The opinion of the court was delivered by: Crabtree
These are consolidated local property tax proceedings wherein the Town of Secaucus seeks review of judgments of the Hudson County Board of Taxation reducing the 1991 and 1993 assessments on property owned by Eugene E. Mori on Paterson Plank Road, Secaucus, N.J. (Block 227, Lot 9). Mr. Mori seeks direct review of the 1992 assessment on the same property.
The assessments, which were for land only for all years, and the county board judgments for 1991 and 1993 were:
Assessment County Board Judgment
The municipality seeks an increase in the assessment for all years under review, while the taxpayer seeks a reduction in the assessment for all such years. For the sake of simplicity and to avoid confusion the municipality will be referred to hereafter either as Secaucus, the municipality, or the taxing district, while Eugene E. Mori will be referred to as the taxpayer. The municipality, however, bears the burden of overcoming the presumption of correctness of the county board judgment for the years 1991 and 1993; the taxpayer bears the same burden for 1992.
Tax year 1991 was a reassessment year in Secaucus. The taxing district filed no cross-petition seeking an increase before the county board for that year, so its relief for 1991 will be limited to a restoration of the original assessment, irrespective of its proofs of value. F.M.C. Stores v. Morris Plains Boro., 100 N.J. 418 (1985); Hackensack Water Co. v. Woodcliff Lake Boro., 9 N.J. Tax 545 (Tax 1988).
The general average ratios promulgated by the Director, Division of Taxation, for Secaucus for 1992 and 1993 exceed 100%. The lower limits of the common level range are 88.78% for 1992 and 88.48% for 1993.
The subject of the controversy is an L-shaped parcel of vacant land, located in the northeast corner of Secaucus, containing 135.93 acres, of which only 51.11 acres are developable uplands. The balance of the acreage is wetlands. The property has 716 feet of frontage on Paterson Plank Road on the south. It is bordered by Harmon Meadow, a commercial mixed use development of Hartz Mountain Industries (Hartz) on the west, and a complex of industrial and commercial uses on the east. Just beyond that complex is West Side Avenue, a public highway. The rear of the site is bisected in a north-south direction by Cromakill Creek, which is part of the wetlands acreage. The property is subject to the zoning regulations of the Hackensack Meadowlands Development Commission (HMDC).
The southernmost portion (57.5 acres) of the property, including the entire developable 51.11 acres, lies within the Highway Commercial Zone, which includes the following uses: business and professional offices, hotels and motels, restaurants, accessory retail and service uses, and banks.
The area and bulk regulations for the Highway Commercial zone are as follows: minimum lot area - 3 acres; minimum lot width - 200 feet; maximum lot coverage - 40%; minimum front yard - 75 feet; minimum rear yard - 30 feet; minimum side yards - 30 feet any one side; minimum open space - 30%; FAR *fn1 - 0.75.
The northeast portion (49.13 acres) lies within the Light Industrial & Distribution A zone. The permitted uses of the Light Industrial zone are: manufacture or storage of goods and accessory offices; scientific research and development; warehouses; commercial establishments providing supplies and services to industrial customers.
The area and bulk regulations for the Light Industrial zone are: minimum lot area - 3 acres; minimum lot width - 200 feet maximum coverage - 50%; minimum front yard - 50 feet; minimum rear yard - 100 feet; minimum side yards - 90 feet total (at least 30 feet per side); FAR - 2.5.
The northwest portion (29.3 acres) lies within the Research Park zone. The principal permitted uses in the Research Park zone are scientific research and development, office facilities and warehouses. The area and bulk regulations for that zone are: minimum lot area - 5 acres; minimum lot width - 300 feet; maximum lot coverage - 25%; minimum front yard - 100 feet; minimum rear yard - 100 feet; minimum side yards - 135 feet total (no less than 40 feet per side); minimum open space - 50%; FAR - 2.5.
Taxpayer is a landowner, not a developer. He engaged the services of two engineers, both knowledgeable in planning and development of commercial real estate, to submit a plan for the development of the subject property to the HMDC, the agency with primary jurisdiction over planning and development in the meadowlands. The initial development plan was submitted to the HMDC in January, 1988. That submission contemplated the development of 500,000 square feet of office buildings, 20,000 square feet of restaurants and 500 hotel rooms. This plan was later expanded to provide for two 24-story office buildings and a third 25-story office building containing a total of 3,055,500 square feet serviced by a 5.5-story parking deck containing a total of 7,650 spaces, of which 4,464 would be grade level. The aggregate square footage envisioned by this plan was 4,443,120, including the parking deck but excluding hotels or motels. That density level equates to a FAR of 0.7489, which complies with the HMDC requirement for the Highway Commercial zone. Taxpayer's engineering and planning experts anticipated that the development would require 20 - 25 years to complete.
No construction is permitted in the meadowlands without a zoning certificate issued by the HMDC. N.J.A.C. 19:4-4.133. The HMDC's chief engineer will issue a zoning certificate if, among other things, a traffic circulation system, both on and off-site, is found to be adequate for the proposed use, is designed to promote maximum safety and to provide access to existing streets, roads and highways. N.J.A.C. 19:4-4.135. One solution to the traffic access problem was a joint roadway over Hartz's Harmon Meadow development. Negotiations to that end were conducted between taxpayer and his representatives and officers of Hartz over an extended period of time. To describe these negotiations as protracted and desultory is not inaccurate.
An alternate solution was to build a bridge over Cromakill Creek to West Side Avenue. Approval was obtained from the United States Army Corps of Engineers, but no approval has been secured from the HMDC, either by the assessing dates or since.
Another obstacle was the sewer moratorium in effect in Secaucus on all the assessing dates. The evidence shows, however, that the moratorium was lifted in March 1993, and that the end of the moratorium was foreseeable on the earliest assessing date, as an extension of the sewer lines was under construction as early as September 1987 and was actually completed in January 1992.
The HMDC has advised the taxpayer's consultants that it will apply the FAR of 0.75 to the entire parcel of 135.93 acres, even though the buildable area is limited to the 51.11 acres of uplands.
Taxing district's expert estimated the true value of the subject property to be $27,500,000 on October 1,1990 (for tax year 1991) and $21,400,000 on October 1, 1991 and October 1, 1992 (for tax years 1992 and 1993). In arriving at these estimates, he relied primarily upon the sales comparison approach, positing a unit value of $13 per square foot for 3,055,500 square feet of building density for tax year 1991 and $11 per square foot for the same square footage of building density for tax years 1992 and 1993. *fn2 The expert then allowed for off-site development costs of $4 per square foot (an adjustment to which both parties agreed), and arrived at a net unit value of $9 per square foot for tax year 1991 and $7 per square foot for tax years 1992 and 1993.
In developing his value estimates, taxing district's expert concluded that the highest and best use of the subject property was for mixed commercial uses in conformity with the HMDC zoning regulations applicable to the Highway Commercial zone, i.e., offices, hotels and motels and accessory retail and service uses.
The expert relied upon nine vacant land sales that occurred between September 27, 1987 and January 31, 1994. The details of those sales are as follows:
# Location Date Price Acreage Zoning Price/SF/Bldg
1 Jersey City 1/94 $6,000,000 13.348 Redev. $33.22
2 Secaucus 10/90 $6,000,000 18.365 HMDC Lt.Ind'l $15.00
3 E.Ruthfrd. 12/89 $11,497,073
8/89 $172,500 13.23 Gen.Ind.& Bus. $29.17
4 No.Bergen 9/87 *fn4 $12.756 Highway,