***** **NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINION**  **S**

**____________________________________ EREZ HOLDINGS URBAN RENEWAL,**  **: TAX COURT OF NEW JERSEY**  **LLC, :** 

**: DOCKET NO.**  **013941-2018 Plaintiff,**  **: v. :**  **: DIRECTOR, DIV**  **ISION OF TAXATION**  **, : and :**  **TOWNSHIP OF LAKEWOOD, :**  **:**

**Defendants. :**  **____________________________________:**

**Decided: February 1, 2022**  **Catherine J. Bick for plaintiff**  **( Giordano, Halleran & Ciesla, P.C.**  **, attorney).**  **Harold N. Hensel for defendant (**  **Secare & Hensel , at**  **torney ).**  **Joseph A. Palumbo and Anthony D. Tancini for defendant**  **(Andrew J. Bruck, Acting Attorney General of New Jersey, attorney**  **). SUNDAR,**  **P. J.T.C.**  **This opinion decides plaintiff’s challenge to the final determination of defendant,**  **Director, Division of Taxation (Director)**  **, wh**  **o affirmed**  **th e**  **Non**

**- Residential Development Fee (NRDF)**  **imposed by defendant**  **, Township of Lakewood (Lakewood) under N.J.S.A. 40:55D**  **-8.4 . In so**  **affirming, the Director rejected plaintiff’s claim that t he**  **NRDF should be computed by assigning $0 as the**  **equalized assessed value of the improvements**  **because they are exempt from local**  **property tax und**  **er the Long** 

**- Term Tax Exemption law (LTTEL), N.J.S.A. 40A:20** 

**- 1 to** 

**- 22. The**  **Director moved for summary judgment claiming that his final determination should be uph eld**  **since the NRDF should be computed on the equalized assessed value of the**  **entire property (**  **land and improvements)**  **regardless of the LTTEL. Plaintiff (**  **Erez )**  **cross -**  **moved for summary judgment Approved for Publication**  **In the New Jersey Tax Court Reports** **2**

**arguing the contrary: that the NRDF should be computed only on the equalized assessed value** 

**a llocated to land because the improvements are**  **tax exempt. In ot**  **her words, Erez**  **urges th at th**  **e NRDF and the**  **LTTEL statutes should be interpreted in pari materia**  **, thus, the tax exemption provided by the**  **latte r should be incorporated into the**  **form er.**  **In addition, Erez**  **, for the first time**  **, raised the issue**  **that Lakewood improperly computed**  **the NRDF because it did not exclude the**  **parking lot wh**  **ich improvement i**  **s specifically exempt from the fee**

**. For the reasons following, the court finds that Lakewood correctly included the**  **equalized assessed**  **value of the improvements in computing the NRDF. Although Erez raised the parking lot issue for the first time during this litigation, neither**  **defendant disputed that the value of the**  **parking lot is exempt from the NRDF ,**  **did not object to its**  **consideratio n o**  **n the merits**  **, nor did**  **they claim that either was prejudiced in this regard. The court also provided time and op**  **portunity for**  **the parties to resolve th**  **e excludable amount prior to deciding the summary judgment motions, however, they were unable to do so. Therefore, and pursuant to**  **R. 8:3-**  **8(a) and R.**  **4:9- 2, the court**  **decides th e parking lot**  **issue. Based on the evidence presented, the court concludes that Erez has failed to persuade the court that the value of the parking lot to be excluded for purposes**  **of calculating the NRDF should be $3,407,000. The court therefore affirms the Director’s fi**  **nal determination.** 
FACTS AND PROCEDURAL HISTORY **The undisputed facts are as follows. On June 1, 2000, Lakewood adopted a Redevelopment Plan Amendment to include an**  **area called Cedarbridge Redevelopment Area (Area). The Area, zoned DA** 

**- 1, included Block 961.01, Lot 2.06 (Subject) which measures 5.348 acres.**  **A vacant lot, t**  **he Subject was**  **owned by Lakewood, and**  **thus was tax exempt for local property tax (LPT) 3** 

**purposes . Lakewood agreed to sell t**  **he Subject t o Erez’s predecessor**  **for its redevelopment as a single-use corporate office park.**  **Erez was qualified as an urban renewal entity under the LTTEL. It entered into an Acquisition Agreement to purchase the Subject for**  **its redevelopment as a 60,000 square foot (SF) corporate headquarters for its affiliate LTC Consulting Services. Lakewood**  **designated Erez as the Subject’s redeveloper by**  **r esolution dated December 10, 2014 and required Erez to obtain title**  **to the Subject. Per the Ordinance, t**  **he redevelopment project for the Subject received preliminary and final major site approval from Lakewood’s Planning Board on January 20, 2015.**  **In October 2015, Lakewood approved Erez’s request for a n**  **LPT exemption under**  **the**
**LTTEL. L**  **akewood and Erez then entered into a 30** 

**- year financial agreement, which among others,**  **provided that only**  **improvements on the Subject a**  **re exempt from LPT under**  **the LTTEL, in consideration for which Erez would pay an annual service charge. “Improvements” in**  **cluded “[a]ny building, structure or fixture permanently affixed to the Land and const**  **ructed” by Erez. Erez had “all rights pursuant to the applicable State law” as to the Subject’s value det**  **ermination (land and improvements) by Lakewood, “including the r**  **ight to challenge the annual assessments of the value of the Subject . . . through a tax appeal or other appropriate proceeding.”**  **Any disputes**  **as to breach of the a**  **greement or any terms/provisions therein, could be resolved by either party applying to eit**  **her the Tax Court or any other State court in a way “as will tend to accomplish the purposes of the” LTTEL and the a**  **greement. There was no provision addressing the NRDF. Thereafter, Erez improved the Subject with a 60,000 SF office building.**  **Impervious coverage included parking lots, internal roadways, landscaping, stormwater**  **management facilities ,**  **and the like. The development of the Subject was done**  **through a general contractor, Regency Development Properties, LLC (hereinafter**  **“ GC**  **”), an unrelated entity. 4** 

