Petition for Writ of Certiorari — Otlowski v. Kean

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IN THE pcxeemiers

Supreme Court of the United States

OCTOBER TERM, 1986

GEORGE J. OTLOWSKI, Mayor of Perth Amboy; PAUL ZITO,

ARMAND R. CANNAMELA and ANGEL QUINONES,

individually and as members of the City Council; JAMES

GOUMAS, Tax Assessor of the City of Perth Amboy, and

C. MARION LIPIRA, Tax Collector of the City of Perth

Amboy,

vs. Petitioners,

THOMAS H. KEAN, Governor of the State of New Jersey;

MICHAEL M. Horn, Treasurer of the State of New Jersey;

JOHN R. BALDWIN, Director of the Division of Taxation of

the State of New Jersey and the DIVISION OF TAXATION OF

THE STATE OF NEW JERSEY: IRWIN I. KIMMELMAN, Attorney

General of the State of New Jersey; CARMEN A. ORECHIO,

President of the New Jersey Senate; and the NEW JERSEY

SENATE: ALAN J. KARCHER, Speaker of the General

Assembly of the State of New Jersey; and the GENERAL

ASSEMBLY OF THE STATE OF NEW JERSEY: THE MIDDLESEX

COUNTY BOARD OF TAXATION, a body politic of the State of

New Jersey; BARBARA GALLAGHER, President of the

Middiesex County Board of Taxation; FRANKLIN F. MURPHY,

Member of the Middlesex County Board of Taxation; ANGELA

J. SZYMANSKI, County Tax Administrator of the Middlesex

County Board of Taxation; all in their official and individual

capacities,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF NEW JERSEY

OLIVER R. KOVACS

Counsel of Record

KOVACS, RADER & FELDMAN

Attorneys for Petitioner

313 State Street

P.O. Box 621

Perth Amboy, New Jersey 08861

(201) 826-9595

C

i

QUESTIONS PRESENTED FOR REVIEW

1. Is New Jersey’s Local Property Tax Law unreasona-

ble, arbitrary and capricious thereby violating the Due

Process rights of Petitioners.

2. Is New Jersey Local Property Tax Law unreasonable,

arbitrary and capricious thereby violating the Equal Protec-

tion Right of Petitioners.

il

TABLE OF CONTENTS

Questions Presented for Review...............

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Jurisdiction

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Reasons for Granting the Writ:

I. NEW JERSEY’S LOCAL PROPERTY

TAX

UNR

LAW, N.J.S.A. 54:4-1 ET. SEQ. IS

EASONABLE, ARBITRARY AND

CAPRICIOUS, THEREBY VIOLATING

PETITIONERS DUE PROCESS RIGHTS

UND

ER THE FOURTEENTH

AMENDMENT TO THE UNITED

STATES CONSTITUTION.............

Il. THE

PERPETUATION OF THE LOCAL

PROPERTY TAX LAW, N.J.S.A. 54:4-1

ET SEQ., DENIES TO THE CITY OF

PERTH AMBOY AND ITS CITIZENS

THE

LAW

EQUAL PROTECTION OF THE

IN CONTRAVENTION TO THE

FOURTEENTH AMENDMENT OF THE

UNITED STATES CONSTITUTION .....

Conclusion

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10

12

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TABLE OF CITATIONS

CASES CITED:

Bonnet v. State, 141 N.J. Super 177

(1976), affd 155 N.J. Super 520 (App.

Ce ee re

Davenport v. Apportionment Comm., 65

ee eee

Duffcon Concrete Products v. Borough of

Crpaskils, 1 MJ. S09 C1989) ... 2...

McKenny v. Byrne, 82 N.J. 304 (1980) ...

Robinson v. Cahill, 62 N.J. 473 (1973) ...

Robinson v. Cahill, 118 N.J. Super 223

ES ara ae

Scrimminger v. Sherwin, 60 N.J. 483

Se ee ee

So. Burl. Cty. N.A.A.C.P. v. Mt. Laurel

(OR BN Bh Es)

Switz v. Kingsley, 37 N.J. 566 (1962) ....

Velmohos v. Maren Engineering Corp., 83

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STATUTES CITED:

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PAGE

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UNITED STATES CONSTITUTION CITED:

Fourteenth Amendment...............

RULES CITED:

eR ee Se

APPENDIX:

Appendix A — Opinion of Superior Court

of New Jersey, Appellate

Division Filed April 7,

RGR aN sae eee

Appendix B — Order of Supreme Court of

New Jersey Denying

Petition for Certification

yg 6

Appendix C — Oral Opinion of Judge

Michael Andrew, Jr.

