Court Opinion

ID: 6325465
Source: CourtListenerOpinion
Date Created: 2022-03-22 14:06:47.283884+00
Date Added: 2024-06-11T09:22:03.286924
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-0972-20

HPT TA PROPERTIES TRUST,
f/k/a TRAVELCENTERS
PROPERTIES, LP,

          Plaintiff-Respondent,

v.

BLOOMSBURY BOROUGH,

     Defendant-Appellant.
___________________________

                   Argued January 10, 2022 – Decided March 22, 2022

                   Before Judges Rothstadt and Natali.

                   On appeal from the Tax Court of New Jersey, Docket
                   Nos. 8898-2014, 2900-2015, 1751-2016 and 4400-
                   2017.

                   Robert F. Renaud argued the cause for appellant
                   (Renaud Deappolonio, LLC, attorneys; Robert F.
                   Renaud, on the briefs).

                   Alex Paul Genato argued the cause for respondent
                   (Archer & Greiner, PC, attorneys; Alex Paul Genato
                   and Jennifer N. McCracken, on the brief).
PER CURIAM

      In an earlier unpublished opinion, we considered defendant Bloomsbury

Borough's appeal "from the Tax Court's four September 28, 2018 judgments

reducing defendant's assessment of property owned by plaintiff HPT TA

Properties Trust [f/k/a] Travelcenters Properties, L.P. for the years 2014 to

2017." HPT TA Prop. Tr. v. Bloomsbury Borough (HPT TA Prop. I), No. A-

0915-18 (App. Div. June 23, 2020) (slip op. at 2), certif. denied, 244 N.J. 442

(2020).   In our decision, we "affirm[ed] the Tax Court judge's denial of

defendant's Rule 4:37-2(b) motion because plaintiff established that its evidence

about value raised a debatable question as to the validity of the assessme nt,

but . . . we [were] constrained to remand for a further explanation as to how the

judge arrived at the per acre value for the property." Ibid.

      The matter now returns to us after remand on defendant's appeal from the

Tax Court judge's October 29, 2020 judgments, fixing the value of the subject

property again at $200,000 per acre for the reasons stated in the judge's

comprehensive supporting written decision.

      On appeal, defendant contends the Tax Court judge erred on remand in

accepting plaintiff's comparable values. According to defendant, the judge's

finding of $200,000 per acre was based on an incorrect premise, leading to an

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"erroneous conclusion[]." Defendant argues that we must affirm its original

assessment or conclude "that [we] nor the Tax Court can find value based on the

record below," which would warrant the entry of "judgment for defendant."

Finally, defendant contends, in the alternative, "the matter should be remanded

to the Tax Court for retrial before a different Tax Court judge." We disagree

and affirm, substantially for the reasons expressed by the Tax Court judge in her

thorough October 29, 2020 written decision.

      The pertinent facts explaining the background of this matter are well

known to the parties and set forth in detail in our earlier opinion. Id. at 2-10.

We need not repeat them here. Instead, we begin by revisiting our review of the

judge's 2018 decision and our instructions to the Tax Court judge to be followed

on remand.

      For clarity, we quote from our earlier opinion's description of the Tax

Court judge's 2018 explanation as to how she reached the assessed value for

each disputed year. In our description, we stated the following:

             [T]he judge summarized the testimony at trial [as
             follows]. Plaintiff's expert, a real estate appraiser,
             testified that the [highest and best use (HBU)] of the
             property was "continued use as a truck stop." He also
             "concentrated on the land component of the real estate"
             and could not find any directly comparable land sales—
             that is, land sales for truck stops/travel centers. Instead,
             he described comparable non-developed land sales,

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many of which "were non-usable sales" from within
Hunterdon County or dissimilar properties, including
farms, streams and wetlands, undevelopable land in a
preservation area, and "residentially zoned property."
After using these properties and making "adjustments
for conditions of sale, necessary approvals and shape
and topography," he concluded that the value of the
land component of the property was $60,000 per acre,
plus "ten percent for entrepreneurial profit premium,[]
for all [four] tax years under appeal." He combined the
two lots and arrived at the following value assessments:
[2014: 3,537,350; 2015: $3,528,483; 2016: $3,487,386;
and 2017: $3,351,079.]

