**TAX COURT OF NEW JERSEY**

**TAX COURT MANAGEMENT OFFICE P.O. Box 972** 

**(609) 815**

**- 2922**  **TRENTON, NJ 08625**

**- 0972** 

njcourts.gov

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### Corrected Opinion Notice

Date: May 12, 2022

Michael I. Schneck, Esq Schneck Law Group, LLC Dominic P. DiYanni, Esq. Eric M. Bernstein & Associates, LLC
From: Management Office
Re: Giant Realty LLC v. Lavallette Borough Docket number : 0010063-2014 The attached corrected opinion replaces the version released on May 12, 2022 The Opinion has been corrected as noted below: **Page 2, corrected Ta**  **x Lot 5 to read** - **$810,833.00**N OT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS Corrected 4/28/22 – page 6, corrected paragraph 2 Co rrected 5/12/22 – page 2, figure for lot 5

**_____________________________________ :**  **GIANT REALTY, LLC, :**  **TAX COURT OF NEW JERSEY :**  **DOCKET NO. 001063-2014** 

**Plaintiff :**  **: v. :**  **: LAVALLETTE BOROUGH,**  **: :**  **Defendant : _____________________________________:** 

**Decided: April 2**  **8, 2022 Michael I. Schneck**  **for plaintiff ( Schneck Law Group, LLC.,**  **attorney s).**  **Dominic P. DiYanni, for defendant ( Eric M. Bernstein & Associates,**  **LLC, attorney s).** 
**FIAMINGO , J.T.C.**  **This matter is before the Tax Court on plaintiff’s motion for application of the provisions**  **of N.J.S.A. 54:51A**

**- 8 (the “Freeze Act”) to tax years 2015 and 2016. Defendant municipality**  **opposes the application asserting that there was a change in value subsequent to the 2014 tax year.**  **The court finds that defendant failed to make a** prima facie **showing that a substantial and meaningful change in value occurred between the base year 2014 and freeze years 2015 a**  **nd 2016. Accordingly, the court finds that the**  **Freeze Act applies to both years 2015 and 2016.** 
F ACTUAL AND PROCEDURAL BACKGROUND **Giant Realty, LLC (“plaintiff”) timely filed a direct appeal in the Tax Court**  **challenging the 2014**  **tax year local property tax**  **assessments o n**  **the real property located in the Boro ugh of**  **Approved for Publication In the New Jersey**  **Tax Court Reports 2** 

**Lavallette (“defendant”) designated a s**  **lots 1, 2, 3, 4, 5, and 6 in block 21 on the official tax map of defendant**  **municipality (collectively the “subject property”)**

**. After**  **a trial on the issue of**  **valuation, the court entered judgment on March 20, 2 020, reducing the**  **2014 tax year assessment**  **for each of the subject lots (“2014 Judgment”).**  **The original assessment s**  **and the judgments**  **entered by the court with respect**  **to each**  **of the subject lots**  **1 was**  **as follows:**
**Tax Lot Original Assessment**  **Judgment**
**1 $1,250,000.00**  **$810,833.00**
**2 $1,187,500.00**  **$810,833.00**
**3 $1,187,500.00**  **$810,833.00**
**4 $1,250,000.00**  **$810,833.00**
**5 $1,000,000.00**  **$810,833.00**
**6 $1,000,000.00**  **$810,834.00**

**On May 14, 2020 ,**  **plaintiff filed a motion for relief under the Freeze Act to apply the judgment to tax years 2015 and 2016. Defendant filed opposition and the motion was heard before**  **the Tax Court Judge who heard the trial testimony. On August 12, 2020 ,**  **an order was ent ered**  **denying plaintiff’s**  **motion without prejudice**

**. 2**  **On October 6, 2021 ,**  **plaintiff refiled a motion seeking**  **Freeze Act protection identical to the motion**  **filed on May 14, 2020. Defendant filed opposition stating, “[d]efendant shall be relying upon its previously filed opposition to the F**  **reeze Act motion filed by taxpayer’s counsel which is already uploaded on e** 

**- courts for this [d]ocket.”**  **No additional certifications or argument was filed by defendant.**

**1 Each lot at issue was unimproved vacant land during each of the years in question and thus the**  **assessment is land only. 2**  **As a result of the general reassignment of matters in the Tax Court on Septe mber 1, 2020, the**  **se matters were**  **transferred to this court for resolution.** **3**