Superior Court of New

Jersey, Trial Level, dated

i Ay. ere eae ee

PAGE

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3, 4

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

GEORGE J. OTLOWSKI, Mayor of Perth Amboy; PAUL

ZITO, ARMAND R. CANNAMELA and ANGEL QUINONES,

individually and as members of the City Council; JAMES

GOUMAS, Tax Assessor of the City of Perth Amboy, and

C. MARION LIPIRA, Tax Collector of the City of Perth

Amboy,

vs. Petitioners,

THOMAS H. KEAN Governor of the State of New Jersey;

MICHAEL M. HorN, Treasurer of the State of New

Jersey; JOHN R. BALDWIN, Director of the Division of

Taxation of the State of New Jersey and the DIVISION

OF TAXATION OF THE STATE OF NEW JERSEY:

IRWIN I. KIMMELMAN, Attorney General of the State of

New Jersey; CARMEN A. ORECHIO, President of the

New Jersey Senate; and the NEW JERSEY SENATE;

ALAN J. KARCHER, Speaker of the General Assembly of

the State of New Jersey; and the GENERAL ASSEMBLY

OF THE STATE OF NEW JERSEY: THE MIDDLESEX

COUNTY BOARD OF TAXATION, a body politic of the

State of New Jersey; BARBARA GALLAGHER, President

of the Middlesex County Board of Taxation; FRANK-

LIN F. MURPHY, Member of the Middlesex County

Board of Taxation; ANGELA J. SZYMANSKI, County Tax

Administrator of the Middlesex County Board of Taxa-

tion; all in their official and individual capacities.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME

COURT OF THE STATE OF NEW JERSEY

2

Petitioners pray that a Writ of Certiorari issue to

review the Order of the Supreme Court of New Jersey

(App. B) denying review of the opinion of the Appellate

Division of the Superior Court of New Jersey (App. A)

which affirmed the Order and Opinion entered by Judge

Michael Andrew, Jr. in the Superior Court, Law Division,

State of New Jersey. (App. C)

OPINIONS BELOW

The Opinion of the Superior Court, Law Division,

State of New Jersey is printed in Appendix C at a-4. The

Opinion of the Appellate Division of the Superior Court of

New Jersey is printed in Appendix A at a-1. The Order of

the Supreme Court of New Jersey denying the Petition for

Certification is printed in Appendix B at a-3.

JURISDICTION

The decision of the Supreme Court of the State of New

Jersey was filed on June 30, 1986. Petitioners invoke the

Jurisdiction of this Court under 28 U.S.C. 1257.

CONSTITUTIONAL PROVISION INVOLVED

Petitioners allege a violation of their due process and

equal protection rights under Amendment XIV of the

United States Constitution which reads as follows:

No State shall make or enforce any law which

shall abridge the privileges or immunities of citi-

zens of the United States; nor shall deprive any

person of life, liberty, or property, without due

process of law; nor deny to any person within its

jurisdiction the equal protection of the laws.

ee

3

STATUTES AND RULES INVOLVED

N.J.S.A. 54:4-1 Et. Seg. (Local Property Tax Law)

N.J. Rules 4:69-6(c)

STATEMENT OF THE CASE

On February 21, 1985, plaintiff Middlesex County

Board of Taxation filed an action in lieu of prerogative writ

in the nature of mandamus, with the Superior Court, Law

Division, seeking enforcement of a previously issued revalu-

ation order.

On May 6, 1985 certain defendants filed an answer

containing a counterclaim against the plaintiff and the third

party complaint against the Governor, the Treasurer, the

Director of the Division of Taxation, the Attorney General,

Legislative Leaders and members of the Middlesex County

Board of Taxation challenging the revaluation order on the

foilowing grounds:

1. That revaluation will so increase the property

tax load on those property owners least able to pay the

alleged increase in the taxes so as to constitute the

taking of the property in violation of due process under

the federal and state constitutions.

2. That revaluation will deny certain taxpayers of

Perth Amboy equal protection of the laws by denying

them rights and privileges which other taxpayers will

be receiving.

3. That municipal matters being co-extensive with

taxing districts for the purposes of raising property

taxes for county, municipal, and for school services are

arbitrarilly established in favor of certain citizens to

the detriment of other citizens.

4

4. That the system of providing state aid to munici-

palities is arbitrary and violates the New Jersey and

United States Constitution.

5. That the present state tax system has over-

burdened Perth Amboy to the extent that it is unable to

provide its citizens with the essential services that they

are entitled to under the State and United States

Constitutions.

Petitioners contended that the aforesaid constitutional

issues fell within the “interest of justice exception” to the

statute of limitations contained under New Jersey court rule

4:69-6C pertaining to actions in lieu of prerogative writs.

Respondent filed a motion for summary judgment. In

response to respondent’s motion petitioners argued among

other things, that the record was incomplete, that the peti-

tioners were not given an opportunity for discovery and

therefore respondent’s motion was not ripe for summary

judgment. In the alternative, petitioners asserted that

should the court review the matter on its merits, the afore-

stated constitutional challenges required a denial of respon-

dent’s motion for summary judgment. ~

Judge Michael Andrew sitting in the Superior Court,

Law Division, Middlesex County, State of New Jersey ruled

that the petitioners attempt to create a public interest excep-

tion to the forty-five day limitation failed since the constitu-

tional issues raised did not rise to the level necessary to

overcome the forty-five day limitation. Secondly, the

enforcement of the revaluation order would not work an

injustice but would rather advance the constitutional goal of

\equality and sharing of the burden of government.