**On July 28, 2017, the GC submitted the NRDF Certification/Exemption Form (hereina fter** 

**“ Form N** 

**- RDF**  **” ) to Lakewood. It noted that it had received a construction/demolition permit**  **on October 15, 2015. It answered “No” to the question whether the Subject was “previously**  **developed with a building, structure, or other improvement.” It left blank the portion t itled**  **“Exempt From or Not Subject to Fee [N.J.S.A. 40:55D**

**- 8.4] Check one if appropriate,” although**  **the form states (in bold and capital letters) that “i f**  **an exemption o r**  **r educed payment is claimed,**  **developer must attach proof of such claim. ” Erez**  **checked the box “Full Fee Due (2.5%).” On July 31, 2017, Lakewood’s then tax assessor filled in Section B of Form N** 

**- RDF to**  **indicate the “project’s assessed value of land & improvements” w**  **as $12,651,600. The assessed value was also the equalized value**  **( the**  **average ratio**  **being apparently 100% ).**  **He calculated the NRDF at $316,290 (2.5% of $12,651,600,**  **the equalized assessed value (EAV) of the Subject**  **). In March 2018, Erez deposited the NRDF with the Department of Community Affairs**  **(DCA) under protest. I**  **n August 2018, Erez challenged**  **the impositi**  **on of the NRDF**  **to the Director.**  **1 Erez contended that s**  **ince the improvements are exempt “under the [LTTEL] . . . and**  **the . . . [a]**  **greement,” the NRDF should be calculated by “attributing” a zero -dollar**  **value to the improvements.**  **Lakewood opposed Erez’s challenge on grounds that**  **both land and improvements carry value regardless of any LPT exemption, and in any event, an LPT exemption applies only to taxes** 
**not fees**  **such as the NRDF. It attached a computation of the EAV**  **excerpted from its**  **MOD IV syste**  **m. 2**  **One excerpt**  **showed the value assessed for improvements at $10,515,600 and its**

**1 The DCA**  **returned the entire amount of the**  **deposited fee to Erez in July 2019. E**  **rez agreed with Lakewood to hold the funds pending outcome of**  **this litigation.**  **2 The**  **MOD IV “**  **is a statewide computer database used by assessors to keep every line item current as to value and other descriptive data.**  **” Property Administration**  **- Local Proper**  **ty Division of Taxation,**  **Handbook for New Jersey Assessors , ¶304 (rev’d 2021).** **5**

**classification as 15F being under a 30**

**- year**  **financial agreement (also known as PILOT**  **) beginning July 31, 2017, pursuant to N.J.S.A. 40A:20**  **-1. 3**  **The other showed the value asse**  **ssed for land (5.348 acres purchase**  **d in June of 2015**  **for $535,000 ) as $2,136,000**  **; the non-**  **usable code as 3 3**  **(“ sales of . . . currently exempt property,”**  **see N.J.A.C. 18:12.1.1(a)(33))**  **; a nd its classification as**  **4A (taxable). 4**  **The Director upheld the imposed**  **NRDF by letter dated September 24, 2018. He explained that the statutory exemptions from the NRDF did not include a property exempt under the**  **LTTEL, and that an exemption under the LTTEL does not render the**  **improvements’ assessed value as zero**  **nor obvi ate an assessor’s duty to place a value on the property**  **(land and improvements) for**  **LPT**
**purposes under LPT laws** 

**. Erez asked the Director to reconsider his determination**  **since it reflected “a fundamental**  **misunderstanding of the basis of Erez’s challenge to the NRDF.” Erez stated that it was only**  **disputing the computational methodology, not that the Subject’s “development is exempt from the**  **NRDF.” In other words, Erez stated, the NRDF should be calculated on land value alone. Lakewood opposed the reconside**  **ration request for the same reasons it had in its original opposition.**  **On December 19, 2018, the Director denied reconsideration noting that**  **computation of the**
**N RDF is**  **on the EAV**  **of land plus the**  **EAV of improvements. Under Erez’s logic, the Director** 

**3 C**  **lass 15F means “Other Exempt” which**  **includes “real property exempt from taxation but not described in any of the foregoing classes**  **.” N.J.A.C. 18:12**

**- 2.2(q). An assessor “must record**  **and track” in the MOD IV “all exemptions and abatements to ensure that all taxable and exempt**  **property is accounted for.” Handbook for New Jersey Assessors, ¶501.01.**  **4 C**  **lass 4A is “**  **Commercial Property ”**  **and includes “ income-**  **producing property ” such as “**  **shopping centers, malls, office buildings, restaurants, theaters, etc.**  **” N.J.A.C. 18:12-2.2(e). 6** 

**pointed out , no property exempt under the LTTEL would be subject to the NRDF, which would**  **then render the statutory exemptions for the fee a nullity. Erez timely challenged the Director’s determination to th**  **is court. It only asked that the**  **NRDF “must be recalculated by attributing a valuation of zero (0) to the appl icable tax exempt**  **improvements.” In alleged that i t**  **“appeals the determination” of the Director , and**  **demand ed** 

**“ judgment for the full amount of t**  **he [NRDF] plus interest” and any warranted**  **equitable relief. The Director then moved for summary judg**  **e ment on grounds the NRDF imposed on the**  **Subject properly included the value of the**  **improvements . Erez cross** 

**- moved for summary**  **judgment arguing the opposi te.**  **It also, for the first time, contended that there was no reduction for the value of the parking lot in computing the NRDF.**  **5 See**  **N.J.S.A. 40:55D**

**- 8.4(b)(1) (“exempt**  **from the imposition of” the NRDF are “parking lots and parking structures” built “ in c**  **onjunction with a non** 

