KEANE v. TOWNSHIP OF MONROE

s filed pursuant to R. 4:46-2(a), and the Director either admits those facts or states that it has no basis to deny them. Monroe Township either admits or does not dispute the facts relied upon by plaintiff. With respect to the statistics published by the Director, Monroe Township admits that the Director published them but "cannot attest to the accuracy of the information from which such statistics were derived." The data used by the Division, however, was available to Monroe Township for its own review. Much of the data was already in Monroe Township's possession, as indicated in its answers to plaintiffs' interrogatories, and it was certainly available through discovery. Moreover, the sales relied upon by the Division in computing the various ratios and coefficients of deviation were taken from records maintained by the Monroe assessor's office, namely, the SR-1A forms reporting sales and classifying them as usable or non-usable. See New Jersey Division of Taxation, Handbook for New Jersey Assessors at X-3 to X-10 (1989). Similarly, Monroe Township refuses to concede that plaintiffs' counsel's estimate of lost revenues due to tax appeals is correct, but it does not offer any estimate of its own. As set forth in its answers to interrogatories, Monroe Township does not maintain ongoing records related to the amount of tax revenues lost due to successful tax appeals.

The cross-motions of plaintiffs and Monroe Township are made pursuant to R. 4:46, which provides that summary judgment should be granted when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). "By its plain language, Rule 4:46-2 dictates that a court should deny a summary judgment motion only where the party opposing the motion has come forward with evidence that creates a `genuine issue as to any material fact challenged.`" Brill v. Guardian Life Ins. Co. of America, 142 N.J. 520, 529, 666 A.2d 146 (1995). If an opposing party offers no affidavits or matter in opposition, that party cannot be heard to complain if the court grants summary judgment. Judson v. Peoples Bank Trust Co., 17 N.J. 67, 75, 110 A.2d 24 (1954). The court must consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party. Brill, supra, 142 N.J. at 540, 666 A.2d 146. I conclude that there is no genuine issue of material fact in dispute and that disposition of this action by way of summary judgment is appropriate.

At the outset, it will be helpful to set out the constitutional requirement of uniformity in local property taxation, the statutory framework that implements that requirement, and the administrative procedures that have been adopted to effectuate the statutory plan in order to understand the facts that are material to the decision in this matter. The Uniformity Clause of the New Jersey Constitution mandates that all property must be assessed under general laws and by uniform rules and that all real property assessed locally by a taxing district must be assessed according to the same standard of value. N.J. Const., art. 8, § 1, ¶ 1(a). The design of the statutory plan enacted by the Legislature to give effect to this constitutional requirement requires a local taxing district to tax annually all real property in the district, N.J.S.A. 54:4-1, excluding real property that has been exempted by the Legislature to the extent permitted by the Constitution, see N.J. Const., art. 8, § 1, ¶ 2, and excluding real property that is taxed by the State. See, e.g. N.J.S.A. 54:29A-7 (certain railroad property).

As used in the Uniformity Clause, the term "taxing district" means a municipality. Town of Secaucus v. Hudson County Bd. of Taxation, 133 N.J. 482, 506, 628 A.2d 288 (1993).

The municipal assessor must annually assess all property in the taxing district as of October 1 each year. N.J.S.A. 54:4-23. He or she is directed "to determine the full and fair value of each parcel of real property situate in the taxing district at such price as, in his judgment, it would sell for at a fair and bona fide sale by private contract" as of October 1 of the pre-tax year. N.J.S.A. 54:4-23. The assessor enters on the annual tax list the names of the owners, a description of the parcel, and the "taxable value" of each parcel as that value has been determined by the assessor, N.J.S.A. 54:4-24, using the forms and methods prescribed by the Director. N.J.S.A. 54:4-26. "Taxable value" is the percentage of true value established by each county board of taxation. N.J.S.A. 54:4-2.25, -2.27. The term "true value" is not defined, but is understood to be equivalent to the term "full and fair value" as used in N.J.S.A. 54:4-23, and is sometimes referred to as "market value." Calton Homes, Inc. v. Township of West Windsor, 15 N.J.Tax 231, 242 (Tax 1995). See also N.J.S.A. 54:1-35.3 ("true value" for purposes of computing the Director's ratio of assessed value to true value is deemed to be valuation at current market prices). All of the county boards of taxation have established the taxable value as 100% of true or market value.

