Court Opinion

ID: 9966200
Source: CourtListenerOpinion
Date Created: 2024-05-06 14:07:20.604754+00
Date Added: 2024-06-11T08:25:45.627600
License: Public Domain

NOT FOR PUBLICATION WITHOUT APPROVAL OF
                 THE TAX COURT COMMITTEE ON OPINIONS

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PELLA, L.L.C.,                                        :
                                                      :   TAX COURT OF NEW JERSEY
               Plaintiff,                             :   DOCKET NO: 013605-2020
                                                      :              010231-2021
               v.                                     :
                                                      :
CITY OF CAPE MAY,                                     :
                                                      :
               Defendant.                             :
                                                      :
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               Decided: May 3, 2024.

               William T. Rogers, III for plaintiff (Archer & Greiner, P.C.).

               Christopher Gillin-Schwartz for defendant (Gillin-Schwartz Law,
               LLC).

CIMINO, J.T.C.

       Taxpayer alleges the assessor erred when he increased an assessment after site

plan and subdivision approval but prior to the recording of the subdivision plat. The

municipality disagrees asserting the Correction of Errors statute only provides relief

in certain statutorily delineated instances. The actions of the assessor are not

sufficiently certain so as to constitute an indisputable mistake in the tax assessment;

nor would any relief be readily inferable or subject to easy calculation. The court

rejects taxpayer’s claim for relief under the Correction of Errors statute.

                                                -1-
      Plaintiff taxpayer, Pella, LLC (Pella), is the owner of an entire block in the

City of Cape May (City). The City’s tax maps designated the property as Block

1176. On January 13, 2015, Pella obtained final site plan and major subdivision

approval for the block. The approval included permission to construct a street down

the middle of the block with seven subdivided parcels on one side of the new street

and eight subdivided parcels on the other side.         Pella was responsible for

constructing site improvements including the new street, curbs and sidewalks, water

and sewer lines, stormwater control, and landscaping.

      The approval did not require any zoning variance. The subdivided parcels

conform with the zoning ordinance’s lot size, setback, lot width, frontage and bulk

requirements. Pella did obtain a de minimis exception from the Residential Site

Improvement Standards reducing the right-of-way for the new street from fifty feet

to forty feet. However, there was not any reduction of the mandated street width of

twenty-eight feet.1

      On May 13, 2016, Pella submitted a Letter of Credit for $740,000 as a

performance guarantee for the improvements. On June 13, 2016, the City engineer

pointed out certain incomplete items. The City engineer indicated filing of the final

1
   The board waived certain drawings of off-site conditions. Also, while the
Residential Site Improvement Standards only required sidewalks on one side, the
preliminary approval seems to allude to a local ordinance requiring sidewalks on
both sides. In any event, the board specifically waived the requirement for sidewalks
on both sides.
                                         -2-
subdivision plat with the county land records required a completed stormwater

maintenance plan, and a review of the homeowner’s association documents, the draft

deed restrictions and the subdivision plat. On February 28, 2017, Pella deeded an

electrical service utility easement listing the fifteen lots separately.

      By May 1, 2017, the City engineer reported Pella’s completion of nearly 100%

of the stormwater management improvements, 80% of the curbing, as well as a

significant portion of the water and sewer lines. Based upon this progress, the City

engineer recommended reducing the performance guarantee to slightly over

$400,000.

      By October 25, 2017, the engineer noted the completion of even more work.

The additional work included completion of the sidewalks, curbs, the new road

except for the topcoat, and 90-100% of the water and sewer lines. The engineer

recommended reduction of the performance guarantee to approximately $300,000.

      By April 26, 2019, completed site work included placement of signage, most

of the water and sewer lines, and a significant portion of the landscaping. At this

point, the engineer recommended reduction of the performance guarantee to a little

bit over $200,000.

      Pella applied for a construction permit to begin building homes.            The

construction office refused to issue the permit without the subdivision plat filed with

the county land records. On October 15, 2020, Pella made application to the City

                                           -3-
planning board to extend the subdivision approval. To support the application, Pella

asserted the expenditure of significant resources in reliance on the approval

including the completion of necessary site improvements. Pella further noted the

assessor had already assessed the building lots individually. Pella also indicated the

approval extension was pursuant to the Municipal Land Use Law and two permit

extension acts.

