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Gotham Park Associates v. Borough of Carlstadt

A-2679-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

TAXATION; ASSESSMENTS—Assessing property owners for roads in industrial areas while paying for similar roads in residential area out of general revenues is impermissibly discriminatory.

“Pursuant to two municipal ordinances, [a municipality] imposed a special assessment on properties in the industrial area of [the municipality] adjacent to the roads that were repaired.” Two property owners challenged the assessments contending that they violated the Local Improvements Law. In addition, they claimed that the assessments “violated the equal protection clauses of the United States and New Jersey Constitutions because only commercial property owners were assessed for the road improvements and residential property owners were not.” The lower court ruled that the commercial property owners “failed to overcome the presumption of correctness of the assessments even though they had attempted to show no increase in the value of their properties due to the road repair project.” On the other hand, it found that the special assessment violated the equal protection clauses. On appeal, the municipality argued that the special assessment did not violate equal protection and that amendments to the Local Improvements Law validated the property owners’ equal protection claims.

After the constitutional challenge, the lower court noted that the challenge was “based upon the idea that these property owners are a sub-class of industrial properties within [the municipality], which have been illegitimately discriminated against in terms of being made vulnerable to special assessments.” Their claim was that non-industrial properties had “consistently and persistently and repeatedly been not subject to a special assessment.” The evidence showed that where road improvements affected residential property, the municipality treated the appropriations as ones to be paid by general taxation, not by special assessment. Accordingly, the lower court found that there “appear[ed] to be a clear cleavage in treatment between industrial property and non-industrial property in [this particular] municipality” and that the municipality “didn’t even try during the trial to make any dispute or bones about.” The lower court understood that “a classification made by legislation is presumed to be valid and will be sustained if it ‘rationally related to a legitimate state interest.’” Scouring the evidence, the lower court was “satisfied that the disparate treatment [was] unrelated to any legitimate end.” The Appellate Division agreed with the lower court’s ruling.


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