Hence, the counterclaim and third party complaint

were ruled untimely and respondent’s motion for summary

judgment was granted.

5

The Appellate Division affirmed, per curiam, the opin-

ion of Judge Andrew that the perceived inequities and the

system complained of by the petitioners were not remedial

by way of their broad based attack in a judicial forum. See

Robinson v. Cahill 62 N.J. 473, 502-503 (1973) cert. denied

414 US. 976 (1973).

A notice of Petition for Certification was filed on

April 22, 1986 to the Supreme Court of the State of New

Jersey. That petition was denied by Court Order filed

June 30, 1986.

REASONS FOR GRANTING THE WRIT

1. NEW JERSEY’S LOCAL PROPERTY TAX LAW,

N.J.S.A. 54:4-1 ET. SEQ. IS UNREASONABLE,

ARBITRARY AND CAPRICIOUS, THEREBY

VIOLATING PETITIONERS DUE PROCESS

RIGHTS UNDER THE FOURTEENTH

AMENDMENT TO THE UNITED STATES

CONSTITUTION.

While the State Legislature has broad powers to enact

laws, it may not enact a law that violates a federal

constitutional provision.

The Local Property Tax Law (N.J.S.A. 54:4-i et. seq.)

provides for taxing districts that are co-extensive with the

physical and geographic boundaries of the municipalities in

this State. Accordingly, there are hundreds of districts in

the State, each responsible for assessing and collecting taxes

from its residents. The real property tax collected from each

resident is used to pay for municipal services, the cost of

running the county government, and local school expenses.

See Switz v. Kingsley, 37 N.J. 566, 572 (1962). The amount

of tax collected and the level of services received by a

resident in a municipality is based upon the value of real

6

property within the municipality’s border. That there are

significant discrepancies in the value of real property

(wealth) among taxing districts (municipalities) is an

undisputed fact. See Robinson v. Cahill 118, N.J. Super

223, 228 (1972). By creating taxing districts that are co-

extensive with municipal boundaries the Legislature has

established the method of raising funds for municipal,

county and school services which is totally unrelated to the

need for public services in a particular area of the state or to

the ability of the taxpayers in a particular area to pay for the

services that are needed. Not only is the system whereby

taxing districts are co-extensive with municipal boundaries

not rationally or reasonably related to the legislative

purpose of the Local Property Tax Law but it produces the

exact opposite result.

The infirmities of the Local Property Tax Law, acute

on the municipality by municipality basis, are compounded

by the further capriciousness in establishing arbitrary

county taxing districts. The same local taxing districts that

are unable to raise adequate revenue to provide for

municipal services, as compared to other local taxing

districts with fewer needs and greater wealth, are also

required to raise substantial!y greater revenues for county

government. Because Perth Amboy is in Middlesex County,

it must bear an admittedly disproportionate share of the cost

of state and county governmental services than if it were ina

more affluent county. See Bonnet v. State 141 N.J. Super

177, 226 (Law Div. 1976), aff'd 155 N.J. Super 520 (App.

Div. 1978)

The Courts of New Jersey recognize that solutions to

land use, zoning and housing problems extend beyond the

boundaries of a particular municipality. So. Burl. Cty.

N.A.A.C.P. v. Mt. Laurel Twp., 67 N.J. 151 (1975), cert.

denied, 423 U 5. 808 (1975). Citing from Chief Justice

Vanderbilt’s opinion in Duffcon Concrete Products, Inc. v.

7

Borough of Cresskill, 1 N.J. 509, 513 (1949), the court in

Mt. Laurel stated:

ee

... The effective development of a region

should not and cannot be made to depend upon the

adventitious location of municipal boundaries,

often prescribed decades or even centuries ago,

and based in many instances on considerations of

geography, of commerce, or of politics that are no

longer significant with respect to zoning. The

direction of growth of residential areas on the one

hand and of industrial concentration on the other

refuses to be governed by such artificial lines.

Changes in methods of transportation as well as in

living conditions have served only to accentuate

the unreality in dealing with zoning problems on

the basis of the territorial limits of a municipality.

(emphasis supplied) 67 N.J. at 177-178.”

This focus, emphasis, and approach of our State

Supreme Court to the need for regional or extra municipal

solutions to complex problems such as, land use, zoning, and

housing has been resoundingly reaffirmed in Mount

Laurel II. As the Court opined in Mount Laurel I,

While the State may not have the ability to

eliminate poverty, it cannot use that condition as

the basis for imposing further disadvantages.

Mt. Laurel IT, supra. (emphasis supplied).

Providing a reasonable manner of assuring the

citizenry of this state adequate fire and police protection

should be no less a concern of the state than the providing of

shelter. Indeed, Art. I. par. 1 of our State Constitution

provides:

All persons are by nature free and independent,

and have certain natural and unalienable rights,

8

among which are those of enjoying and defending

life anu liberty, of acquiring, possessing, and

protecting property, and of pursuing and obtaining

safety and happiness.

