TAX COURT OF NEW JERSEY

J OSHUA D. N OVIN **Dr. Martin Luther King, Jr. Justice Building** Judge **495 Dr. Martin Luther King, Jr. Blvd., 4 th**  **Floor Newark, New Jersey 07102**  **Tel: (609) 815**

**- 2922, Ext. 54680** 

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS **April 22, 2022** 
**Lawrence P. Cohen, Esq. Kevin P. Benbrook, Esq. Lavery, Selvaggi, Abromitis & Cohen, P.C. Benbrook & Benbrook, LLC**  **1001 Route 517 1734 Route 31, Suite 1 Hackettstown, New Jersey 07840 Clinton, New Jersey 08809**  **Michael A.**  **Haz en, Esq.**  **Janata, Lacap & Hazen, LLC Crossroads Corporate Center**  **One International Boulevard, Suite 400 Mahwah, New Jersey 07495** 
**Re: Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township**  **Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; and 002464-2020**  **Phillipsburg Mall c/o Namdar Realty Corp. v. Pohatcong Township Docket Nos. 007490-2016; 002776-2017; 006254-2018; 005293-2019;**  **and 002455-2020 1** 
**Dear Mr. Cohen , Mr. Benbrook,**  **and Mr. Hazen: This**  **letter constitute s**  **the court’s opinion i**  **n the above- referenced matters on**  **defendants’ motions, under**  **R. 4:40-1,**  **for entry of judgments**  **at trial. 2**  **For the reasons explained more fully below, defendants’ motions are granted.**  **Accordingly, because**  **the court finds plaintiff**  **has failed to overcome the presumption of validity**  **that attaches to**

**1 Trial also included H&R Phillipsburg, LLC v. Pohatcong Township**  **, docket numbers 006261-**  **2018, 005286-2019, and 002834-2020. However, after**  **trial plaintiff withdrew th os**  **e c**  **omplaints. 2**  **A lternatively**  **, defendants requested entr**  **y of judgments**  **following trial , affirming the local**  **property tax assessments.** 

# ADA

Americans with Disabi li ti es Act ENSURING AN OPEN DOOR TO 

## JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -2-**  **the 2016, 2017, 2018, 2019, and 20**  **20 local property tax assessments**  **, and defendants’ have failed**  **to offer evidence of the property’s true val ue with respect to their counterclaims, the assessments**  **are affirmed.**
I. Procedural History and Factual Findings
**Pursuant to R.**  **1:7- 4, the court makes the following findings of fact and conclusions of law**  **based on the evidence and testimony adduced during trial. As of the valuation dates**  **at issue ,**  **Phillipsburg Mall, LLC c/o Namdar Realty Corp. (“plaintiff”)**  **was the owner of the re al property and improvements located at 1200 Route 22 East**  **, in**  **Lopatcong and Pohatcong Townships**  **, Warren County, New Jersey (the “subject property”)** 

**. The subject property is identified on Lopatcong Township’s**  **(“ Lopatcong**  **”) municipal tax map as Block 102,**  **Lot 9 .01, and on Pohatcong Township’s (“Pohatcong”) municipal tax map as Block 1,**  **Lot 1.01 (Lopatcong and Pohatcong are**  **collectively referred to as “defendants”). 3**  **The Lopatcong**  **lot comprised approximately 33 to 35-**  **acres as of the valuation dates, and the Pohatcong**  **lot comprised approximately 37 to 43-**  **acres as of the valuation dates.**  **4**
**Plaintiff instituted these direct appeals**  **challeng ing**  **the subject property’s 2016, 2017, 2018,** 
**2019 , and 2020**  **tax year assessments**

**. Lopatcong**  **file d**  **counterclaims for the**  **2017, 201 8, 2019,**  **and 2020 tax year**  **s. Pohatcong filed counterclaims for the 2016 and 2019 tax year**  **s.**

**3 The Case Information Statement for d**  **ocket number 002776- 2017 misidentifie**  **d the subject**  **property as Block 1, Lot 1.02. Accordingly, the court hereby**  **amends the pleading to correct the**  **property identifier** 

**. See**  **R. 4:9-2.**  **4 Because the subject property was**  **subdivided and portions sold durin g the tax years at issue**  **, the subject property’s**  **total acreage fluctuated.** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -3-**  **The subject property has been historically operated**  **and is improved with**  **a one-**  **story regional mall**  **, containing approximately 558,204 square feet of gross leasable area**  **and several**  **outbuildings containing restaurant pad**  **site s.**  **5 P**  **laintiff acquired the mall in 2013**  **for reported** 

**c onsideration of $11,500,000. Following acquisition, plaintiff subdivided**  **th e subject property**  **creating several outparcels and “condominiumized”**  **the mall**

**. Between 2**  **014 and 2015, plaintiff**  **sold the four**  **restaurant pad site**  **outparcel s for consideration totaling $5,314,760.**  **6 In addition, on**  **or about October 23, 2017, plaintiff s**  **old the**  **unit containing the Kohl’s**  **department store**  **for $2,600.000,**  **reducing the mall’s**  **gross leasable area to 475,379 square feet. 7**  **In or about August 2018, the roof**  **of the**  **retail store site**  **former ly occupied by**  **Sears collapsed. Following th**  **e roof**  **collapse, plaintiff demolished the**  **former Sears and former Bon** 

**- Ton store**  **s ites**  **, resulting in a furt**  **her reduction in the mall’s**  **gross leasable area to 300,635 square feet. 8**  **During trial, plaintiff**  **offered testimony from a**  **State of New Jersey certified general real estate appraiser who,**  **after voir dire and without objection, was accepted by the court as an expert** 