**- residential development, such as an office building”). Per Erez’s GC, about 15% of**  **the Subject is occupied by an**  **office building, thus, 85% is**  **comprised of site improvements (parking lot, curbs and aprons, driveway, and storm drainag**  **e). Construction costs included developing the site such as “grading, drainage, earthwork, tree clearing . . . storm d**  **rainage construction, engineering costs, survey expenses and the builder’s management fee.**  **” 6**  **The GC tabulated the “expenses . . . direc**  **tly related to construction of the parking” as follows:**

**Driveway Paving (including base course, top course, and striping of $16,900)**  **$ 486,410.50**  **Parking lot signage $**  **37,590.00**

**5 In its protest and reconsideration request to the Director, Erez did not contest**  **the EAV of the improvement**  **s, never raised the issue that such value improperly included the value of the parking lot in calculating the NRDF, and never contended that the NRDF should be computed on**  **some amount other than $0**  **for the improvements**

**. 6**  **A fter the Director filed a reply t**  **o Erez’s cross**

**- motion, Lakewood was included as a defendant**  **by a Consent Order. Erez filed an amended complaint identifying Lakewood as a defendant and**  **adding only one additional allegation: that**  **the DCA returned the**  **deposited NRDF to Erez in July**  **2019 which it was holding pending litigation.**  **It did not raise the parking lot issue. Lakewood**  **filed an answer, and the Director filed an amended answer to the amended complaint. 7**  **Curbs & Aprons $**  **39,030.00 Storm drainage**  **$ 310,127.17**  **Site work (approximate 85% of**  **$306,080.79) $**  **260,168.67**
**B uilder’s management fee (10% of costs**  **identified in this cert.) $**  **116,009.79 Engineering (approximate 85%)**  **$ 13,213.96**  **Surveyor (60%) $**  **13,557.60 Total**  **$1,276,107.50 The total divided by the 268 parking spaces, provided a per-space cost of $4,761.60.**  **Erez retained a real estate appraiser (accepted by the court, without objection, as an expert**  **in real estate appraisal) who testified that the above costs were the mos t credible indicator of value**  **under the cost approach since they were actually incurred, they were local costs, and the Subject**  **was newly developed. He also converted each item into a cost per SF (PSF) (based on aeri al**  **measurements of the parking lot at 1 20,795 SF), and cost per parking space. He noted that the**  **costs were similar to those of an adjacent site also developed by the same contractor, t hus**  **, were**  **reasonable and reliable, as opposed to cost data from Marshall & Swift (M&S) which is estimated** 

**on a national basis**  **and does not account for the variations of site work “between property to property.” To the above tabulated costs, he added 15% for entrepreneurial prof**  **it for a total cost of the parking lot as $**  **1,467,000. 7**  **He also opined a separate val ue for**  **the land underlying the parking area (2.77 acres) at $1,940,000 based on a comparable sales approach using six land sales**  **in Lakewood . His total**  **value for the parking lot was thus $3,407,000 as of December 3, 2021. Neither defendant disputed that the value of the parking lot should be excluded from the**  **NRDF. Per Lakewood’s deputy tax assessor, the value under a cost approach is $2.99 PSF of**  **asphalt paving using data from M&S. The tota l**  **parking space area**  **was 34,304 SF (268x128 SF,**

**7 The**  **parking lot also included canopies with solar power ,**  **but thes**  **e were**  **built after the Subject was developed by another GC. Erez did not contend that t**  **he se**  **costs are**  **part of, and therefore, should be**  **exempt from**  **the NRDF. 8** 

**the measurement o f each space at 8x16 SF), thus**  **he opined , the**  **amount to be**  **excluded from the NRDF should be $102,569. He conceded that each parking space measured 9x18 SF per the site**  **plan . He**  **maintained that since Lakewood only values**  **parking spaces for purposes of imp**  **osing the LPT**  **, only the value of such spaces should be excluded for NRDF purposes.**
ANALYSIS
A. Disposition Method for Issues Presented **The Director and Erez moved for summary judgement on the issue of**  **whether the NRDF must be calculated by allocating a zero** 

**- dollar value to the improvements on the Subject because**  **they are tax e**  **xempt under the LTTEL. 8**  **Resolution of this issue involves onl y a legal analysis,**  **therefore, a decision by summary judgment is appropriate.**  **See R.**  **4:46-2( c)**  **; Brill v. Guardian**  **Life Ins. Co. of Am. , 142 N.J. 520, 540 (1995).**  **As noted above, Erez , for the first time, in its cross** 

**- motion for summary judgement,**  **raised**
**t he issue that the NRDF calculation was also incorrect because the EAV for improvem**  **ents did not exclude the value of the Subject’s parking lot. Neither in its administrative p**  **rotest, nor in its complaint did Erez allege that the EAV of the improvements imp**  **roperly included the value of the parking lot. As such the court could remand the issue for the Director’s examinat**  **ion, or deny Erez the ability to raise the issue during litigation.**  **See generally Bauer v. Nesbitt**  **, 198 N.J. 601, 610 (2009) (a “cause of a**  **ction . . . must be discernable within the four corners of the complaint ,**  **” and if it**  **“ completely omits the underlying basis for relief**  **, ” then it “c**  **annot be sustained as a matter of fundamental fairness.**  **An opposing party must know what it is defending against; how else would**

**8 In its brief in support of its cross** 

**- motion, Erez footnoted that the “Lakewood Redevelopers**  **Consortiu m, a group of similarly situated redevelopers in Lakewood, join in [Erez’s] challe**  **nge.” Neither Erez nor the “**  **Consortium” moved for the**  **“C onsortium**  **” to formally participate in this**  **litigation in compliance with the court rules. The court thus**  **rejects the attempted joinder**