      The City planning board promptly met on November 10, 2020, but carried the

meeting to November 24, 2020, due to technical difficulties. At the later meeting,

the board extended the major subdivision approval and then adopted a conforming

written resolution on December 8, 2020. The resolution articulated the City,

applicant and assessor proceeded with the understanding and belief there was an

approved subdivision.     The planning board unanimously passed the extension

resolution by 8-0.

      Some three weeks after obtaining the extension of the site plan and

subdivision approval, Pellas filed the Correction of Errors complaint. The property

had an initial assessment of $2.8 million. After the 2015 final site plan and

subdivision approval, the assessor listed the block as fifteen separate building lots,

with an aggregate assessment of $13 million. The assessment of each parcel was

                                         -4-
between $800,000 to $900,000.2 Pella asserts the tax assessor erred in increasing

the assessment on the property from 2018 through 2021 without a subdivision plat

duly filed with the county land records.

      This matter comes before the court on cross-motions for summary judgment.

On summary judgment, the court must assess “whether the competent evidential

materials presented, when viewed in the light most favorable to the non-moving

party, are sufficient to permit a rational factfinder to resolve the alleged disputed

issue in favor of the non-moving party.” Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 540 (1995). While not a per se rule, “[t]he filing of a cross-motion for

summary judgment generally limits the ability of the losing party to argue that an

issue raises questions of fact, because the act of filing the cross-motion represents to

the court the ripeness of the party’s right to prevail as a matter of law.” Spring Creek

Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 177 (App. Div. 2008).

However, cross-motions do not compel the granting of summary judgment one way

or the other. Ibid.

      October 1st of the prior tax year is the assessment date for property. N.J.S.A.

54:4-23. Every year, the assessor mails each taxpayer a “Chapter 75” postcard with

the assessment. N.J.S.A. 54:4-38.1. L. 1991, c. 75, §32. In most counties, the

2
  To be exact, the initial assessment of the block was $2,788,400, the aggregate
assessment of the fifteen lots is $13,040,800, and the individual lots are assessed
from $839,600 to $900,800.
                                           -5-
taxpayer has until April 1st to file a tax appeal. N.J.S.A. 54:3-21. Strict enforcement

of short filing deadlines is necessary so municipal governments may ascertain their

tax ratables and adopt a responsible and fairly accurate budget. F.M.C. Stores Co.

v. Borough of Morris Plains, 100 N.J. 418, 424-25 (1985).

      The exception to the April 1st filing deadline is the Correction of Errors statute,

which allows the “filing of a complaint at any time during the tax year or within the

next 3 tax years thereafter, . . . to correct typographical errors, errors in transposing,

and mistakes in tax assessments . . . .” N.J.S.A. 54:51A-7. When first adopted in

1905, the statute did not limit the time to seek relief, nor the types of correctable

errors. L. 1905, c. 67, § 5. See also Hovbilt, Inc. v. Township of Howell, 138 N.J.

598, 604 (1994). In 1979, legislative amendments limited the time to seek relief to

within the tax year or the ensuing three years, and narrowed the relief to

“typographical errors, errors in transposing, and mistakes in tax assessments.”

N.J.S.A. 54:51A-7. L. 1979, c. 44, §1. In addition, with the 1979 amendments, the

“court shall not consider . . . any complaint relating to matters of valuation involving

an assessor’s opinion or judgment.” Ibid. The Legislature wanted “a more carefully

defined and limited procedure . . . not intended [to] be used for settlement of

challenges of an assessors [sic] opinion as to value of a parcel of real property . . . .”

Hovbilt, 138 N.J. at 605 (quoting S. Revenue, Fin. & Appropriations Comm.

Statement to S. 1103 2 (Sept. 18, 1978)).

                                           -6-
      Our Supreme Court understood the exclusion of matters of valuation

involving an assessor’s opinion of judgment “as a clear expression of legislative

intent to limit the statutory authorization to the correction of mistakes that are

indisputable and not subject to debate about whether the assessment to be corrected

resulted from an assessor’s exercise of discretion.” Hovbilt, 138 N.J. at 618.

“Accordingly, [the Supreme Court held] that mistakes in assessments that are

indisputable, and cannot plausibly be explained on the basis of an exercise of

judgment or discretion by the assessor or his or her staff, are within the category of

mistakes that can be corrected under the statute.” Ibid.