**5 The subject property**  **also has**  **seven “raw s tores**  **” that “are within the footprint of the mall** 

**. ”**  **However, these areas were never developed into**  **occupied retail stores and**  **thus, we**  **re not included by**  **plaintiff’s expert (as defined herein) in the 558,204 square feet of gross leasable area.**  **6 Plaintiff’s expert identified the**  **sales as: (i) Block 1, Lot 1.03 – 1194 Route 22, Pohatcong, sold on**  **December 15, 20 14,**  **for $1,600,000 consideration; (ii) Block 1, Lot 1.04 –**  **1196 Route 22, Pohatcong, sold**  **on April 2, 2015**  **, for $1,689,760 consideration; (iii) Block 1, Lot 1.05**  **– 1198 Route 22, Pohatcong, sold**  **on June 10, 2015**  **, for $675,000 consideration; and (iv) Block 102, Lot**  **9.03 – 1200 Route 22, Lopatcong, sold on September 1, 2015, for $1,350,000 consideration. 7**  **P laintiff’s expert identified this outparcel**  **as Block 1, Lot 1.01, Unit 200, 1200 Route 22, Pohatcong, sold on October 23, 2017, for $2,600,000 consideration (the “Kohl’s store”).**  **8 Although not relevant to the valuation dates involved herein, p**  **laintiff’s expert testified that on or about November 20, 2019, plaintiff executed a sales contract for the subject property with CR**  **G Acqu**  **isition, LLC, for $28,875,000 (without the Kohl’s store), or $35,150,000 (with the Kohl’s store), subject to zoning**  **change approvals.** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -4-**  **in the field of property valuation (the “expert”)** 

**. 9**  **10 Plaintiff’s expert**  **prepared an appraisal report expressing opinion**  **s of the subject property’s**  **true or fair**  **market value as of the October 1, 20 15,**  **October 1, 2016, October 1, 2017, October 1, 2018, and October 1, 2019 valuation dates. As of each valuation date, the subject**  **property’s local property tax assessment s, and**  **implied equalized values are set forth below**  **:**

**Valuation date**  **s Lopatcong’s** 

**t ax**  **a ssessment**  **Average ratio**

**of assessed to true value**  **Lopactong’s**

**i mplied equalized**  **v alue**  **10/1/2015 $11,096,200**  **100% $11,096,200**  **10/1/2016 $11,096,200**  **99.83% $11,115,096**  **10/1/2017 $11,096,200**  **99.97% $11,099,530**  **10/1/2018 $8,596,200**  **98.44% $8,732,426**  **10/1/2019 $8,596,200**  **11 99.15%**  **$8,669,894**

**Valuation date**  **s Pohatcong’s** 

**t ax**  **a ssessment**  **Average ratio**

**of assessed to**  **true value Pohatcong’s** 

**i mplied equalized**  **v alue**  **10/1/2015 $17,977,200**  **99.91% $17,993,394**  **10/1/2016 $17,977,200**  **99.32% $18,100,282**  **10/1/2017 $17,977,200**  **95.92% $18,741,868**  **10/1/2018 $15,442,400**  **95.42% $16,183,609**  **10/1/2019 $15,442,400**  **12 94.29%**  **$16,377,559**

**9 During voir dire, plaintiff’s expert**  **testified that he had been qualified by the court as a property**  **valuation expert in other matters. However, he acknowledged that prior to this appraisal assignment, he had n**  **ever performed an appraisal of a**  **New Jersey regional mall.**  **10 Defendants identified a New Jersey certified general real estate appraiser as a p**  **roposed testifying property valuation expert witness. However, following plaintiff’s prese**  **ntation of its proofs, defendants elected not to elicit testimony or evidence from its proposed tes**  **tifying property valuation expert witness.**  **11 Plaintiff’s Case Information Statement and plaintiff’s expert’s appraisal re**  **port both identify the 2020 tax year assessment as $8,596,200. However, plaintiff’s counsel’s post-**  **trial submission asserts that it is $8,346,200.**  **12 Plaintiff’s Case Informatio**  **n Statement and plaintiff’s counsel’s post-trial submission both identify**  **the 2020 tax year assessment as $15,442,400. However, plaintiff’s expert’s appraisal report asserts that it is $17,977,200.** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -5-**  **Plaintiff’s expert valued the subject property as a single economic unit**  **, reach**  **ing the**  **following value conclusions: (i) $7,000,000, as of the October 1, 2015 and October 1, 2016 valuation dates**  **; (ii) $6,000,000, as of the October 1, 2017 valuation date; (i**  **ii ) $5,500,000, as of**  **the October 1, 2018 valuation date; and (iv) $5,750,000, as of the October 1, 2019 valuation date. Lopatcong**  **offered testimony from its**  **professional planner, who was accepted**  **by the court, without objection,**  **as an expert in the field of professional planning and zoning. In addition,**  **Pohatcong offered testimony from**  **its professional planner**  **and engineer ,**  **who was accepted by the**  **court, without objection, as an**  **expert in the field s**  **of engineering and professional planning.**  **At the close of the evidence ,**  **defendants moved, under R.**  **4:40- 1, for entry of judgments at**  **trial and requested the opportunity to submit briefs**  **detailing the**  **alleged deficiencies i**  **n plaintiff’s evidence** 

**. 13**  **In support of the**  **ir motions, defendants**  **advance several arguments.**  **First, defendants**  **emphasize that plaintiff’s expert**  **possessed in adequate**  **knowledge and understanding of**  **Lopatcong ’s**  **and Pohatcong’s zoning ordinances,**  **zoning map, and the**  **permitted uses identified th**  **ereunder. Accordingly, plaintiff’s expert’s highest and best use**  **analys e**  **s and conclusions were materially**  **flawed. Second,**  **defendants contend that in performing his sales comparison approach, plaintiff’s expert identified**  **property sales that**  **b ore**  **uses not permitted**  **under defendants’ zoning**  **ordinances. Specifically,**  **defendants argue that because plaintiff’s expert “thought that the**  **permitted uses for this [subject] property included warehousing**  **,” distribution centers, and** 

**13 Alternatively, defendants contend that, should the court not grant their motions, following tria**  **l and after weighing the evidence, the court should nonetheless enter judgments affirm**  **ing all tax years assessments.**  

# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -6-**  **industrial uses, his reliance on certain sales identified as comparable was**  **misplaced. Third,**  **defendants argue that in performing his income capitalization approach plaintiff’ s expe**  **rt failed to employ market or economic rents. Charging that it was improper for plaintiff’s exp**  **ert to rely on anchor tenant leases executed in 1989, 1994, and 2004.**  **In sum, defendants argue that because**  **plaintiff’s expert’s highest and best use analyses,**  **and sales comparison and income capitalization**  **approaches to value were so “fraught with errors, mistakes and misrepresentation of law,” that**  **the court should accord them no**  **weight. As a result, defendants maintain that plaintiff failed to overcome the p**  **resumption of validity that attaches to the local property tax assessments in these**

**matters. In addition,**  **in support of their request**  **for entry of judgments following trial,**  **defendants emphasize**  **that cross**

**- examination disclosed numerous “errors, misconceptions, [and] faulty**  **conclusions” in both**  **plaintiff’s income capitalization and sales comparison**  **approaches to value.**  **As a result of these errors, defendants argue**  **that plaintiff has not proven, by a fair preponderance of the evidence, the subject property’s true or market value**  **requiring the court to affirm all years ’**  **local property tax assessments**

**. In opposition to defendants’ motions**  **and in support of its request for judgments reducing the subject property’s tax assessments**  **, plaintiff argues that**  **viewing the evidence presented, with the benefit of all reasonable inferences, a debatable question was raised**  **as to the validity of the loc**  **al property tax assessments** 

**. Plaintiff highlights the 2013 sale of the subject property and the**  **body of evidence that plaintiff’s expert considered under his income capitalization and s ales**  **comparison approaches to value. Moreover, p laintiff submits that**  **defendants have offered no**  **valuation expert testimony challenging the opinions and conclusions reached by**  **plaintiff ’s expert.**  

# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -7-**  **Therefore, plaintiff argues**  **that defendants’ motions must be denied, and judgments should be**  **entered reducing the subject proper ty’s**  **2016, 2017, 2018, 2019, and 2020 tax year assessments** 

**. T**  **he court observes that plaintiff’s brief**  **lacks any**  **detailed discussion regarding**  **plaintiff’s expert’s highest and best use**  **analysis, as vacant, or plaintiff’s expert’s highest and best use**  **analysis, as improved for the 2019 and 2020 tax years ,**  **two of the**  **core themes**  **of defendants’ motions.**  **In response to defendants’ motions**  **, plaintiff’s brief**  **summarily states only that “[t]he**  **expert concluded a highest and best use to be continued use as an enclosed regional shopping mall.**  **This conclusion considered the on-going positive cash flows for the identified period as we ll as**  **the lack of further plans for development during this same time.” Moreover, plaintiff contends**  **that “**  **[t]he expert concluded the property would be best developed with an eye towards some**  **industrial use. I f**  **. . . industrial use[] is not legally permitted, nonetheless the evidence presented indicates a vast over** 

**- assessment.”**  **However, plaintiff fails to reconcile how plaintiff’s expert**  **reached the conclusion that the**  **subject property’s highest and best use, as vacant (for all tax years),**  **and as improved (for the 2019 and 2020 tax years), was for industrial and**  **distribution/warehousing, a use**  **not permitted under either Lopatcong’s**  **or Pohatcong’s zoning ordinances.** 
II. Conclusions of Law
**A. Presumption of Validity/motion for judgment or involuntary dismissal**  **“Original assessments and judgments of county boards of taxation are entitled to a presumption of validity.”**  **MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18**  **N.J.**
**Tax 364, 373 (Tax 1998). The presumption**  **“attaches to the quantum of the tax assessment. ”**  **Pantasote Co. v. Passaic City , 100 N.J. 408, 413 (1985). Accordingly, the taxpayer shoulders the** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -8-**  **burden of proving**  **that the local property tax assessment is incorrect** 

**. Only through the introduction**  **of “cogent evidence” of true value; that is, evidence “definite, positive and certain in qua**  **lity and quantity to overcome the presumption**  **,” that**  **a taxpayer**  **fulfills this obligation**  **. Aetna Life Ins. Co. v. Newark City, 10 N.J. 99, 105 (1952).**  **Th us, th**  **e presumption of validity applies “until sufficient**  **competent evidence to the contrary is adduced.” Little Egg Harbor Twp** 

**. v. Bonsangue, 316 N.J.**  **Super. 271, 285-86 (App. Div. 1998). However, the presumption should not be viewed “simply an evidentiary presumption**  **serving . . . as a mechanism to allocate the burden of proof. It is, rather, a construct that**  **expresses the view that in tax matters, it is to be presumed that governmental authority has bee**  **n exercised correctly and in accordance with law.”**  **Pantasote Co. , 100 N.J.**  **at 413.**  **In sum, at the close of plaintiff’s case, the court must be presented with**  **competent evidence that**  **raises a “debatable question as to the validity of the assessment.”**  **MSGW Real Estate Fund, LLC , 18 N.J. Tax**  **at 376. A motion for judgment or involuntary dismissal may be brought either at the close of**  **plaintiff's case, under R. 4:37-**  **2(b), or at the close of all the evidence, under R. 4:40-1.**  **See Verdicchio v. Ricca**  **, 179 N.J.**  **1, 30-32 (2004). However, regardless**  **of when such motions are presented, the court’s review is governed by the same standard. That inquiry requir**  **es the trial**

**court to: accept[] as true all the evidence which supports the position of the** 

**party defending against the motion and accord[] him the benefit of all inferences which can reasonably and legitimately be deduced**  **therefrom**

**. . . . [Estate of Roach v. TRW, Inc., 164**  **N.J. 598, 612 (2000) (quoting**  **Sons of Thunder, Inc. v. Borden, Inc., 148 N.J.**  **396, 415 (1997) (quoting Dolson v. Anastasia, 55**  **N.J. 2, 5-6 (1969)) (citations and**  **quotations omitted from original).]** 

# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -9-** 
**In deciding such a motion, the court must view the evidence presented as “uncontradicted” and accord the non-**  **moving party the “benefit of all legitimate inferenc es” which can be deduced**  **therefrom. Verdicchio**  **, 179**  **N.J. at 30**  **-32. See also**  **MSGW Real Estate Fund, LLC , 18**  **N.J. Tax** 

**at 376**  **(concluding that “ plaintiff must** 

**. . . present**  **[] evidence sufficient to demonstrate the value**  **of the subject property, thereby raising a debatable question as to the validity of the assess ment . .**  **. , the court, in deciding whether the plaintiff's evidence satisfies the standard . . . , must accept**  **such evidence as true and accord the plaintiff all legitimate inferences which can be deduced from**  **the evidence.”) However, one notable distinction**  **exists between motions presented under R.**  **4:37- 2(b) and** 
**R. 4:40-**  **1. Motions offered under R.**  **4:37- 2(b)**  **are brought at the conclusion of plaintiff’s case and thus,**  **limit the court’s evaluation only to**  **plaintiff’s evidence. ( See**  **R. 4:37-**  **2(b), stating “after having completed the presentation of the evidence . . . the plaintiff shall so announce to the cour**  **t, and thereupon the defendant without waiving the right to offer evidence in the event the motion is**  **not granted, may move for a dismissal. . . .”). Conversely, motions presented under**  **R. 4:40-1,** 
**“m ay be made by a party**  **either at the close of all the evidence**  **or at the close of the evidence offered by an opponent.**  **” (Emphasis added). Thus, when a motion under**  **R. 4:40-**  **1 is presented “at the close of all the evidence,”**  **the court is afforded access to**  **a ll evidence**  **presented . H**  **owever, the court must nonetheless accord the non-**  **moving party the “benefit of all legitimate inferences” which can be deduced therefrom.**  **Es tate of Roach**  **, 164 N.J.**  **at 612. Accordingly,**  **when presented with a motion for judgment or involuntary dismissal, the trial** 
**court’s decision turns upon an evaluation of the evidence. Therefore, the court’s consideration of** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -10-**  **defendants’ motions begins**  **with a**  **discussi on of**  **the evidence presented and the first phase**  **of the**  **valuation process, the highest and best use analysis.**
**B. Highest and Best Use**  **An indispensable element not only to principles of property valuation but to the de**  **termination of a property’s true or market value is discerning its highest and best use. Ford**  **Motor Co. v. Edison Twp., 10 N.J. Tax 153, 161 (Tax 1988), aff’d o.b., 12 N.J. Tax 244 (App. Div. 1990),**  **aff’d , 127 N.J. 290 (1992).**  **See also General Motors Corp. v. City of Linden, 22 N.J.**  **Tax 95, 107 (Tax 2005). Highest and best use is defined as**  **“[t]he reasonably probable and legal use of vacant**  **land or an improved property that is physically possible, appropriately supported, financially feasible, and that r**  **esults in the highest value.” Appraisal Institute, The Dictionary of**  **Real Estate Appraisal 93 (5**  **th ed. 2010). “For local property tax assessment purposes property must**  **be valued at its highest and best use.” Entenmann’s Inc. v. Totowa Borough, 18 N.J. Tax 540, 545 (Tax 2000). Thus, the highest and best use analysis is often referred to as “the first and mos**  **t important step in the valuation process.” Ford Motor Co., 10 N.J. Tax at 161.**  **Importantly, an appraiser’s**  **highest and**  **best use conclusion must not be**  **based on a**  **property’s in**  **-use value because**  **that may**  **re flect**  **only the property “owner's**  **use or**  **subjective judgment**  **as to**  **how a property should be used.” Clemente v. Township of South Hackensack, 27**  **N.J. Tax 255, 268 (Tax 2013), aff’d**  **, 28 N.J. Tax 337 (App. Div. 2015).**  **Rather, in**  **determin ing**  **a property’s highest and best use, an appraiser must sequentially consider “the following four**  **criteria, determining whether the use of the subject property is: 1) legally per missible; 2) physically**  **possible; 3) financially feasible; and 4) maximally productive.” Ibid. Moreover,**  **in analyzing an improved property’s highest and best use, the appraiser should select the “use that ma**  **ximizes an**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -11-**  **investment property’s value, consist ent with the rate of return and associated risk.”**  **Ford Motor Co., 127 N.J. at 301.**  **Here, a fter reviewing defendants**  **’ zoning maps**  **and zoning ordinances, plaintiff’s expert**  **concluded that the subject property was**  **in Lopactong’s “ HB**  **/ ROM**  **; Highway Business/Research Office Manufacturing” zoning district and in Pohatcong’s “B-3**  **; Highway Business zone.”**  **According to plaintiff’s expert, permitted uses in Lopatcon g’s HB**  **/ ROM**  **districts include**  **farms, retail and personal service establishments, all**  **uses permitted in the Research Office Manufacturing zone,**  **14 commercial indoor and outdoor recreation facilities, and solar energy**  **facilities (as an accessory use)** 

**. 15**  **P lain**  **tiff’s expert further expressed that**  **the permitted uses in**  **Pohatcong’s “B-3 ;**  **Highway Business zon e”**  **include professional offices, banks and financial institutions, stores and shops for retail sales and services, full-service res**  **taurants, houses of worship, clubs, lodges, and charitable and fraternal organizations, hotels and motels,**  **scientific or** 

**resear ch laboratories, office buildings, farms, fast-food restaurants, animal kennels, a**  **nd wireless**  **telecommunication equipment. 16**  **A fter reviewing the permitted uses,**  **plaintiff’s expert concluded**

**14 Plaintiff’s expert identified Lopatcong’s Research Office Manufacturing zone**  **as permitting use**  **s i ncluding warehouse and distribution centers, industry (involving the processing, assembly,**  **packaging and storage of previously refined materials), offices, computer and data proce ssing**  **centers, scientific, engineering and/or research laboratories, integ rated industrial/office parks, co** **location of wireless telecommunication equipment, hospital support services, mini warehouse/self** 