Each assessor must complete his or her annual assessment list of taxable valuations and file it with the county board of taxation by January 10 of the tax year. N.J.S.A. 54:4-35. The county board of taxation is charged with the statutory duty of securing the taxation of all property in the county at its taxable value. N.J.S.A. 54:3-13. This is in furtherance of both the constitutional command that all real property in a taxing district be assessed according to the same standard of value, N.J. Const. art. 8, § 1, ¶ 1(a), and also in furtherance of the county board's statutory duty to promulgate an equalization table, N.J.S.A. 54:3-18, the purpose of which is to allocate the costs of county government equally and proportionally among the taxing districts of a county. Willingboro Township v. Burlington County Bd. of Taxation, 62 N.J. 203, 207, 300 A.2d 129 (1973).

The courts of this state have long cited the need for periodic revaluation of all of the real property in a municipality in order to maintain assessments at true value. See, e.g., Switz v. Township of Middletown, 23 N.J. 580, 130 A.2d 15 (1957), where the Court noted "[t]he general disregard of the full true value standard," id. at 594, 130 A.2d 15, and acknowledged that several municipalities had undertaken programs of complete revaluation in an effort to eliminate inequalities in the burden of taxation. Id. at 597-98, 130 A.2d 15. "The purpose and function of a revaluation is to `achieve tax equality not only as to any given taxing district but also between municipalities of the same county.`" Borough of Totowa v. Passaic County Bd. of Taxation, 23 N.J.Tax 466, 469 (Tax 2007), quoting Middlesex County Bd. of Taxation v. Borough of Sayreville, 133 N.J.Super. 41, 44, 335 A.2d 73 (App.Div. 1975).

In In re Appeal of Rents, 34 N.J. 21, 166 A.2d 763 (1961), property owners sought reductions in their assessments where the assessments were admittedly at less than true value but were alleged to be above the "common level" of assessment in the municipality. The Court concluded from the evidence before it that there was no common level of assessment in the defendant municipality, that there was clearly inequality of assessment, and that a taxpayer should have a practical, individual remedy when his or her property was being taxed unfairly as compared with other property owners in the municipality. Id. at 30-31, 166 A.2d 763. The Court noted: "[E]xperience indicates that except where a municipality has made a complete revaluation, parcel by parcel, and has implemented that work-product, a common level, in the sense of a single ratio to true value at which the great bulk of the ratables is assessed, cannot readily be shown if indeed one exists." Id. at 26, 166 A.2d 763. The Court declined to impose a specific formula for remedying discrimination in assessment, id. at 30, 166 A.2d 763, but concluded that, where there is no common level of assessment, and no effort has been made to achieve a common level, the Director's average ratio "should be deemed sufficient evidence of the level to which reduction should be granted." Id. at 31, 166 A 2d 763.

In Piscataway Assocs., Inc. v. Township of Piscataway, 73 N.J. 546, 376 A.2d 527 (1977), the Court explained that, when an assessor carries over assessments following a revaluation, it assumes that the percentage increase in value of each property remains the same. While the Court accepted the efficacy of a revaluation for the years immediately following the revaluation, it allowed Kents-type relief where a revaluation had occurred nine years previously, noting that the "the vitality of th[e] assumption [that the percentage increase in value of each property remains the same] dissipates with the passage of time." Id. at 552, 376 A.2d 527.

Several years after Kents was decided, the Legislature responded to the issue of discrimination in local property tax assessment by enacting what has come to be known as Chapter 123, L. 1973, c. 123. As explained in Murnick v. City of Asbury Park, 95 N.J. 452, 460, 471 A.2d 1196 (1984), Chapter 123 reduces the taxpayer's burden of proof because it eliminates the need to prove that property was generally assessed at less than true value and to prove the common level of assessment. The statute achieves this by defining "average ratio" and "common level range." Ibid. Generally, when the Tax Court finds from the proofs presented that the ratio of the assessed valuation of the property to its true value is outside the common level range, the court must revise the taxable value of the property by applying the average ratio to the property's true value. N.J.S.A. 54:51A-6.

