Court Opinion

ID: 4550069
Source: CourtListenerOpinion
Date Created: 2020-07-22 14:07:33.844178+00
Date Added: 2024-06-11T09:20:16.550459
License: Public Domain

SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.

              Carol Crispino v. Township of Sparta (A-16-19) (083171)

Argued March 16, 2020 -- Decided July 22, 2020

ALBIN, J., writing for the Court.

       In this appeal, the Court considers a resolution, passed by defendant Township of
Sparta (Township), that imposed a special assessment on fifty-eight properties to recoup
public funds expended in the rehabilitation of a private dam owned by the Glen Lake
Beach Club, Inc. (Beach Club).

        The Beach Club owns Glen Lake and the Glen Lake Dam, which impounds the
water that forms the lake. All owners of real estate within a specifically delineated
perimeter near the lake known as the “reserve” -- as set forth in the Beach Club’s bylaws
-- are automatically eligible for membership and voting rights.

      To fund necessary repairs to the dam, the Beach Club received a loan from the
New Jersey Department of Environmental Protection’s Dam, Lake and Stream Project
Fund. In accordance with N.J.S.A. 58:4-12(d)(1), the Township agreed to serve as a co-
borrower: the Beach Club would be responsible for repayment of the loan and the
Township would act as the “collection agent” by passing an ordinance imposing a special
assessment on “real estate in the Township benefitted by [the dam] improvement.”

       The Township Council enacted Ordinance 16-03, which authorized the Township
to impose a special assessment on “the benefitted properties” of the dam project, and
Ordinance 16-04, which established an Assessment Commission to identify the benefitted
properties and to determine the assessment to be imposed on those properties.

       In March 2016, the Council appointed Scott Holzhauer, a real estate appraiser and
consultant, to assist the Assessment Commission in fulfilling its charge. Holzhauer
recommended that fifty-eight properties that fell within the Beach Club’s “reserve” be
subject to the special assessment to repay the loan. The owners of those properties
received a “peculiar benefit” or “advantage,” according to Holzhauer, because they have
the option to become members of the Beach Club and to enjoy its recreational amenities.
Holzhauer devised an approach to allocate the special assessment by dividing the
properties in the “reserve” into three separate categories: (1) seven lakefront properties,
(2) eleven lakeview properties with lake access, and (3) the forty remaining properties.
                                             1
In that three-tiered approach, Holzhauer assigned “share values” to each category,
allocating the highest share value to lakefront properties (2.0), a lower value to
lakeview/access properties (1.5), and the lowest value to all other properties (1.0).
Holzhauer’s report does not explain the methodology he followed in assigning the values
to the three classes of property.

        Despite opposition from some residents, the Township Council passed Resolution
6-1, adopting the recommendations made in Holzhauer’s report. Plaintiffs filed an action
in lieu of prerogative writs in Superior Court challenging the validity of Resolution 6-1.
The court voided Resolution 6-1, reasoning that the Township arbitrarily applied the
special assessment to plaintiffs’ properties. The Appellate Division reversed, and the
Court granted certification. 239 N.J. 600 (2019).

HELD: The expert report relied on by the Township did not apply any reliable
methodology to assure that the assessment allocating the costs among the properties was
“in proportion to and not in excess of the benefits conferred,” as required by N.J.S.A.
58:4-12(d)(1) and other statutes. The Court is constrained to invalidate Sparta Township
Resolution 6-1, which imposes a special assessment on plaintiffs’ properties to recoup the
costs of the dam restoration project. The Township must pass a resolution allocating
costs based on a valid methodology in accordance with the applicable statutes and
relevant case law.

1. The Dam, Lake and Stream Project Fund provides a means for the owner of a private
dam, such as a lake club or association, to secure a loan for the rehabilitation project.
N.J.S.A. 58:4-12(d)(1) provides two important features: (1) the cost of an improvement
funded under this section must be assessed “in the same manner as provided for the
assessment of local improvements generally under chapter 56 of Title 40 of the Revised
Statutes,” and (2) the assessment against the properties benefitted must be “in proportion
to and not in excess of the benefits conferred.” The plain language of the statute makes
clear that the Legislature intended to incorporate the law governing the special
assessments for local improvements under Title 40 into Title 58’s assessment for private
dam and lake improvements financed by public funds. By that act of incorporation, the
Legislature did not have to repeat the procedural and substantive standards for the
imposition of an assessment already set forth comprehensively in Title 40. The
Township understood that the special assessment process was governed by both Title 58
and Title 40. (pp. 17-20)

2. The justification for any special assessment levied for the purpose of financing a local
improvement, N.J.S.A. 40:56-27, or an improvement to a privately owned dam, N.J.S.A.
58:4-12, is that the assessed property has received a benefit from the improvement. If
there is no “peculiar benefit, advantage or increase in value” to the property from the
improvement, then there is no basis for imposing an assessment. See N.J.S.A. 40:56-27.
Under relevant case law, the benefit to the assessed property must be certain rather than
                                             2
speculative, although it may arise in the future, and the benefit to the specific property
must be substantially greater than to the public in general. An assessment, moreover,
must be proportionate to the benefit conferred on the property. The proportionality
requirement is measured by a standard of reasonableness, not by scientific precision. See
N.J.S.A. 58:4-12(d)(1) (“in proportion to . . . the benefits conferred”); N.J.S.A. 40:56-27
(“as nearly as may be in proportion to”). (pp. 21-23)