**- storage facilities, flexible office/warehouse, and solar energy facilities** 

**. 15**  **Plaintiff’s expert’s report identified the fol lowing conditional uses in the HB zone: (i) service**  **stations; motor vehicle or automobile service stations, filling or gasoline stations or motor vehicles**  **or automobile repairs garages; (ii) advertising signs; and (iii) massage, bodywork ,**  **and somatic thera**  **py. 16**  **Plaintiff’s expert’s report identified the following conditional uses in the B-3 ;**  **Highway Business zone: (i) day-**  **care or child**

**- care centers; (ii) service stations; (ii) wireless communication**  **towers; (iii) billboards; (iv) small wind energy systems; and (v) freestanding solar arrays.** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -12-**  **that use of the subject property as a regional mall is a legal, c**  **onforming use.**
**1. As vacant**  **Notably, p laintiff’s expert’s**  **appraisal report**  **d id**  **not identify a specific**  **highest and best use, as vacant, for the subject property.**  **Rather, under the “legally permitted uses” section of**  **the report plaintiff’s expert s**  **tates, “Lopatcong permits distribution warehouse uses in their HB/ROM zone; however . . . Pohatcong’s zone does not permit and would require approvals. . . .”**  **Further, under the “financially feasible” heading, t**  **he report details**  **that ,**  **“[b]ased upon the le gally permitted uses,**  **development of a range of commercial/industrial uses can be considered for the site.”**  **Finally, under the “maximally productive”**  **section of h is**  **report plaintiff’s expert states that**  **the subject property’s**  **highest and best use ,**  **as vaca nt, “would be to develop the site with a use to the maximum**  **density permitted by the HB/ROM and B-3 Zones.”**
**D uring trial, plaintiff’s expert**  **reasonably testified that**  **his highest and best use ,**  **as vacant ,**  **analysis was influenced by his review of develop**  **ment in the marketplace.**  **According to plaintiff’s expert, “you don’t see regional malls being developed anywhere, so there’s probably a good reason**  **regionally malls aren’t being developed.” In his opinion, b ecause there is**  **“ limited r**  **etail development**  **going on . . . but there is industrial development going on, so . . . I would skew my financially feasible**  **[analysis] to**  **wards a range of commercial**  **/industrial, could be considered for**  **the site overall.” He continued, “commercial/industri**  **al ,**  **you know towards that side, I mean**  **towards industrial side. . . .” P laintiff’s expert**  **further explained**  **that “w**  **hen you drive around [Routes] 78, 22 all you see are these warehouse buildings going up, you hardly ever see a shopping**  **center, let alone a regional mall, very, very, few offices, . . . so, I went towards the industrial side**  **because . . . what the subject property did was sell**

**. . . the outparcels** 

**. . . along Route 22 . . . and** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -13-** 
**now you ’re**  **behind these lots, and you know,**  **you’re not going to build a shopping center back there**  **, but an industrial building, especially one to service all these retail centers, now that you have** 

**e- commerce**  **, Amazon, and Wish ,**  **and these others popping up, that’s why I skewed [**  **my highest**  **and best use, as vacant conclusion**  **] towards an industrial development.” He concluded by stating,**  **“I would . . . skew it towards industrial, but that’s going to require some work with both Townships, . . . so you’re going to have to apply for approvals, you’re going to have to get**  **a variance . . . there is a lot of maybes here because this is hypothetical in nature, I can’t conclude definite**  **ly, but it’s a lot of maybes. . .”** 
**2. As improved**  **For the 2016, 2017, and 2018 tax years, plaintiff’s expert’s report**  **states that**  **due to the subje**  **ct property’s “high rate of vacancy for the past several years” and the closu res of “malls**  **across the country . . . due to retailer crisis,” as of the October 1, 2015, October 1, 2016, and October 1, 2017 valuation dates, the subject property’s highest and**  **best use, as improved, was**  **continued use as a regional**  **mall. However, for the 2019 and 2020 tax years,**  **plaintiff’s expert’s appraisal**  **report similarly**  **fails to identify a specific**  **highest and best use for the subject property**  **as improved. Rather, the** 
**rep ort states the subject property’s highest and best use, as improved, “is for the de**  **molition of the current improvements and redevelopment of the underlying land in accordance with the [sic] e**  **ach township’s zoning.”**  **During trial, plaintiff’s expert explained**  **that “for the first couple of years, [the subject**  **property] was still producing a positive net income, so I concluded . . . that the actual mall it self**  **was the highest and best use, [but]**  **the writing was on the wall that if they didn’t renovate or figure**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -14-**  **out some better tenancy, there were going to be issues, and then of course, there were is sues.”**  **However, for the 2019 and 2020 tax years , he**  **expressed that the subject property “was no longer**  **producing a positive net income, and at this point i t**  **was obvious that . . . demolition of the mall and reuse of the site would be best highest and best use.” Thus, in plaintiff’s expert’s opinion,**  **for the 2019 and 2020 tax years,**  **the subject property’s highest and best use**  **, as improved,**  **w as**  **“skewed ” towards redevelopment with**  **an industrial use.** 
**3. Analysis**  **When embarking on a highest and best use analysis, the appraiser must interpret “the market forces that affect the subject property and identify[] the use or uses on whic**  **h the final**  **opinion of value is based.” Appraisal Institute, The Appraisal of Real Estate**  **, 42 (14**  **th ed. 2013).**  **An appraiser must closely examine the zoning ordinance s applicable to the parcel being appraised**  **“for all possible [permitted] uses and [select] tha t use which will yield the highest return. . . .”**  **Inmar Associates, Inc. v. Edison Twp., 2 N.J. Tax 59, 64 (Tax 1980). In sum, the highest and best use is truly an analysis, interpretation, and “economic study of market forces f**  **ocused on the subject**  **property.” Appraisal Institute, The**  **Appraisal of**  **Real Estate**  **, 305 (11 th**  **ed. 1996). Following voir**  **dire, defendants**  **stipulated to**  **plaintiff’s expert’s**  **qualifications in**  **the real**  **property valuation**  **field ,**  **and the court**  **agreed. See**  **N.J.R.E. 702 (stating that an individual possessing knowledge, skill, experience, training, or education may be qualified by the court as an**  **expert and offer opinion testimony). Although qualified as an expert and permitted to**  **offer opinion testimony, the expert’s opinion**  **must nonetheless be rooted in “facts, or data derived from (1) the expert’s personal observations, or (2) evidence admitted at the trial, or (3)**  **data relied upon by the expert which is not necessarily admissible in evidence[,] but which is the type of dat**  **a normally**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -15-**  **relied upon by experts.’” Polzo**  **v. County of**  **Essex , 196**  **N.J. 569, 583 (2008);**  **N.J.R.E. 703. A**  **n expert’s opinion**  **that lack**  **s a credible foundation and “consist[s] of bare conclusions unsupported**  **by factual evidence is inadmissible.” Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App. Div.**  **2002). The**  **expert’s opinion must have o**  **bjective support and**  **may not be based on a standard that is**  **strictly personal.**  **See Pomerantz Paper Corp. v. New Comm. Corp., 207 N.J. 344, 373 (2011).**  **Thus, the worth, significance, and “probative utility of an expert's opinion stands or falls on the facts and reasoning offered in its support.” Bonsangue, 316 N.J. Super.**  **at 284. Here,**  **the evidence disclosed that**  **, contrary to plaintiff’s expert’s belief, no part of the subject property is in Lopatcong’s Research Office Manufacturing zone**  **(“ROM”)**