      In Hovbilt, the Township misplaced Hovbilt’s application for farmland

assessment. Id. at 601. Hovbilt conceded if Correction of Errors relief was

available, farmland assessment would not automatically follow. Id. at 619. In

rejecting Correction of Errors relief, the Court found “although the tax assessor’s

misplacing of the application is uncontested, we are unpersuaded that Hovbilt has

established the existence of an indisputable mistake in its tax assessment, or that the

relief sought is readily inferable or subject to ready calculation.” Id. at 621. “[T]he

essential factual questions that determine whether the property is to be assessed as

farmland and, if so, the value of the land have not been addressed. Because those

questions may themselves result in dispute and future litigation, [the Court could

not] conclude that the ‘mistake in tax assessment’ and the appropriate relief therefor

                                          -7-
are subjects of sufficient certainty to justify relief under the abbreviated and

extraordinary procedures authorized by the Correction of Errors statute.” Id. at 622.

        In essence, the Supreme Court set up a two-part test. First, is the mistake

“sufficiently certain so as to constitute an indisputable mistake in tax assessments .

. . ++++.” Id. at 622. Second, is the relief readily inferable or subject to easy

calculation. Ibid. Both prongs are necessary for relief.

        The Municipal Land Use Law adopted in 1975 governs land development.

N.J.S.A. 40:55D-1 to -163. L. 1975, c. 291. The law protects a developer from

changes in the general terms and conditions of an approval, as well as zoning

requirements, for a period of two years from final approval of a site plan or major

subdivision. N.J.S.A. 40:55D-52(a), -49 (incorporated in part by reference into

section 52). In the case of a major subdivision, the signatures of the planning board

chair and secretary on the plat evince the approval. N.J.S.A. 40:55D-54(b). The

protections expire without a signed plat recorded in the county land records.

N.J.S.A. 40:55D-52(a).

        If a developer of a major subdivision has followed the standards prescribed

for final approval and has duly recorded the plat, the planning board may extend the

period of protection for three years in one-year increments.3 Ibid.

3
    A developer can also seek extensions to file the plats. N.J.S.A. 40:55D-54(a).
                                          -8-
      Pella never received a signed plat to record. It is not necessary to determine

whether Pella should have been more diligent as to receipt of the plat or the City

should have realized the plat was unrecorded. Obviating any dispute was the parties’

realization as a practical matter the project was moving along as if there was a

recorded plat. Moreover, the record does not reveal any changes in the zoning

requirements for the block under development, nor did the City seek any additional

exactions from the developer when it extended the approval.

      Pella asserts it could not build on its fifteen-unit subdivision without filing the

plat. And, until filing of the plat, Pella asserts it was improper for the assessor to

raise the total assessment and bill the parcels separately. The City counters everyone

considered the property subdivided and acted in that fashion.

      Both in its moving papers and in oral argument, Pella is unable to point out

how, as a practical matter, recording the plat sooner would have impacted the timing

of the improvements and development of the property. Pella posted a performance

guarantee with the City, made various improvements, and continued on with

developing the property. There was not any roadblock until Pella could not pull a

construction permit. Once that happened, Pella and the City worked together to

remedy the issue in under sixty days. Pella asserts the assessment should be set back

to $2.8 million.

                                          -9-
       Pella essentially argues that upon the expiration of the approval on June 30,

2017, it did not have a right to the site plan and subdivision, and therefore the

assessment reverts to its original value.4 Even with the granting of the three

retroactive one-year extensions, Pella still claims entitlement to a reduction until

filing of a signed plat.

       Pella does not satisfy the two-part Hovbilt test requiring a sufficiently certain

indisputable mistake with a readily inferable or easily calculated correction. 138

N.J. at 621, 622. First, the assessor’s actions are not sufficiently certain as to

constitute an indisputable mistake. As required by the approval, Pella obtained a

performance guaranty.       See N.J.S.A. 40:55D-53.        Pella commenced making

improvements to the property. The City reduced the performance guaranty as the

improvements progressed. Pella recorded an easement for electric service listing the

lots separately. In its application for extension, Pella represented it was improving

the lots and paying the increased taxes on the separate parcels as a reason for the

extension. The assessor had listed each of the lots separately and imposed an

assessment for each lot. As a practical matter, both parties agree they were acting

as if the approval remained in effect.

4
   Under the Permit Extension Act of 2008, the approval expired on June 30, 2017,
slightly more than two years. N.J.S.A. 40:55D-136.3, 136.4(a)(2).
                                          -10-
      This was not a project the City did not approve or where Pella did not proceed.