Finally, defendant's expert, also a real estate appraiser,
testified as to land value and to eight comparable land
sales, none of which were for truck stops/travel centers
and the sales extended past Hunterdon County. The
expert chose these comparable land sales as they were
businesses that relied on access to major highways. He
opined that the value of the land was $315,000 per acre
for 2014 to 2015 and $325,000 per acre for 2016 to
2017. He arrived at the following value assessments:
[2014: $6,432,350; 2015: 6,423,483; 2016: $507,386;
and 2017: $6,371,079].

The judge then explained that original assessments
were entitled to a presumption of correctness and the
taxpayer had the burden of proving that assessment is
erroneous, which it can only do by introducing "cogent
evidence" of true value. The judge also explained the
cost approach valuation to land. In the judge's analysis,
she began with Lot 4.01 and stated that neither expert
specifically valued that property. Plaintiff's expert
stated that it had the same value per acre as Lot 3, which
was not based on evidence submitted, and defendant's
expert did not explore its value individually. She
concluded that Lot 4.01 had less value than the land in

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                            4
Lot 3, found that plaintiff did not overcome the
presumption, and affirmed the tax assessment as to that
lot for all four years.

As to Lot 3, the judge selected three comparable sales
from each party's expert, and then assessed the land at
a value of $200,000 per acre. The judge explained that
she had "confidence in [her] land value determination
because it is supported by the current land value
contained within the subject property's assessment."
She also explained that defendant's assessor confirmed
that this value was based on "a 2006 revaluation
formulated by Appraisal Systems using the [c]ost
[a]pproach" and "was not therefore arbitrary or merely
an administrative act." The judge noted that "land
values do not change at the same rate as improvements
because depreciation is not a factor." Adding the
judge's conclusion of land value to the stipulated
depreciated replacement costs, the judge concluded that
the true market value on the relevant valuation dates
was as follows: [2014: $5,051,350; 2015: $5,042,483;
2016: $5,001,386; and 2017: $4,865,079.]

Finally, the judge applied Chapter 23, N.J.S.A. 54:51A-
6(a), which requires that "in a non-revaluation year an
assessment must be reduced when the ratio of the
assessed value of the property to its true value exceeds
the upper limit of the common level range." As such,
the judge rounded the true value figures for 2014 and
2015 as follows: [2014: $5,054,000; and 2015:
$5,044,000].

For 2016 and 2017, the judge calculated the following
values: [2016: $4,780,000; and 2017: $4,550,000].

[Id. at 6-10 (third, fourth, and seventh alteration in
original) (footnotes omitted).]

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                           5
      In her 2018 written decision, the judge explained her acceptance of certain

comparable sales values offered by the parties by only stating the following

conclusions:

            All land has value, and the court's review of the
            comparable land sales offered by both experts is the
            best evidence available to determine the subject
            property's land value. In choosing the most credible
            land sales, the court gives greater weight to those land
            sales zoned commercial zoning, that are in the
            Highlands region, and on or near roads or highways
            with heavy truck volume.

            The court finds that the most credible land sales
            provided by plaintiff's expert (with an additional ten
            percent for entrepreneurial profit) are sale number 5
            ($49,844 per acre), number 6 ($73,052 per acre), and
            number 7 ($59,400 per acre). The most credible land
            sales provided by defendant's expert are sale number 1
            ($253,479), number 7 ($394,942), and number 8
            ($363,636). After weighing probative value of each of
            these sales, the court concludes a true value price per
            acre of $200,000.

      Notably, the judge never expressed with any detail why she found the four

comparables she identified to be "the most credible."

      As already noted, we instructed the Tax Court judge on remand to provide

an explanation regarding her valuation "because we [could not] determine how

the judge established the ultimate value for Lot 3." HPT TA Prop. I, slip op. at

26. Taking "into account the special expertise of Tax Court judges in matters of

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                                       6
taxation," we concluded "that to a point, the judge properly considered the

parties' proofs and correctly satisfied her obligation '[o]nce [she found] that the

presumption [of defendant's assessment of value] ha[d] been overcome by

cogent evidence, [to] . . . independently determine true value.'" Id. at 10, 31

(first, second, and fifth alteration in original) (quoting Brae Assocs. v. Park

Ridge Borough, 19 N.J. Tax 306, 312 (App. Div. 2001)). We also found that

"the judge made numerous findings that were supported by the record and well

within her discretion." Id. at 31.

