Piscataway Assoc., Inc. v. Township of Piscataway

Conford, P. J. A. D.,

Temporarily Assigned, dissenting. The judgment of the Court here appears superficially to rectify discrimination in the assessment of the property of a particular taxpayer. Actually, as will be shown, it accomplishes discriminatorily favorable treatment for that taxpayer in relation to many other taxpayers in the municipality. Moreover, it encourages a breakdown of the uniformity and regularity of the tax rolls. It was fox these reasons, implicitly, that in our recent unanimous decision in Tri-Terminal Corp. v. Bor. of Edgewater, 68 N. J. 405 (1975), cert. den. 425 U. S. 958, 96 S. Ct. 1739, 48 L. Ed. 2d 203 (1976), we strictly confined the discrimination remedy announced by the Court in In re Appeals of Kents 2124 Atlantic Ave. Inc., 34 N. J. 21 (1961) ("Kents-type relief”) to the conditions specifically laid down in that case for such relief. These were that there be no demonstrable “common level” for assessment of property generally in the taxing district and that “the assessors disavow any effort to achieve one”. 34 N. J. 31. Then, and only then, could the “average ratio” (of aggregate sales prices to aggregate assessments), annually determined by the Director of the Division of Taxation from sales studies in each taxing district,1 be taken presumptively as the “common level” to which a taxpayer’s property assessment might be reduced if substantially above that level. Tri-Terminal Corp., supra, 68 N. J. at 409-410.

*558In Tri-Terminal Corp., the complaining taxpayer made a case substantially like that of the present appellant. It showed there was an average assessment ratio of about 68% for the tax years there in question and it sought a reduction of the adjudicated true value of its property down to that percentage. We affirmed the Appellate Division in refusing to do so because we found that all property, including the appelant’s, was purported to be assessed at a uniform common level. 68 N. J. at 411-412. It made no difference that the sales study there showed variations in assessment ratios of individual properties from 23% to 108%, 68 N. J. at 413, or that the average ratio of all sales, as indicated above, was 68%.

In principle, the Court now retreats substantially from Tri-Terminal Corp. Although the factual pattern here is different, the case is the same in principle in that, as well demonstrated in the Appellate Division opinion, 139 N. J. Super. 276 at 281,2 the instant assessor purported in good faith to maintain a common level in the taxing district for the year in question, 1973, and that level was 100%. The taxpayer was therefore not entitled to the Kents-type relief.

As we explained in Tri-Terminal Corp., the Kents-type remedy was avowedly an extreme one, designed to shock taxing districts whose assessors were functioning planlessly into the salutary practice of regular periodic revaluations. 68 N. J. at 410. Kents-type relief was obviously contemplated to *559be used only in the exceptional case where no bona fide effort at uniform assessments was being made by the local assessors, as where no effort at periodic revaluations was made or no common level maintained in some other way.

The mischievous potentialities of routine allowance of Kents-type relief are readily apparent against the background of continuously rising realty values such as we have had for several decades and bid fair to continue for the foreseeable future. The average municipality cannot afford a complete tax revaluation more often than every five to eight years. This means that between revaluation years, with assessments customarily being repeated yearly until the next revaluation, there will, in a steadily rising realty market, always be average assessment ratios below 100%, sometimes substantially so. To the sophisticated taxpayer or his legal advisor, such a situation constitutes an invitation to bring a discrimination appeal every year to get the assessment reduced down to the level of the average ratio. And if, as by the decision of the Division of Tax Appeals in the instant case, the appealing taxpayer is successful, his reduction in tax dollars will have to be made up by the general body of unsophisticated taxpayers who have not appealed. Ex hypothesi, and under the law of mathematical probability, about one half of those taxpayers will have been assessed at a higher ratio level than the average ratio level to which the appellant taxpayer has been reduced. The appellant will thus have achieved a discriminatory benefit vis a vis all of such other taxpayers. Moreover, if a substantial number of taxpayers file for Kents-type relief and succeed, the result is simply to drive the average ratio even lower, proliferating still more appeals and compounding the disarray of the assessment rolls in terms of uniformity. The result is one set of taxpayers assessed at the common level the assessor is following and another set (the appealers) at the lower average ratio.

Complicating the picture is the fact that Kents-type relief is granted only when the ratio of actual assessment is *560“substantially”3 above the Director’s average ratio, and in such case the assessment reduction is all the way down to the average ratio, Kents, supra, 34 N. J. at 32; Tri-Terminal Corp., supra, 68 N. J. at 410. Taxpayers assessed above, but not “substantially” above, the average ratio, cannot qualify for any relief under Kents. The unfairness of the resulting treatment of such taxpayers is obvious.

When considerations like those just mentioned were raised in the Kents case itself against allowance of that form of relief, one of the responses of the Court was that the resulting “flood of appeals” from granting reductions down to average ratios would “induce the district to revalue and to keep the roles current”. 34 N. J. at 32. But in the present case that stimulus is not necessary as Piscataway did revalue during 1974 for the tax year 1975, having previously done so for the year 1965, and it is to be hoped that it will do so in the future at shorter intervals than 10 years. Only in that way can practical uniformity in assessments be achieved; certainly not by the scatter-gun effect of random discrimination appeals of the Kents type. The fact, noted by the majority, that between revaluations different properties may well rise at different rates of valuation, is not a good reason for routine Kents-type relief. Relative uniformity as between all properties in a taxing district cannot be achieved by separate valuation appeals on separate properties or by “discrimination” appeals, but only by periodic revaluations of entire taxing districts at one time. As already noted, the Kents remedy was an extreme one, devised for a condition of complete planlessness in local assessments. Its use is best avoided when such conditions do not exist currently in the municipality involved. Unfortunately the Court’s decision today encourages such appeals.

*561A final observation. The 1975 true value of tbe property here involved as shown by the 1975 revaluation was $15,548,000, as compared with the adjudicated 1973 “true value” fixed by the Division of Tax Appeals at $13,065,243, or about 19% more. Unless it is to be supposed that the true value increased by that percentage within two years, the revaluation figure, arrived at on a basis of relative uniformity with all other property in the taxing district, easts doubt on the reliability of the adjudicated “true value”, determined in the course of an isolated appeal. In turn, the justification for use of the adjudicated 1973 figure as a base for application of the 80% average ratio, as effected by the judgment of the Division of Tax Appeals, is similarly east in doubt, even if Kents-tjpe relief were otherwise appropriate in this case, as I believe it is not.

Chief Justice Hughes and Justice Sullivan join in this opinion.

For reversal — Justices Mountain, Pashman, Clieeoed and Scheeibee — 4.

For affirmance — ¡Chief Justice Hughes, Justice Sullivan and Judge Coneoed — 3.

These sales studies are conducted by the Director solely for the purposes of aiding distribution of state aid to school districts and as guides for establishment of county equalization tables. Tp. of Willingboro v. Burlington Cty. Bd. Tax, 62 N. J. 203, 209 (1973). They have nothing to do with the setting of individual property tax assessments.

For the year 1965, when a revaluation was put into effect, the common level was 100%. Thereafter, until 1973, 1965 valuation standards were used for assessing new construction, including the property of appellants. In 1971 and 1972, because of inflated market values, the assessor recognized a common level of 35%. In 1973 the county board of taxation directed that a 100% level be used. This was effected by multiplying all valuations of record by 3. The accuracy of the resulting valuations is not issuable on a discrimination appeal, only whether the assessor purported to be applying a common level in good faith. In this case there can be no doubt that he did.

The subordinate issue of what is a “substantial” difference between tbe average ratio and the actual assessment ratio contributes another element of uncertainty to Kents-type litigation.