Title: Township of Holmdel v. New Jersey Highway Authority

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

In this appeal, the Supreme Court must determine whether the amphitheater and reception center facilities of the PNC Bank Arts Center (formerly known as the Garden State Arts Center), which is owned by the New Jersey Turnpike Authority, are exempt from local property taxation. In 1954, the Authority acquired 400 acres of land in Holmdel Township for the purpose of constructing the Arts Center. At that time, the Highway Act authorized the Authority to acquire, construct, maintain, and operate highway projects, which were exempt from taxation. A highway project was defined as any highway together with such adjoining park or recreational facilities that the Authority finds necessary and desirable to promote the public health and welfare. The Highway Act empowered the Authority to enter into lease agreements with private parties if those agreements were necessary or incidental to the performance of the Authority s duties. After delaying construction, the Authority approved construction of a 5,000-seat amphitheater at the Arts Center site in 1965. The Authority maintained that the Arts Center was statutorily authorized as a highway project because its purpose was to provide public access to the performing arts, while generating more traffic on the Parkway during off-peak hours and thereby increasing toll revenue for the Authority. Construction of the Arts Center was completed in 1968. At that time, it consisted of only the amphitheater, parking and restroom facilities, two miles of nature trails, and the Celebrity House, where community botany classes were held. There were no reception facilities. The Authority contracted with a private company for booking, ticket sales, and general amphitheater management. In 1968, a study commission created by the Assembly concluded the Arts Center was only tenuously connected to the Authority s statutory mandate. Accordingly, the Legislature amended the definition of highway authority to include only facilities directly related to use of the highways to prevent repetition of such unauthorized projects. The amendment provided it did not affect the continued operation of existing facilities, thus grandfathering the Arts Center. Notwithstanding the limitation to existing facilities, the Authority, in 1972, converted the Celebrity House to a full-service reception facility with a maximum capacity of seventy, including service people. In 1984, the Authority announced construction of a larger reception center, now known as the Robert B. Meyner Reception Center, which would accommodate 350 people for sit-down receptions and 500 for stand-up receptions. The final cost of the larger reception center was $6.4 million. In response, the Senate convened a special investigation committee, which concluded that the new construction violated the 1968 legislation. No corrective legislation ensued, however. In 1989, the reception center was completed and the Authority leased it to 116 Park Caterers. The Park agreement provided that the reception center would be operated as a first-class catering and conference facility. After two renewals, the Park lease was replaced in 1996 by a similar agreement with Bott, Inc., which currently operates the reception center. Under both the Park and Bott agreements, the lessee was responsible for day-to-day operations and was required to use best efforts to manage the reception center as a profitable catering facility available to the general public. Both lessees were required to make minimum annual payments to the Authority, which were credited towards a percentage of gross receipts. Prior to 1997, the Authority operated the amphitheater in conjunction with several private companies. In 1997, the Authority leased the amphitheater, which currently accommodates over 17,000 people, to GSAC Partners pursuant to a lease agreement that expires in 2017. Minimum annual rental payments are required. GSAC has the exclusive right to operate the amphitheater for entertainment events, seminars, corporate meetings, and political fundraisers. Events may be hosted any day of the week. GSAC is authorized to sell merchandise, food and beverages at performances. GSAC has a limited right to sell alcohol. The lease requires GSAC to use recognized business practices to provide efficient, high quality services to the public and to use reasonable efforts to present balanced programming, however, GSAC makes