To the extent government recognizes that shelter and

housing comprise a basic human need, Mt. Laurei, supra,

67 N.J. at 178-179, it cannot act in a manner that will have

the effect of depriving citizens of their homes by virtue of an

unfair and confiscatory tax system. Both land use regulation

and taxing regulation are guided by the general welfare and

police power. In the context of zoning, the State Supreme

Court has expressly stated that:

Municipalities must zone primarily for the living

welfare of people and not for the benefit of the

local tax rate. (footnote omitted) (emphasis

supplied) Mt. Laurel, supra, 67 N.J. at 18.

In Mt. Laurel II, the Supreme Court acknowledged

that prior to the first Mt. Laurel opinion the Court believed

its hands were tied and that “Mount Laurel obligation(s)”

could not properly be allocated because of the method of

distributing the tax burden in New Jersey and because

zoning was not permitted on a regional basis. Mt. Laurel 11,

92 N.J. 158, 456 A2d 390 (App. Div. 1983).

However, in order to correct a grossly inequitable

situation the Court “discovered” a constitutional mandate

which permitted it to override the law as therefore

interpreted with regard to zoning. In view of the same gross

inequities and the same parochial interests, there is no

reason not to extend the constitutional mandate to the tax

burden, etc. as well as zoning laws.

What is applicable to municipalities is also applicable

to the state. The state tax system, which elevates the

preservation of historical geographical boundaries over the

9

promotion of the general welfare of all the people in this

state is an arbitrary and perverse relic violative of the most

fundamental purpose of government. When county or

municipal boundaries run afoul of basic constitutional

principles, courts have not hesitated to disregard them. See

Davenport v. Apportionment Comm., 65 N.J. 125 (1974):

Scrimminger v. Sherwin, 60 N.J. 483 (1972).

The legislature has long recognized the unwisdom of

solving many public needs on the basis of municipal and

county boundaries. It has sanctioned the establishment of

multi-district utility authorities (N.J.S.A. 40:14B-1 et seq.),

multi-district school systems (N.J.S.A. 18A:13-1 ef seq.),

multi-district port development facilities (N.J.S.A.

12:11A-1 et seg.), multi-district sewerage authorities

(N.J.S.A. 40:14A-1 et seq., multi-district public

improvement projects (N.J.S.A. 40:48B-1 et seq., and

multi-district park, beach or recreation facilities (N.J.S.A.

40:61-35 et seq.). It has permitted the creation of districts to

deal with problems of beach erosion (N.J.S.A. 40:68-27 et

seq.), fire (N.J.S.A. 40A:17-70 et seq.), and soil

conservation (N.J.S.A. 4:24-7 et seq.). Although this list is

not intended to be all inclusive it does illustrate that certain

problems lend themselves to solutions that transcend

boundary lines based on centuries old considerations of

geography, commerce and politics. See Duffcon Concrete

Products, Inc., supra 1 N.J. at 513. Boundaries which no

longer bear a rational relationship to the purposes for which

government intended them are arbitrary and capricious.

The constitutional guarantee of substantive due process

mandates that the operation of a statute not be

unreasonable, arbitrary or capricious and that the means

selected bear a rational relationship to a permissible

legislative purpose. Velmohos v. Maren Engineering Corp.,

83 N.J. 282, 297 (1980). The legislative purpose of the

Local Property Tax Law N.J.S.A. 54:4-1 et seq. is the

10

equalized distribution of the burden of local government

upon taxable real property. The purpose is frustrated by the

present system or utilizing traditional geographic and

political boundaries as taxing districts. That basis of

establishing taxing districts must be invalidated.

2. THE PERPUTATION OF THE LOCAL

PROPERTY TAX LAW, N.J.S.A. 54:4-1 ET SEQ.,

DENIES TO THE CITY OF PERTH AMBOY AND

ITS CITIZENS THE EQUAL PROTECTION OF

THE LAW IN CONTRAVENTION TO THE

FOURTEENTH AMENDMENT OF THE UNITED

STATES CONSTITUTION.

Although it is true that the Legisiature has discretion in

establishing classifications in the field of taxation, this dis-

cretion is not unbridled and cannot constitutionally discrim-

inate among citizens in this State. McKenny v. Byrne

82 N.J. 304, 319, nS (1980). All residents of this State are

entitled to equal protection of the laws with regard to essen-

tial government services. As was noted by the court in

Robinson v. Cahill, 62 N.J. 473, 482 (1973).

“If the monies are raised by local taxation in the

way which permits the different dollar expenditure

per affected resident, the program is invalid as to

the beneficiaries unless a state aid program fills in

the gap. It would then follow that a state aid pro-

gram which did not neutralize local inequalities

would itself deny equal protection as to benefi-

cars ....”