LEGAL ANALYSIS **The Freeze Act provides in pertinent part,**

**Where a judgment not subject to further appeal has been rendered by the Tax Court involving real property, the judgment shall be**  **conclusive and binding upon the municipal assessor and the taxing district, parties to the proceeding, for the assessment year and for the**  **two assessment years succeeding the assessment year covered by the final judgment, except as to changes in the value of the property**  **occurring after the assessment date. The conclusive and binding effect of the judgment shall terminate with the tax year immediately**  **preceding the year in which a program for a complete revaluation or complete reassessment of all real property within the district has**  **been put into effect. If as of October 1 of the pretax year, the**  **property in question has been the subject of an addition qualifying**  **as an added assessment, a condominium or cooperative conversion, a subdivision or a zoning change, the conclusive and binding effect**  **of such judgment shall terminate with said pretax year. [N.J.S.A. 54:51A-8**  **(a) ]**  **The Freeze Act is intended “to prevent ‘the repeated yearly increases in the assessed valu e**  **of property, not related to or justified by any changes increasing its market value and resul ting in**  **harassment of the taxpayer, subjecting him to the trouble an d expense of annual appeals to the**  **county tax board.’” AVR Realty Co. v. Cranford T**  **wp. , 316 N.J. Super. 401, 405** 

**- 06 (App. Div.**  **1998), certif.**  **denied , 160 N.J. 476 (1999)**  **(quoting Newark v. Fischer**  **, 8 N.J. 191, 200 (1951). The**  **Freeze Act is self** 

**- executing**  **. AVR Realty Co. v. Cranford T wp.**  **, 294 N.J. Super 294, 299 App. Div**  **. 1996), certif.**  **denied 148 N.J. 460 (1997).**  **The statute thus provides a clear and unequivocal mandate to taxing districts.**  **They must accord the taxpayer the benefit of the Tax Court judgment for the two tax years following the last year encompassed**  **by the judgment**

**-- that is, the base year** 

**-- unless there has been a**  **general revaluation or a change of value of the subject property prior to the assessme**  **nt date for a "freeze" year. [**  **Id . at 298].** **4**

**Procedurally, w here the judgment for the base year becomes final after the assessment**  **is fixed**  **for the freeze years ,**  **a taxpayer must file**  **a motion to obtain Freeze Act relief. 3**  **See Curtis**  **s Wright Corp. v. W**  **ood- Ridge Boro., 4 N.J. Tax 68 (Tax 1982). Thus, plaintiff**  **here has moved**  **for application of**  **the Freeze Act in this matter for**  **the two years following**  **entry of judgment. In opposition**  **defendant assert**  **s that there has been a change in value of the subject property**  **which occurred after the assessment date s**  **such that the**  **20 14**  **J udgment is not conclusive and**  **binding to the freeze**  **years. In cases w here**  **a municipality opposes a motion for Freeze Act**  **applicati on by asserting a change in value,** 

**a municipality must make a prima facie**  **showing that there was a**  **change in the property's value between the assessment dates for the base year and freeze years and that:**  **‘ "(1) the change in value**  **result[ed] from an intern al or external change; (2) the change**  **materialized after the assessing date of the base year; and (3) the change substantially and meaningfully increased the value of the**  **property."’ AVR Realty Co. v. Cranford Township, 316 N.J.**  **Super. 401, 407, 720 A.2d 434 (App.**  **Div. 1998),**  **certif. denied**  , **160 N.J. 476, 734 A.2d 791 (1999) (**  **AVR Realty II ). If the municipality**  **makes this prima facie showing, it is entitled to a plenary hearing regarding the applicability of the Freeze Act.**  **Ibid.; see**  **also Entenmann's, Inc. v. Totowa Borough, 19 N.J. Tax 505, 515**  **(Tax 2001); Rockstone Group v. Lakewood Township, 18 N.J. Tax**  **117, 120-21 (Tax 1999). [**  **Coastal Eagle Point Oil Co. v. Twp. of W. Deptford, 353 N.J. Super. 212, 218 (App. Div. 2002)**  **]. Changes in value may occur as a result of an internal change or an external chan**  **ge. “[I]nternal changes consist of capital improvements that substantially and meaning**  **fully increase the value of the subject property, while external changes consist of extre**  **me economic changes or**