the ultimate decision as to programming. GSAC also must pay all taxes imposed on the amphitheater. GSAC has the right to sublease the amphitheater without Authority approval. Finally, the lease requires GSAC to undertake various renovations, including expansion of the amphitheater s covered and lawn seating, parking lots, restroom facilities, and access walkways and plazas. The Authority retains the right to use the amphitheater annually for ethnic-heritage festivals, admission-free performances, and a winter holiday celebration. The Authority s right to use the facility is subordinate to GSAC s rights. In 1998, Holmdel s tax assessor determined that the Arts Center s amphitheater and reception center were no longer eligible for property tax exemption under the Highway Act s immunity provision, as the Authority had leased those facilities to private, for-profit entities. No tax was assessed against facilities or property not subject to the GSAC and Bott agreements, such as the picnic and nature areas and the New Jersey Vietnam Veteran s Memorial, which Holmdel concedes are tax exempt. For 1996 and 1997, the assessor imposed an omitted added assessment of over $14 million for each year for the combined amphitheater and reception center complex, and a regular assessment of $200 for 1998. Both Holmdel and the Authority appealed those assessments. Appeals are also pending for other subsequent tax years. In 1999, the Tax Court held that the Authority was entitled to tax immunity. The Appellate Division reversed and remanded for a determination whether the amphitheater s use under the GSAC lease coincided with the use the Legislature envisioned in 1968; whether the reception center, completed in 1989, was contemplated by the Legislature in 1968; and, if so, whether the use of the reception center under the Bott agreement is too far removed from the Legislature s initially-contemplated use to warrant tax immunity. On remand, the Tax Court concluded that the amphitheater and reception center were significantly different, physically and in their operation, than the Legislature contemplated in 1968. The Appellate Division summarily affirmed. The Supreme Court granted both parties motions for leave to appeal. 188 N.J. 570 (2006). HELD: Because the current operation of the amphitheater furthers the Arts Center s original purposes of providing public access to performing arts and generating revenue, the amphitheater and its attendant facilities are exempt from local property taxation. However, because the construction and privatization of the reception center were dramatic, unanticipated departures from the Authority s statutory mandate, the reception center is subject to taxation for all years under appeal. 1. All real property within New Jersey is subject to taxation unless expressly exempted by the Legislature. The New Jersey Constitution limits the Legislature s authority to grant tax exemptions. Exemptions must be based only on the property s use, not the owner s identity. (pp. 15-17) 2. Tax immunities for governmental agencies should be liberally construed because they facilitate the provision of public services. On the other hand, local governments are dependent on property taxes for revenue, and tax exemptions place added burdens on private property owners who are required to fill the tax-gap. Tax immunity for government agencies should be denied if the property benefiting from the exemption is not within the scope of the agency s statutory purpose. If a government property is leased to a private entity that operates it in accordance with the agency s statutory purpose, the tax immunity may still apply. The issue in this case is whether the current operation of the amphitheater and reception center is consistent with the scope of the 1968 grandfather provision authorizing and immunizing the Arts Center. (pp. 17-20) 3. In 1968, the Arts Center s existing facilities immunized by the Highway Act amendment consisted of only the amphitheater, nature trails, and the Celebrity House then used for botany classes. The amphitheater initially was operated in conjunction with a private firm in a manner substantially similar to the terms of the current GSAC lease. GSAC is contractually obligated to operate the amphitheater in accordance with its original purpose, and the lease contains many provisions reinforcing that the amphitheater is a community asset to be operated consistent with its past use as a public performing arts center that generates revenue for the Authority. Those purposes were contemplated by the 1968 Legislature when it grandfathered the amphitheater. Renovations, contemporary programming, and the provision of alcoholic refreshments are all reasonable adaptations aimed at retaining the amphitheater s profitability. Because the GSAC lease agreement serves the Authority s underlying purposes in creating the amphitheater, the amphitheater is entitled to statutory tax exemption. (pp. 20-26). 