**. 9** 

**it conduct an investigation and discovery to meet the claim? ”)** 

**. Cf.**  **Univ . Cottage**  **Club of**  **Princeton v. Borough of**  **Princeton , 26 N.J. Tax 185, 191 (Tax 2011) (denying plaintiff’s attempt**  **to raise the issue of valuation since the complaint only pled the incorrectness of the LPT exemption**  **denial and holding that “ R.**  **8:3- 8(a)**  **cannot be read to permit an amendment to add a claim which is made beyond the limitation period provided by N.J.S.A. 54:3-21”).**  **Neither course of action is warranted here. I f**  **an issue**  **th at**  **was never pled**  **is “tried**  **by consent or without the objection of the parties,” then the court can decide the s**  **ame by treating it “in all respects as if [it] . . . had been raised in the pleadings.”**  **R. 4:9-2.**  **The complaint c**  **an thereafter**  **be amended**  **by motion**  **at any**  **time “**  **to cause**  **them to**  **conform to**  **the evidence**  **and to raise” the issue, however, “**  **failure ” to do so “s**  **hall not affect the result of the trial of these issues.” Ibid.**  **Even if the adversary opposes presentation of the evidence “on the ground that it is not within**  **the issues made by the pleadings,” the court can permit amendment of the pleadings and “shall do**  **so freely when the presentation of the merits of the action w ill be thereby subserved and the**  **objecting party fails to satisfy the court that the admission of such evidence wou ld be prejudicial**  **in maintaining the action or defense upon the merits.” Ibid.**  **The court can adjourn the trial so the objecting party can p**  **roperly address the evidence. Ibid.**  **The rules governing the Tax Court**  **incorporate R.**  **4:9- 2.**  **See R.**  **8:3- 8(a)**  **(“Amendments to conform to the evidence may be permitted in accordance with**  **Rule 4:9 -2”).**  **Here, neither defendant objected to Erez’s ability to r**  **aise the parking lot issue. In**  **reply to**
**Erez’s cross**

**- motion, the Director only argued that his determination should be upheld as**  **presumptively correct and reasonable because**  **Erez did not prove with clear and convincing evidence “that the EAV used to calcu**  **late the NRDF included the value of the parking lot” or that Lakewood assessed a value on the lot** 

**. Further**  **, during oral argument of the summary judgment 10** 

**motions , neither defendant argued that Erez is foreclosed or barred from raising the park**  **ing lot issue**  **. Rather, they agreed that the Subject was developed with a parking lot , and**  **that parking lots**  **are exempt from the NRDF. Neither defendant objected to proof being adduced in thi s connection,**  **nor did either contend that doing so would be prejudicial to them. The court also provided the parties time and the opportunity to attempt an amicable**  **resolution of this issue. Erez and Lakewood were unable to reach a consensus (th e Director**  **advising the court that Lakewood took the**  **lead on this issue, since the assessor computes the EAV).**  **Lakewood conceded that the EAV for improvements included costs for the parking lot ($102,569)**  **and if this**  **inclusion is found to be incorrect**  **, then the NRDF should be reduced but not to the extent**  **claimed by Erez. Testimony was also add uced**  **, with Erez and Lakewood proffering evidence**  **through their respective direct and cross examination of the witnesses, and undis puted documents**  **in support thereof. 9**  **Thus, both defendants had ample time and opportunity to rebut/prove the value**  **of the concededly NRDF- exempt parking lot.**  **Under these circumstances, the court finds**  **that the application of**  **R. 8:3** 

**- 8(a) and**  **R. 4:9** 

**- 2,**  **is appropriate.**  **Therefore, it will decide the issue as to the parking lot’s value**  **based on the evidence presented**  **solely for purposes of determining the amount to be exempted from the NRDF.**
B. The Plain Language of the NRDF S tatute Obviates the Need for in pari materia Analysis
**T he Director’s interpretation of a statute**  **is entitled to deference**

**. Koch**  **v. Dir**

**. , Div. of**  **Taxation, 157 N.J. 1, 8**  **(1999) . However,**  **the “ deference is not total, as the**  **courts remain the final authorities on issues of statutory construction**  **.” Ibid.**  **(citation and internal quotation marks**

**9 Lakewood**  **advised the court that it would not present testimony of a real estate appraiser b ecause**  **the proper method of calculating EAV is by applying calculations in M&S manual, not val ue**  **“calculations . . . from an appraisal of the property,” but that it would not object to Ere z presenting**  **testimony of a real estate appraiser. 11** 

**omitted). Here, the court concludes that the Director properly construed the NRDF l aw when**  **upholding Lakewood’s assessor’s inclusion of the EAV of improvements for purposes of computing the NRDF.**  **The NRDF is imposed “on all construction resulting” in the development of a new non** 

**** **residential property on an unimproved lot at 2.5% of the EAV “of the land and**  **improvements.”**
**N.J.S.A. 40:55D**

**- 8.4(a)(1) (emphasis added)**  **; 10**  **Legislative Fiscal Estimate, Sen. Comm. Substitute**  **for Sen. 1783, 2 (June 20, 2008) (proposed NRDF law “requires development fees to be charged Statewide on non** 

**- residential construction or improvements”).**  **11 EAV is defined by N.J.S.A.** 

**10 The NRDF is also imposed when**  **additions are made to exi sting structures for non** 

**- residential**  **use and is**  **computed at 2.5%**  **on the increase in the EAV of the “additions to existing structures.”**  **N.J.S.A. 40:55D-8.4(a)(2). 11**  **See also General Instructions to Form N** 

**- RDF**  **which state as follows:**  **For Assessor: The Assessor shall determine if a claimed exemption is justified. I f**  **the property is exempt, the Assessor shall check the “exempt” box at the bottom of Section B, sign and provide the original signed Form N** 

**- RDF to the Construction**  **Official a nd a copy to the Developer. If not exempt, the Assessor, based on review**  **of plans and conceptuals submitted with Construction Permit Application, shall prepare an estimated assessment of the property. The Assessor is responsible for**  **completing the “Estim ated” column of Section B (E1** 