3. The test often used to determine the value of the benefit and the amount of the
assessment is the difference between the market value of the land before and after the
improvement. Nevertheless, no inflexible formula applies, nor is mathematical precision
required. Another assessment methodology may be used, so long as the result is a just
and equitable assessment of the benefits conferred. The value of the benefit conferred on
the assessed property by the improvement must be established by reliable proof. To state
the obvious, a municipality cannot impose an assessment based on an arbitrary
methodology. (pp. 23-24)

4. The Holzhauer report, which was adopted by the Assessment Commission and the
Township Council, did not comport with the statutory mandates and the governing case
law. Holzhauer simply concluded that property owners listed within the geographical
ambit of the Beach Club’s bylaws received a “benefit” because of “their right, by
property ownership and/or interest, to become a member of the club and therefore have
access to the lake and other amenities.” Plaintiffs suggest that the Beach Club randomly
placed their properties in the “reserve,” pointing to properties an equal distance from the
lake, whose owners are not automatically eligible for membership in the Beach Club.
Additionally, there is lack of certainty whether all property owners within the Beach Club
“reserve” are, in fact, automatically eligible for membership. Even assuming that
plaintiffs were eligible to become members of the Beach Club and that such membership
conferred on them a benefit from the dam restoration project, the Holzhauer report does
not set forth a rational methodology for the assessments imposed on plaintiffs’ properties.
Holzhauer did not explain how he arrived at assigning value shares to each category or
refer to any reliable methodology to support his opinion. (pp. 25-28)

5. Special assessments cannot be imposed on properties based on arbitrary
categorizations or speculative valuations. The Court concludes that the presumption of
validity accorded to Resolution 6-1 has been overcome by clear and convincing evidence
and invalidates Resolution 6-1 as an arbitrary and unreasonable law. (pp. 28-29)

       REVERSED and REMANDED to the Sparta Township Council.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE ALBIN’s
opinion.

                                             3
       SUPREME COURT OF NEW JERSEY
             A-16 September Term 2019
                       083171

           Carol Crispino, Vilma Verber,
           Mark Edwards, Jorge Cabrera,
         Stephen Cappadora, Paul O’Keefe,
        Kenneth Gardner, and Mary Gardner,

                Plaintiffs-Appellants,

                           v.

                 Township of Sparta,

               Defendant-Respondent.

        On certification to the Superior Court,
                  Appellate Division.

      Argued                         Decided
   March 16, 2020                 July 22, 2020

John E. Ursin argued the cause for appellants (Schenck,
Price, Smith & King, attorneys; John E. Ursin and Sandra
Calvert Nathans, on the briefs).

Thomas N. Ryan argued the cause for respondent
(Laddey, Clark & Ryan, attorneys; Thomas N. Ryan and
Jessica A. Jansyn, on the brief).

JUSTICE ALBIN delivered the opinion of the Court.

                          1
      Defendant Township of Sparta (Township) passed a resolution imposing

a special assessment on fifty-eight properties to recoup public funds expended

in the rehabilitation of a private dam owned by the Glen Lake Beach Club, Inc.

(Beach Club). Under the Beach Club’s bylaws, the owners of the fifty-eight

properties -- all within close proximity to Glen Lake -- are eligible to join the

Beach Club and enjoy its amenities.

      Eight of those property owners (plaintiffs) filed an action in lieu of

prerogative writs challenging the validity of the special assessment. Plaintiffs

are not members of the Beach Club, and they do not own properties either on

the lake or with a view of the lake. They claimed that the special assessment,

which allocates the costs for the restoration of the dam among the fifty-eight

properties, was not in proportion to any benefit they received, thus violating

N.J.S.A. 58:4-12(d)(1). Plaintiffs attacked the expert appraiser’s report relied

on by the Township, asserting that it offered no methodology or justification

for imposition of the assessment on their properties and therefore it constituted

a “net opinion.”

      The trial court agreed. The court determined that the expert report did

not follow any discernible methodology in allocating the cost for the dam

restoration among plaintiffs’ properties and therefore declared the resolution

imposing the special assessment arbitrary and void. The Appellate Division

                                        2
reversed, finding within the four corners of the expert report a sufficient basis

to justify the special assessment on plaintiffs’ properties, and reinstated the

resolution.

      We come to a different conclusion than the Appellate Division.

Although plaintiffs’ properties may have received a benefit from the dam

restoration project, the expert report relied on by the Township did not apply

any reliable methodology to assure that the assessment allocating the costs

among the properties was “in proportion to and not in excess of the benefits

conferred,” as required by N.J.S.A. 58:4-12(d)(1) and other statutes. The

Legislature has delegated to municipalities the power to impose special

assessments on property owners to fund certain improvements. That power,

however, may not be arbitrarily exercised. The presumption of validity

accorded to a municipal law cannot shield a special assessment based on a

methodology that lacks any indicia of reliability. Accordingly, we are

constrained to invalidate Sparta Township Resolution 6-1, which imposes a

special assessment on plaintiffs’ properties to recoup the costs of the dam

restoration project.

      We therefore reverse the judgment of the Appellate Division. The

Township must pass a resolution allocating costs based on a valid

methodology in accordance with the applicable statutes and relevant case law.

                                         3
                                       I.

                                       A.

      The Glen Lake Beach Club -- a private club located in the Township of

Sparta -- owns Glen Lake and the Glen Lake Dam, which impounds the water

that forms the lake. The Beach Club offers various amenities to its members

and their guests, such as boating, fishing, swimming, and social activities.