4. There were no reception facilities or services at the Arts Center in 1968. There is no indication that the 1968 Legislature contemplated the subsequent construction of a $6.4 million commercial reception center. Rather, the Legislature intended to prevent future repetitions of unauthorized projects like the amphitheater. In 1988, the Senate s special investigation committee concluded that the Authority had exceeded its power in constructing the reception center. The reception center was an unexpected project without any reasonable nexus to the Arts Center s original purposes. It is thus beyond the intended scope of the tax exemption and is not entitled to tax immunity. (pp. 26-28) 5. The 2003 Merger Legislation, which repealed the Highway Act and merged the Highway Authority into the Turnpike Authority to reduce administrative inefficiencies, amended the definition of highway project to include the Arts Center as transferred to the Turnpike Authority. The 2003 Merger Legislation also reaffirms that existing facilities of the Highway Authority as transferred to the Turnpike Authority are exempt from local taxes. The Court does not need to consult this subsequent legislation for clarification to discern the intent of the 1968 Legislature because the language and history of the 1968 amendment provide conclusive evidence of the statute s intended meaning. (pp. 28-31) 6. The 2003 Merger Legislation also does not create a new, prospective tax exemption. It merely reaffirms the scope of the Arts Center s tax immunity prior to 2003 as defined by the 1968 amendments. Further, the 2003 Merger Legislation was not intended to enlarge the Highway Authority s mandate. Its sole purpose was to improve administrative economies and operational efficiencies. Further, nothing in the history of the 2003 Merger Legislation suggests that the Legislature considered the tax immunity of the Arts Center or intended to enlarge its tax exemption. (pp. 32-34) The decision of the Appellate Division is REVERSED IN PART and AFFIRMED IN PART, and the matter is REMANDED for an assessment of the Authority s tax liability consistent with this opinion. JUSTICE WALLACE, joined in part by JUSTICE RIVERA-SOTO, has filed a separate opinion CONCURRING IN PART and DISSENTING IN PART. Justice Wallace agrees with the majority on the tax-exempt status of the amphitheater and the taxable status of the reception center prior to the 2003 Merger Legislation. He is of the view, however, that the 2003 Merger Legislation created a new tax exemption that applies to the entire Arts Center, including the reception center, for all years after 2003. Justice Rivera-Soto joins in Justice Wallace s opinion insofar as it would confer tax-exempt status on the reception center. JUSTICE RIVERA-SOTO has filed a separate opinion CONCURRING IN PART and DISSENTING IN PART, expressing the view that the Arts Center complex in its entirety has been tax-exempt since its inception. JUSTICES LONG and HOENS join in CHIEF JUSTICE ZAZZALI s opinion in its entirety. JUSTICES WALLACE and RIVERA-SOTO join in that portion of the CHIEF JUSTICE s opinion that holds the Arts Center amphitheater to be tax exempt. JUSTICE WALLACE also joins in that portion of the CHIEF JUSTICE s opinion holding that the Arts Center reception center was not tax exempt prior to the 2003 Merger Legislation. JUSTICES WALLACE and RIVERA-SOTO filed separate opinions concurring in part and dissenting in part. JUSTICES LaVECCHIA and ALBIN did not participate. SUPREME COURT OF NEW JERSEY A- 64 September Term 2006 TOWNSHIP OF HOLMDEL, Plaintiff-Respondent, v. NEW JERSEY HIGHWAY AUTHORITY, Defendant-Appellant. NEW JERSEY HIGHWAY AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. TOWNSHIP OF HOLMDEL, Plaintiff-Respondent, v. NEW JERSEY TURNPIKE AUTHORITY, Defendant-Appellant. NEW JERSEY TURNPIKE AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. Argued January 30, 2007 Decided April 4, 2007 On appeal from the Superior Court, Appellate Division, whose opinion is reported at 388 N.J. Super. 