The very fact that the legislature of the State of New

Jersey has been forced to create a plethora of aid programs

to supplement the funds received via local property taxes by

municipalities such as Perth Amboy, is an admission that

the Local Property Tax Law permits vastly different sums of

money to be raised and distributed among residents in this

il

state to provide essential government services. Not only are

these various aid programs “band aid” solutions designed to

hide and perpetuate a constitutionally invalid system of

funding and distributing essential government services to

the citizens of the state, but it is evident that by piggyback-

ing the aid programs on the local property tax structure the

inequities among services available to residents in this state

continue to vary incredibly from municipality to municipal-

ity. These programs and the local property tax structure

itself failed to neutralize local inequalities. It is evident that

for the purpose of providing essential government services,

the very institution of local government itself denies equal

protection. See Robinson v. Cahill, 62 N.J. at 500. By plac-

ing the basic burden of raising taxes needed for essential

government services upon local government and limiting

local government’s resource base to the value of real prop-

erty fortuitiously located within that local government’s

arbitrarily created borders, the Legislature has perpetuated

a system that treats different citizens in this state in a

grossly disparate manner. Chief Justice Weintraub writing

for the New Jersey Supreme Court succinctly summarized

the problem when he stated:

“Unequal demands upon unequal tax basis resuit

in statewide inequality as to benefits or as to tax

burden, Id. at. 500... "u

Legislative flexibility in the field of taxation cannot be a

shibboleth for those seeking to perpetuate a policy that

denies all persons in this state equal protection of the laws as

guaranteed in the Fourteenth Amendment of the United

States Constitution. The present method of revaluation and

taxation by local government combined with supplementary

state aid is not rationally or reasonably related to achieving

the goals of making government services available to all

residents in this state.

12

CONCLUSION

For the reasons set forth above, the petition for a writ of

certiorari should be granted so this Court can review this

matter.

Respectfully submitted,

OLIVER R. KOVACS

Counsel of Record

Kovacs, Rader & Feldman

Attorneys for Petitioner

Datec: August 25, 1986

APPENDICES

la

APPENDIX A

APPENDIX A — OPINION OF SUPERIOR COURT

OF NEW JERSEY, APPELLATE DIVISION

FILED APRIL 7, 1986

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

A-5181-84T1

MIDDLESEX COUNTY ;

BOARD OF TAXATION,

Plaintiff-Respondent, Original Filed

y. April 7, 1986

CiTy OF PERTH AMBOY, Elizabeth McLaughlin,

et al., Clerk

Defendants-Appellants. }

Submitted March 25, 1986 — Decided April 7, 1986

Before Judges Pressler, Bilder and Gruccio.

On appeal from the Superior Court, Law Division,

Middlesex County.

Kovacs, Rader & Feldman, attorneys for appellants

(Richard P. Feldman, on the brief).

W. Cary Edwards, Attorney General of New Jersey,

attorney for respondent (James J. Ciancia, Assistant

Attorney General, of counsel; Harry Haushlater,

Deputy Attorney General, on the brief).

NOT FOR PUBLICATION WITHOUT THE APPROVAL

OF THE COMMITTEE ON OPINIONS

2a

PER CURIAM

Defendants City of Perth Amboy and a number of its

government officials appeal from a summary judgment

entered by the Superior Court, Law Division, enforcing an

order issued by plaintiff Middlesex County Board of Taxa-

tion requiring the city to undertake a real property revalua-

tion. By its counterclaim, defendants sought to raise a

variety of federal and state constitutional challenges to the

validity of this State’s local real property taxation system.

Having reviewed the record and the argument of coun-

sel, we agree with Judge Andrews that the perceived inequi-

ties in the system complained of by plaintiff are not remedial

by way of their broad-based att»ck in a judicial forum. See

Robinson v. Cahill, 62 N.J. 473, 502-503 (1973), cert. den.

414 U.S. 976 (1973). Bonnet v. State, 155 N.J.Super. 520,

529-530 (App. Div. 1978), aff'd 0.b., 78 N.J. 325 (1978).

Accordingly, we affirm substantially for the reasons

expressed by Judge Andrews in his oral opinion.

Affirmed.

3a

APPENDIX B

APPENDIX B — ORDER OF THE SUPREME

COURT OF NEW JERSEY DENYING PETITION

FOR CERTIFICATION FILED JUNE 30, 1986.

SUPREME COURT OF NEW JERSEY

C-1057 SEPTEMBER TERM 1985

25,551

MIDDLESEX COUNTY )

BOARD OF TAXATION,

Plaintifj-Respondent,

V.

CiTy OF PERTH AMBOY, ON PETITION For

et al, CERTIFICATION

Defendants,

and + Filed Supreme Court

GEORGE J. OTLOWSKI, June 30, 1986

et al,

Defendant-Third Party Clerk

Plaintiffs-Petitioners,

v.

THOMAS H. KEAN, et al,

Third-Party Defendants. |

To the Appellate Division, Superior Court:

A petition for certification of the judgment in A-5181-

84T1 having been submitted to this Court, and the Court

having considered the same;

It is ORDERED that the petition for certification is

denied with costs.

WITNESS, the Honorable Robert L. Clifford, Presid-

ing Justice at Trenton, this 27th day of June, 1986.

CLERK OF THE SUPREME COURT

4a

APPENDIX C

APPENDIX C — ORAL OPINION OF

JUDGE ANDREW, JR. SUPERIOR COURT OF

NEW JERSEY, TRIAL LEVEL, DATED JUNE 7, 1985

MR. HAUSHALTER: Yes, yes, your Honor.