      Nonetheless, we found that the judge failed to explain "how any of the

facts . . . led her to the conclusion that the land value of the property was

$200,000 per acre." Id. at 32. In addition, we concluded the "judge did not

detail how she weighed the evidence or explain the reasoning that led her to fix

$200,000 per acre as the value of the land component of the property. " Ibid.

That omission impeded our ability to review her decision on appeal. Ibid.

      Moreover, we warned that "to the extent the judge relied upon defendant's

assessor's testimony, or on averaging the comparable sales identified by each

expert, that reliance [was] misplaced." Id. at 33-34 (footnote omitted). We

instructed that reliance on the assessor's testimony was inappropriate because

there was no way to test the accuracy of the "values established by her office [as

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                                        7
it was] calculated by an outside service using [an unidentified] formula." Id. at

34. Further, the use of averaging as a substitute for weighing and eval uating

evidence, had been rejected because using a "simple mathematical formula" did

not satisfy the judge's role as a fact-finder. Id. at 34-35 (quoting Pansini Custom

Design Assocs., LLC v. City of Ocean City, 407 N.J. Super. 137, 144 (App. Div.

2009)).

      On August 18, 2020, the Tax Court judge considered the parties'

arguments. The judge did not consider any additional evidence. However,

during the hearing, the judge requested that the parties address her question

about "the valuation of vacant land" under the cost approach because her

research had not found a "distinction between developed and undeveloped

vacant land" that would lead her to reject plaintiff's comparable land sales as

argued by defendant. On August 31, 2020, the parties responded to the judge's

inquiry by agreeing that property's HBU was its current use as a truck stop/travel

center and the HBU of the land as vacant was not an issue in this case.

      On October 29, 2020, the Tax Court judge issued her twenty-five-page

written decision and entered the four judgments reducing defendant's original

tax assessments to the same amounts she had in 2018. In her 2020 decision, she

found that "the zoning in place during the tax years at issue does not permit a

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                                        8
truck stop/travel center, and conclude[d] that the [HBU] of the subject property

as vacant is [a] development consistent with a truck stop or travel center but

limited as permitted in the [defendant's] B-2 business district."

      The judge recognized that despite the experts' "best efforts," the land

valuation was "complicated and challenging," which led each expert to

"establish other criteria to locate vacant land sales that had similar

characteristics to the subject property, and which would require the least amount

of adjustments." The judge observed that "[n]either expert claimed that the land

component of the subject property could not be reasonably or reliably valued."

In addition, she found that "cross-examination [did not] elicit sales more

comparable than the ones chosen by the respective experts and their determined

criteria." Ultimately, she found and "accept[ed] that although their separate

criteria led them to different properties, locations, and ultimately divergent

valuations, their efforts to find comparable vacant land sales were thorough and

in conformance with real estate appraisal practices."

      After reviewing the comparable land sales offered by the parties' experts,

the judge accepted and gave weight to two comparable land sales submitted by

each party, as compared to the three she accepted in 2018, because they were

"the most reasonably reliable comparable sales to determine fair market value."

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Unlike the Tax Court judge's 2018 decision, the judge dedicated over fifteen

pages of her written decision to a detailed analysis of each comparable presented

by the two experts and explained why she either accepted or rejected the

suggested comparable sales in reaching her ultimate conclusion.        And, she

explained the reason for any adjustment she made to the values found by the

experts.

      From plaintiff's expert, she accepted comparables identified as TLS#5

with a 10 percent adjusted value of $45,313 per acre, and TLS#7 with a 10

percent adjusted valued of $54,000 per acre. From defendant's expert, she

accepted BLS#1, with a 10 percent adjusted value of $298,211 per acre, and

BLS#7, with a 10 percent adjusted value of $394,942 per acre. Further, with

regard to the defendant's two adjusted comparable sales values, she recognized

that defendant's "expert included a separate lot[, Lot 4.01], which [she]

previously determined to have its own individual value, thus slightly inflating

[defendant's] two adjusted comparable sales values."