37 (2006). Jeffrey J. Miller argued the cause for appellants (DeCotiis, Fitzpatrick, Cole & Wisler, attorneys; Mr. Miller, Michael R. Cole and Benjamin Clarke, of counsel). Frederick W. Rose argued the cause for respondent (Lindabury, McCormick, Estabrook & Cooper, attorneys). CHIEF JUSTICE ZAZZALI delivered the opinion of the Court. In this appeal, we must determine whether portions of the PNC Bank Arts Center (Arts Center), which is owned by the New Jersey Turnpike Authority (Authority), are exempt from local property taxation. The municipal tax assessor determined that the Arts Center s amphitheater and reception center were no longer entitled to tax immunity because the Authority had leased those facilitates to two private, for-profit entities. Both the Tax Court and the Appellate Division held that those facilities were subject to taxation. Because the amphitheater s current operation furthers the Arts Center s original purpose, we conclude that the amphitheater remains tax exempt. However, the reception center s construction and privatization were dramatic, unanticipated departures from the Authority s statutory mandate, and, for those reasons, we hold that the reception center is subject to taxation. Thus, we reverse in part, affirm in part, and remand for a tax assessment of the reception center. A. (b) for the holding or conducting of fairs and festivals; (c) as a center or location for educational conferences, seminars, corporate meetings, shareholder meetings, civic events, graduations or political fundraisers; (d) as a place for selling food, beverages (including alcoholic beverages . . .) and other merchandise; and (e) for any and all other lawful purposes which are directly related to the foregoing uses and purposes. Additionally, the Authority retains the right to use the amphitheater annually, consistent with past practices, for ten ethnic-heritage festivals, twenty admission-free performances, and a winter holiday celebration. GSAC is also required to make reasonable best efforts to provide balanced programming at the amphitheater. The lease contains a host of other provisions reinforcing that the [a]mphitheater is a significant community asset to be operated in a reputable manner and requiring GSAC to operate the amphitheater consistent with its past use. Thus, the terms of the GSAC agreement ensure that the amphitheater will continue to be operated as a public performing arts center. Nevertheless, Holmdel identifies several aspects of the GSAC lease that it asserts fundamentally alter the Arts Center s use. Specifically, Holmdel notes that Nederlander was prohibited from serving alcohol during performances and could not schedule performances during the Parkway s peak traffic periods -- Friday and Sunday evenings during the summer. GSAC is not subject to those same limitations and may serve alcohol at performances and schedule events for any day of the week. Holmdel also emphasizes that, under the terms of the GSAC agreement, the amphitheater facilities will be enlarged and upgraded, further altering the amphitheater from its original design. Finally, Holmdel contends that the amphitheater was originally designed to function as a cultural and educational facility, not a commercial venue for popular artists. Holmdel s characterization of the amphitheater s initial use is inaccurate. The amphitheater has always hosted popular performers, as well as educational and cultural events. Indeed, the 1968 season included multiple performances from outstanding artists from the . . . popular performing world. October Hearing, supra, at 66A. Additionally, the GSAC lease ensures that the amphitheater will continue to be the site of cultural and educational events because the Authority is entitled to use the amphitheater for thirty-one public interest events per year and requires GSAC to present balanced programming. Further, the question in this appeal is not whether there have been any operational changes since 1968. We are satisfied that the 1968 Legislature did not intend the amphitheater to be frozen in the state of operation and repair that existed in 1968. Such an interpretation would produce an absurd result. Instead, the relevant inquiry is whether the amphitheater s current use was contemplated by the 1968 Legislature when it grandfathered the Arts Center. One of the Arts Center s original purposes was to generate revenue for the Authority. The Arts Center s construction was financed by issuing State-guaranteed bonds, to be repaid from revenue