**- E5) to determine the**  estimated **. . . [NRDF] due (E6). E1 should be the** estimated **assessed value of land and improvements of the final development . . . . E3 should be the estimated**  **[EAV] of the land and improvements of the final development on the site (E1+E3). If the development is new construction on vacant land, the [NRDF] is assessed on**  **the value of land and improvements of the final development and E4 and F4 should equal $0.**  **If the development is situated on real property that was previously developed with**  **a building, structure, or other improvement, the [NRDF] is assessed on the val ue of**  **the new improvements only, without including the value of the land or the existing improvements, and E4 and F4 should show the existing [EAV] of the land and**  **improvements as of the date listed in section A when the construction or demolition permit was first sought.**  **The Assessor then provides a copy of the estimate to the Construction Official and**  **the Developer, and retains the original**

**. . . . Upon notification that the property is**  **ready for a final assessment, the Assessor reviews the estimate, performs a final assessment and completes Section B, “Final” column (F1** 

**- F5) to determine final**  **fee, F6. F1 should be the actual assessed value of land and improvements, and E4**  **and F4 should show the existing [EAV] of the land and improvements at 12** 

**40:55D- 8.3 as “the assessed**  **value of a property divided by the current a verage ratio of assessed to**  **true value for the municipality in which the property is situated ” pursuant to LPT laws, N.J.S.A.** 
**54:1- 35a to** 

**- 35c. The assessor must initially estimate the EAV of the “non** 

**- residential**  **development,” thereafter confirm or modify the same pursuant**  **to the LPT law,**  **N.J.S.A. 54:1**

**- 35.35,**  **12 and then compute the NRDF. N.J.S.A. 40:55D-8.4(e).**  **The statute’s plain language evidences that the NRDF is computed on the EAV of both**  **land and improvements. Lakewood’s then assessor did precisely**  **what the NRDF statute plainly requires: he first determined the total EAV of**  **the Subject at $12,651,600 (allocated $10,515,600**  **to improvements and $2,136,000 to land), and then multiplied the same by 2.5%. Therefore, there**  **is no need to resort to other m ethods of interpretation**  **of how the NRDF should be calculated. See**  **State v. Butler , 89 N.J. 220, 226 (1982)**  **(“ If the statute is clear and unambiguous on its face and**  **admits of only one interpretation, we need delve no deeper than the [statute’s] . . .**  **literal terms to divine the Legislature**  **’ s intent**  **”). Erez concedes that the Subject’s improvements are not exempt**  **from the NRDF. However**  **, it argues, the**  **line on Form N** 

**- RDF as to**  **the EAV for improvements must reflect $0**  **because the improvements are exempt from**  **LPT under the LTTEL.**  **The court rejects this argument** 

**. As noted**  **above, the EAV is to be determined under LPT law. The LPT law has no provision requiring an assessor to allocate or attribute $0 of the EAV to the improvements for properties**  **which are subject to the LTTEL. Nor is there any such mandate or suggestion in the LTTEL.** 

**completion, F2 should be the Director’s ratio** at the time of completion of the project **, and F3 should be the [EAV] of land and improvements at completion (**  **F1+F2). 12**  **This statute provides that the Director**  **must “by rule establish standards to be used in the valuation and revaluation of real property to be used for assessment purposes.”** **13**

**Erez is misguided in contendin g that**  **the classification of a property as 15F for purposes of**  **the LPT**  **list evidences that the property has “no taxable value.” The classification sim ply identifies**  **that the property is tax exempt in that there is no tax to be paid on the assessed**  **value, not that the**  **property’s assessed value is $0. The statue in this regard makes this plain. See**  **N.J.S.A. 54:4**

**- 27**  **(assessor should maintain a separate tax list of tax**

**- exempt properties, and “shall**  **value such land and buildings . . . at the amount which woul**  **d be the taxable value if the same were not exempt from taxation in the same manner as other real** 

**. . . property,**  **and in each case he shall state the**  **ground of exemption”). So do the regulations. See**  **N.J.A.C. 18:12 -3.1**  **(a) (assessors must enter**  **the “value of [the]**  **land and buildings” o**  **f tax**

**- exempt properties o**  **n the exempt tax list) ;**  **N.J.A.C.**
**18:12- 3.1(b)(2)(viii; ix; x) (an assessor must “[i]nsert**  **the true value of the land to which an exemption is granted**  **” as well as “the true value of all**  **buildings or improvements to which an exemption is granted**  **” when preparing the exempt tax list). Assessors are thus instructed to determine the value of a tax** 

**- exempt property although the property will not generate tax revenues.** 
**See Handbook for New Jers**  **ey Assessors , ¶416**  **.01 (“Although exempt property is taxed at zero**  **dollars ($0), assessors must determine accurate taxable assessed values so that should exem ption**  **cease proper tax payments will be obtained. Also accurate valuing of exempt property e nsures**  **the correct basis for any**  **‘ in** 

**- lieu**  **’ of payments”); ¶503.16 (exemption under the LTTEL is shown on**  **the tax list as “both a taxable and an exempt line item” and the “total assessed va lue exempted**  **appears on the Exempt Property List with the same block and lot as the taxable po rtion with the**  **addition of an X qualifier and exempt property class 15F”).**
**W hile the phrase “taxable value” as used by Erez can imply $0 value, it is $0 in the sens**  **e that no tax is forthcoming from the tax** 

**- exempt property**  **(or as the Director calls it, “billable value”)**  **, not that the property is assessed at a true value of $0**

**. The NRDF requires the assessor**  **to 14** 

**determine the property’s EAV (land and improvements), and Lakewood’s then**  **assessor properly did so. There is undoubtedly value in the improvements, and the tax exemption does not obliterate**  **that value. See**  **City of Hackensack v. Cnty**  **. of Bergen**  **, 30 N.J. Tax 240, 252 (Tax 2017) (“To say that a property has a value of zero defies logic.**  **All real property has inherent value. A tax** 

**e xemption does not strip a property of its value.**  **Rather, it simply relieves a taxpayer from an obligation of paying the tax owed**  **”)**

**. Had the NRDF law intended to exempt improvements from the fee for properties und**  **er an agreement pursuant to the LTTEL law,**  **it would have done so. It did not. See**  **N.J.S.A. 40:55D**

