On appeal from the Tax Court of New Jersey.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lefelt, Parrillo, and Sapp-Peterson.
Plaintiff Sumo Property Management, L.L.C. (Sumo or plaintiff) appeals from the March 9, 2006 order of the Tax Court granting summary judgment to defendant City of Newark (City) and denying plaintiff's application for a five-year abatement from local property tax under applicable State law and municipal ordinance. For the following reasons, we reverse and remand.
This matter dates back to September 1994, when plaintiff acquired four separate city tax lots (Lots 26, 30, 36 and 50) on which existed a vacant former community food warehouse or "bank" containing approximately 34,000 square feet in a blighted area. The property is located in the City's I-3 Industrial District. At all relevant times, namely from 1995 to 1997, a city ordinance captioned "Five-Year Tax Exemption and Abatement", Newark Revised Ordinance (N.R.O.) 10:23-1 et seq., permitted owners of "eligible property" to apply for a five-year abatement from local property tax for "new construction" or "rehabilitation" of "commercial structures" in urban areas in blight in need of redevelopment. N.R.O. 10:23-3. The ordinance is authorized by the Five-Year Tax Abatement Law, N.J.S.A. 40A:21-1 to -21, which permits municipalities to adopt an ordinance that allows for short-term abatement from local property tax for all or some of the designated types of work and structures enumerated in the enabling statute, at the option of the municipality.
Beginning in 1994 and continuing into 1995, after receiving "conditional use approval" from the City Planning Board, plaintiff renovated and expanded the warehouse that existed on the property (Lot 30) for operation and occupation, pursuant to a lease agreement, by the Kintock Group, a for-profit private corporation whose business is to provide a variety of privatized correctional related services for federal, state and county government. The certificates of occupancy for the existing warehouse and renovations were issued on September 14, 1994, concerning the majority of the renovations and permitting Kintock to commence occupancy as tenant that day, and on September 20, 1995, concerning completion of the balance of renovations. Plaintiff did not formally apply for abatement from local property tax for these renovations, but did challenge, unsuccessfully, the 1995 and 1996 tax assessment of that building (building #1) as excessive and discriminatory.
The following year, 1996, plaintiff constructed on the same lot (Lot 30) a free-standing building containing 22,514 square feet immediately next to the existing renovated warehouse, but not physically connected to it. A certificate of occupancy for this newly constructed building was issued on April 16, 1996, and within thirty days, on May 3, 1996, plaintiff filed an application for tax abatement with the City's Office of Assessment. The application specifically described building #2, but referenced Lots 26, 30 and 36.
The next year, 1997, plaintiff constructed a second free-standing building (building #3) containing 30,363 square feet across the parking lot from the other two buildings, on Lot 26. The certificate of occupancy for this newly constructed building was issued on March 31, 1997, and again within thirty days, on April 22, 1997, plaintiff filed an application for tax abatement for this structure with the City's Office of Assessment. The application described building #3, but again referenced Lots 26, 30 and 36.
The result of all this construction was a three-structure complex containing gross building area of 87,690 square feet, which expanded the existing space by 150%, leased to Kintock, who took occupancy on or about the time of issuance of the certificates of occupancy in 1996 and 1997. Kintock utilized the three buildings and tax lots to house and operate its business of providing a spectrum of privatized corrections-related services, including but not limited to substance abuse counseling, vocational training and other rehabilitative services. Approximately 14,000 square feet of the 87,960 square feet consisted of office space. The balance of the building area consisted of dormitory-style sleeping, kitchen and dining, bathroom and shower and recreational facilities for those former inmates assigned to Kintock who were required to stay at this facility overnight.
As noted, plaintiff timely filed separate applications for the five-year tax abatement, permitted by local ordinance, for each of the two newly constructed buildings. On September 20, 1996, the City's Tax Assessor sent plaintiff a Notice of Disallowance of Claim with regard to its May 3, 1996 application on the first newly constructed building. In denying the application, the Tax Assessor opined that the construction did not qualify as either "new construction" or "rehabilitation" under the ordinance and therefore was not "eligible" property for tax abatement purposes. It appears that plaintiff's April 22, 1997 application for a tax abatement on the second newly constructed building was denied as well, in light of a letter from corporation counsel dated August 26, 1998, which summarized the reasons for disallowance as "The structure . . . does not meet the definition of 'a commercial and industrial structure' under the ordinance and 'the property does not qualify for exemption as a residential dwelling because it is not owner occupied . . .'", and "In addition, because the property is being used as a 'multiple dwelling' it is specifically excluded".
Plaintiff appealed first to the Essex County Board of Taxation, which sustained the disallowance without hearing, and then to the Tax Court.*fn1 Thereafter, on October 18, 2004, the Tax Court entered an order finding the matter "not ripe for decision. Specifically, . . . the actions by the City's Tax Assessor and corporate counsel, in denying taxpayer's application, do not constitute municipal action" or "a ruling by the . . . governing body." The Tax Court remanded the matter "to the Mayor and Council . . . for disposition of taxpayer's pending application" while retaining jurisdiction, at least for the purpose of "reopen[ing] the summary judgment motions", which were denied without prejudice. 21 N.J. Tax 522 (2004).
On remand, the City Council formally denied the abatement applications by adopting an ordinance, which found that: (1) the property was not a "commercial" structure; (2) the property was not an "eligible property" under the ordinance, and (3) that the applications for five-year abatement were untimely as far exceeding the thirty-day requirement, measured from issuance of the property's first certificate of occupancy on September 14, 1994.
Plaintiff again appealed this determination to the Tax Court and both parties thereafter filed motions for summary judgment. On March 9, 2006, the Tax Court granted summary judgment in favor of the City, dismissing plaintiff's complaints and finding that although the taxpayer's property was a "commercial structure" within the intendment of the ordinance, it was not "eligible property" because not "newly constructed" when considering the complex operates as a "single, integrated economic unit", and that, in any event, plaintiff is judicially estopped from now seeking abatements for two "new" and "separate" buildings when it originally sought abatement for the "entire" property. Again viewing the property as a unitary ...