The parties forgot to record the plat. Pella wants to take advantage of this snafu even

though the practical reality on the ground, literally, was the project was proceeding.

Taxation is a practical matter. In re Lichtenstein’s Estate, 52 N.J. 553, 569 (1968).

Pella does not actually seek the correction of a mistake. Rather, Pella seeks a

windfall based upon its own technical failure to record the plat or seek extensions.

The failure to record the plat never impaired Pella’s progress in developing the

property. With the City planning board approving the three retroactive one-year

extensions, it is as if there were approvals all along.    There was no mistake the

project was going forward.

      Second, even if the circumstances constitute an indisputable mistake, its

correction is not readily inferable or subject to easy calculation based solely on the

nature of the mistake. Hovbilt, 138 N.J. at 621, 622. This court considered the

impact of site plan approval in Rockstone Group v. Township of Lakewood, 18 N.J.

Tax 117 (Tax 1999). “[S]ite plan approval was granted subject to posting a

performance bond for any improvement . . . and obtaining all other [governmental]

approvals . . . .” Id. at 119. The municipality wanted to avoid a prior Tax Court

judgment that had frozen the assessment for the settlement year and two subsequent

years. Id. at 119-20. See N.J.S.A. 54:51A-8 (Freeze Act). “[F]inal approval under

the Municipal Land Use Act does not require that every regulatory approval be

                                         -11-
granted and permit be issued and that the developer be ready to put the spade in the

ground.” Id. at 123-24. “The economic reality is not whether each and every

condition of final site plan approval has been satisfied, but the perception in the

marketplace that a protected right has been conferred on the property, and that there

is a value attributed to that right.” Id. at 124. The planning approval raised a

debatable question as to value. Id. at 125.

      There is not a dispute the planning board conferred a protected right as to the

property, at least through June 30, 2017. However, at no point after June 30, 2017,

did the City take any steps, nor did Pella act in a way, indicative of the loss of

protected rights.    Everyone perceived the approval had continuing validity.

Everything was a green light to go.

      Both parties’ actions clearly warranted extension of the approval. The parties

concur the extension was appropriate.         Pella is certainly not arguing lack of

entitlement to the extensions, or it obtained something extra-legal. It goes without

saying that the approval, even if not properly perfected for a period of time, had

value vis-a-vis the property.

      While Rockstone focuses on actual approvals, New Jersey courts have long

and frequently recognized the reasonable probability of obtaining an approval is

sufficient to impact value. State by State Highway Comm’r v. Gorga, 26 N.J. 113,

116 (1958); State by Comm’r of Transp. v. Caoili, 135 N.J. 252, 265 (1994);

                                        -12-
Borough of Saddle River v. 66 East Allendale LLC, 216 N.J. 115, 119, 143 (2013);

Township of Manalapan v. Gentile, 242 N.J. 295, 308 (2020); Six Cherry Hill, Inc.

v. Township of Cherry Hill, 7 N.J. Tax 120, 129 (Tax 1984), aff’d o.b., 8 N.J. Tax

334 (App. Div. 1986); Schimpf v. Township of Little Egg Harbor, 14 N.J. Tax 338,

346 (Tax 1994); BASF Corp. Coating & Ink Div. v. Town of Belvidere, 23 N.J. Tax

551, 563-64 (Tax 2007). Pella not only had the probability of approval, but

previously obtained an approval. There is no evidence offered establishing Pella

faced any serious risk of not obtaining any extensions of the prior approval.

      “[F]air market value of [a] property [is] determined by what a willing buyer

and a willing seller would agree to, neither being under any compulsion to act.”

Caolli, 135 N.J. at 260. In valuing a property, the court looks to the highest and best

use which requires a consideration of what is legally permissible upon a property.

Caolli, 135 N.J. at 260. A “critical inquiry is the reasonable belief by a buyer and

seller engaged in voluntary negotiations over the fair market value of property that

a [zoning] change may occur and will have an impact on the value of the property

regardless of the degree of probability.” Caolli, 135 N.J. at 264-65. A factfinder

“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.” Caolli, 135 N.J. at 265. When a jury is the

factfinder such as in the case of a condemnation trial, “[t]he trial court should

                                         -13-
examine the evidence proffered in support of the reasonable probability of a zoning

change and determine whether it can render its required determination based on the

papers.” 66 East Allendale, 216 N.J. at 143. Only then is the matter submitted to a

jury. Id. at 142-43.

