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Coastal Eagle Point Oil Co. v. Township of West Deptford

A-5449-00T2 (N.J. Super. App. Div. 2002) (Unpublished)

TAXATION; FREEZE ACT— A taxpayer does not need an appraisal report to move for Freeze Act relief because the burden is on the municipality to make a prima facie case that relief is not warranted.

An oil refinery was the beneficiary of a Tax Court judgment setting its real property tax assessment for 1987. It then filed a motion with the Tax Court to freeze its 1988 and 1989 assessments at the amounts established for 1987 in accordance with the Freeze Act. The cognizant taxing authorities opposed the motion on the ground that the refinery had made substantial improvements between the assessment dates for 1987 and the assessment dates for 1988 and 1989, resulting in a substantial increase in the property’s market value. The Tax Court granted the Freeze Act relief application for 1988 but concluded that a plenary hearing was required with respect the 1989 tax year. When this matter first reached the Appellate Division, that Court reversed the Tax Court’s ruling because it concluded that an expenditure of more than $10,000,000 during 1988 for improvements in property assessed for slightly less than $50,000,000 combined with the opinion of the municipalities’ expert that those expenditures had “significantly enhanced” the property’s market value, entitled the municipalities to “a plenary hearing on the issue of change in value.” Such a hearing was held, but only pursuant to the Tax Court’s ruling that the municipalities needed to “show that any change in value was attributable solely to the physical changes in the property, not to general inflationary trends in the real estate market or in refinery values[,]” and “[i]n addition, [the municipalities needed to] show that any changes in value were meaningful and substantial.” Apparently, the Tax Court ruled that the parties could not introduce evidence of the value of the property before and afer the years in question because, the Tax Court said, “the salutary purposes of the Freeze Act [would] be undermined by allowing the introduction of evidence on the property’s value in the freeze years.” On appeal, the Appellate Division believed that this principle did not “mean that a municipality or taxpayer can be denied the right to present evidence of the property’s value in the freeze years if it concludes that that is the most effective means of proving its case. ... [A] taxpayer is entitled to summary relief under the Freeze Act without presenting any evidence unless the municipality can make a prima facie showing of not only a substantial and meaningful increase in the property’s value but also that that increase was the result of internal or external changes rather than just general inflationary trends. ... Thus, a taxpayer is not required to obtain an appraisal report in order to move for Freeze Act relief. Moreover, even if the Tax Court concludes that a municipality has made the prima facie showing required to justify a plenary Freeze Act hearing and the municipality introduces evidence of the property’s value in the freeze years at the hearing, the taxpayer may defend its claim to Freeze Act relief by simply cross-examining the municipality’s expert, without presenting an appraiser’s testimony with the intention of presenting its own appraisal evidence only if the Tax Court concludes that the Freeze Act is inapplicable and conducts a valuation hearing.”


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