**3 The**  **2014 J udgment for the**  **2014 base year was not entered until March 20, 2020 well after the**  **assessment dates for the 201 5**  **and 201 6**  **tax years, October 1, 2014 and October 1, 2015 respectively.** **5**

**zoning changes in close proximity to the property that increase its value.” 160 Chubb Props., LLC**  **v Twp. of Lyndhurst, 30 N.J. Tax 613 (Tax 2018). 4** 
**D efendant asserts an external change occurred**  **due to the issuance of a**  **permit by the New Jersey Department of Environmental Protection pursuant to the provisions of the Coasta**  **l Area Facility Review Act, N.J.S.A. 13:19** 

**- 1 to** 

**- 51 (“CAFRA”)**  **, permitting development of**  **the subject property** 

**. CAFRA**  **’s purpose is the protection of “th**  **e unique and fragile coastal zones of the State.” In re Egg Harbor Associates (Bayshore Centre)**  **, 94 N.J. 358, 364 (1983). Accordingly, “ CAFRA**  **grants broad authority to the DEP to protect the environment and to regulate land use wit hin the**  **coastal area for the general welfare.” Matter of Cape May Cty. Mun. Utils. Auth., 242 N.J. Super.**  **509, 514 (App. Div. 1990). As explained in Siegel v. N.J. Dep’t. of Envtl. Prot., 395 N.J. Super. 604, 615 (App. Div.**  **2007) In enacting CAFRA, the Legislature found** 

**that certain portions of the coastal area are now suffering serious adverse environmental effects**  **resulting from existing facility activity impacts that would preclude or tend to preclude those multiple**  **uses which support diversity and are in the best long**

  ** term, social, economic, aesthetic and recreational** **interests of all people of the State. [N.J.S.A. 13:19-2.]**  **The Legislature balanced, however, its desire to address the adverse environmental effects of coastal area development with recognized**  **economic considerations for those who inhabited the coastal areas,**  **noting CAFRA was intended to also encourage the development of compatible land uses**  **in order to improve the overall economic position of**

**4 The**  **Appellate Division affirmed the**  **trial court in an unpublished decision which can be found**  **at 2020 N.J. Super. Unpub. LEXIS 1551 (App. Div. 2020). 6**  **the inhabitants of that area within the framework of a compr**  **ehensive environmental design strategy which preserves the most ecologically sensitive and**  **fragile area from inappropriate development and provides adequate environmental safeguards for the**  **construction of any facilities in the coastal area. [Ibid.]** 
**A CAFRA permit is required to develop property subject to its provisions**  **. Nonetheless, “as a general matter, CAFRA ‘regulations do not preempt local zoning authorit**  **y.’” Bubis v. Kasin ,**  **184 N.J. 612, 630 (2005) (quoting**  **Lusardi v. Curtis Point Prop. Owners Ass’n**  **, 86 N.J. 217, 229 (1981)).**  **To develop a property subject to CAFRA**  **one must also obtain approval from local zoning**  **authorities before any development may commence. See**  **Ferraro v. Zoning Bd. of Adjustment ,**  **119 N.J. 61 (1990). Thus, while impactful**  **and a necessary precursor to development, the issuance of a CAFRA permit does not constitute**  **final approval for development.**  **A CAFRA permit was issued on September 22, 2**  **015, authorizing “the construction of four**  **new single family dwellings an d**  **associated development**

**. ” Counsel argues that issuance of the**  **CAFRA permit resulted in the subject property being developable**  **subject to local zoning and building laws.**  **Because the subject property was previously undevelopable**  **as a “dune,” counsel** 
**argues that**  **there was an external increase in value**  **upon issuance of the CAFRA permit. Counsel further**  **argues that “the progression of the CAFRA permitting process and the ultimate appr oval”**  **resulted in a change in value, such that the anticipatory issuance of the permit**  **positively affected**  **the value for the 2015 tax year, even though the permit was not issued until nearly one year after**  **the valuation date for**  **that tax**  **year. In support of this latter position c**  **ounsel’s legal brief**  **references testimony of plaintiff’s expert at trial regarding the CAFRA application process.**  **5**

