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City of Newark v. Essex County Board of Taxation

April 08, 1998

CITY OF NEWARK, RONALD W. JEAN, DIRECTOR OF FINANCE AND MICHELLE R. JONES, TAX COLLECTOR OF THE CITY OF NEWARK, PLAINTIFFS-APPELLANTS/CROSS-RESPONDENTS,
v.
ESSEX COUNTY BOARD OF TAXATION, DEFENDANT-RESPONDENT/CROSS-APPELLANT.



Argued November 12, 1997 - Reargued January 2l, l998

On appeal from Superior Court of New Jersey, Law Division, Essex County.

Before Judges Long, Kleiner and Kimmelman.

The opinion of the court was delivered by: Long, P.j.a.d.

Article VIII, § 1, ¶ 1(a) of the New Jersey Constitution provides that "[p]roperty shall be assessed for taxation under general laws and by uniform rules [and] according to the same standard of value, except as otherwise permitted herein...." Consonant with this exception, effective December 4, l975, Article VIII, § 1, ¶ 6 was added to the Constitution as an urban renewal incentive. It provides:

The Legislature may enact general laws under which municipalities may adopt ordinances granting exemptions or abatements from taxation on buildings and structures in areas declared in need of rehabilitation in accordance with statutory criteria, within such municipalities and to the land comprising the premises up which such buildings or structures are erected and which is necessary for the fair enjoyment thereof. Such exemptions shall be for limited periods of time as specified by law, but not in excess of 5 years. [N.J. Const. art. VIII, § 1, ¶ 6. (emphasis added).]

In l989, in connection with the reenactment of the New Jersey Urban Enterprise Zones Act, N.J.S.A. 52:27H-60 to -95, the Legislature invoked Art. VIII, § 1, ¶ 6 of the Constitution and enacted N.J.S.A. 54:4-3.l39 to -3.l49, a statute designed, among other things, to encourage in "certain urban areas" "the construction of new single-family housing units" and "stimulate neighborhood revitalization." N.J.S.A. 54:4-3.l39a-b. In so doing, the Legislature recognized that the deterioration of urban residential neighborhoods "is in large measure the result of the unwillingness of the owners of, and investors in, residential properties to properly maintain and improve their properties, arising out of fear of the resulting increase in property taxes." N.J.S.A. 54:4-3.l39d. More particularly, the statute declared:

g. Further, while the rapidly growing demand for housing has begun to encourage some private investment in urban residential construction, the substantial property tax burdens in many of our urban areas have discouraged many prospective purchasers of newly constructed housing units in those municipalities;

h. These prospective purchasers may be further discouraged by the severe intramunicipal assessment discrepancies in certain urban areas, in which older residential properties remain assessed at a fraction of market value while newly constructed residential properties are assessed at full market values and the owners thereof pay substantially higher taxes than the owners of the older properties;

i. Property tax abatements for the construction of certain residential structures, and property tax abatements for the conversion of other structures to residential use, will constitute a substantial incentive for owners and investors to improve vacant land and underutilized structures;

j. The provision of property tax abatements for new residential structures in certain urban areas will assure the prospective purchasers of those properties that their property tax assessments will be no greater than the assessments of older homes, thus removing the fear of overly high tax burdens;

k. In certain urban areas, the encouragement of residential construction and conversion can be expected to make available older, more affordable housing stock, thus encouraging both the provision of affordable housing and general urban redevelopment, while in other urban areas, any new residential construction can be expected to contribute to the growth and neighborhood stability needed in conjunction with incentives for the rebirth of the business community;

l. Article VIII, Section I, paragraph 6 of the Constitution of this State authorizes the Legislature to enact general laws under which municipalities may adopt ordinances granting exemptions or abatements from taxation for limited periods of time not in excess of five years on buildings and structures in areas declared in need of rehabilitation in accordance with statutory criteria; and

m. It is, therefore, a compelling public purpose to provide qualified municipalities with the means of ...


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