, a public park and a specified number of buildings. The court rejected this approach as "speculative," "theoretical at best," and "unrealistic." Id. at 228.

In the later decision, involving 1961, 1962 and 1963, the court again concluded that the land had to be divided into its various classifications, following which a value had to be determined for each classification and an assessment fixed by simply adding the total of the lands in each category. In re Appeal of the City of East Orange, 103 N.J. Super. 109 (App.Div.) aff'd 54 N.J. 96 (1968).

Both decisions followed the method prescribed by the Supreme Court in Newark v. West Milford Tp., 9 N.J. 295 (1952), namely, "a comparison of the representative component parts of the various classifications of the lands with the true value of comparable parcels of land owned by private persons...measured by the standard of value established by a fair and bona fide sale at private contract." Id. at 308.

Two significant changes affecting the subject property's value have occurred since the 1960's: the 1987 enactment of the Freshwater Wetlands Protection Act, P.L. 1987, c.156, N.J.S.A. 13:9B-1, et seq., and the moratorium on sewer connections for new residential construction, which, defendant concedes, is of indefinite duration.

The Freshwater Wetlands Act effectively prohibits any activity which disturbs the wetlands on the subject property. The same proscription applies to the so-called transition area, which is the buffer strip abutting the wetlands. The size of the transition area depends upon whether the abutting wetlands are of exceptional resource value or of merely intermediate resource value. If the wetlands are the habitat for one or more threatened or endangered species, the wetlands are of exceptional resource value, and the transition area is 150 feet wide; if the wetlands do not contain threatened or endangered species but are not isolated or man-made drainage ditches, swales or detention facilities, they are of intermediate resource value, and the transition area is 50 feet wide. N.J.S.A. 13:9B-7(a),(c); N.J.A.C. 7:7A-6.1(d)(e).

Plaintiff has offered testimony of two individuals tending to establish the presence of two species on the threatened or endangered list, namely, the barred owl and the red-shouldered hawk.

The moratorium on sewer connections for new residential construction was imposed by defendant-municipality at the direction of DEPE, on or about June 6, 1988. While defendant acknowledges the existence of the moratorium and that it is of indefinite duration, it contends that sewer connection alternatives are available to the suppositious buyer of the subject property and thus, that the property's highest and best use is for residential development (of the uplands portion), consistent with existing zoning regulations. *fn4

Plaintiff's valuation expert, following the Supreme Court mandate in Newark v. West Milford Tp., supra, first divided the subject property into seven parcels. He then identified, within each parcel, the quantum of developable acres, the quantum of non-developable upland acres and the quantum of other non-developable acres. In the latter category, he lumped wetlands, transition area, landlocked upland and 100-year flood plain.

The expert's breakdown of the parcels and the composition of each is best understood when expressed in tabular form as follows:

Developable Constrained Wetlands and

Parcel Size (Acres) Acres Upland Transition area

1 336.24 3 2.37 330.87

2 57.64 2 0.88 54.76

3 376.67 18 8.07 350.60

4 64.04 12 3.35 48.69

5 261.54 31 51.29 179.25

6 163.57 14 12.59 136.98

7 162.63 6 7.41 147.22

Relying upon eight sales of developable vacant land, the expert estimated the value of developable acreage in Parcel 3 to be $50,000 an acre. He arbitrarily assigned one-third of that value to the non-developable upland acreage, and on the basis of eight sales of wetlands, he estimated the value of the other non-developable acreage in all seven parcels at $2,000 an acre.

He made qualitative adjustments about the values of developable acreage in Parcel 1, 2 and 4 through 7, compared to Parcel 3. Parcel 1 was deemed 20% inferior; Parcel 2 was the same as Parcel 3; Parcel 4 was deemed 10% superior; Parcel 5 was the same as Parcel 3; Parcel 6 was deemed 10% superior; Parcel 7 was deemed 20% superior.

Thus, his value estimates for all three assessing dates, prior to adjustment for the sewer moratorium, were as follows:

Parcel 1 (Block 291, Lots 2A, 2B, 10C, 22-26, 28B,

28C, 29B, 29C, 37-40, 41A, 41B, 42, 43A, 45B, 46)

Developable acres Value

3 acres [at] $40,000 $120,000

Non-developable upland acres

2.37 acres [at] $13,300 $31,521

Other non-developable acres

330.87 acres [at] $500

(The expert deemed the flood-prone lands in

Parcel 1 to be worth no more than $500/acre) $165,435

Total (rounded) $317,000

Parcel 2 (Block 291, Lot 10B)

Developable acres

2 acres [at] $50,000 $100,000

Non-developable upland acres

0.88 acres [at] $16,650 ...


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