MR. LEVINE: Thank you.

THE COURT: All right, gentlemen, I want to make

a complete record with regard to it because I think the issue

is extremely important. And I recognize the arguments that

have been made by Mr. Kovacs and by Mr. Haushalter.

Specifically, the motion that is before me today is one

for summary judgment which has been brought by plaintiff,

the Middlesex Board of Taxation, seeking court enforce-

ment of a revaluation order directed at defendant, the City

of Perth Amboy.

Plaintiff issued an order on October 1, 1984 requiring

defendant and its officials to commence a real property

revaluation to be affective for the 1986 tax year. In accord-

ance with N.J.A.C. 18:12A-1.14(b), the revaluation order

was approved by the Director of the Division of Taxation on

October 22, 1984.

Defendants did not appeal the validity or propriety of

the revaluation order within the applicable 45-day limita-

tion period prescribed by N.J.S.A. 54:51A-1(a), nor have

defendants to date attempted to adopt a program for imple-

mentation of a revaluation.

On February 21, 1985, plaintiff filed the present action

in lieu of prerogative writs in the nature of mandamus with

the Superior Court, Law Division seeking court enforce-

ment of the revaluation order.

a ao

Sa

On May 6, 1985, certain defendants filed an answer

containing a counterclaim against plaintiff and a third-party

complaint against the Governor, the Treasurer, the Director

of the Division of Taxation, the Attorney General, legisla-

tive leaders and the members of the Middlesex County

Board of Taxation challenging the revaluation order on the

following grounds.

One, that revaluation will so increase the property tax

load on those property owners least able to pay the alleged

increase in taxes so as to constitute a taking of the property

in violation of due process under the federal and state

constitutions.

Two, that revaluation will deny certain taxpayers of

Perth Amb »y equal protection of the law by denying them

rights and privileges which other taxpayers will be receiving.

Three, that the municipal boundaries by being co-

extensive with taxing districts for purposes of raising prop-

erty taxes for county and municipal and for schools are

arbitrarily established and favor certain citizens to the detri-

ment of other citizens.

Four, that the revaluation will have a negative impact

upon the minority population of Perth Amboy in violation of

the New Jersey and the United States Constitutions and 42

U.S.C.A., Section 1983. I note parenthetically that the

defendants did not brief the particular question as to a

violation of Section 1983, therefore, I’ve concluded that this

allegation was abandoned.

Five, that the system of providing state aid to munici-

palities is arbitrary and violates the New Jersey and the

United States Constitutions.

Six, that the present State tax system has overburdened

Perth Amboy to the extent that it is unable to provide its

6a

citizens with the essential services that they are entitled to

under the State and the United States Constitutions.

Alleging that there are no material facts in dispute,

plaintiff bases its motion for summary judgment on the

following grounds.

One, the County Tax Board is empowered to order

revaluation which as in the case of defendants will correct

inequities in assessments under local property tax law. This

has not been disputed by defendants.

Two, defendants third-party plaintiffs cannot now by

way of counterclaim or otherwise challenge the propriety of

the revaluation order because the applicabie statutory limi-

tation period has expired.

Three, this case does not fall into an exception which

might permit extension of the statutory limitations period.

And four, accepting defendant third-party plaintiff's

counterclaim and complaint as timely, defendants third-

party plaintiffs are without standing to raise any constitu-

tional challenge to the local property tax laws.

Moreover, substantive consideration of the constitu-

tional challenges on the merits will reveal that the general

local property tax scheme is valid.

Defendant third-party plaintiffs respond to the present

motion alleging, one, summary judgment should be denied

because the record before the Court is incomplete and

defendants should be permitted additional discovery.

Two, defendant, the City of Perth Amboy, has standing

to challenge the constitutionality of the local property tax

scheme.

MO die

Ta

Three, the constitutional challenges presented rise to

the level necessary to enlarge the applicable statutory limi-

tation period so as to permit consideration of the issues

raised.

And four, consideration of the constitutional chal-

lenges on the merits reveals that the New Jersey local prop-

erty tax scheme N.J.S.A. 54:4-1 et seq is constitutionally

infirm.

To being with, I cannot find merit in defendants’ claim

that summary judgment would be premature if granted.

Defendants have had since October of 1984 to contest the

revaluation order in the proper forum and obtain discovery

but have chosen to do nothing until required to respond to

the action instituted by plaintiff to secure judicial compul-

sion of plaintiff's revaluation order.

Defendants’ failure to act will not bar substantive con-

sideration of plaintiff's motion.

Defendants have admitted to exceeding the 45-day lim-

itation period within which to challenge actions of the

County Board pursuant to N.J.S.A. 54:51A-1(a). While

plaintiff asserts defendeats untimely filing as grounds for

summary judgment, defendants contend that the issues

raised by their challenges to the revaluation order warrant

an extension of the 45-day limitation period.

Pursuant to Rule 4:69-6 actions in lieu of prerogative

writs must be filed, “Within 45 days after the accrual of the

right to review.” Under Rule 4:69-6(c) this limitation period

may be enlarged “where the interest of justice so requires.”