**. Rather, a**  **close examination of Lopatcong’s zoning map di**  **vulged that the subject property is**  **entirely in Lopatcong’s**  **HB -**  **Highway Business District (“HB”)**  **and PD –**  **Planned Development District**

**o verlay zones**  **(“PD”)**

**. 17**  **18 Moreover,**  **Lopatcong last revised its**  **zoning map on July 15, 2010 ,**  **approximately five years prior to the earliest valuation date involved herein. Th**  **us, either**  **plaintiff’s expert incorrectly interpreted Lopatcong’s zoning map or reviewed an out dated**  **map**
**. 19**  **Additionally ,**  **des pite plaintiff’s expert belief that the**  **HB zoning ordinance a llows**  **all uses** 

**17 The term**  **overlay zon**  **e “ refers to a situation in which a municipality leaves in place the**  **existing zoning**  **regulations applicable to an area, but superimposes an additional set of requirements.” Weeden**  **v. City**  **Council of Trenton**  **, 391 N.J. Super. 214, 225 (App. Div.), certif.**  **den., 192 N.J. 73 (2007). In sum,**  **an overlay zone affords additional development opportunities**  **, provided**  **that certain**  **ordinance parameters are met**  **. Here, Lopatcong’s PD**  **overlay zone requir ed**  **a minimum of 50-**  **acres of land to afford th ose additional development opportunities.**  **18 During trial, plaintiff’s expert a**  **cknowledged that he**  **likely relied on an August 2004**  **Lopatcong zoning map. However, evidence was elicited during trial that**  **on or about July 6, 2005, Lopactong**  **amended its zoning map. 19**  **Plaintiff’s expert testified that he reviewed a black and white version of Lopatc ong’s zoning**  **map ; however, h**  **is appraisal report did not**  **contain a copy of the zoning map**  **that he reviewed.** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -16-**  **permitted under the**  **ROM zone, a careful review of**  **Lopatcong’s zoning ordinance revealed**  **that only**  **three ROM**  **uses are**  **permitted i**  **n the HB zone. 20**  **Specifically, Lopatcong’s**  **HB zoning ordinance recites that**  **the permitted**  **uses under t**  **he ROM zon ing ordinance**  **are limited to : (4)** 

**o ffices for business, executive, professional and administrative purposes; (10)**  **mini warehouse/self** 

**- storage facility (subject to additional requirements); and (12) s**  **olar and photovoltaic energy facilities. S**  **tated differently**  **, industrial and distribution/warehousing uses are** 
**not legally permitted**  **in the HB**  **zone absent a variance or**  **zoning ordinance change. Moreover, t**  **he court’s review of the**  **a**

**pplicable provisions of the zoning**  **ordinance reveals that it**  **w as**  **last amended in November 2011, approximately four years prior to the earliest valuation date involved here**  **in. In addition,**  **trial testimony revealed that as of each**  **valuation date involved herein, industrial and**  **distribution/warehousing uses were not permitted in Pohatcong’s B**  **-3 Highway**  **Business zoning district. Finally, during**  **cro ss**  **- examination**  **, in response to questions whether plaintiff’s expert ever**  **reached “**  **a specific ”**  **conclusion regarding the subject property’s highest and bes**  **t use, as vacant**  **( for all tax years**  **) , and as improved (**  **for the 2019 and 2020 tax years**  **), p laintiff’s expert re**  **sponded,**

**. . . because you’ve got an issue here, you are dealing with two towns, two different municipalities, two different mayors, both on**  **record wanting different things for the property, I mean, it, y eah,**  **you have a lot of choices to choose from, hence,**

**. . . I said permitted**  **to what can be permitted by the zone, with a skewing towards industrial.**  **In undertaking a highest and best use analysis, although the legally permissible**  **and physically possible**  **criteria can be considered in either order, both criteria**  **must be applied**  **before**

**20 Township of Lopatcong Zoning and Land Use**  **Ordinance, § 243-74**  **(A)(4).**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -17-**  **consideration is given to the financially feasible and maximally productive criteria. Our court**  **s have**  **repeatedly emphasized that :** 

**Tests of legal permissibility and physical possibility must**  **be applied before the remaining tests of financial feasibility and maximal**  **productivity. A use may be financially feasible, but this is irre**  **levant if it is physically impossible or legally prohibited.**  **Only when there is a reasonable possibility that one of the prior, unacceptable**  **conditions can be changed is it appropriate to proceed with the analysis** 

