Opinion ID: 2285872
Heading Depth: 1
Heading Rank: 2

Heading: The Case Presented

Text: Willingboro, formerly Levittown, had by far the greatest amount of 1969 and 1970 assessed valuations of realty of the forty taxing districts in Burlington County. About 99% of its individual real property assessment items is comprised of one-family dwellings of fairly uniform construction. In recent years, inclusive of 1969 and 1970, these have been sold at the rate of about one in five each year, and it is conceded that there has been a steady trend of increase in sales prices over that period, which continues. There was testimony before the Division of increases in building costs at the rate of 8 1/2% per annum. The assessor of Willingboro has maintained close study of the sales and has used a computer to update assessed valuations on all residences. Pursuant to this program there has been a general reassessment [8] of ratables in Willingboro in each of the years 1968, 1969 and 1970 In 1970 ten of the taxing districts in the county (including Willingboro) effectuated reassessment or revaluation of their real property ratables, all presumably increasing them in the aggregate over previous years. For all of them except Willingboro the Director's October 1, 1969 weighted ratio and final average ratio were under 100, the weighted ratios varying from 52.23 to 88.22, the final average ratios somewhat higher. Willingboro's weighted ratio was 107.32 and its final average ratio 120.39. Of the non-revalued districts, three, Lumberton, New Hanover and Wrightstown, had weighted ratios over 100, varying from 104.70 to 117.38 and final average ratios running from 107.48 to 130.27 (Lumberton). The other non-revalued districts had weighted ratios under 100. In fixing its final equalization table for 1970, the county board set a ratio of 100 for every one of the ten taxing districts which had been revalued for that year, reasoning that since the legal standard of individual assessments for Burlington County fixed by the county board pursuant to N.J.S.A. 54:4-2.27 was 100% of true value, it should be conclusively presumed that the 1970 assessments on revaluation were based upon that standard. The board nevertheless used the Director's weighted ratios for those districts which had not revalued, except that as to those which had not revalued but had weighted ratios over 100, the official ratios were uniformly set at 100. It appears from the testimony of the secretary of the county board before the Division of Tax Appeals that as a matter of policy no district's county equalization ratio would be fixed at in excess of 100 and that every one which revalued would be set at exactly 100. As an additional reason for fixing Willingboro's ratio at 100 the witness stated that Willingboro's assessor had certified the 1970 list as fixed at full true value. Before the Division, the assessor testified that the Willingboro 1970 assessments were at about true value, being based on studies of sales for the first eleven months of 1969. There was also evidence that spot checks of Willingboro sales in the first few months of 1970 showed a ratio of 1970 assessments of at or slightly below 100. In summary, the county equalization table set the ratios of 27 districts at the precise weighted ratio of the Director's October 1, 1969 table, these all being under 100, varying from a low of 76.66 to a high of 97.72. The ratios of the other thirteen districts were set at the policy or presumed levels of 100, as indicated. The position of Willingboro before the Division of Tax Appeals was basically that it was arbitrary for the county board to fix its ratio at 100 merely because it was attempting to assess at true value, without considering the relative current relationship to true value of the assessments of all the districts in the county inter sese; that from the latter standpoint the districts which had been assigned the Director's weighted ratios of October 1, 1969 (lower than 100) were receiving the benefit of calculations based upon the substantially lower average sales prices recorded during the sales-sampling period from July 1, 1967 to July 1, 1969 [except those for January 1 to June 30, 1968; see note 10 infra ] used by the Director, as contrasted with average higher sales prices from January to November 1969 upon which Willingboro's revaluation for 1970 at a presumed 100% ratio was based. The result was a relatively lower ratio for a 1970 revaluing district (with Director's ratio over 100) than for the districts accorded the weighted ratios; a consequent inflation of such revaluing district's equalized valuations in relation to those of the others; and allocation of an unfair share of the county tax burden to any such revaluing district. It could well have been argued, moreover, (a) that raising revalued districts' ratios to 100 automatically notwithstanding their ratios under the Director's tables were under that figure gave those districts a relatively unfair advantage as against all those districts (whether revalued or not) whose Director's ratios were used in the county