**5 Counsel has not provided this court with**  **any expert report to support the argument, nor has counsel provided the court with**  **any transcript of the trial**  **proceedings in which such testimony** **7**

**Defendant provides no certification of any expert to demonstrate that an**  **increase in value actually occurred, nor what that increase in value might be. Couns**  **el argues that logic dictates that the value of property which was previously subject to restrictions prohibiting developmen**  **t necessarily increased**  **because of the issuance of**  **the CAFRA permit** 

**. Counsel surmise**  **s , without**  **support, that although the permits w ere not actually issued until**  **September 21, 2015 , the**  **subject property**  **also increased in value**  **as of October 1, 201 4,**  **due to the probability**  **that the permits would issue.**  **In sum defendant’s c ounsel assert**  **s that as the permit progressed through the applic**  **ation process the likelihood of issuance increased such that a buyer would likely pay more for**  **the lots than would have been paid as of October 1, 2013. However**  **, this assertion**  **is unsupported by any evidence whatsoever. Defendant has provided nothing to**  **this court**  **demonstrating that the issuance of the CAFRA permit was reasonably probable as of the October 1, 2014 valu**  **ation date. Moreover, defendant has failed to show that a willing buyer would have paid substantiall**  **y and meaningfully more for the**  **subjec t property**  **on October 1, 2014 than he or she would have paid**  **on October 1, 2013.**  **N othing changed between those two dates, except the passage of time. The**  **CAFRA permits had not issued ,**  **and defendant provides no support**  **for its conclusion that**  **the issuance**  **of a CAFRA permit was more reasonably probable on October 1, 2014 than it was on**  **October 1, 2013. Counsel references the bench opinion delivered**  **with respect to the 20 14 Judgment**  **wherein the trial**  **court concluded**  **that there was a reasonable likelihood t**  **he CAFRA permit would be**

**was apparently given**

**. No affidavit or other certification as to this testimony was submitted to the**  **court. The court has no basis upon which to evaluate the accuracy of counsel’s characterization**  **of the testimony provided by the expert at trial or the credibility of any statemen ts which might**  **have been made by the expert. 8** 

**obtained in reaching**  **the determination**  **that the subject property had “considerable value.” 6**  **This court’s determination as to the proper application of the Freeze Act is not influe**  **nced by the factors taken into consideration by the trial court in**  **arriving at a**  **conclusion of value for the base year.**  **7**
**This court’s determination is informed only wi**  **th respect to whether defendant has made a** prima facie **showing that there was a**  change **in value from the base year to the f reeze**  **a ct years.** 
**In further support**  **of its position that there was a change in value for the 2015 tax year**  **, d**  **efendant refers to Sta**  **te v. Caoili , 135 N.J. 252 (1994) and other condemnation cases.**  **In Caoili**  **the court held that,**

**in determining the fair market value of condemned property as a basis for just compensation, the jury may consider a potential zoning**  **change affecting the use of the property provided the court is**  **satisfied that the evidence is sufficient to warrant a determination that such a change is reasonably probable. If evidence meets that**  **level of proof, it may be considered in fixing just compensation in light of the we**  **ight and effect that reasonable buyers and sellers would give to such evidence in their determination of the fair market**  **value of the property. [Id.**  **at 265]. Defendant misapprehends its obligations hereunder. The question here is not whether t**  **he likelihood of the issuance of the CAFRA permit would have been**  **considered by a willing buyer**  **and willing seller. The question here is whether defendant has establishe d a**  prima facie **case that**

**an external change in**  **the value of the subject property materialized after October 1, 2013**  **, that**  **“substantially and meaningfully increased the value of the property.” Coastal Eagle Point Oil Co.**  **, 353 N.J. Super. at 218.** 

**6 T**  **he court was not provided with any tra nscript of the oral decision of the trial court**  **and cannot evaluate the accuracy of counsel’s characterization of the court’s oral decision** 

**. 7**  **Arguably, defendant’s position that a substantial and meaningful increase in val ue occurred on**  **October 1, 2014 is undermined by its position that the trial court already included the i ncreased**  **probability of the issuance of the CAFRA permit in the value determination f or October 1, 2013.** **9**