Eligibility for membership in the Beach Club is governed by the organization’s

bylaws. All owners of real estate within a specifically delineated perimeter

near the lake known as the “reserve” -- as set forth in the Beach Club’s bylaws

-- are automatically eligible for membership and voting rights, provided they

apply for membership and satisfy the Club’s membership requirements.1

      Other Township residents who live outside of the “reserve” can apply for

“special membership” in the Beach Club if sponsored by a voting member.

Those residents granted special membership by the Beach Club’s governing

body may enjoy all of the Club’s amenities but do not have voting rights.

      In the early 2000s, the New Jersey Department of Environmental

Protection (NJDEP) classified the Glen Lake Dam as a “high hazard dam”

requiring rehabilitation. To fund the repairs necessary for the dam to meet the

1
  The record reflects that the geographical boundaries of the “reserve” have
not changed since the 1970s.

                                        4
state’s regulatory requirements, the Beach Club applied for and received a

$725,000 loan from the NJDEP’s Dam, Lake and Stream Project Fund,

N.J.S.A. 58:4-12. In accordance with N.J.S.A. 58:4-12(d)(1), the Township

agreed to serve as a co-borrower on the loan. The co-borrower agreement

between the Beach Club and the Township provided that the Beach Club

would be responsible for repayment of the loan -- $925,726 in principal,

interest, and related costs -- and the Township would act as the “collection

agent” by passing an ordinance imposing a special assessment on “real estate

in the Township benefitted by [the dam] improvement.”

      In February 2016, the Township Council enacted Ordinances 16-03 and

16-04. Ordinance 16-03 authorized the Township to impose a special

assessment on “the benefitted properties” of the dam project, and Ordinance

16-04 established an Assessment Commission to identify the benefitted

properties and to determine the assessment to be imposed on those properties.

      In March 2016, the Council appointed Scott Holzhauer, a real estate

appraiser and consultant, to assist the Assessment Commission in fulfilling its

charge. More than a year earlier, before his appointment, Holzhauer had

submitted a written proposal to the Township setting forth a market-value

approach in assessing the benefit that properties received from the dam project.

Under that approach, the Township would appraise the market value of each

                                       5
affected property before and after the dam rehabilitation project. The

difference between the property’s market value before and after the project

would represent the property’s enhanced value.

      In a report dated June 22, 2016, Holzhauer submitted his consulting

report to the Assessment Commission. Holzhauer identified fifty-eight

properties that benefitted from the Glen Lake Dam Rehabilitation Project. He

recommended that those properties be subject to the special assessment to

repay the loan received from the NJDEP’s Dam, Lake and Stream Project

Fund. The fifty-eight properties that Holzhauer proposed for the special

assessment came from a list of sixty-five properties that fell within the Beach

Club’s “reserve,” an area near the lake delineated in the organization’s

bylaws.2 Seven of the sixty-five properties were exempt from the special

assessment for various reasons, such as by the terms of the co-borrower

agreement or the NJDEP loan agreement. The owners of the fifty-eight other

properties were eligible for voting membership in the Beach Club, even though

a number had chosen not to become Club members.

      Holzhauer’s report acknowledged that, by statute, the special assessment

on the fifty-eight properties must be proportionate to “and not in excess of the

2
  Holzhauer transposed a map of the Beach Club’s “reserve” onto the then-
current Township tax map.

                                        6
peculiar benefit, advantage or increase in value” from the dam project , quoting

N.J.S.A. 40:56-27. The owners of the fifty-eight properties received a

“peculiar benefit” or “advantage,” according to Holzhauer, because they have

the option to become members of the Beach Club and to enjoy its recreational

amenities. The report states that “[t]his benefit serves as an enhancement to

property value for these property owners,” thus distinguishing them from

property owners outside the “reserve,” except for those who had availed

themselves of special membership. In explaining the reasons for imposing the

special assessment on the properties within the “reserve,” the report states that

“[o]wnership of property in a lake community . . . brings with it the

expectation of recreational amenities and scenic views that each contribute to

the value and desirability of the property.” The report adds, however, that

those rewards must be balanced against the “risk” associated with the

“survival” of a dam that “is generally crucial to property value for owners that

have located within the lake community.”3

      Holzhauer devised an approach to allocate the special assessment by

dividing the properties in the “reserve” into three separate categories:

3
  The report noted that if the Beach Club did not undertake the dam
rehabilitation project, then the NJDEP possessed the authority to do so under
N.J.A.C. 7:20-2.9 and to recoup the costs by imposing a lien on the benefitted
properties within the “reserve.”

                                        7
(1) seven lakefront properties, (2) eleven lakeview properties with lake access,

and (3) the forty remaining properties. In that three-tiered approach,

Holzhauer assigned “share values” to each category, allocating the highest

share value to lakefront properties (2.0), a lower value to lakeview/access

properties (1.5), and the lowest value to all other properties (1.0). 4 The

following chart sets forth the special assessment imposed on each class of

property over a fifteen-year period -- the period required to accomplish the

repayment of the loan:

                                                                Special
    Number Of       Value Share
                                        Share   Payment/Year Assessment
    Properties       Summary
                                                             Over 15 Years
         7       Lakefront              2.0       $1750.87     $26,263
        11       Lake View/Access       1.5       $1313.13     $19,697
                 Other Properties In
        40                              1.0      $875.40            $13,131
                 The “Reserve”
    Total Assessment To Be Collected From All Properties            $925,726

        Holzhauer’s report does not explain the methodology he followed in

assigning the values to the three classes of property -- other than presenting his

conclusion that the properties closest to the lake received the greatest benefit

4
  The lakefront properties “enjoy unimpeded direct access to the lake, along
with the potential for establishing lake edge improvements,” such as docks.
The lake-access lots are located “immediately across the street from the lake,
enjoying direct pedestrian access to the lake and generally unobstructed
views.” The remaining properties -- assigned the lowest share value -- do not
enjoy any of the direct benefits of lakefront and lake-access properties but
have proximity to the lake and the option of joining the Beach Club.