equalization, and (b) that reducing the non-revalued districts with weighted ratios over 100 to 100 unfairly discriminated against them in relation both to all districts allowed to retain their weighted ratios as well as to those lifted to 100 from their weighted ratios. Willingboro asked the Division to fix its 1970 equalization ratio at either the Director's final average ratio of 120.39 or his weighted ratio of 107.32. [9] For reasons later to be stated neither figure can be accepted; there must be a new equalization hearing and table by the Division of Tax Appeals. The basic attack by Willingboro on the County board action is soundly grounded. Inspection of the Director's directive to the county boards and taxing districts dated September 30, 1969 which explains how the school aid tables of October 1, 1969 were constructed, reveals the following. The sales used for calculating the Director's ratios (as to non-revalued districts) were (1) all those from July 3, 1968 to June 30, 1969 and (2) all transactions used in the preparation of the [Director's] 1968 Table of Equalized valuations   . We have been advised that the period intended by the last phrase, and in fact applied, was that from July 1, 1967 to December 30, 1967. [10] It is thus apparent that for purposes of the Director's tables of October 1, 1969, calculation of ratios was based on sales going back to July 1, 1967. In view of the conceded continuously rising trend of realty market values thereafter it is plain beyond debate that the Director's October 1, 1969 ratios were founded upon data substantially earlier, and therefore materially lower than such indicia of value (whether sales or other valuation data) as would normally be used in revaluing a district for 1970 assessment purposes, the statutory valuation date therefor being October 1, 1969. N.J.S.A. 54:4-23. The essence of the foregoing observations is also encompassed by the unrefuted testimony of Mr. Skelly, assessor of Willingboro, adduced before the Division of Tax Appeals. Despite the foregoing, the Division found the county board's action correct because Willingboro had failed to prove that the ratio of assessed value assigned to it (100) was below its true value and because the board had treated the revalued districts in an identical manner. The Appellate Division affirmed the Division of Tax Appeals, saying in an unreported opinion: Although it might have elected to do so, the County Board was neither required to apply the 1970 [meaning October 1, 1969] table of school ratios, nor was it precluded from placing a ceiling of 100% true value on the municipal equalization. We are not convinced that plaintiff has carried the burden of proving that the Division or the Board acted arbitrarily or unreasonably. See Little Falls Tp. v. Passaic Co. Bd. of Taxation, 115 N.J. Super. 115 (App. Div. 1971), which involves substantially the same questions presented in this case and which appears to be controlling. In the Little Falls case cited in the foregoing excerpt the Passaic County Board of Taxation had also fixed the 1970 equalization ratios at 100 for revalued districts notwithstanding the Director's ratios for them were higher, while setting the ratios for all other districts in accordance with those determined in the Director's school aid equalization table of October 1, 1969. The court noted that the complaining revalued districts admitted that they had assessed for 1970 at full true value and that the Director's tables had been approved by our courts as an equalization measure (115 N.J. Super. at 121), and it concluded ( Ibid. ):    Petitioners have merely shown that the county board utilized different methods and sources of determining the aggregate true values for the taxing districts of Passaic County. This the board was free to do, for all that was required of it was to carry out the equalization function in a reasonable and efficient manner. The county boards, the Division of Tax Appeals and the Appellate Division in both the present and the Little Falls case fell into error. The cardinal principle which county boards of taxation must follow in the county equalization process was reflected in this expression of Justice Brennan in the leading case in this field, City of Passaic v. Passaic County Bd. of Taxation, supra (18 N.J. at 390): When a county board increases an aggregate submitted by a local assessor, not `from any judgment formed by them that the valuation    was relatively less than it should have been,' State, Weehawken Twp., Pros., v. Roe, supra, 36 N.J.L., at page 89, but from considerations foreign to the relation of the average assessment ratio reflected therein to the average assessment ratios of the aggregates of the other taxing districts, the action is, in law, arbitrary and oppressive and the table must be set aside. (Emphasis added.) The mandate for accomplishment of relative equalization as among the taxing districts was not here followed by the county board or the Division. It was of no materiality, alone, that Willingboro and other reassessing districts had purported to set 