  ** 8.4(b). Rather, the properties for which the NRDF need not be paid are those exempted f** **rom tax under the LPT statute.**  **See N.J.S.A. 40:55D** 

**- 8.4(b) (properties not subject to the fee are those used**  **b y religious entities and those used for educational purposes and exempt from LP**  **T under N.J.S.A.**
**54:4- 3.6). Here, there is no allegation that the Subject has received any LPT exemption und**  **er N.J.S.A. 54:4**  **-3.6 . T**  **herefore, the NRDF applies to the EAV of the land and improvements**  **on the Subject (except the parking lot).**  **Cf. N.J.S.A 40:55D** 

**- 8.6(a)(2) (nonresidential developers**  **or redevelopers under an agreement prior to July 2008, the effective date of the NRD**  **F law, need not pay the fee provided the agreement**  **requires either**  **to “pay a fee for affordable housing of at least one percent of the equalized assessed value**  **of the improvements which are the subject of the**  **development plan, developer’s agreement, or redevelopment agreement”) (emphas is added).**  **Erez argues that the LTTEL should be read in**  **pari materia with the Local Redevelopment**  **and Housing Law (LRHL), N.J.S.A. 40A:12A**

**- 1 to** 

**- 22 (**  **enacted in 1992), since the subject matter of both statutes is the same: redevelopment of certain neglected areas in a town for th**  **e betterment of all by incentivizing developers/redevelopers to construct residential and nonres**  **idential buildings with tax ex**  **emptions/abatements. See also**  **N.J.S.A. 40A:20**

**- 2 (the LTTEL’s “provisions** **15**

**are one means of accomplishing the redevelopment and rehabilitation purposes of the**  **[LRHL] . .**

**. through the use of private entities and financial arrangements pertaining theret**  **o, an d**  **[the LTTEL] . . . should be construed in conjunction with**  **” the LR H**  **L)**

**. There is no need for this**  **pari materia analysis if the court finds, as it did here, that the** 
**NRDF statute’s plain language controls.**  **See Carlson v. City of Hackensack, 410 N.J. Super. 491,**  **497 (App. Div. 2009) (when the language of the statute at issue**  **is “cle**  **ar and unambiguous**  **” the**
**court “ need**  **not resort to ” its**  **pari materia reading with another**  **statute ).**  **Even if the court were to consider the L**  **RH L and the LTTEL as having the same**  **goals of encouraging private entities to partner**  **with the government for societal good, in return for tax exemptions, Erez’s argument fails.** 
**T here is nothing explicit or implicit in either law as to assigning a $0 value to the**  **tax exempted improvement**  **, or equating a tax exemption to a $0 EAV. More to the point, the explicit legislative intent of the NRDF law is to legislatively re**  **quire what the courts permitted**  **- requiring developers to continue to fund affordable housing, but on a**  **uniform state**

**- wide rat**  **e. See**  **N.J.S.A. 40:55D**

**- 8.2 (the NRDF law, N.J.S.A. 40:55D**  **-8.1 to -8.7 “prohibits municipalities from imposing their own fees to fund affordable housing on non** 

**** **residential development,” thus obviating “over” reliance on municipal fees f or this purpose, whi**  **ch if not imposed uniformly on a state** 

**- wide basis, can dissuade and “halt[] . . . non** 

**- residential and**  **residential development,” frustrating “the constitutional obligation to prov ide for a realistic**  **opportunity for housing for families at all income levels” );**  **Sen. Eco. Growth Comm., Statement** 
**to Sen . 1873**  **(May 19, 2008) (the 8%**

**- 10% fee currently being charged on nonresidential**  **construction or improvement if allowed to continue would have a “devastating impact . . . on job**  **creation in New Jersey,” and the NRDF law would “substantially” reduce the fee t o “2**  **.5% of the equalized assessed value of land and proposed improvements” for new construction o**  **n vacant lots, 16** 

**or “2.5% of the increase in equalized assessed value of the additions to existing structures to be**  **used for non- residential purposes”).**  **The legislat ive intent of the NRDF law renders irrelevant, if not questionable, any resort to**  **reading in pari materia**  **, the provisions of the LRH L and LTTEL. That the LRHL and the LTTEL**  **may have the same goals of redevelopment does not require a conclusion that the tax e xemption**  **afforded to improvements be incorporated into the NRDF law. Indeed, doing so would subve rt**  **the goals of redevelopment -**  **by depriving a source of funding for the same, i.e., the NRDF. See** 
**Statement to Sen. 1783 (May 8, 2008) (proposed NRDF law**  **“requires development fees to be charged on nonresidential construction or improvements, by all municipalities, t**  **o fund affordable housing”).**  **Erez contends that the NRDF statute should be read in pari materia**  **with N.J.S.A. 46:15** 

**- 7.2, which imposes a fee (**  **also called “mansion tax”) upon transfer of real property for a consideration over $1,000,000 but not for properties**  **that are**  **tax exempt. Therefore, it argues,**  **properties such as the Subject should also not be required to pay the NRDF because “[t]her e is**  **nothing in the language or legislative history of the” NRDF statute “to suggest that th e Legislature**  **intended to take a different approach to exempt property than the approach used with the fee established by N.J.S.A. 46:15**  **-7.2.” The court rejects this arg**  **ument. For one, there is simply no parity between the two statutes. The mansion tax was imposed to raise revenue for “general state purposes.”**  **Wells Reit II**

**- 80 Park**  **Plaza, LLC v. Dir**

**. , Div. of Tax**  **ation , 24 N.J. Tax 98**  **, 99 ( Tax**  **2008) (citing**  **Assem. Budg et Comm.** 
**Statement to Assem . 3115 (2004)),**  **rev’d on other grounds ,**  **414 N.J. Super. 453, 457 (App. Div.**  **2010). As noted above, the NRDF was to streamline imposition of development fees a t a State** 