I am not certain that the timeliness of defendants’ defensive

claims should be measured by Rule 4:69-6 because the limi-

tation period prescribed is set forth in N.J.S.A. 54:51A-1(a)

which is a taxing statute limitation period and not a limita-

tion period for actions in lieu of prerogative writs. But

8a

because it is my firm belief that the same policy considera-

tion should control in the Superior Court as in the Tax Court

relative to proceedings involving tax assessments, I consider

it preferable to consider defendants’ defensive claims in the

context of a filing in the Superior Court in lieu of preroga-

tive writs.

Subsections C of Rule 40 — of Rule 4:69-6 has been

interpreted to permit extension of the 45-day limitations

period under two circumstances which are potentially appli-

cable to the facts of this case. Namely, where the pleadings

raise an important public rather private interest which

requires adjudication or clarification; and where the plead-

ings raise novel and substantial constitutional questions.

The presence of a novel and substantial constitutional

issue raised by defendants in the present case requires con-

sideration of the relative merits of each constitutional

attack. Defendants begin by alleging that enforcement of

N.J.S.A. 54:4-1 et seq, the local property tax law, directly

contravenes Article 8, Section 3, paragraph | of the New

Jersey Constitution and the public policy of the State. The

constitutional provision provides in part that “the clearance

replanning development or redevelop-ment of blighted areas

shall be of public purpose and public use for which private

property may be taken or acquired.”

Defendants have detailed the history of this provision

and have pointed out that the tax clause of the New Jersey

Constitution in Article 8, Section 1, paragraph 1(a) pro-

vides that property shall be assessed for taxation under gen-

eral laws and by uniform rules according to the same

standard of value. This particular provision further provides

“except as otherwise permitted herein.” From this exception

language defendants argue that the avoidance of blight con-

stitutes an exception to the same standard of value and

9a

uniformity requirement and that Perth Amboy would qual-

ify for relief under the statutory provisions implementing

the constitutional authority for biighted property.

I find this reasoning is flawed for two reasons. First,

defendants have misconstrued the impact of the phrase

“except as otherwise permitted herein.” As the Tax Court

recounted in its opinion in Centex Homes of New Jersey v.

Manalapan Township 4 N.J. Tax 599 at 605-606, that

phrase was made an amendment to our State Constitution

for the purpose of accommodating a legislative enactment

granting preferential tax treatment to farmland in this

State. The Farmland Assessment Act of 1964 N.J.S.A.

54:4-23 et seq, accords preferential treatment to taxation of

real property actively devoted to agricultural use. However,

in 1962 our Supreme Court declared that any legislative

enactment which permitted preferential tax treatment to

farmland was in violation of Article 8, Section 1, para-

graph 1 of the State Constitution which mandated that all

real property be assessed according to the same standard of

value. Switz v. Kingsley, 37 N.J. 566 at 585.

What made the Farmland Assessment Act as it pres-

ently operates a constitutional statute was the amendment

of Article 8, Section 1, paragraph 1 which was drafted to

enable taxation of farmland to deviate from the standard of

value applied to other real property in the name of advanc-

ing the public policy of encouraging retention of farmland.

The only exception to the criteria of the same standard of

value and by uniform rule is the assessment of duly qualified

farmland. And that was the only exception that was

intended by the amendment to the Constitution in 1963, as

is readily seen by a review of Senate concurrent resolution

number 16 which was adepted in May of 1963.

,

10a

Keeping the origin of this constitutional amendment in

mind, clearly it does not serve the purpose suggested by

defendants.

Secondly, defendants’ argument is predicated on the

assumption that a revaluation to bring all property values

into line where there exists as present a disparate assessment

pattern would result in total blight in Perth Amboy. This is

total speculation and conjecture. Even if the two constitu-

tional provisions could be construed to have the provision

authorizing special treatment for blighted areas as an

exception to the same standard of value and uniform rules

requirement of Article 8, Section 1, paragraph 1(a) of the

Constitution, the conclusion proposed is that an admittedly

disparate assessment practice should be continued to avoid

possible blight. I find defendants’ position to be totally lack-

ing in substance. I say admittedly disparate assessment

practice because defendants have not seen fit to controvert

any of plaintiff's findings and conclusions which resulted in

plaintiff's issuance of a revaluation order on October 1,

1984.

The legislature can provide for exemptions from taxa-

tion on their proper classifications to include those for

blighted areas as advanced by defendants. But once real

property has been designated for local property taxation, it

must be taxed by a uniform rules according to the same

standard of value. Here true value or fair market value.

Defendants’ second argument is that the State system

which provides that taxing boundaries be co-extensive with

the geographic boundaries of municipalities and counties is

unreasonable, arbitrary and capricious and violates the

United States and New Jersey Constitutions. The argument

is made that some local taxing districts are unable to raise

a a

lla

adequate revenue to provide for municipal services as com-

pared with other taxing districts with fewer needs and

greater wealth.

Further, that because Perth Amboy is in Middlesex

County, it must bear a large share of the cost of County

government. This argument was answered in Bonnet v.