      In explaining her evaluation, the judge agreed with defendant's argument

that that "three most important factors in valuing land sales are location,

location, location." In this regard, she explained that:

            The first location [element] the court focused on was
            geographic proximity - property in Bloomsbury, near

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                                       10
             Bloomsbury, and finally in Hunterdon County. The
             second location element considered was property at or
             near an interchange. The third location [element] was
             property further away geographically (and in these
             cases the [defendant's] comparable sales are all closer
             to the large metropolitan areas) that borders or is in near
             proximity to main travel transportation roadways.
             These three locational elements were most significant
             in the court's selection of comparable sales.

      After a "thorough review of the evidence, consideration of the closing

arguments of counsel, review of the relevant case law including the cases

submitted to the court, and reconsideration of all elements of valuation, [the

judge] reaffirm[ed her] prior determination of value for all four tax years," and

held that the land value of the subject property, for the years at issue is $200,000

per acre. She reasoned that "[o]nce [she] accepted both experts' conclusion that

the subject property was unique, logic dictated that the comparable sales were

not going to be a 'one size fits all' or 'hand in glove' variety." Thus, "[f]lexibility,

not rigidity, was required to determine a fair valuation." Therefore, she affirmed

her previous holding of the true market value on the relevant valuation dates

after her "conclusions of land value are added to the stipulated depreciated

replacement costs," as follows:

           Tax Year         Land         Improvements             Total
             2014         $2,404,000         $2,647,350          $5,051,350
             2015         $2,404,000         $2,638,483          $5,042,483
             2016         $2,404,000         $2,597,386          $5,001,386

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                                         11
          Tax Year         Land         Improvements           Total
            2017         $2,404,000         $2,461,079        $4,865,079

      This appeal followed.

      In our review of the Tax Court judge's determination on remand, we hew

to the same limited, deferential standard that we described in our earlier opinion

as follows:

              Our review of a Tax Court decision is limited. [Est.] of
              Taylor v. Dir., Div. of [Tax'n], 422 N.J. Super. 336, 341
              (App. Div. 2011). The Tax Court's factual findings
              "will not be disturbed unless they are plainly arbitrary
              or there is a lack of substantial evidence to support
              them." Yilmaz, Inc. v. Dir., Div. of [Tax'n], 390 N.J.
              Super. 435, 443 (App. Div. 2007) (quoting Alpine
              Country Club v. Borough of Demarest, 354 N.J. Super.
              387, 390 (App. Div. 2002)). In our review, "we take
              into account the special expertise of Tax Court judges
              in matters of taxation," Dover-Chester Assocs. v.
              Randolph [Twp.], 419 N.J. Super. 184, 195 (App. Div.
              2011), and a tax judge's "findings will not be disturbed
              unless they are plainly arbitrary or there is a lack of
              substantial evidence to support them," Jablin v.
              Borough of Northvale, 13 N.J. Tax 103, 107 (App. Div.
              1991). Thus, we examine "whether the . . . findings of
              fact are supported by substantial credible evidence
              allowing due regard to the Tax Court's expertise and its
              ability to assess credibility." Id. at 108. However, our
              11 A-0915-18T3 review of the Tax Court's legal
              conclusions is de novo. Advance Hous., Inc. v. [Twp.]
              of Teaneck, 215 N.J. 549, 566 (2013).

              [HPT TA Prop. I, slip op. at 10-11.]

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                                        12
      In addition, after a remand, we must determine whether the trial court

complied with our instructions as written. See Tomaino v. Burman, 364 N.J.

Super. 224, 232-33 (App. Div. 2003) (recognizing "it is the peremptory duty of

the trial court, on remand, to obey the mandate of the appellate tribunal precisely

as it is written" (quoting Jersey City Redevelopment Agency v. The Mack Props.

Co. No. 3, 280 N.J. Super. 553, 562 (App. Div. 1995))).