**. [**  **Mori v. Town of Secaucus, 15 N.J. Tax 607, 619 (Tax 1996) , rev'd**  **on other grounds, 17 N.J. Tax 96 (App. Div. 1997) (quoting**  **Appraisal Institute, The Appraisal of Real Estate**  **, 280 (10th ed.**  **1992) )**  **(emphasis in original).] See also**  **County of Monmouth v. Hilton, 334 N.J. Super. 582, 588 (App. Div. 2000) ;**  **Schimpf v. Little Egg Harbor Twp., 14 N.J. Tax 338, 344 (Tax 1994)**  **; A ppraisa**  **l Institute, A**  **ppraisal of Real**
**Estate , 335 (14**  **th ed. 2013) (concluding that**  **“[i ]n practice, the tests of physical possibility and**  **legal permissibility can be applied in either order, but they must be applied before the tests of**  **financial feasibility and maximum productivity**

**. ”)**  **Here, plaintiff’s expert valued the subject property as**  **a single economic unit,**  **expressing in his report that the subject property’s highest and best use, as vacant, “would be to develop the**  **site with a use to the maximum density permitted by the HB/ROM and B**

**- 3 Zones**  **.” Thus,**  **plaintiff’s expert’s report failed t o identify a specific highest and best use, as vacant, for the subject**  **property. However,**  **an appraiser**  **’s r**  **ecit ation**  **of a zoning ordinance, along with**  **a generic**  **statement that**  **the property could be**  **developed or redeveloped**  **in accordance**  **with all**  **legally permitted**  **uses ident**  **ified under**  **th e ordinance,**  **offers no meaningful insight or**  **analysis of a property or**  **its**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -18-**  **marketplace**

**. Rather,**  **such statements**  **, when**  **accurate, constitute**  **mere factual**  **recitations and**  **do**

**not amount to**  **a comprehensive highest and**  **best use**  **analysis or**  **evaluation**

**. “T**  **he proper determination of highest and best use requires a comprehensive market analysis to ascertain the supply and demand characteristics of alternative uses**  **.” Clemente**  **, 27 N.J. Tax at 269 (citing**  **Six Cherry**  **Hill, Inc.**  **v. Cherry**  **Hill Twp.**  **, 7 N.J. Tax 120, 131 (Tax 1984),**  **aff'd , 8 N.J. Tax 334 (App. Div. 1986)). Importantly, the “highest and best use conclusion**  **should specify the optimal use (or uses), when the property will be put to this use or achieve**  **stabilized occupancy, and who would be the most likely purchaser or user of the property.” Clemente**  **, 27 N.J.**  **Tax at**  **269 (citing**  **The Appraisal of**  **Real Estate**  **, 139 (13**  **th ed.**  **2008)) (emphasis**  **added). Thus,**  **an appraiser**  **must not only evaluate**  **all legally**  **permitted uses identified under the**  **zoning ordinance but must**  **reconcile th**  **ose use s against examinations of what is**  **physically possible, financially feasible, and**  **select th**  **e use that**  **will be**  **most maximal ly productive.**  **See Inmar**  **Associates, Inc. v. Edison Twp., 2 N.J. Tax 59, 64 (Tax 1980). Notwithstanding**  **the deficiencies in plaintiff’s expert’s report**  **s , plaintiff’s expert’s**  **testimony truly revealed**  **that his highest and best use**  **analysis, as vacant (**  **for all tax years ),**  **and as improved (for the 2019 and 2020 tax years),**  **was fatal**  **ly flawed**  **. Seemingly unaware that industrial and distribution/warehousing uses were not legally permitted in Lopatcong’s HB zone or in**  **Pohatcong’s B-3 zone as of any of the va luation dates at issue, plaintiff’s expert expressed that**  **h is**  **highest and best use analysis**  **, as vacant (for all tax years)**  **, and as improved (for the 2019 and 2020**  **tax years), were “skewed**  **towards an industrial development.” Moreover,**  **when presented with t he**  **zoning ordinances, zoning maps, and**  **evidence that industrial and distribution/warehousing uses**  **are not be permitted under either the HB or B- 3 zones,**  **plaintiff’s expert was unable to quantify** 



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -19-**  **how this information**  **would alter his highest and best use analysis and conclusions. Instead, responding,**  **“I would have to sit down and go through it . . . I don’t know if my [highest and best use] conclusions would change, but I am still leaning towards an industrial use . . .”** 
**I n applying the legal permissibility**  **test, an appraiser must determine what “uses are [legally]**  **permitted by current zoning, [and] which uses could be permitted if a zoning change were reasonably probable. . . .”**  **The Appraisal of Real Estate , 338 (14**  **th ed.).**  **I n attempting to discern**  **the tru e or market value of a**  **property, the court may consider how a potential zoning change may**  **alter or affect a**  **property’s use and**  **, correspondingly, its value, provided evidence is adduced**  **sufficient to warrant a determination that such change is reasonably probable. See**  **State v. Caoili ,**  **135 N.J.**  **252, 265 (1994)**  **; State by State Highway Comm’r v. Gorga, 26 N.J. 113 (1958)** 

**. In**  **sum, the “proposed use must not be remote, speculative, or conjectural.”**  **Clemente , 27 N.J. Tax at 269**  **(citing Penns Grove Gardens, Ltd. v. Borough of Penns Grove, 18 N.J. Tax 253, 263 (Tax 1999);**  **Ford Motor Corp. , 10**  **N.J. Tax at 167 );**  **Borough of Saddle River v. 66 East Allendale, LLC, 216 N.J. 115, 139**  **(2013 ) (stating that part of the**  **court’s analysis requires consideration of**  **the “reasonable probability of future site plan approval [or zoning changes] when deter**  **mining fair market value. . . .”)**  **; Linwood Properties, Inc.**  **v. Ft. Lee Borough, 7 N.J. Tax**  **320, 328-29 (Tax 1985) (**  **stating that**  **“except in the most unusual cases, it is unlikely that an increment in value in anticipation of a zone change or variance from the zoning ordinance requirements may be a**  **dded to reflect the probability of such action.”);**  **Hoechst Celanese Corp. v. Bridgewate r T**  **wp. , 12**  **N.J.**
**Tax 532, 539 (Tax 1992) (stating that “property must be valued in its existing zoned use unless**  **there is a probability of a change in zoning”).**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -20-**  **Here, plaintiff’s expert opined that his highest and best use analysis**  **, as vacant (for all tax** 