**** **wide level to fund affordable housing at a fixed amount than**  **c urrently charged by municipalities.** **17**

**Second, the mansion tax is imposed based on the status of the grantee**  **for income tax purposes, i.e., no tax if the grantee is exempt from federal income tax under I.R.C.**  **§501(c)(3).**
**N.J.S.A. 46:15**

**- 7.2(b)(1). Clearly, the NRDF is not based on the tax** 

**- exempt status of the grantee**  **for income tax purposes. In fact, N.J.S.A. 46:15-**  **7.2(b)(2) contradicts Erez’s argument since that provision references EAV in the context of the fee: transfers of real property “incid**  **ental to a corporate merger or acquisition” are exempt provided “the equalized assessed va**  **lue of the real property t**  **ransferred is less than 20%” of the value of all assets transferred. In sum, the court finds that Lakewood did not err in**  **i ncluding the value allocated to**  **improvements for purposes of calculating the NRDF.** C. The Amount to be Excluded for the Parking Lot in Computing NRDF Cannot be Determined
**N.J.S.A. 40:55D**

**- 8.4(b)(1) “exempt[s] from the imposition of” the NRDF, “parking lots**  **and parking structures” whether or not built “in conjunction with a non**

**- residential development,**  **such as an office building, or whether the parking lot is developed as an independent non**

  ** residential development** **.” There are no regulations or other guidance on the methodology for**  **determining the exempted amount of a parking lot or parking structures although the Legislature**  **delegated the regulatory authority to Treasury. Se**  **e N.J.S.A. 40:55D** 

**- 8.4 (e) (“**  **The Treasurer**  **shall adopt**  **such regulations**  **as necessary**  **to effectuate**  **” the NRDF**  **laws). 13**  **The NRDF law imposes a fee on the EAV of land and improvements if the new**  **construction i s on vacant land, but only on improvements**  **if the n**  **ew construction is on improved**  **property. See**  **N.J.S.A. 40:55D**

**- 8.4(a)(2) (fee is on the “**  **the increase**  **in equalized**  **assessed value,**  **of the additions to**  **existing structures”);**  **General Instructions to Form N**

**- RDF, n.**  **11. The Subject** 

**13 Cf.**  **N.J.A.C. 18:15**

**- 4.5(b) (a regulation promulgated by the Director providing detailed guidance**  **on using a cost approach to value taxable structures for purposes of farmland assessm ent).** **18**

**was vacant when it was slated for redevelopment and was vacant when Erez redeveloped it. As**  **noted above, the assess ed value of real property is computed under LPT laws.**  **Therefore, here, the**  **exemption amount for purposes of the NRDF would (and should) be the value of the parking lot, i.e., value of**  **land plus improvements as determined for purposes of the LPT laws** 

**. It fo**  **llows that the methodology for determining the value of a property for purposes of computing the exemption amount from the NRDF should not be different than that employed for** 

**a non -**  **fee purpose. See**  **e.g., N.J.S.A. 40:55D** 

**- 8.6(e) (the NRDF law “**  **shall not be construed**  **in any** 

**manner as**  **affecting the**  **method or**  **timing of**  **assessing real**  **property for property taxation**  **purposes,” however, the payment of the**  **fee “shall**  **not increase**  **the equalized**  **assessed value**  **of any**  **property”). Thus, the valuation methodologies**  **com monly**  **used for**  **LPT purposes**  **(cost, income,**  **sales comparison) apply for**  **determining the**  **value of the**  **real property**  **subject to**  **the NRDF**  **(land and**  **improvements or**  **only improvements).**  **However, because**  **the NRDF**  **statute mandates**  **when the**  **EAV should be**  **determine d (**  **an estimate**  **within 90 days of the “**  **issuance of the first building permit for a development” and**  **a final**  **one pursuant to LPT law within “10 business days of a**  **request for the scheduling of a final inspection,” see**  **N.J.S.A. 40:55D-8.4(e)), the normal Octo ber**  **1, pre**

**- tax year date for LPT assessments,**  **see N.J.S.A. 54:4** 

**- 23, does not control. For instance,**  **here pursuant to N.J.S.A. 40:55D**

**- 8.4(e), the Subject’s final assessed value**  **is to be, and properly was determined as of July 31, 2017.**  **Logically then, it follows that the standard of review for determining the reasona bleness of**  **value of a structure deemed exempt from the NRDF should be no different than the standa rd of**  **review attendant of any value determination by an assessor when imposing a LPT assessment**  **on real property. That standard is**  **that LPT**  **assessments are presumptively correct and the party challenging the same has the burden to (a) overcome the presumptive correctness;**  **and (b) persuade 19** 

**the court what the property’s fair market value should be.**  **See TD**  **Bank v.**  **City of**  **Hackensack ,**  **28 N.J. Tax 363, 374 -377**  **(Tax 2015) (setting forth the presumption of correctness attached to an**

**assess or’s determination**  **for LPT purposes, and the challenger’s burden in this regard). It should be noted here that in adopting this standard, the court is not**  **judging the correctness of the EAV of**  **the Subject as determined by the assessor. Rather, the court is only examining whet her the**  **value assigned by the assessor to a component of**  **the Subject (parking**  **lot) for purposes of correctly computing the NRDF**  **is reasonable . Since that value assign**  **ment is a**  **part of an**  **assessor’s responsibility just as**  **is determining the Subject’s EAV, the same presumptive correctness standard**  **applies, since b oth exercises**  **are undertaken by**  **the assessor as a governmental a**  **gent**