      With those guiding principles in mind, we turn to defendant's contentions

in this appeal. First, defendant challenges the Tax Court judge's reliance upon

any of plaintiff's comparables. However, we considered this very argument in

our earlier decision.1   In fact, defendant concedes in this appeal that we

previously rejected its contention that the parties' divergent comparable land

sales accepted by the judge "cannot be reconciled" "because they are not

1
   As we described in our earlier opinion, "defendant argue[d] that plaintiff's
expert's comparable land sales were for properties that were not truck
stops/travel centers, were not used for similar purposes, and did not have a
similar HBU. Defendant contends that the HBU 'deficiency in [p]laintiff's
proofs should have precluded the [judge] from considering any of [p]laintiff's
[expert's] . . . comparable sales as evidence of the value of the subject
[property].'" HPT TA Prop. I, slip op. at 11. Also, among its earlier arguments,
defendant contended, as it does now before us, "that four of [p]laintiff's sales,
Numbers 3, 4, 5 and 7, were not verified by the appraiser in accordance N.J.S.A.
2A:83-1 and, therefore, were inadmissible to show land value . . . and that one
of the sales, Number 6, was a sale in bankruptcy without any proof that it was a
market sale. . . ."
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                                       13
comparable to each other, and [p]laintiff's sales are not comparable to the subject

and should have been disregarded."           We decline to revisit our earlier

determination as our remand was unrelated to the judge's acceptance of both

experts' opinions, which we affirmed.

      Our review is limited to whether the Tax Court judge erred by concluding

that the value of the subject property was $200,000 per acre after she accepted

plaintiff's comparable land sales of $49,944 per acre and $59,400 per acre, and

defendant's comparable land sales of $328,032 per acre and $434,436 per acre.

Defendant asserts that comparing the per acre values in the 2018 decision and

the 2020 decision, demonstrates that the judge's "'conclusion' of value was

wholly arbitrary" because her adjustments—the positive adjustments of

defendant's sales comparable and the deletion plaintiff's comparable number 6—

did not "result[] in any change in the [judge's] concluded value" despite the

disparity between the appraisals.

      Defendant also argues that its assessment must be affirmed because the

judge could not determine the property's value. However, it is obvious that the

judge determined value and that defendant is unsatisfied with the result. The

only issue is whether the judge has now provided an acceptable explanation of

her decision. We conclude the judge fulfilled her obligation on remand.

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                                        14
      As already discussed, after finding that plaintiff overcame the

presumption of correctness, the judge explained in detail in her 2020 decision

why each comparable offered by the parties' experts was either accepted or

rejected. By supplying those details and explaining her adjustments to the

accepted comparable land values, the judge provided parties and this court with

the explanation we deemed necessary in our earlier opinion. Moreover, the

decision on remand contained the level of detail that Tax Courts typically

provide in cases where there is great disparity in experts' opinions about value.

      For example, in Congoleum Corp. v. Hamilton Twp., 7 N.J. Tax 436

(1985), the Tax Court dealt with a similar situation when determining the proper

tax assessment for a "massive industrial complex" and where the experts

"differed widely as to the true value." Id. at 439, 441. The court accepted a

comparable sale that had been selected by both experts, but with widely different

valuations after making their adjustments—"a minus 70% for one and a minus

15% for the other, which result[ed] in one expert's valuing the sale at almost

three times the opposing expert's value." Id. at 453. In reaching its decision,

the court reviewed in detail each of the comparables offered in that case before

deciding to accept the comparable sale and making its own determination as to

adjustments to ultimately find the subject property's value. Id. at 447-57.

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      Here, although the judge never specifically articulated why she selected

$200,000 per acre, as compared to a different value, she provided the same type

detailed analysis for her acceptance and adjustment of the experts' values.

Thereafter, exercising her expertise as a Tax Court judge, she assigned the

$200,000 value. Considering the broad range of discretion we afford to Tax

Court judges in recognition of their expertise in property value assessments , we

have no cause to disturb the result the judge reached in this case in light of her

more detailed explanation.

      We are not persuaded otherwise by defendant's argument that the judge's

error in her conclusion stems from her observation that "[t]he trial focused on

the value of the land at its highest and best use as vacant." As the judge clarified

at oral argument, her observation stemmed from discussions in the experts'

reports as to that value. Despite that observation, it is clear from the judge's

opinion that the value she selected for each challenged assessment was based on

the property's current use, which everyone agreed was its HBU.

      To the extent we have not specifically addressed any of defendant's

remaining arguments, we conclude we either need not reach them as a result of

our affirmance or that they are without sufficient merit to warrant further

discussion in a written opinion. R. 2:11-3(e)(1)(E).

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Affirmed.

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