On appeal from the Tax Court of New Jersey.
Approved for Publication October 22, 1996.
Before Judges Pressler, Stern and Humphreys. The opinion of the court was delivered by Pressler, P.j.a.d.
The opinion of the court was delivered by: Pressler
The opinion of the court was delivered by
This is a Freeze Act case arising under N.J.S.A. 54:51A-8. Defendant municipality, Township of Cranford, appeals from a judgment of the Tax Court granting the motion of the taxpayer, plaintiff AVR Realty Co., for application of the Freeze Act to its 1994 assessment despite the Township's claim of a change in value. We affirm, but for somewhat different reasons than those relied on by the Tax Court.
These are the facts relevant to the Freeze Act issue. The subject property, approximately seven acres in area, is a mixed-use commercial development consisting of some 193,000 square feet of building space used for leasable office space, a motel, and a restaurant and banquet facility. The total assessment of the property as of October 1, 1991, for tax year 1992 was $14,884,100, $4,649,000 for land and $10,235,100 for improvements. AVR appealed. The assessment for tax year 1993 was in the same amount, and that assessment was appealed as well. The assessment for tax year 1994, identical to the 1992 and 1993 assessments, was made prior to the consolidated trial of the 1992 and 1993 tax appeals. That trial resulted in judgments entered on June 2, 1995, reducing the improvements component of the assessment for each of the two years in controversy. The judgment for 1993, which the taxpayer asserts is the base year for Freeze Act purposes, affirmed the assessor's land assessment but reduced the improvements assessment to $6,521,000, a reduction of just under four million dollars.
By the time the judgment for 1993 was entered, AVR had already filed an appeal from the 1994 assessment, which was dismissed, however, pursuant to N.J.S.A. 54:4-34. Thus, following entry of the 1993 judgment, AVR moved the Tax Court, as provided by R. 8:7(d), for Freeze Act relief for 1994 based on the judgment for 1993. Cranford opposed the motion, asserting that a change of value prior to the 1993 assessing date precluded that relief. The motion was decided in AVR's favor, and Cranford appeals.
N.J.S.A. 54:51A-8, the Freeze Act applicable to Tax Court judgments, provides that:
Where a final judgment has been rendered by the tax court involving real property, the judgment shall be conclusive and binding upon the municipal assessor and the taxing district, parties to the proceeding, for the assessment year and for the 2 assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property occurring after the assessment date. Where those changes are alleged, the complaint shall specifically set forth the nature of the changes relied upon as the basis for the appeal. However, the conclusive and binding effect of the judgment shall terminate with the tax year immediately preceding the year in which a program for a complete revaluation of all real property within the district has been put into effect.
The statute thus provides a clear and unequivocal mandate to taxing districts. They must accord the taxpayer the benefit of the Tax Court judgment for the two tax years following the last year encompassed by the judgment//--that is, the base year//--unless there has been a general revaluation or a change of value of the subject property prior to the assessment date for a "freeze" year. See Union Terminal Cold Storage Co. v. Spence, 17 N.J. 162, 167, 110 A.2d 110 (1954). The public policy implicit in Freeze Act provisions is clear. As explained by the Supreme Court in Hasbrouck Heights v. Div. of Tax Appeals, 41 N.J. 492, 498, 197 A.2d 553 (1964), in construing the cognate provision applicable to the former Division of Tax Appeals, replaced by the Tax Court, *fn1 "...the legislative purpose of the Freeze Act is to eliminate the harassment of requiring yearly appeals to be taken to the county and state tax boards where there has been no change in the value of the property." See also Newark v. Fischer, 8 N.J. 191, 199-200, 84 A.2d 547 (1951), noting that the "evil which the 'freeze' statute sought to remedy was repeated yearly increases in the assessed value of property, not related to or justified by any changes increasing its market value, and resulting in harassment of the taxpayer, subjecting him to the trouble and expense of annual appeals...." See also Riverview Gardens v. N. Arlington Borough, 9 N.J. 167, 171-173, 87 A.2d 425 (1952). Accordingly, we address the change-of-value exception, upon which Cranford relies, in the light of the protection that the Legislature intended to accord taxpayers by enactment of the Freeze Act.
We deal first with the procedural issues posed by this appeal. To begin with, we recognize that because of the assessor'sstatutory obligation to evaluate the property annually as of October 1 next preceding assessment year, the techniques available to a taxing district for asserting a change-of-value claim depends on the timing of the entry of the Freeze Act judgment. That is to say, if the judgment for the base year has been entered prior to the assessment date for the Freeze-Act years, the assessor is no longer at liberty to make an independent assessment of value as of that date. Because the Freeze Act is self-executing, the assessor is obliged simply to conform the assessment for the freeze years to the judgment. Should the assessor believe that there has been a change of value as of the assessment date, the Freeze Act expressly requires the taxing districts to file a complaint seeking relief from the base year assessment. See, e.g., Clearview Gardens v. Parsippany-Troy Hills Tp., 196 N.J. Super. 323, 329, 482 A.2d 523 (App. Div. 1984); Curtiss Wright Corp. v. Wood-Ridge, 4 N.J. Tax 68, 74 (Tax Ct. 1982); Edgewater v. United States Life Realty Corp., 2 N.J. Tax 421, 423 (Tax Ct.), aff'd 4 N.J. Tax 531 (1981).
The situation is, of course, quite different if the assessment is made before the entry of final judgment for the base year. Obviously, even though the assessor may know that the prior year's assessment has been challenged by the taxpayer, the assessor cannot know what the outcome of the challenge will be and what, if any, will be the base and the freeze years. Thus, until final judgment is entered there is no constraint upon the assessor's exercise of the statutory obligation to assess annually according to true value on the assessment date, and there is neither reason nor opportunity, prior to the fact, to require the assessor to file a complaint in order to increase the prior year's assessment. If a final judgment is entered in the taxpayer's favor after that date, it is then the taxpayer's burden to seek the benefit of the Freeze Act by a motion filed in the original cause. R. 8:7(d). And if the assessor is of the view that a change of value has occurred between the base year assessment date and the freeze year assessment date, the taxpayer's motion can be defended against by the assertion of and, ultimately, by proof of that change. See Clearview Gardens, (supra) ; Hudson Terrace Apts. v. Fort Lee, 191 N.J. Super. 489, 491-492, 467 A.2d 1092 (App. Div. 1982); Tp. of Wayne v. Robbie's, Inc., 118 N.J. Super. 129, 286 A.2d 725 (App. Div. 1972); 2nd Roc-Jersey Assocs. v. Morristown, 11 N.J. Tax 45, 51 (Tax Ct. 1990); Union Min. and Alloys Corp. v. Kearny, 11 N.J. Tax 280, 283 (Tax Ct. 1990), aff'd 13 N.J. Tax 114 (1992; Chevron USA v. Perth Amboy, 11 N.J. Tax 190, 194-195 (Tax Ct. 1990); Cumberland Arms v. Burlington Tp., 10 N.J. Tax 255, 262-263 (Tax Ct. 1988).
For the foregoing reasons, and because the final judgment was entered here after the assessing date for the freeze year, it is plain that the Tax Court erred in its holding that Cranford's failure to file a complaint challenging application of the Freeze Act to tax year 1994 was fatal to its right to defend against AVR's motion. We affirm the Tax Court's grant of that motion, however, because we are satisfied that Cranford's opposition thereto did not ...