**y ears)**  **, and as improved (for the 2019 and 2020 tax years ), w**  **ere “**  **skewed towards an industrial development,”**  **“distribution warehouse,” or**  **“industrial uses.” However**  **, the evidence revealed**  **that industrial and distribution/warehousing uses were not permitted**  **in either**  **Lopactong’s HB zone or Pohatcong’s B-**  **3 zone. Thus,**  **because industrial uses were not permitted during the tax**  **years at issue, to render his highest and best use**  **conclusions reasonable and cr**  **edible, it was**  **incumbent upon plaintiff’s expert to demonstrate**  **that a reasonable probability existed for a zoning**  **change. However, plaintiff’s expert failed to offer any evidence demonstra ting that defendants** 

**were contemplating a zoning change as of any of the valuation dates involved herein or that other**  **similarly situated property owners or contract purchasers**  **had made application s**  **for a zoning change and that such applications were approved.**  **21**
**A n appraiser’s**  **unsupported assumptions of a zoning change or grant of**  **variance relief for**

**a use that is not**  **leg ally permitted**  **renders the appraiser’s**  **highest and best use analysis**  **wholly deficient** 

**. The party proposing a**  **specific highest and best use for a property**  **that assumes**  **a zoning change or variance relief from zoning requirements must “produce[] credible evi**  **dence that a**  **potential use is reasonably pr**  **acticable and reasonably probab le.”**  **Caoili , 135 N.J. at 263 (quoting**  **United States v. 341.45 Acres of Land, 605 F.2d 762, 817 (5 th**  **Cir. 1979)).**

**21 The only testimony elicited**  **from plaintiff’s expert regarding zoning change s**  **arose in connection with the November 20, 2019 sales contract. Plaintiff’s expert testified that on Nove**  **mber 20, 2019, plaintiff executed a sales contract for the subject property with CRG Acquisition, L**  **LC, for $28,875,000 (without the Kohl’s store), or $35,150,000 (with the Kohl’s store), subject to zoning**  **change approvals.** 

# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -21-**  **To enable plaintiff’s expert to conclude the subject property’s highest and best use, as**

**vacant (for all tax years)**  **and as improved (for the 2019 and 2020 tax years), was for industrial and distribution/warehousing uses, he was required to objectively evaluate economic c**  **onditions, demand in the marketplace,**  **public records, and other extrinsic evidence, to discern whether a variance or zoning change was reasonably probable. Yet, p**  **laintiff’s expert**  **failed to**  **offer any**  **analysis , evaluation, or other**  **credible evidence**  **demonstrating that**  **a zoning change was**  **reasonably probable**  **as of any valuation date s**  **involved herein. Moreover,**  **neither plaintiff’s expert’s report**

**n or his testimony revealed**  **that his highest and best use conclusions were based on the report**  **, analysis**  **, or opinions of a professional planner eng**  **aged in investigating**  **possible zoning and land use relief**  **for the subject property under the parameters of**  **N.J.S.A. 40:55D-70. To overcome the presumption of validity that attaches to the local property tax assessm**  **ent, the**  **plaintiff shoulders the burden of proving t**  **hat the subject property’s assessment is erroneous** 

**. However, when a plaintiff has failed to offer cogent evidence, based on sound theory, rais**  **ing a**  **debatable question of the property’s value, then**  **“judgment should be entered dismissing the appeal thus affirming the assessment.”**  **MSGW Real**  **Estate Fund,**  **LLC , 18**  **N.J. Tax**  **at 376.**  **Here, viewing the**  **evidence presented**  **in the light most favorable to the non-moving party and a**  **fford ing**  **plaintiff all reasonab**  **le and legitimate inferences which can be deduced**  **therefrom, the court finds that plaintiff has not met that threshold. For the reasons**  **detailed above, p**  **laintiff’s expert’s highest and best use analyse**  **s, as vacant (for all tax years)**  **and as improved ( for**  **the 2019 and 2020 tax years**  **), w ere**  **fundamentally flawed. Plaintiff’s expert’s highest and best use conclusions**  **lacked a**  **credible foundation , analysis,**  **and objective support and**  **, thus, were entitled**  **to no weight. Thus, because the first phase**  **of plaintiff’s valuation analysis was defective**  **the court**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE**Phillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township & Pohatcong Township**

**Docket Nos. 007449-2016; 002773-2017; 006216-2018; 003180-2019; 002464-2020 ;**  **007490- 2016; 002776-2017; 006254-2018; 005293-2019; and 002455-2020**  **Page -22-**  **need not embark on a further**  **examination and analysis of the valuation**  **evidence proffered by plaintiff** 

**.** III. Conclusion **For the foregoing reasons, the court grants**  **defen dants’ motions**  **, under R.**  **4:40- 1, for entry**  **of judgments at trial**

**. Based on the fatal flaws disclosed in plaintiff’s expert’s highest and best use**  **analyses, the court concludes that plaintiff ha**  **s failed to**  **overcome the presumption of validity that**  **attaches to the local property tax assessments.**  **Because plaintiff has failed to overcome the presumption of validity that attaches to the local property tax assessments, the court ne**  **ed not evaluate and weigh**  **the valuation evidence**  **presented by plaintiff in the se tax appeal**  **matters**

**. Moreover, the court finds that defendants have offered no evidence of the subject prope**  **rty’s true or fair market value.**  **Accordingly, the court affirms the 2016, 2017, 2018, 2019, and 2020 local**  **property tax assessments. Very truly yours,** 

**Hon. Joshua D. Novin, J.T.C.**



# ADA

Americans with Disabilities Act ENSURING AN OPE N DOOR TO 

### JUSTICE