May 10, 2011
CITY OF JERSEY CITY, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
LIBERTY HARBOR HOLDING, LLC, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-4359-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 5, 2011
Before Judges Parrillo and Yannotti.
The Law Division entered an order dated August 6, 2010, which declared that defendant Liberty Harbor Holding, L.L.C. (LHH) is not required to obtain a license from plaintiff City of Jersey City (City) to operate a parking lot, but is liable for the City's municipal parking tax. LHH appeals and the City cross-appeals from the court's order. For the reasons that follow, we conclude that the trial court correctly found that LHH need not be licensed by the City as an operator of a parking lot, but erred in finding that LHH is subject to the City's parking tax.
LHH is the owner of real property in the City. It entered into two separate, four-year lease agreements for the property, one with the City's School District (School District), and the other with the New Jersey Schools Construction Corporation (SCC). In the leases, LHH agreed to undertake such work as is necessary to "construct a surface parking lot on the Leased Premises." LHH further agreed to provide the School District with 128 parking spaces and the SCC with 92 parking spaces. Under the leases, the School District and the SCC have the sole discretion to allocate the parking spaces between Public School 3 and Middle School 4, and to designate any such spaces as reserved parking spaces.
In addition, the School District's lease requires it to pay LHH rent in the amount of $95 each month for each parking space, for a total yearly rent of $145,920. The SCC's lease requires that it pay yearly rent to LHH in the amount of $104,880, in monthly installments of $8740. Although SCC's lease does not break down the rent according to the number of parking spaces, the annual rent represents $95 per parking space per month.
In both leases, LHH agreed to maintain the property and to repair in a timely manner all major damage "including damage caused by utility construction or repair[.]" The School District and the SCC are, however, responsible "for snow removal, cleaning, security and minor maintenance items such as repair of minor fence damage and pothole repair." The leases additionally provide that, after construction of the parking lot, the lessees must obtain commercial general liability insurance for the leased premises. The School District and the SCC took possession in 2006.
By letter dated December 12, 2008, the City's Assistant Corporation Counsel (ACC) informed LHH that it was required to apply to the City for a parking lot license, as required by section 236 of the City's Municipal Code (Code). In the letter, the ACC also stated that LHH should "immediately complete" the parking tax return forms for the years 2006 through 2008, and remit all of the parking taxes due to the City pursuant to Section 304 of the Code
Thereafter, the City filed a complaint in the Law Division seeking an order compelling LHH to obtain a parking license and pay the license fees owed for years 2006 through 2009. The City also sought an order requiring LHH to pay $114,497.50 in parking taxes, plus interest and penalties, for the 2006 to 2009 tax years. LHH filed an answer, in which it denied that it was required to obtain a parking license or pay the City's parking tax.
In June 2010, LHH and the City filed motions for summary judgment. The trial court considered the motions on August 6, 2010, and placed its decisions on the record, finding that LHH is not required to obtain a parking license because it did not operate a parking lot "as a day-to-day business[.]" The court found, however, that LHH was required to pay the City's parking tax because the rent that LHH collects from the School District and the SCC "is precisely the type of fees that [the Code] seeks to tax[.]" The court entered an order dated August 6, 2010, memorializing its decisions on the motions.
LHH thereafter filed a motion for reconsideration, and for the first time argued that the court did not have jurisdiction to entertain the City's claim for unpaid taxes. The trial court found that it had jurisdiction and entered an order dated August 30, 2010, denying LHH's motion for reconsideration. The court also entered a final judgment dated August 30, 2010, against LHH and in favor of the City, in the amount of $178,300.56. LHH's appeal and the City's cross-appeal followed.
We turn first to the City's cross-appeal. The City argues the trial court erred by finding that LLH is not required to obtain a parking license. We disagree.
When interpreting a municipal ordinance, we apply established rules of statutory construction, one of which requires that we interpret a statute to "'effectuate the legislative intent in light of the language used and the objects sought to be achieved.'" Twp. of Pennsauken v. Schad, 160 N.J. 156, 170 (1999) (quoting AMN, Inc. v. Twp. of S. Brunswick Rent Leveling Bd., 93 N.J. 518, 524-25 (1983)). The best indication of legislative intent is the language of the statute, which should be given its ordinary meaning and significance. DiProspero v. Penn, 183 N.J. 477, 492 (2005). We read the pertinent statutory provisions "in context with related provisions so as to give sense to the legislation as a whole[.]" Ibid.