**A** prima facie **case is one where a party produces enough evidence to allow the court to infer the fact at issue and rule in the party’s favor.**  **Blacks Law Dictionary , 1382**  **(10 th**  **ed. 2014).**
**D efendant produced no evidence to support its supposition that was an increased**  **probability that the CAFRA permit**  **would issue on**  **or before October 1, 2014 , and**  **that such increased possibility sub**  **stantially and meaningfully increased the value of the subject property**  **over its value on October 1, 2013.**  **Certainly ,**  **defendant has provided nothing in**  **support of its hollow**  **assertion that the mere passage of t**  **ime made it more likely that**  **the CAFRA permit would be issued**  **so as to**  **meaningfully and substantially increase its fair market value on October 1, 2014.**  **Accordingly, the court finds that**  **defendant failed to demonstrate a**  prima facie **case entitling it to a plenary hearing on the application of the Freeze Act for the 2015 tax year.**  **The CAFRA permit issued on September 21, 2015. Defendant asserts there was**  **a change in value for the 2016 tax year**  **because the CAFRA permit**  **issued prior to the October 1, 2015**  **valuation date for the 2016 tax year. Again, defendant provides no evidence**  **in support of**  **its position**  **. Instead, d efendant**  **argues it is unquestionable that the change in the status of the lots**  **from unbuildable dunes**  **to buildable lots**  **substantially and meaningfully increased their value. 8**  **In opposition, p**  **laintiff argues that the mere issuance of the CAFRA permit does not constitute a**  prima facie **showing that there was a meaningful and substantial change in value to the subject property.**  **The court is mindful that ,**  **[t] here may be instances in which a change in zoning or a physical**  **change alone is sufficient to conclude that there has been a change in value,**  but whether that change is substantial and meaningful can

**8 Here the court notes that the CAFRA permit, while applicable to all six lots under consid**  **eration, permitted the construction of four single family homes, requiring that the six lots be re**  **configured into four building lots. Defendant did not provide any explanation of how the value of the**  **reconfigured four buildable lots related to the value of the six lots under considerati on.** **10** only be measured by a showing of the value of the property before and after the change. **[2 nd**  **Roc**

**- Jersey Assocs. v. Morristown**  **, 11 N.J. Tax 45, 52 (Tax 1990**  **) (Emphasis added)].**
**See also**  **Ritchie & Page Distrib. Co., Inc. v. City of Trenton, 29 N.J. Tax 538, 545**

**- 47 (Tax**  **2016) (bare allegation of change in occupancy does not establish prima facie showing of**  **substantial change in value); Entenmann’s Inc. v. Borough of Totowa, 19 N.J. Tax 505, 514**

**- 15**  **(Tax 2001) (allegation in change of highest and best use is not necessarily**  **a sufficient showing of change in value),**  **aff’d , 21 N.J. Tax 182 (App. Div. 2003).**  **Here defendant provided no evidence of a change in value of the lots as of either valuation**  **date at issue**

**. The court has no**  **evidence that the issuance of the CAFRA permi**  **t had a positive or**  **negative e ffect on the value of the subject property**  **or that that**  **e ffect was substantial and**  **meaningful. While the court may infer that a buildable lot is more valuable than a non**  **-buildable dune, the court has been presented with no ev**  **idence that the value of the lots here increased over their**  **October 1, 2013 value of $810,834 , or that such an increase was substantial and meaningful** 

**. Defendant produced no**  **evidence of the value of a building lot as of October 1, 2015**  **from which the court could infer that the value of the subject property increased, substantia**  **lly and meaningfully over its October 1, 2013 value.** 

**A municipality must first show that the property's value changed between "the assessment dates for the base year and freeze ye**  **ars" due to "an internal or external change," which "substantially and**  **meaningfully increased the value of the property," after which it is entitled to a "plenary hearing" on the applicability of the Freeze**  **Act. Coastal Eagle Point Oil Co. v. Township of W**  **est Deptford , 353**  **N.J. Super. 212, 218 (App. Div. 2002) (citations and quotations omitted).**  **[Ritchie & Page Distrib. Co., Inc. v. City of Trenton, 29 N.J. Tax at**  **545].** 

### -- --- --------------------------------**11**

**T he court finds defendant has failed to make the**  **required** prima facie **showing of an**  **increase in value which would entitle it to a plenary hearing**

**. Judgment granting Freeze Act relief to**  **the subject property for tax years 2015 and 2016 will be entered.**