                                         8
from the dam rehabilitation project and that the properties further from the

lake received a lesser benefit.

      After conducting a public hearing and considering public comments, in

June 2016, the Assessment Commission recommended that the Township

Council adopt Holzhauer’s “report and formulaic approach” in allocating the

special assessment.

      During Township Council public meetings, a number of property owners

in the Beach Club’s “reserve” expressed their objections to the proposed

special assessment. The property owners made various complaints, for

example, alleging that their deeds, including the chain of title, did not alert

them to the potential of a special assessment; that the boundary lines of the

1970s bylaws did not include some of the targeted properties; and that the

bylaws had been amended in the 2000s to widen the perimeter of the “reserve.”

Sylvia Cappadora stated that, although the Beach Club claimed that the

property owners “had the ability to join the lake association,” she -- a thirty-

four-year resident of the “reserve” -- had been told when she attempted to join

that the Club was not taking new members.

      Despite opposition from some residents, on August 23, 2016, the

Township Council passed Resolution 6-1, adopting the recommendations made

                                         9
in Holzhauer’s report, including the special assessment of $925,726 to be

collected from the fifty-eight property owners in the Beach Club’s “reserve.”

                                        B.

      On September 12, 2016, plaintiffs Carol Crispino, Vilma Verber, Mark

Edwards, Jorge Cabrera, Stephen Cappadora, Paul O’Keefe, Kenneth Gardner,

and Mary Gardner filed an action in lieu of prerogative writs in Superior Court

challenging the validity of Resolution 6-1. In their complaint, plaintiffs

alleged that the Township Council failed to conduct a fair-market-value

analysis to determine whether their properties received a “benefit” from the

dam rehabilitation project, or the extent of any such benefit, and arbitrarily

placed their properties “in the assessment area.” Plaintiffs claimed that,

without some showing that the project conferred a “benefit” on their

properties, the special assessment violated N.J.S.A. 40:56-27, and therefore

Resolution 6-1 should be declared void. 5

5
  The complaint also alleged other bases for striking down Resolution 6-1: a
councilperson’s purported conflict of interest that tainted the Township
Council proceedings, as well as purported violations of the Open Public
Meetings Act and the Open Public Records Act. Although we granted
certification on the conflict-of-interest issue, it is not relevant to our
disposition of this appeal and therefore we need not reach it. Nor in this
procedural history will we discuss other issues raised in plaintiffs’ complaint
that were decided by the trial court and Appellate Division.

                                        10
                                       C.

      In a hearing before the Honorable Stuart A. Minkowitz, A.J.S.C., the

parties relied on various submissions, such as the Beach Club’s bylaws, the

minutes of the Township Council meetings, and the Holzhauer report. In a

written opinion, Judge Minkowitz voided Resolution 6-1, reasoning that the

Township arbitrarily applied the special assessment to plaintiffs’ properties.

      In reaching that decision, the court acknowledged the presumption of

validity that attaches to municipal action. The court, however, recognized that

a Township cannot levy a special assessment on property owners for a local

improvement unless the improvement confers some benefit on the assessed

property, in accordance with N.J.S.A. 40:56-27. The court noted that the

Township Council relied on the Holzhauer report in passing the special

assessment, but the report “did not use any stated methodology for deciding

which houses would be burdened by the special assessment.” Although

Holzhauer did not have to use a “fair market value benefit analysis,” the court

declared that the expert had “to apply a non-arbitrary methodology” to justify

imposing a special assessment on plaintiffs’ properties. The court found that

Holzhauer’s reliance on the Beach Club’s bylaws to decide the reach of the

special assessment ceded to a private entity the “indiscriminate power” to

                                       11
amend its bylaws to include, if it chose, the entire Township to contribute to

the assessment -- a “ludicrous result” in the court’s view.

      Judge Minkowitz compared the Holzhauer report to a “net opinion” -- an

opinion resting “on unfounded speculation and unquantified possibilities,”

quoting Townsend v. Pierre, 221 N.J. 36, 55 (2015). The court concluded that,

in imposing the special assessment, the Township’s reliance on an expert

report devoid of any meaningful methodology was “arbitrary and

unreasonable.” The court held that “[t]he Township must begin the special

assessment process anew, using an expert report that relies on . . . factual bases

and a methodology that is reliable and not arbitrary,” citing ibid.

      In denying the Township’s motion for reconsideration, the court further

elaborated that the Holzhauer report did not show that the properties subject to

the special assessment -- based on the Beach Club’s bylaws -- “would receive

a benefit from the Project, simply because those properties were eligible for

membership.” Nor had the Township shown, the court stated, that

“membership even had value.”

                                       D.

      In an unpublished opinion, the Appellate Division reversed the trial

court’s voiding of Resolution 6-1. It determined that the Township Council

properly relied on the methodology in the Holzhauer report and that the

                                       12
Council’s adoption of Resolution 6-1 and the accompanying special

assessment “was neither arbitrary nor unreasonable.”