generated by the Arts Center. The Arts Center was also expected to generate additional revenue that would be used to repay bonds that were issued to construct the Parkway. Since its birth, therefore, the Arts Center was intended to generate revenue for the Authority in addition to providing public access to the performing arts. The 1968 Legislature was fully aware of the Arts Center s dual purpose. The first of the 1968 Amendments to the Highway Act did not include a provision grandfathering the Arts Center. L. 1968, c. 348. The Governor vetoed those amendments because they would violate the specific covenant of the State with the bondholders, Veto Message of Governor Richard J. Hughes With Respect to Senate Bill 493 (Sept. 19, 1968). The Legislature subsequently added the grandfather provision, evincing its recognition that the amphitheater should continue to be used to generate revenue for the Authority. Holmdel s assertion that the amphitheater s current operation was not contemplated by the 1968 Legislature presumes that the Legislature did not intend for the amphitheater s operation to evolve and adapt as necessary to maintain profitability. That presumption is misguided. The amphitheater was intended to serve two purposes -- providing access to the performing arts and generating revenue for the Authority. Renovations, contemporary programming, and alcoholic refreshments are all reasonable adaptations aimed at retaining the amphitheater s profitability. The GSAC lease agreement thus serves the Authority s underlying purposes in creating the amphitheater, and the amphitheater is entitled to the Authority s statutory tax exemption. We are satisfied that the Legislature intended the amphitheater to be operated in much the same manner as it is currently operated by GSAC. In grandfathering the amphitheater, the 1968 Legislature expected that the amphitheater s operation would evolve as necessary to retain profitability. Although the amphitheater s programming and facilities have changed since 1968, those incremental and reasonable changes were in furtherance of the amphitheater s original purpose. The terms of the GSAC lease do not depart from that intended progression. JUSTICE WALLACE has filed a separate CONCURRING and DISSENTING opinion, in which JUSTICE RIVERA-SOTO joins in part. JUSTICE RIVERA-SOTO also has filed a separate CONCURRING and DISSENTING opinion. JUSTICES LaVECCHIA and ALBIN did not participate. Plaintiff-Respondent, v. NEW JERSEY HIGHWAY AUTHORITY, Defendant-Appellant. NEW JERSEY HIGHWAY AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. TOWNSHIP OF HOLMDEL, Plaintiff-Respondent, v. NEW JERSEY TURNPIKE AUTHORITY, Defendant-Appellant. NEW JERSEY TURNPIKE AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. JUSTICE WALLACE, JR., concurring in part and dissenting in part. Except for the portion that rejects a prospective tax exemption, I concur with the majority opinion. I agree with the New Jersey Turnpike Authority s (Authority) position that the New Jersey Turnpike Authority Act (Merger Legislation or Act) created a new, prospective tax exemption that applies for all years after 2003. As the majority notes, [t]he Merger Legislation was prompted by Governor McGreevey s concern that New Jersey was facing a fiscal crisis. Ante at ____ (slip op. at 28). As a result, the Legislature amended the Highway Authority Act to include the PNC Bank Arts Center (Arts Center) in the definition of [h]ighway project, which is defined as the acquisition, operation, improvement, management, repair, construction, . . . and maintenance of the New Jersey Turnpike and of the Garden State Parkway, . . . and of the Garden State Arts Center, as transferred to the authority. L. 2003, c. 79, 8 (codified as amended at N.J.S.A. 27:23-4). The Legislature also amended the Act to include highway projects as a subset of tax-exempt [t]ransportation project[s]. L. 2003, c. 79, 8, 23 (codified as amended at N.J.S.A. 27:23-4, -12). Further, the Act authorized the Authority to contract with any person . . . desiring the use of any part [of a highway project] . . . for placing thereon . . . stores, hotels, and restaurants, offices, entertainment facilities, or for any other purpose, L. 2003, c. 79, 22 (codified as amended at N.J.S.A. 27:23-9), and to decide whether [t]o transfer, sell, dispose of, or otherwise relinquish all right, title, or interest in the Garden State Arts Center, L. 2003, c. 79, 9 (codified as amended at N.J.S.A. 27:23-5(u)). The Legislature