**. Here, then, the value**  **attributed by Lakewood to the Subject’s parking lot, i.e., $102,569, is presumptively correct. Erez has the burden of overcoming the same, and the burden of**  **persuading this cour t, with competent, credible evidence, that preponderantly demonstrates that**  **the value should be increased solely for purposes of deciding the amount to be excluded fr om the**  **EAV for purposes of the NRDF. Both**  **Erez and Lakewood’s deputy**  **tax assessor**  **used the**  **cost approach**  **as a valuation**  **method. This**  **method has**  **“ has two elements**  **- land**  **value and the reproduction or replacement cost**  **of the buildings and other improvements.” Int’l Flavors & Fragrances, Inc. v. Borough of Union Beach**  **, 21 N.J. Tax 403, 417 (Tax 2004). The**  **court agrees**  **that this**  **is the appropriate method**  **as the Subject**  **was newly**  **constructed, and**  **new construction obviates the difficulty**  **in determining**  **the appropriate depreciation.**  **See Appraisal Institute,**  **The Appraisal of**  **Real Estate**  **, 566**  **(1 4**  **th ed.**  **2013) ( since “cost and market value are more closely related when properties are new, the cost**  **approach is more important in estimating the value of new or relatively new cons truction”**  **). 20** 

**Erez has overcome the presumptive correctness of the value attributed to the parking lot**  **by Lakewood**  **. One is because the court is unpersuaded by the deputy tax assessor’s contention that the value of a parking lot is only for the area covered by parking spaces because only**  **those spaces**  **are assessed and taxed. It is unclear why improvements such as storm drains, curbs**  **, and aprons**  **do not add to value. Second is because he did not attribute value to land. The Subject was unimproved prior to its development**  **, therefore, value for the NRDF purposes should be for both**  **land and improvements. However, Erez has failed to persuade the court that the amount exempt**  **ed from the NRDF**  **should be $3,407,000**  **. First, the valuation date of December 2, 2021 (the date Erez’s**  **appraiser inspected the Subject) is problematic. The Subjec**  **t was completed in 2017 . Th**  **erefore ,**  **credible comparable sales would be those in 2017,**  **a nd if there was a paucity of sales in that period,**  **then possibly post-**  **2017 sales. There was no explanation that sales in Lakewood or competitive taxing districts**  **durin g 2017**  **were scarce. Second, assuming such paucity, and therefore,**  **accepting as evidence, post-**  **2017 sales, market adjustments**  **, if necessary, would be**  **required going back**  **to 2017 when the Subject was completed and assessed for NRDF purposes. Because a Decem**  **ber 2021 valuation (appraisal) date was used, this did not occur. While the appraiser opined that Lakewood is one of the most robus**  **t market**  **s in Ocean County w ith**  **land prices on a continu al**  **increase ( and corresponding**  **decrease in land**  **supply), thus meriting a +5% adjustment per year, there is no information to show that the robust market existed in 2017 or from 2017 onwards**  **to warrant a 5% adjustment for sales occurring** 
**in 2019. Again, even if the 5% is reasonable (there was no objective data to support this amount),**  **it would have to be adjusted negatively for a 2017 valuation date. Thus, even if the court were to** **21**

**consider the vacant land comparables, it could not arrive at a meaningful value conc lusion since it**  **cannot speculate adjustments for market cond itions.**  **14 If the court cannot conclude a value for the land**  **based on the evidence before it ,**  **there is no need**  **to continue to evaluate the evidence for the value of the site improvements, the s**  **econd element of the cost approach.**  **See Union Drydock & Repair v. City of Hoboken, 19 N.J. Tax 207,**  **212 (Tax 2000) ( when**  **the court cannot**  **“reasonably estimate the value of the subject land, review**  **of [the appraiser’s] cost analysis for the subject improvements . . . [was] un necessary”)** 

**. 15**  CONCLUSION **For the aforementioned reasons, the court affirms the Director’s final**  **determination that Lakewood correctly computed the NRDF on the Subject.**  **16**

**14 Note that, if evaluated, the court**  **would reject Sales**  **1, 2 and 6 since they were in zones different from the Subject (**  **S ale 2 with 1.03 acres would not qualify to be in the Subject’s zone DA** 

**- 1 which**  **requires minimum 3 acres) . This**  **raises the issue whether their highest and best use (HBU) is similar to the Su**  **bject , which Erez’s appraiser concluded is, as vacant, for “office development.”**  **See Th**  **e Appraisal of Real Estate**  **, 366, 376 (“Zoning is a basic criterion in selecting comparables.**  **Sites zoned the same as the subject property generally have the same or si milar” HBU, thus,**  **would be “t**  **he most appropriate comparables”). Comparable 6,**  **a contract for sale**  **, was**  **for develop**  **ment of**  **the site with multi**

**- family units.**  **Sal e 4 was allegedly approved to be developed for retail use**  **with two pad sites which does not**  **appear to be a permissible use in the Subject’s DA -1 zone.**  **15 T**  **he court notes that due to the GC’s**  **subjective guesstimate that 85% of the development costs are attributable to the parking lot**  **, the M&S**  **data would be more reliable in determining the value**  **of the site improvements.**  **16 The**  **Director should not**  **be a defendant in a NRDF litigation simply because a challenge to the**  **imposed NRDF is to the Director and “appeals” from his determination are to the Tax Co urt under**  **the State**  **Uniform Tax**  **Procedure Law**  **(SUTPL)**

**. See**  **N.J.S.A. 40:55D-8.6(b).**  **His role**  **as a**  **defendant in**  **routine State**  **tax matters**  **, where**  **appeals from**  **his final**  **determination are**  **also to**  **the Tax**  **Court under the SUT**  **P L,**  **however, is proper, because**  **it is**  **the Director**  **who audits,**  **assesses, imposes,**  **and collects**  **a state**  **tax**

**. This**  **is not**  **so for**  **NRDF matters**  **because he**  **does not (1)**  **determine the**  **EAV; (2) compute**  **the NRDF;**  **and (3) impose the NRDF.**  **See also**  **Nat ’l**  **Winter Activity**  **Ctr. v.**  **Dir., Div.**  **of Taxation**  **, 32 N.J. Tax 12, 20, n.3 (Tax 2020) ( t**  **he Director acts in a “quasi-**  **judicial capacity ”**  **in an NRDF matter, similar to a county board of taxation, therefore, only**  **the municipality should be the defendant).**