      The Appellate Division rejected the notion that the rules of evidence

apply to proceedings before a municipal body considering the imposition of a

special assessment, quoting N.J.R.E. 101(a)(4) (stating that “proceedings

before administrative agencies shall not be governed by [the rules of

evidence],” with the exception of the rule governing privileges). “On that

basis alone,” the Appellate Division reasoned, the trial court erred in applying

“the net opinion rule to bar Holzhauer’s unrefuted methodology.”

      Assuming that the net opinion rule applied, the Appellate Division was

satisfied that Holzhauer’s report “sets forth the ‘why’ and ‘wherefore’ of his

methodology.” It did not discern any arbitrariness in imposing a special

assessment on plaintiffs’ properties, given that they received, under N.J.S.A.

40:56-27, a “peculiar benefit” or “advantage” from the dam rehabilitation

project due to their “proximity to the lake and [the] recreational amenities

[available] ‘through optional membership.’” The Appellate Division

concluded that plaintiffs had failed to demonstrate “by clear and convincing

evidence[] that the challenged decision was not ‘just and fair,’” quoting

N.J.S.A. 40:56-54.

      We granted plaintiffs’ petition for certification. 239 N.J. 600 (2019).

                                       13
                                        II.

                                        A.

      Plaintiffs argue that the Township’s imposition of a special assessment

on their properties, which they allege received no benefit from the dam

rehabilitation project, was arbitrary and unreasonable. Plaintiffs describe

themselves as property owners who fall within the Beach Club’s “reserve”

only by the grace of the Club’s bylaws. They state that (1) they have “no lake

view or lake access except by crossing a very busy road”; (2) though eligible

to join this private Club, they have chosen not to do so; (3) they purchased

their homes with no obligation to pay Beach Club fees; and (4) “they never

expected to be burdened with a special assessment to repair a dam owned by

. . . a private club, to which they did not belong.”

      Plaintiffs emphasize that the possibility or eligibility for membership in

a private beach club is not an “actual benefit” under the relevant statutes and

that the true test of whether they received a benefit from the dam project is any

difference in the market value of their properties before and after the project’s

completion. Plaintiffs point out that, during a Township Council meeting, one

homeowner within the “reserve” asserted that she was denied membership in

the Beach Club when she attempted to join. Plaintiffs complain not only that

their properties were chosen for the special assessment by a random selection

                                        14
-- inclusion in the Beach Club’s bylaws -- but also that the Township made no

showing that the approximately $1000 annual assessment over fifteen years

was proportionate to any benefit conferred.

      In sum, plaintiffs submit that the Appellate Division erred in upholding

Resolution 6-1 without any proof that the dam project benefitted their

properties or that the special assessment was in proportion to any benefit

received, as required by N.J.S.A. 58:4-12(d)(1) and N.J.S.A. 40:56-27.

                                       B.

      The Township counters that the Holzhauer report provided the Township

with a sufficient basis to impose the special assessment on plaintiffs’

properties. According to the Township, plaintiffs’ eligibility to become

members of the Beach Club since at least 1979 was a “benefit” under N.J.S.A.

58:4-12(d)(1). From the Township’s perspective, the Beach Club had

conferred on plaintiffs “the unique benefit of the ability to manage and control

the lake, dam, and associated facilities.” The Township contends that, in

determining the amount of the assessment, it was not required to analyze

whether the market value of plaintiffs’ properties increased as a result of the

dam project. It asserts that the standard governing public improvements,

N.J.S.A. 40:56-27, which refers to “increase in value,” is different from the

“more flexible standard” governing private dam improvements, N.J.S.A. 58:4-

                                       15
12(d)(1), which refers to “benefits conferred.” The true test, the Township

maintains, is whether the special assessment when measured “against the real

estate benefited [is] thereby in proportion to and not in excess of the benefits

conferred,” quoting N.J.S.A. 58:4-12(d)(1).

      The Township rejects plaintiffs’ use of an unsworn statement made by a

homeowner within the “reserve” during a Township Council meeting to

support the proposition that plaintiffs did not necessarily have the option to

join the Beach Club. The Township claims that plaintiffs have presented a

“moral argument,” not a legal one, “that only current [Beach Club] members

should be ‘saddled’ with the cost of the dam improvements.” It submits that

“limiting the assessment to current members could result in the perverse

incentive for members to withdraw, leaving no one managing or running the

club and, more importantly, no one to pay for the dam improvements, which

benefitted real estate.”

      For those reasons, the Township urges that we affirm the Appellate

Division.

                                       III.

      The issue before us is whether Sparta Township Resolution 6-1, which

imposed a special assessment on plaintiffs’ properties for the repayment of a

publicly funded loan that financed the rehabilitation of a dam owned by a

                                        16
private lake club to which plaintiffs did not belong, complies with N.J.S.A.

58:4-12 and other state laws.

      We begin with the well-established principle that municipal legislation

enjoys a presumption of validity, and that courts will not invalidate an

ordinance that bears a rational relationship to a legitimate objective and is not

arbitrary or unreasonable. See N.J. Shore Builders Ass’n v. Township of

Jackson, 199 N.J. 38, 54-55 (2009). Plaintiffs and the Township dispute

whether Resolution 6-1 complies with state law. Our first task is to identify

the state laws that govern the municipal action in this case.

                                        A.

      After the NJDEP determined that the Glen Lake Dam needed to be

rehabilitated because of its hazardous condition, the Beach Club looked to the

Dam, Lake and Stream Project Fund, N.J.S.A. 58:4-12, to finance the project.