In Murnick, the issue before the court was whether Chapter 123 was the exclusive remedy available to a taxpayer that complained of discrimination in property tax assessment. The Court concluded that a taxpayer retains a constitutional right to relief in egregious cases of discrimination, but except in those "rare" cases, "chapter 123 establishes both the right to and measure of relief." 95 N.J. at 455, 471 R2d 1196. The Court emphasized that mathematical precision in assessment is not required, and that "[s]ubstantial, although imperfect, justice satisfies the constitutional mandate." Id. at 459, 471 A.2d 1196.

As noted in Piscataway Assocs., Inc. 2;. Township of Piscata way, supra, 73 N.J. at 552, 376 A.2d 527, the common level of assessment resulting from a revaluation dissipates over time. Even when an assessor is diligent about maintaining the municipality's assessment list, various changes in the real estate market and in the development of the municipality eventually result in wide variations in the ratios of assessments to sale prices, rendering Chapter 123 relief illusory. Consequently, municipal assessment rolls must be periodically examined to determine whether there is a need for a revaluation.

Municipalities may voluntarily undertake a revaluation. N.J.S.A. 54:1-35.36; N.J.RC. 18:12A-1.14(a). As this court has pointed out, however, municipal governing bodies are often reluctant to authorize a revaluation: it is an expensive undertaking and, because a revaluation inevitably results in some taxpayers paying more tax than they did before the revaluation, it can have political consequences for the members of the municipal governing body. Freehold Borough v. WNY Properties L.P./Post Coach, 20 N. J. Tax 588, 607-08 (Tax 2003).

When a municipality does not act voluntarily, county boards of taxation may act to secure the taxation of all property in the county at its taxable value pursuant to N.J.S.A. 54:3-13 by issuing an order of revaluation to a municipality. Bergen County Bd. of Taxation v. Borough of Bogota, 114 N.J.Super. 140, 275 A.2d 158 (App.Div. 1971). See also, N.J.S.A. 54:4-47 (county board may generally do everything necessary for the taxation of all property in the county at its taxable value). Such orders of the county boards of taxation must be approved by the Director. N.J.S.A. 54:3-16; N.J.A.C. 18:12A-1.14(b); Bergen County Bd. of Taxation v. Borough of Bogota, supra, 114 N.J.Super. at 145, 275 A.2d 158. The county board of taxation is required to take into account the criteria listed in N.J.A.C. 18:12A-1.14(b) when considering ordering a municipality to conduct a revaluation. N.J.A.C. 18:12A-1.14(b). Not all of the criteria need be met. Borough of Totowa v. Passaic County Bd. of Taxation, 23 N.J.Tax 466, 471 (Tax 2007). A county board may also consider criteria other than the twelve enumerated in the regulation. N.J.A.C. 18:12A-1.14(b)(1). When submitting an order of revaluation to the Director for approval, the county board is required to attach its findings with respect to the criteria set out in the regulation as well as other criteria that were considered by the board. N.J.A.C. 18:12A-1.14(b).

Alternatively, the Director has the independent statutory authority to order or to undertake a revaluation, and need not wait for a municipality or a county board of taxation to act where the need for a revaluation is present. N.J.S.A. 54:1-26 through -30; Mount Laurel Township v. Burlington County Bd. of Taxation, 25 N.J.Tax 319, 329 (Tax 2009). The Director's own regulation acknowledges that the Director has that authority. N.J.AC 18:12A-1.14(c)(6). According to the certification of an assistant director of the Division who supervises the administration of the local property tax on behalf of the Division, the Division does not independently undertake any investigations to secure the uniform taxable valuation of property within the state pursuant to N.J.S.A. 54:1-30 due to limited resources. The Director exercises the authority granted by statute through the promulgation of his regulation setting forth rules for revaluations, reassessments, and compliance plans, N.J.A.C. 18:12A-1.14, and through its authority to approve revaluations ordered or supervised by the county boards of taxation.

Not specifically mentioned in the certification, but crucial to the administration of the local property tax, the Division conducts the study of sales of real property in the State. From the data collected from that study, the Division compiles various statistics for the purpose, among other things, of determining when there is a need for a revaluation.