1970 assessments at relatively current true value if no effort was made by the Board or the Division to ascertain whether the Director's weighted ratios for the districts given such ratios by the board were based upon valuation data substantially similar in quality to those which were the foundation of the assessments of the revalued districts; and, if not, to settle upon and apply substantially similar data and a common standard uniformly in determining ratios of assessments to true value for all districts in the county. The substantial dissimilarity of the underlying data and standards in the respective categories of districts is here quite obvious. The fact that nominally the standard was the same percentage of true value for both sets of districts cannot hide the crucial fact that actually a differently constructed standard of true value was applied to each group, operating discriminatorily against the revalued districts with Director's ratios over 100 (and equally discriminatorily in favor of revalued districts with Director's ratios under 100). Thus, the evidence before the Division should have put it on notice of substantial prima facie disparities between the relative standards applied by the county board in fixing the ratios for any revalued district as opposed to any non-revalued district and as between districts of either category where there were either arbitrary increases of weighted ratios to 100 or reductions of such ratios to that figure. Upon these showings, it became the duty of the Division to prepare a proper equalization table, and for that purpose to conduct a de novo equalization hearing, on notice to all districts, itself seeking out, if necessary, any pertinent and relevant data, and proceeding in the manner enjoined by the statute upon the county boards for fixing the final equalization table. City of Passaic, supra (18 N.J. at 395); Woodbridge v. Middlesex Co. Bd. of Taxation, et al., 96 N.J. Super. 532, 536 (App. Div. 1967). We pointed out above (in note 9, supra ) that there was an additional special problem applicable to Willingboro as a district which had reassessed in the tax years 1968 and 1969 as well as 1970. Because of the reassessment in 1969 a special provision of the Director's directive for preparation of the October 1, 1969 school aid tables became implicated in relation to calculating the ratios for Willingboro. This was that the sales sampling period applicable to 1969  reassessed or revalued districts was specified as only from January 1, 1969 to June 30, 1969, as contrasted with the longer and earlier period used in respect of the other districts. We are satisfied, however, that by reason of the double-averaging of the 1969 equalized valuations of the revalued districts with those of 1968, as explained in note 9 above, the effect of the disparate sales sampling periods has been sufficiently neutralized as a practical matter in this particular regard. We recognize the correctness in principle of the argument urged upon us on behalf of the county board that any reasonable and efficient method of equalization may be used; that mathematical exactitude is not required; and that a degree of imperfection will be tolerated. Woodbridge v. Middlesex Co. Bd. of Taxation, et al., supra (96 N.J. Super. at 536), holding that a board may use an unweighted instead of a weighted method of sales ratio analysis if applied uniformly to  all of the taxing districts in the county (emphasis in the original) ( Id., at 538). Moreover, the equalization process cannot as a practical matter be encrusted with rigid technicality and formalism, Kearny v. Div. of Tax Appeals, 35 N.J. 299, 311 (1961). Yet the overriding legislative purpose is the equal, proportionate sharing of the county tax burden, and when a method  any method  used imposes on a particular municipality a share dramatically or substantally excessive the review agency or the court must grant relief. Id., at 310. As already shown, the separate decisions of the county board concerning ratios to be assigned revalued districts on the one hand, and non-revalued districts on the other, cannot be adjudged for correctness independent of each other, as assumed by the tribunals below. This also applies to the artificial bench-mark of the county board precluding a ratio over 100 for any district. The crucial issue concerns the interrelated effect of each of these decisions on the proportionate county tax burden of all the districts. The failure to apply a common standard to each district necessarily distorted the burden-sharing balance of all. For the reasons stated there is a prima facie basis to believe that some municipalities in Burlington County were necessarily subjected to excessive proportionate shares of the county tax burden for 1970 in favor of others by the methods and principles here used. The degree of excessiveness cannot be estimated on this record, nor is it material, for present purposes. The Division must reexamine the matter. We proceed to a consideration of possible alternative methods of equalization, for the guidance of the Division.