      The Legislature enacted the Dam, Lake and Stream Project Fund to

provide a financial source for the restoration and repair of private dams

without burdening municipal capital budgets. See N.J.S.A. 58:4-11 and -12.

The Fund provides a means for the owner of a private dam, such as a lake club

or association, to secure a loan for the rehabilitation project. N.J.S.A. 58:4-12.

To ensure repayment of the loan, N.J.S.A. 58:4-12 provides for a private and

public partnership between the Beach Club and the Township -- with the

                                        17
Township acting as the collector of the debt through the use of its municipal

power to assess properties benefitted by the project.

      To that end, N.J.S.A. 58:4-12(d)(1) states:

            Loans awarded under this section to owners of private
            dams or lake associations shall require local
            government units to act as co-applicants. The cost of
            payment of the principal and interest on these loans
            shall be assessed, in the same manner as provided for
            the assessment of local improvements generally under
            chapter 56 of Title 40 of the Revised Statutes, against
            the real estate benefited thereby in proportion to and not
            in excess of the benefits conferred, and such assessment
            . . . shall be a first and paramount lien upon the real
            estate assessed to the same extent, and be enforced and
            collected in the same manner, as assessments for local
            improvements.

            [(emphases added).]

      For our purposes, N.J.S.A. 58:4-12(d)(1) provides two important

features: (1) the cost of an improvement funded under this section must be

assessed “in the same manner as provided for the assessment of local

improvements generally under chapter 56 of Title 40 of the Revised Statutes ,”

and (2) the assessment against the properties benefitted must be “in proportion

to and not in excess of the benefits conferred.” The plain language of the

statute makes clear that the Legislature intended to incorporate the law

governing the special assessments for local improvements under Title 40 into

                                       18
Title 58’s assessment for private dam and lake improvements financed by

public funds.

      By that act of incorporation, the Legislature did not have to repeat the

procedural and substantive standards for the imposition of an assessment

already set forth comprehensively in Title 40. Significantly, nothing in Title

40 is in conflict with the provisions of N.J.S.A. 58:4-12, including the

requirement that property assessed be benefitted by the improvement and that

the assessment be proportional to the benefit conferred.

      The Township understood that the special assessment process was

governed by both Title 58 and Title 40. For example, the co-borrower

agreement between the Beach Club and Township stated that “[t]he cost of the

payment of the principal and interest on the Loan may be assessed, pursuant to

the Special Assessment Ordinance in accordance with N.J.S.A. 58:4-12 et seq.,

N.J.A.C. 7:24A-1.1 et seq., and N.J.S.A. 40:56-1.” Additionally, Ordinance

16-03 authorized the Township to impose a special assessment “against the

benefitted properties, pursuant to N.J.S.A. 40:56-1 et seq. and N.J.S.A. 58:4-

12 et seq. in accordance with the Special Assessment statutes including but not

limited to N.J.S.A. 40:56-27.” Ordinance 16-04 established the Board of

Assessment Commissioners “in accordance with N.J.S.A. 40:56-1 et seq.,” to

assist the Township Council, evidently because N.J.S.A. 58:4-12 makes no

                                       19
provision for a Board of Assessment Commissioners. Finally, the Holzhauer

report, which the Township Council adopted, expressly relied on and quoted

from N.J.S.A. 40:56-27 in determining and identifying the benefitted

properties.

      We therefore turn to the procedural and substantive standards set forth in

Title 40 governing the imposition for assessments on properties benefitted by

local improvements. See N.J.S.A. 40:56-1 to -64. “A local improvement is

one, the cost of which, or a portion thereof, may be assessed upon the lands in

the vicinity thereof benefited thereby.” N.J.S.A. 40:56-1 (emphasis added). A

municipality is authorized to appoint “commissioners to make the assessments

for benefits for [a local] improvement,” N.J.S.A. 40:56-22, and those

commissioners are empowered to “make a just and equitable assessment of the

benefits conferred upon any real estate by reason of [the local] improvement

having due regard to the rights and interests of all persons concerned, as well

as to the value of the real estate benefited,” N.J.S.A. 40:56-26.

      N.J.S.A. 40:56-27 describes in detail how the assessment must relate to

the benefit received:

              All assessments levied under this chapter for any local
              improvement shall in each case be as nearly as may be
              in proportion to and not in excess of the peculiar
              benefit, advantage or increase in value which the
              respective lots and parcels of real estate shall be
              deemed to receive by reason of such improvement.

                                        20
      We do not discern any real distinction between the language above and

N.J.S.A. 58:4-12(d)(1)’s language stating that the imposition of an assessment

on property must be “in proportion to and not in excess of the benefits

conferred” by the dam improvement. Title 40 also sets forth procedural

guideposts. For instance, “[a]ll assessments for local improvements shall be

presumed to have been regularly assessed and confirmed . . . until the contrary

be shown,” N.J.S.A. 40:56-33, and ultimately a reviewing court must

determine whether the assessment is “just and fair,” N.J.S.A. 40:56-54; see

also 2nd Roc-Jersey Assocs. v. Town of Morristown, 158 N.J. 581, 597 (1999)

(stating that special “assessments are ‘presumptively correct and the taxpayers

[have] the burden of overcoming that presumption by clear and convincing

evidence’” (alteration in original) (quoting McNally v. Township of Teaneck,

75 N.J. 33, 44 (1977))).

      Because N.J.S.A. 58:4-12(d)(1) incorporates the provisions of Title 40

that relate to “the assessment of local improvements” and because this is our

first occasion to address N.J.S.A. 58:4-12(d)(1), the case law construing the

relevant provisions of Title 40 offers guidance.