The Director urges that the court should grant summary judgment in favor of the plaintiffs in this case. In making this argument, the Director asks this court to recognize the "strong deferential presumption" that attaches to the Division's determinations under Title 54 of the New Jersey statutes, citing Metromedia v. Director, Div. of Taxation, 97 N.J. 313, 327, 478 A.2d 742 (1984). The difficulty here, however, is that the Director has not made any determination pursuant to N.J.S.A. 54:1-26 through -30, or otherwise. Had the Division made a determination to order a revaluation of Monroe Township, there would not have been the need for this litigation. Nevertheless, it is clear from the deposition testimony of the Division's assistant director that, in connection with this litigation, the Division has analyzed the criteria set forth in N.J.A.C. 18:12A-1.14(b)(1) in the same manner as it would have if the Director had been asked to approve an order of revaluation issued by a county board of taxation, and the Division has concluded that a revaluation is needed. Bergen County Bd. of Taxation v. Borough of Bogota, supra, 114 N.J.Super. at 145, 275 A.2d 158; see also N.J.S.A. 54:3-16 (Director must approve orders of a county board of taxation).

The Board has taken no position in this litigation. As already noted, prior to the commencement of this litigation, plaintiffs' counsel had asked to meet with the Board to discuss plaintiffs' position that a revaluation was needed. Plaintiffs' counsel's letter specifically pointed out that the Monroe assessor's office had improperly coded numerous sales as non-usable for purposes of the Director's sales ratio study. In response, the county tax administrator advised plaintiffs' counsel that the Board was of the view that there was no problem with the Monroe Township assessment list and therefore declined the request for a meeting. According to the county tax administrator's letter of August 25, 2006, the Board based this determination solely "in view of the fact that in all of the Monroe appeals heard this year there was no proof established overcoming the presumption of regularity." In a subsequent certification filed in connection with these motions, the administrator clarified that it was his intention to analogize to the language contained in Pantasote Co. v. City of Passaic, 100 N.J. 408, 495 A.2d 1308 (1985), which, he said, "allud[ed] to a presumption of validity afforded to a municipality in its assessments."

Pantasote stands for the principle that a tax assessment is presumed to be correct and that a taxpayer may not prevail in an appeal of its assessment simply by attacking the assessor's methodology unless there is a "strong indication arising from the evidence properly before the Tax Court that the quantum of the assessment was far wide of the mark of true value." Id., at 414-15, 495 A.2d 1308.

It is quite possible that no taxpayer appealing a 2006 Monroe Township assessment to the Board was able to overcome the presumption that his or her assessment was incorrect. Pantasote, supra, 100 N.J. at 413, 495 A.2d 1308. Even if a taxpayer was successful at overcoming that presumption and proved a valuation for his or her property at variance with the assessment, the ratio of the property's assessment to its true value might have been within the common level range, in which case, the taxpayer was not entitled to relief. N.J.S.A. 54:3-22(c) through (f).

That says nothing about the quality of the assessment list as a whole. The purpose of a revaluation is to achieve tax equality within a taxing district and among the municipalities of a particular county. Borough of Totowa v. Passaic County Bd. of Taxation, supra, 23 N.J. Tax at 469. The criteria to be considered by a county board of taxation are those set forth in the Director's regulation, N.J.A.C. 18:12A-1.14(b)(1). Notably, fifty-two Monroe taxpayers in four residential developments represented by plaintiffs' counsel were able to establish to the satisfaction of the Board or the Tax Court that their assessments for tax year 2007 were too high. Accordingly, the presumption of correctness of the assessments was overcome. The assessor agreed with those determinations and lowered the assessments for the properties in those developments for tax year 2008. Nevertheless, the Board has never acted and refuses to take a position even now.

At oral argument on the cross-motions, the court requested a certification from the Board as to how many revaluations it had ordered. The Board thereafter submitted a certification stating that, in the past five years, it had entered three orders of revaluation, and had implemented two additional revaluation orders that had been entered in 2003. There are twenty-five municipalities in Middlesex County. As noted by plaintiffs, the certifications were carefully worded so as to avoid stating whether the revaluations had been undertaken voluntarily by the municipalities involved. Orders of revaluation are frequently entered by county boards of taxation, whether the revaluation is voluntary or involuntary, for the purpose of memorializing various administrative details as to the conduct of the revaluation.