expressly declared that: The exercise of the powers granted by this act will be in all respects for the benefit of the people of the State, for the increase of their commerce and prosperity, and for the improvement of their health and living conditions, and as the operation and maintenance of transportation projects and other property by the Authority will constitute the performance of essential governmental functions, the Authority shall not be required to pay any taxes or assessments upon any transportation project or any property acquired or used by the Authority under the provisions of this act or upon the income therefrom, and any transportation project and any property acquired or used by the Authority under the provisions of this act and the income therefrom, and the bonds issued under the provisions of this act, their transfer and the income therefrom (including any profit made on the sale thereof) shall be exempt from taxation. The Legislature reaffirms that all existing facilities and property, and their operations, and management, of the authority and of the New Jersey Highway Authority, as transferred to the authority, are deemed public and essential governmental functions and are exempt from local taxes or assessments. [L. 2003, c. 79, 23 (codified as amended at N.J.S.A. 27:23-12) (emphasis added).] The Legislature in clear, plain language reaffirm[ed] that all existing facilities and property . . . of the . . . Authority, as transferred to the authority, are deemed public and essential governmental functions and are exempt from local taxes or assessments. Ibid. Despite that clear language, the majority reads the phrase as transferred to the authority to mean that the Legislature intended to transfer the Arts Center to the Turnpike Authority without creating a new tax immunity or enlarging the Art Center s statutory purpose. Ante at ____ (slip op. at 33). I cannot agree. At the time the Legislature passed the Merger Legislation, the Authority was continuing to challenge any attempt by Holmdel to impose taxes on the Arts Center. The Appellate Division had also remanded to the Tax Court to determine whether the use of the reception center under the Bott agreement is too far removed from the Legislature s initially-contemplated use to warrant tax immunity. Ante at ____ (slip op. at 13) (citation omitted). Thus, the tax issue was before the Tax Court when the Legislature passed the Merger Legislation. In my view, the Legislature intended to clarify the tax issue that was pending before the Tax Court and did so by passing the Merger Legislation. The Legislature declared that the Arts Center was a highway project and that any property used by the Authority under the provisions of the Merger Legislation shall be exempt from taxation. L. 2003, c. 79, 23 (codified as amended at N.J.S.A. 27:23-12). After making that declaration, the Legislature then reinforced its intention by stating that it reaffirms that all existing facilities and property . . . of the . . . Authority . . . are deemed public and essential governmental functions and are exempt from local taxes or assessments. Ibid. The Legislature could not have been clearer in the Merger Legislation in declaring its intention that the Arts Center was exempt from taxes. The majority takes a different view and states that it is incongruous to conclude that the Legislature intended to create an entirely new tax exemption but chose to use the word reaffirm, which implies confirmation of a past condition, to create that exemption. Ante at _____ (slip op. at 32). As noted above, at the time the Legislature passed the Merger Legislation, the Authority had never paid taxes to Holmdel Township (Holmdel) for the Arts Center and had challenged Holmdel s attempt to impose taxes. Under those circumstances, the Legislature s use of the word reaffirm was intended to maintain the then existing, but disputed, tax exemption. Finally, in disagreeing with my position, the majority notes that the Merger Legislation s exclusive purpose was to mitigate the State s fiscal crisis by reducing administrative inefficiencies. Ante at _____ (slip op. at 34) (citation omitted). It seems obvious that the majority s rejection of a tax exemption for the Arts Center will have the opposite effect. Clearly, by imposing taxes for the first time on the Authority, it will raise the Authority s expenses and create new financial obligations. I conclude that, once the Merger Legislation became effective in 2003, the Arts