                                       B.

      The justification for any special assessment levied for the purpose of

financing a local improvement, N.J.S.A. 40:56-27, or an improvement to a

                                       21
privately owned dam, N.J.S.A. 58:4-12, is that the assessed property has

received a benefit from the improvement. See Gabriel v. Borough of Paramus,

45 N.J. 381, 384 (1965) (“The foundation of the power to levy a special

assessment is the benefit or enhancement of value which the improvement

confers.”). Special assessments may be imposed on properties for such local

improvements as the installation of sewage and water lines, street paving and

curbing, and construction of parking facilities. See N.J.S.A. 40:56-1 and -1.1;

see also 2nd Roc-Jersey Assocs., 158 N.J. at 604 (upholding a special

assessment of commercial properties within a special improvement district). If

there is no “peculiar benefit, advantage or increase in value” to the property

from the improvement, then there is no basis for imposing an assessment. See

N.J.S.A. 40:56-27.

      The benefit to the assessed property “must be certain rather than

speculative, although it may arise in the future.” 2nd Roc-Jersey Assocs., 158
N.J. at 593-94 (noting that an assessment for an improvement is proper even if

“the benefit is not presently apparent”). “The fact that a landowner has no

present, immediate use for the improvement is . . . immaterial, so long as the

use of the improvement is accessible and available to the land sought to be

assessed for any use to which the property may legitimately be put.”

Ridgewood Country Club v. Borough of Paramus, 55 N.J. 62, 68-69 (1969).

                                       22
Ordinarily, “the benefit to the specific property must be substantially greater

than to the public in general.” 2nd Roc-Jersey Assocs., 158 N.J. at 592-93.

      An assessment, moreover, must be proportionate to the benefit conferred

on the property. The proportionality requirement is measured by a standard of

reasonableness, not by scientific precision. See N.J.S.A. 58:4-12(d)(1) (“in

proportion to . . . the benefits conferred”); N.J.S.A. 40:56-27 (“as nearly as

may be in proportion to”); 2nd Roc-Jersey Assocs., 158 N.J. at 596. “So long

as [the] owner is required to pay [no] more than the benefit received and the

method of determining the amount of that benefit is reasonable and appli ed

uniformly to all property owners, the statutory mandate has been satisfied.”

McNally, 75 N.J. at 46.

      The test often used to determine the value of the benefit and the amount

of the assessment is “the difference between the market value of the land

before and after the improvement.” Id. at 42; see also McQueen v. Town of

West New York, 56 N.J. 18, 23 (1970) (stating that the “‘[b]enefit’ is the

increment of value to land affected by improvement. It represents the

difference between the market value of the lands before the improvement and

the market value of the land immediately after the improvement” (quoting In

re Pub. Serv. Elec. & Gas Co., 18 N.J. Super. 357, 365 (App. Div. 1952))).

                                       23
      Nevertheless, no inflexible formula applies, nor is “mathematical

precision” required. See 2nd Roc-Jersey Assocs., 158 N.J. at 596, 601;

McQueen, 56 N.J. at 24. Another assessment methodology may be used, so

long as the result is a “just and equitable assessment of the benefits conferred.”

McQueen, 56 N.J. at 24; see also 2nd Roc-Jersey Assocs., 158 N.J. at 601-02

(finding that “[t]he method of assessment must necessarily be adapted to the

benefit conferred” and that other methods that are “just and equitable” or

“rational and appropriate” may be used). Although a fair-market-value

approach may be suitable for an improvement such as the installation of a

water or sewage line, see Ridgewood Country Club, 55 N.J. at 68-71, it may

not be suitable for determining the benefit to commercial properties located

within a special improvement district, see 2nd Roc-Jersey Assocs., 158 N.J

601-02 (noting that the standard fair-market-value approach was not applicable

because “the nature of the benefit [was] general and intangible, and the

quantum of the benefit [was] imprecise”).

      The value of the benefit conferred on the assessed property by the

improvement must be “established by the conventional method of expert

testimony or by some other reliable proof.” See McNally, 75 N.J. at 42

(emphasis added) (citing McQueen, 56 N.J. at 24). To state the obvious, a

municipality cannot impose an assessment based on an arbitrary methodology.

                                       24
See Ridgewood Country Club, 55 N.J. at 69-70 (finding that the assessment

was “arbitrary and unreasonable” because the record did not contain “proof by

any qualified witness of any such net dollar enhancement in value”).

                                        IV.

        The Holzhauer report, which was adopted by the Assessment

Commission and the Township Council, did not comport with the statutory

mandates and the governing case law. Holzhauer did not apply a fair-market-

value methodology to determine the value of the subject properties before and

after the dam improvement, as he stated in his proposal letter to the Township. 6

Although Holzhauer and the Township were not bound to follow the traditional

fair-market-value approach, they were required to employ a rational and non-

arbitrary methodology.

6
    Holzhauer stated that his report would

              contain valuation information for each property (base
              land value with and without consideration of the dam
              improvement), . . . the identification of each property,
              purpose and function of the appraisal report, date of
              valuation, identification of property rights appraised,
              neighborhood characteristics, zoning, site data, highest
              and best use conclusion, a discussion of the appraisal
              technique(s) considered and used in the valuation
              process, a presentation of comparable market data for
              each approach considered, and a reconciliation of the
              data into two separate estimates for each property as of
              the appraisal date.