Notwithstanding the fact that the Board has refused to take any action (or even a position) with respect to Monroe Township's need for a revaluation, Monroe Township insists that the complaint must be dismissed because the plaintiffs' have failed to pursue their administrative remedies before the Board. Monroe Township contends that the only remedy available to plaintiffs is for each to file an individual tax appeal of his assessment pursuant to N.J.S.A. 54:3-21.

None of the authority cited by Monroe Township is apposite. It points first to R. 8:2(c), which provides that no action to review a local property tax assessment may be maintained unless an action has been instituted before the county board of taxation. Plaintiffs do not seek review or reduction of their assessments. Plaintiffs maintain that they have lost confidence that the average ratio actually reflects a common level of assessment in the taxing district due to the irregularities discovered regarding the sales improperly excluded from the Director's sales ratio study, and due to the manner in which properties constructed subsequent to the 1993 revaluation have been assessed. In other words, plaintiffs allege that, even if they can establish that the value of their properties is something other than their assessments, thereby overcoming the presumption of correctness as required by Pantasote, supra, the average ratio is unreliable, the common level range is therefore unreliable, and that they will be denied Chapter 123 relief pursuant to N.J.S.A. 54:3-22(c) through (f) and N.J.S.A. 54:51A-6. Significantly, the plaintiffs seek prospective relief only, namely, a revaluation for the purpose of establishing uniformity of assessment within the municipality.

Consequently, Brookview Gardens, Inc. v. Borough of Bergen-field, 4 N.J.Tax 625 (Tax 1982), aff'd, 6 N.J.Tax 253 (App.Div. 1983), is not relevant. The court in that case rejected an attempt by a taxpayer to appeal directly to the Tax Court the assessments on sixty-four condominium units when the aggregate assessments on the units met the then-jurisdictional amount for filing a complaint directly with the Tax Court, but the assessment on any single unit did not. The taxpayer sought reductions on the assessments of each of the sixty-four units. Similarly, the taxpayers in Pleasantville Taxpayers v. City of Pleasantville, 111 N.J.Super. 377, 268 A.2d 342 (Law Div. 1970), sought to file a class action tax appeal for the purpose of reducing their assessments. Plaintiffs in J.H. Becker, Inc. v. Township of Marlboro, 82 N.J.Super. 519, 198 A.2d 463 (App.Div. 1964), alleged that a revaluation had resulted in non-uniform assessments and demanded that the revaluation be re-performed, and that the entire assessment list for that tax year be revised. None of these cases is on point. In each of them, the underlying relief sought by the taxpayers was a revision of assessments that had already been made.

By contrast, the right to bring an action in lieu of prerogative writ for the purpose of securing an order directing a prospective revaluation is well-settled. See, e.g., Switz v. Township of Middle-town, supra, 23 N.J. at 582 and 598, 130 A.2d 15 (modifying by delaying for two years an order directing an assessor to value and assess all taxable real property in the municipality by uniform rules and at full and fair value). See also Village of Ridgefield Park v. Bergen County Bd. of Taxation, 31 N.J. 420, 157 A.2d 829 (1960) (permitting plaintiffs to proceed on a complaint seeking revaluation of other municipalities in the county), where the Court noted: "With respect to the [administrative remedy available to review and revise assessments of taxable property], it is sufficient to say that the statutory right to equal treatment cannot effectively be achieved by an appeal to supervisory statutory agencies or by a multitude of petitions to raise the properties of others to full true value." Id. at 426-27,157 A.2d 829.

There are no legal or factual grounds for the assertion that this action is barred by failure to pursue an administrative remedy. The plaintiffs are not aggrieved by their assessments but by the entire assessment list. Consequently, petitions to the Board filed pursuant to N.J.S.A. 54:3-21 will not afford them the relief they seek. Monroe Township has not cited any other statute that would provide appropriate relief.