Center, including the reception center and the amphitheater, was tax exempt. JUSTICE RIVERA-SOTO joins in this opinion insofar as JUSTICE WALLACE would confer tax-exempt status on the reception center. Plaintiff-Respondent, v. NEW JERSEY HIGHWAY AUTHORITY, Defendant-Appellant. ____________________________ NEW JERSEY HIGHWAY AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. ____________________________ TOWNSHIP OF HOLMDEL, Plaintiff-Respondent, v. NEW JERSEY TURNPIKE AUTHORITY, Defendant-Appellant. ____________________________ NEW JERSEY TURNPIKE AUTHORITY, Plaintiff-Appellant, v. TOWNSHIP OF HOLMDEL, Defendant-Respondent. JUSTICE RIVERA-SOTO, concurring in part and dissenting in part. The PNC Bank Arts Center (Arts Center), a facility originally owned by the New Jersey Highway Authority and now owned by its statutory successor agency the New Jersey Turnpike Authority (Authority), See footnote 3 consists of two major parts: a performance amphitheater and a reception center. See footnote 4 Each of the amphitheater and the reception center is operated by a private entity under contract with the Authority. Starting with the 1996 tax year, the Township of Holmdel (Holmdel), where the Arts Center is located, sought to impose real estate tax liability on the entire Arts Center. It is that effort, placed in the context of the rather tortured history of this controversy, which leads to the disparate results advanced. It is my view that the entirety of the Arts Center complex is tax-exempt. Therefore, to the extent the majority grants tax-exempt status to the amphitheater portion of the Arts Center, I concur. However, to the extent the majority denies tax-exempt status to the reception center portion of the Arts Center, I dissent. She concluded that [b]ased upon the case law, the statutes, [and] the [l]egislative [h]istory, it is clear to this Court that the Arts Center is a [ ]project,[ ] [that] it serves a public purpose by being a [ ]project[ ] within the ambit of the statute which serves a public purpose, [and] that it is expressly exempt from taxation pursuant to N.J.S.A. 27:12B-16 [(repealed by L. 2003, c. 79, 49)]. The Appellate Division rejected Judge Axelrad s reasoning and conclusion. Twp. of Holmdel v. N.J. Highway Auth., 329 N.J. Super. 410, 412 (App. Div. 2000). Focusing on the nature of the leases between the Authority and private entities for the separate operation of the amphitheater and the reception center, the panel explained that the fundamental issue here is whether the operation and activities of the Arts Center complex under the [private party] leases are within the boundaries of the authority delegated by the Legislature to the agency and whether the use is within the terms in which the Legislature bestowed the [tax] immunity. Id. at 420 (quoting Borough of Moonachie v. Port of N.Y. Auth., 38 N.J. 414, 422-23 (1962)). Concentrating on the 1968 amendments to the New Jersey Highway Authority Act, See footnote 6 the Appellate Division disagreed with Judge Axelrad s findings and concluded that, on the record developed to that point, it could not determine with certainty whether the use of each of the amphitheater and reception center was a project meriting a tax exemption. Id. at 431, 432. The panel thus remanded the case to flesh out the record[.] Id. at 433. On remand, the parties expanded the temporal scope of the litigation to cover the original tax years 1996, 1997, and 1998 and the additional tax years 2000, 2001, 2002, and 2004. See footnote 7 Tax Court Judge Kuskin See footnote 8 determined that the entire Arts Center complex -- both the amphitheater and the reception center -- lost its tax-exempt status because of a change in the nature of the operations of the Arts Center as a whole, and that the merger legislation, N.J.S.A. 27:23-4, did not reinstate or revive that exemption. Twp. of Holmdel v. N.J. Highway Auth., 22 N.J. Tax 428, 451-52, 464 (Tax 2005). Judge Kuskin ordered that (1) the amphitheater was tax-exempt for tax year 1996 but not for the tax years 1997, 1998, 2000, 2001, 2002, and 2004, and (2) the reception center was not tax-exempt for any of the tax years at issue. Id. at 466. The Appellate Division affirmed. Twp. of Holmdel v. N.J. Highway Auth., 388 N.J. Super. 36 (App. Div. 2006). Plaintiff-Respondent, v. NEW JERSEY HIGHWAY AUTHORITY Defendant-Appellant. DECIDED April 4, 2007 Chief Justice Zazzali Presiding OPINION BY Chief Justice Zazzali CONCURRING/DISSENTING OPINIONS BY Justices Wallace and Rivera-Soto