                                        25
      Holzhauer simply concluded that property owners listed within the

geographical ambit of the Beach Club’s bylaws received a “benefit” because of

“their right, by property ownership and/or interest, to become a member of the

club and therefore have access to the lake and other amenities.” Plaintiffs

suggest that the Beach Club randomly placed their properties in the “reserve,”

pointing to properties an equal distance from the lake, whose owners are not

automatically eligible for membership in the Beach Club. Surely, if

membership eligibility increased the value of property, that seemingly would

indicate an ascertainable and tangible benefit, even to plaintiffs, none of whom

were members of the Beach Club or intended to become members. But

Holzhauer did not conduct any analysis showing that plaintiffs’ outer-rim

properties received such a benefit because of Beach Club eligibility.

      Additionally, there is lack of certainty whether all property owners

within the Beach Club “reserve” are, in fact, automatically eligible for

membership. One property owner spoke out at a Township Council meeting,

stating that she was denied membership because she was told the Club was not

taking any new members. Certainly, if an assessment were premised on

membership eligibility, the Township Council should have resolved the issue

of whether membership in the Beach Club was automatic for property owners

within the “reserve” who applied for and accepted the terms of membership.

                                       26
Indeed, the trial court suggested at the action in lieu of prerogative writs

hearing that exposure of a property owner to an assessment because of

presence within the “reserve” might even hinder the marketability of property. 7

Such questions arise here only because of the lack of a market-value study or

some other reliable methodology establishing that plaintiffs received a “certain

rather than [a] speculative” benefit. See 2nd Roc-Jersey Assocs., 158 N.J. at

593.

       Even if we assume that plaintiffs were eligible to become members of

the Beach Club and that such membership conferred on them a benefit from

the dam restoration project, the Holzhauer report does not set forth a rational

methodology for the assessments imposed on plaintiffs’ properties. Holzhauer

assumed that lakefront properties received the greatest benefit, lake

view/access properties a lesser benefit, and all other properties furthest from

the lake and in the “reserve” the least benefit. That assumption has some

logical and perhaps facial appeal. But Holzhauer did not explain how he

arrived at assigning value shares to each category or how he came to the result

7
  During the public comment period before the Township Council, one
property owner within the “reserve” stated that he had purchased his property
several months earlier and had just received the approximately $14,000
assessment bill for the dam project -- an additional cost of which he was
unaware when he had purchased his home. For that reason, he asked the
Township Council to exclude his property from the assessment.

                                        27
that the fifteen-year special assessment for lakefront properties is $26,263

(value share 2.0), lake view/access properties is $19,967 (value share 1.5), and

all other properties is $13,131 (value share 1.0). Holzhauer did not refer to

any reliable methodology to support his opinion. Special assessments cannot

be imposed on properties based on arbitrary categorizations or speculative

valuations.

      Although we do not import the “net opinion” rule used in court

proceedings into this municipal/administrative setting, that rule simply stands

for the proposition that an expert opinion must have a rational basis.

Townsend, 221 N.J. at 53-54. For that reason, the “net opinion” rule “forbids

the admission into evidence of an expert’s conclusions that are not supported

by factual evidence or other data.” Ibid. (quoting Polzo v. County of Essex,

196 N.J. 569, 583 (2008)). Experts must “‘give the why and wherefore’ that

supports the opinion, ‘rather than a mere conclusion.’” Id. at 54 (quoting

Borough of Saddle River v. 66 E. Allendale, LLC, 216 N.J. 115, 144 (2013)).

      The general conception of the “net opinion” rule has long guided our

local improvement assessment jurisprudence, which requires that a special

assessment be founded on “expert testimony or by some other reliable proof,”

see McNally, 75 N.J. at 42, or “proof by any qualified witness” that is not

“arbitrary or unreasonable,” see Ridgewood Country Club, 55 N.J. at 70.

                                       28
      The Holzhauer report did not address in any meaningful way the

statutory requirements -- that the special assessment imposed on plaintiffs’

properties for the dam rehabilitation project be “in proportion to and not in

excess of the benefits conferred,” see N.J.S.A. 58:4-12(d)(1), or “be as nearly

as may be in proportion to and not in excess of the peculiar benefit, advantage

or increase in value . . . by reason of [the dam] improvement,” see N.J.S.A.

40:56-27.

      Ultimately, it is the role of our courts to “determine whether or not the

assessment . . . is a just and fair assessment,” see N.J.S.A. 40:56-54, after

giving due regard to the presumption of validity that attaches to the municipal

action in this case, see N.J.S.A. 40:56-33.

      The Holzhauer report, on which the Township relies, does not set forth

any methodology or any sound analysis to justify the special assessment

imposed on plaintiffs’ properties. We therefore conclude that the presumption

of validity accorded to Resolution 6-1 has been overcome by clear and

convincing evidence. See 2nd Roc-Jersey Assocs., 158 N.J. at 597. Because

the special assessment cannot be sustained based on the record before us, we

must invalidate Resolution 6-1 as an arbitrary and unreasonable law.

                                        29
                                       V.

      For the reasons explained, we reverse the judgment of the Appellate

Division. We remand this matter to the Sparta Township Council to start anew

the process of establishing a special assessment for the repayment of the loan

that funded the dam rehabilitation project -- guided by the applicable statutes

and the opinion of this Court.

      CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE ALBIN’s
opinion.

                                       30