In Feldman v. Borough of Ringwood, 23 N.J.Tax 29 (Tax 2006), the Tax Court declined to order a revaluation and instead directed the county board of taxation to consider the record and make whatever other investigation and inquiry the board deemed necessary to determine whether a revaluation should be ordered. Id. at 37. The court concluded in Feldman that the proofs presented by the plaintiffs were insufficient to establish that a revaluation should be ordered but were sufficient to require the county board of taxation to review them. Neither the Director nor the county board of taxation took a position as to the need for a revaluation. Id. at 32. The opinion does not indicate whether the Feldman plaintiffs had attempted informally to bring their grievances to the county board of taxation as plaintiffs did here.

The court concludes that referral back to the Board in this case would be futile. The Board has continuously refused to investigate or make any finding based on facts or take any action Unlike the proofs offered in Feldman, the court concludes that the evidence before it in the current case establishes that a revaluation is required in order to bring uniformity to the assessment of local property taxation in Monroe Township.

Especially persuasive is the high general coefficient of deviation, which has steadily increased from 14.61 in 2005 to 21.31 in 2009. This is a measure of how frequently sales transactions produce an assessment sales ratio that varies from the common level of assessment in a municipality. N.J.A.C. 18:12A-1.14(b)(1)(i). According to the regulation, a general coefficient of deviation that exceeds 15% generally indicates a need for revaluation. I find in this case that it is a sufficient ground by itself to order a revaluation.

The variation in individual assessment sales ratios for Class 2 property, which is by far the most predominant property class in Monroe Township, also establishes that, more often than not, residential property sold for sales prices that produced individual ratios of assessment to sale price outside of the common level range. Confirming the lack of uniformity of assessment within Class 2, the stratified coefficient of deviation for class 2 properties was 14.11 in 2006 and steadily increased to 20.84 in 2009. N.J.A.C. 18:12A-1.14(b)(1)(ii). In other words, at least as to Class 2 property, there really is no common level of assessment.

Moreover, even though the number of sales of Class 1 and Class 4 properties was too small to make any reliable determination from the segmented coefficients of deviation as to whether there was a lack of uniformity among property classes, the assessor's deposition testimony plainly evidences that a different methodology and a different standard of value was used for Class 4 properties than Class 2 properties. Class 4 properties were assessed based on current market value. Class 2 properties were apparently assessed based on cost standards set in 1993. This contravenes the Uniformity Clause and does not conform to the statutory requirement that property be assessed annually at "full and fair value." N.J.S.A. 54:4-23.

Due to frequent property tax appeals by owners of commercial properties, the assessor has had occasion to review commercial properties assessed during the 1993 revaluation. It appears from the deposition testimony that commercial properties assessed in the 1993 revaluation, as well as commercial properties constructed subsequent to the revaluation, are assessed on the basis of market value.

That the last revaluation was conducted in 1993 is also compelling evidence of the need for a revaluation. Numerous new residential neighborhoods have been added to the municipality since 1993, but there has been no attempt to value any of them based on current market value, except with respect to adjustments to assessments in four developments following the loss of several tax appeals in 2007. There has been no attempt to determine the current market value of homes assessed during the 1993 revaluation. As our Supreme Court noted in Piscataway Assocs., supra, 73 N.J. at 552, 376 A.2d 527, "[a] great number of economic, social, and governmental influences will affect the properties within a taxing district in varying degree. In order to keep assessments equitable, the assessor must keep in constant touch with changing conditions." (quoting The Handbook for New Jersey Assessors, § 903.1 at 217 (rev. ed. 1965)). It is simply not credible that of the numerous residential developments and neighborhoods within Monroe Township, all have increased (or decreased) in value at the same rate over seventeen years.

For the foregoing reasons, plaintiffs' motion for summary judgment is granted, and Monroe Township's motion is denied. Monroe Township is directed to conduct a complete revaluation to be effective for tax year 2012. Defendants will file with the court a proposed plan and schedule for the revaluation by December 1, 2010. Once a schedule has been approved by the court, any requests for extensions of time shall be by application to the court. In all other respects, the Board and the Director are directed to exercise the same supervisory roles over the revaluation to the same degree and in the same manner as though the revaluation had been ordered by the Board and approved by the Director. The Monroe Township assessor, the Board and the Director are each directed to comply with the Director's regulations regarding revaluations, including, without limitation, N.J.A.C. 18:12-4.1 through -4.11, and N.J.A.C. 18:12A-1.14(b)(2), (3) and (4).