      Pella enjoyed more than the reasonable probability of a zoning change. First,

the steps taken to effectuate a subdivision are a relevant consideration. Caolli, 135

N.J. at 267-68. The City previously granted site plan and subdivision approval.

There is not any evidence indicating the City had a basis to deny any extension. To

the contrary, the City was proceeding with approving the construction of the site

improvements and periodically reducing the performance guaranty.5

      Second, the subdivision did not require a zoning change, just site plan and

subdivision approval. Short of an ordinance amendment, a variance accomplishes a

zoning change. 6 A variance requires the “showing that such variance or other relief

can be granted without substantial detriment to the public good and will not

5
   Both parties cited Beranto Towers v. City of Passaic, 1 N.J. Tax 344 (Tax 1980)
in support of their respective positions. However, Beranto is inapposite to the case
at hand since it concerned an added assessment to a completed structure. Id. at 346.
An added assessment only covers part of a year until placement of a regular
assessment. See Id. at 346-47. It only applies to structures, not site improvements.
Township of Hopewell v. Monmouth Cnty. Bd. of Tax’n, 18 N.J. Tax 149, 163 (Tax
1999). Thus, the arguments over economic viability and the need for a certificate of
occupancy are not applicable. See Beranto, 1 N.J. Tax at 348-49.
6
  “‘Variance’ means permission to depart from the literal requirements of a zoning
ordinance . . . .” N.J.S.A. 40:55D-7.
                                        -14-
substantially impair the intent and the purpose of the zone plan and zoning

ordinance.” N.J.S.A. 40:55D-70. This stringent standard reflects “the Legislature’s

apparent objective and strong legislative policy of encouraging municipalities to

make zoning decisions by ordinance rather than by variance.” Chesterbrooke Ltd.

P’ship v. Planning Bd. of Chester, 237 N.J. Super 118, 127 (App. Div. 1989). In

this case, the subdivided parcels met the zoning ordinance’s lot size, setback, lot

width, frontage and bulk requirements.7 Applications without a variance are as-of-

right. See Mountain Hill, LLC v. Zoning Bd. of Adjustment of the Tp. Of Middleton,

403 N.J. Super. 210, 218 (App. Div. 2018).

      Based upon the evidence presented, there was a reasonable probability at the

time of the 2018, 2019, 2020, and 2021 assessments the subdivision would go

forward. The evidence here is more than “mere speculation.” See 66 East Allendale,

216 N.J. at 142. “[T]he evidence is of a quality to allow [a factfinder] to consider

the probability of a zoning change should [the factfinder] be permitted to assess a

premium based on that zoning change.” See Ibid. Consideration of the probability

of a planning board approval and the premium which attaches is the subject of a

regular appeal, not a Correction of Errors application.

7
   The City granted a de minimis exception to the Residential Site Improvement
Standards reducing the right-of-way of the new street from fifty feet to forty feet.
See N.J.A.C. 5:21-4.2, -4.5 -3.1. However, the bed of the new street remained at
twenty-eight feet. N.J.A.C. 5:21-4.2, -4.5.

                                        -15-
      Certainly, the premium for approvals is greater with an unexpired approval

and a recorded subdivision plat. While the premium here may or may not be the full

increase to $13 million, the premium is likely not zero. Any reduction in the

aggregate assessment is subject to debate. Debates over the correct assessment value

cannot be the subject of Correction of Errors complaints. The assessment must be

readily inferable or subject to easy calculation. Hovbilt, 138 N.J. at 622. Pella’s

remedy was to timely file a regular appeal.

      Overall, Pella’s assessment, as well as its taxes, increased five-fold. Pella is

hard pressed to assert it was unaware that the assessment had changed. Pella

repeatedly did not file regular appeals by the April 1st deadline of each tax year.

Pella seeks the extraordinary remedy available through a Correction of Errors

complaint allowing a filing up to three years after the tax year. Even with expired

approvals and an unrecorded plat, it is reasonably probable the overall value of the

land increased, even if not to the full $13 million overall assessment. Since a

debatable question of assessment value remains, Correction of Errors relief is not

available.

      For the foregoing reasons the court dismisses Pella’s Correction of Errors

claims.

                                        -16-