Section 236-2(A) of the Code provides that no person shall operate a "parking lot or garage" in the City without first obtaining a parking license. The term "garage" is defined to mean "[a]ny covered and enclosed space, or any portion thereof, where more than five motor vehicles are exhibited for sale, stored, parked, housed or located." Code § 236-1. The term "parking lot" is defined as "[a]ny outdoor space or uncovered plot of ground, place, lot, parcel, yard or enclosure, or any portion thereof, where more than five motor vehicles are exhibited for sale, stored, parked, housed or located." Code § 236-1.
The Code additionally provides that every applicant for a parking license must file with the licensing authority "a complete schedule of rates and charges." Code § 236-8. Licensees may not charge an amount greater than the amounts set forth in the license application, unless the licensee had notified the licensing authority of the new schedule of rates and posted signs showing the increase. Code § 236-9. Licensees also must maintain at each entrance to the parking lot or garage "a permanently fixed sign" informing patrons of the hours of operations and the rates to be charged. Code § 236-10.
In addition, the licensees must give patrons "a distinctive claim check" for the vehicle and the licensee may not return the vehicle to any person "without the proper claim check being presented or without satisfactory proof of ownership of the vehicle." Code § 236-12(A). Each licensee also must file a certificate with the licensing authority, "showing that the licensee has insurance against fire, theft and liability for the protection of the owners of the cars parking in his or her parking lot or garage." Code § 236-13. Furthermore, the "operator of a parking lot or garage" must keep the entrances and exits to the lot "properly attended at all times" when "the parking lot or garage is in operation." Code § 236-14.
The Code further provides that the parking lot and garage must be "completely enclosed by barriers[.]" Code § 236-15. The licensee must maintain the premises and keep the surrounding sidewalks free of "dirt, ice sleet and snow[.]" Code § 236-16. The licensee also is required to "immediately" inform the licensing authority of every claim against the licensee "by reason of loss, theft or conversion or any damage or injury to person or property" arising from the operation of the lot or garage. Code § 236-17.
Moreover, the licensee must notify the licensing authority concerning any vehicle left in the licensee's lot or garage for more than forty-eight consecutive hours unless the licensee knows the name and address of the vehicle's owner. Code § 236-18. The licensee also may not make "unauthorized use or removal" of any parked vehicles. Code § 236-19. In addition, the lot attendant must leave keys and the parking coupon "for safekeeping" at a reasonable distance from the lot, in the event a vehicle is not "called for at closing time[.]" Code § 236-20.
As the trial court noted, the Code requires a license only if a person or entity is, in fact, "operating" a parking lot or garage. In our view, the meaning of the term "operating" can be discerned by reference to the other provisions of the Code which detail the actions that generally constitute the "operation" of a parking lot. The Code indicates that the "operation" of a parking lot occurs when more than five motor vehicles are stored or parked on the premises, in an enclosed space that is manned by a parking attendant and is open during specified hours. Furthermore, "operation" of a parking lot involves the parking of vehicles at posted rates for specified periods.
We are satisfied that the trial court correctly found that LHH was not operating a "parking lot" under the Code. Here, LHH leased its property to the School District and the SCC. The lot is not open to the public generally. The property is used exclusively by the School District and the SCC for parking, and these entities exercise complete discretion as to the allocation of the parking spaces.
In addition, persons using the parking spaces on the property are not charged posted rates. Indeed, there are no signs apprising members of the public as to the hours of operation, the rates charged or the times the lot will be closed. Furthermore, there is no evidence of a parking attendant on the property. Parking checks are not given to persons who park there, and the lessees have the obligation for snow removal, cleaning and minor maintenance.
Although LHH leases a parking lot to the School District and the SCC, its action in doing so does not constitute the "operation" of a parking lot under the Code. We accordingly conclude that the trial court correctly found that LHH is not required to obtain a license.
We next consider the issues raised by LHH in its appeal.
A. Jurisdiction of the Trial Court.
LHH argues that the Law Division did not have jurisdiction to entertain the City's complaint for the parking taxes allegedly due and owing. We disagree.
The Local Tax Authorization Law, N.J.S.A. 40:48C-1 to -42 (LTAL), provides that municipalities may enact an ordinance imposing in such municipality a tax not to exceed fifteen percent "on fees for parking, garaging, or storing of motor vehicles, other than parking in a garage which is part of premises occupied solely as a private one- or two-family dwelling." N.J.S.A. 40:48C-6. The LTAL provides that all taxes imposed by any such ordinance shall be collected on behalf of the municipality "by the person" who provides "parking services to the customer." N.J.S.A. 40:48C-7(a). The LTAL further provides that the taxes collected must be remitted to the chief financial officer of the municipality. N.J.S.A. 40:48C-7(d).
In addition, N.J.S.A. 40:48C-35 states that all taxes, penalties and interest imposed under any ordinance adopted pursuant to the LTAL "shall be a debt of the taxpayer[.]" Such debt may be "recoverable in any court of competent jurisdiction in a civil action" brought in the name of the municipality within three years of the date the taxpayer's report is filed or due, whichever is later. Ibid.
LHH contends that the Law Division did not have jurisdiction to consider the City's claim because the City does not have statutory authority to prosecute an action to collect unpaid parking taxes without first obtaining a decision, order or assessment from the chief fiscal officer pursuant to N.J.S.A. 40:48C-38. In our view, this contention is without merit.
As we stated previously, N.J.S.A. 30:48C-35 permits the municipality to commence an action in a court of competent jurisdiction to collect any tax due under an ordinance adopted pursuant to the LTAL. A decision, order, finding or assessment by the municipality's chief fiscal order is not required to bring such a lawsuit. Although N.J.S.A. 40:48C-38 permits the City's chief fiscal officer to issue a certificate to the Clerk of the Superior Court in order to obtain a docketed judgment for unpaid parking taxes, this is an alternative remedy to a collection action brought under N.J.S.A. 40:48C-35.
LHH also argues that jurisdiction in this matter rests with the Tax Court. The Tax Court has jurisdiction to review actions, decisions or regulations by State agencies or officials, a county board of taxation, and county or municipal officials with respect to tax matters. N.J.S.A. 2B:13-2(a).
Rule 8:2 implements the Tax Court statutory jurisdiction, and provides that the Tax Court may entertain appeals challenging final decisions including any act, action, proceeding, ruling, decision, order or judgment . . . of a County Board of Taxation, the Director of the Division of Taxation, any other state agency or official . . . or any county or municipal official with respect to a tax matter[.] [Ibid.]
Here, the City filed a claim in the Law Division pursuant to N.J.S.A. 40:48C-35 for the collection of parking taxes allegedly due and owing. Although LHH maintains that it is not subject to the tax, this matter is not an "appeal" by a taxpayer challenging a particular tax determination by a municipal official. Therefore, we conclude that the Law Division properly exercised jurisdiction over the City's claim.
B. Parking Tax Liability.
Next, LHH argues that the trial court erred by finding that it is liable for the City's parking tax. We agree.
As indicated, the LTAL permits a municipality to impose a tax upon "fees for parking, garaging, or storing of motor vehicles[.]" N.J.S.A. 40:48C-6. The parking tax is collected on behalf of the municipality "by the person" who provides "parking services to the customer." N.J.S.A. 40:48C-7(a). The LTAL thus authorizes municipalities to impose a tax upon the "fees" charged for parking motor vehicles, and requires the person who provides "parking services" to collect the tax from the "customer[s]."
The City's parking tax was enacted pursuant to the authority conferred by the LTAL. Chapter 304-2 of the Code states in pertinent part that:
A. There is hereby imposed a fifteen percent (15%) tax on any fees whether paid directly, or paid as part of the rent charged in a lease for parking, garaging or storing of motor vehicles, in any commercial, industrial or residential property. . . .
B. All taxes imposed by this section shall be collected on behalf of the City of Jersey by the person providing parking services to the customer.
Thus, the Code provides that the tax will be imposed on "any fees" for parking, which includes "the rent charged in a lease for parking, garaging or storing of motor vehicles." However, the LTAL does not define the term "fees" to include "rent."
Indeed, the ordinary meaning of the word "fee" is a "payment asked or given for professional services, admissions, licenses, tuition," and the like. Webster's New World College Dictionary 496 (3d Ed. 1997). The term "rent" is generally understood to mean the "payment for the temporary possession or use of a house, land or other property[.]" Id. at 1137. In the LTAL, the Legislature intended that the parking tax would be imposed on "fees" charged for the services provided in the operation of parking lot, not upon "rent" paid to lease property. Furthermore, a lessee of property that is used for parking would ordinarily not be considered a "customer" under the LTAL or the Code.
We are therefore satisfied that the trial court erred by finding that LHH is liable for the City's parking tax. In this case, LHH leased its property to the School District and SCC, and while those entities use the property for parking, LHH is not engaged in the provision of "parking services" to either entity. The leases at issue here provide for the transfer of a leasehold interest in property. The lease payments are "rent" and not "fees" for parking services.
Reversed on the appeal; affirmed on the cross-appeal.
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