State, 155 N.J. Super 520, at 527. The Appellate Division in

that case upheld the administrative functions where they

were attacked on the grounds that property taxes should be

uniform throughout the State rather than separately on a

county by county basis. In so doing, it quoted from Robin-

son v. Cahill, 62 N.J. 473, as follows “the short answer is

that the tax clause was not intended to say that a State

function may not be delegated to local government to be met

by local taxation. As we noted in point one, local govern-

ment is simply an arm of the State with respect to the many

state functions which the State decides shall be performed

through local government. The tax clause that does not

restrict the State with respect to that decision. Rather, it

means that if the State decides to handle a service at state

level, and to do so on the basis of a property tax, it must tax

all taxable property in the State rather than only property in

a part of the State. And that if the responsibility for the

state function is assigned to local government, the local tax

must fall uniformly upon all taxable property within the

county or the municipality as the case may be.”

Accordingly, this Court finds no merit in defendants’

argument that the taxing district boundaries violate the

United States and New Jersey Constitutions.

Defendant next argues that a revaluation would dis-

criminate against and would have a negatively disportionate

impact on the minority population of Perth Amboy and

violates both federal and state Constitutions. However, the

revaluation order contains no provision which would treat

12a

any particular taxpayer differently. It merely seeks to treat

all in the same manner by complying with the constitutional

same standard of value and uniform rules mandate. Indeed,

defendants’ position would attempt to continue an uncontro-

verted discriminatory assessment pattern.

Defendant next argues that the need for government

services and the ability to provide those services has resulted

in a situation of a municipal overburden in Perth Amboy

which is perpetuated and exacerbated by the local property

tax law. This argument which in affect was also unsuccess-

fully put forward in Bonnet v. State must fail for the same

reasons stated in that particular case.

Further, a revaluation will not increase the municipal

burden but will redistribute it in accordance with the consti-

tutional requirement, the taxes be assessed by uniform rules

according to the same standard of value. Defendant recog-

nizes that the present situation in Perth Amboy is not in

accordance with the constitutional mandate of uniformity.

Consequently, a portion of the taxpayers of that taxing

district are bearing an unequal tax burden because taxes are

assessed either in excess of fair market value or because

some taxpayers are paying taxes assessed at a greater per-

centage of fair market value than others.

Defendant next argues that revaluation will result in an ~

increase in property taxes to a confiscatory level. This posi-

tion is totally lacking in merit since a revaluation can only

result — if properly done, can only result in an increase tax

in those situations where a taxpayer is presently paying less

than his fair share of the cost of government.

Defendants’ last argument is that the local property tax

law denies Perth Amboy and its citizens the equal protection

of the law and is in violation of both the federal and state

Constitutions in that governmental services vary among tax-

ing districts. There again, this particular position was

13a

advanced and rejected in Bonnet v. State which specifically

upheld the authority of the State to delegate its responsibili-

ties to its subdivisions despite unequal burdens among coun-

ties. The fact that various statutory provisions which have

attempted to relieve municipal burdens may not be ade-

quate is not sufficient reason to justify a departure from the

general principals enunciated in Bonnet v. State.

Based on what I have stated thus far, it seems evident

that the defendants’ constitutional challenges are neither

novel nor substantial, and as such do not warrant subverting

- the applicable 45-day limitation period.

But defendants also contend that there is present in this

case a public rather than private interest that requires adju-

dication and thereby warrants permission to raise an

untimely challenge. Defendants base their argument on the

fact that a successful challenge to the local property tax

scheme will impact on all residents of Perth Amboy through

resulting changes in revenue raising and allocation.

Challenges rising to the level of public interest neces-

sary to disregard technical time restraints have been recog-

nized in cases involving actions of municipal governing

bodies which impacted upon the general population in the

municipality. In Weehawken Environment Commit-

tee, Inc. v. Township of Weehawken, 161 N.J. Super 381, at

389-390, the Court granted a public interest exception to

the 45-day limitation period of Rule 4:69 based on extensive

public opposition to the municipality’s resolution granting

tax exempt status to a controversial private development

project.

Similarly, in Reahl v. Randolph Township Municipal

Utilities Authority, 163 N.J. Super 501, at 509-510, the

Court permitted late filing of an action in lieu of prerogative

writs where plaintiffs challenged the power of the Municipal

Utilies Authority to impose service charges on residents of

14a

single family dwelling units. In this regard, it suggested that

the case of Cervase v. Kawaida Towers, Inc., at 124 N.J.

Super 547 which was affirmed on the opinion below in

129 N.J. Super 124, be consulted.

The public interest exception rests on the presence of

an issue and I emphasis the word issue affecting the public

which requires adjudication or clarification. In the present

case, the public interest exists in the affect of the present

distribution of the tax burden on residents in the City of

Perth Amboy. Each resident’s right to have the disparities in

assessment equalized is the public interest which should be

adjudicated. However, the distinction between public inter-

est aS an exception as applied in the cases that I have

referred to and the interest of the public in the present case

is that plaintiff herein has recognized the present inequality

in assessment and seeks to provide a remedy through

revaluation.

Defendants on the other hand see the public interest as

a deprivation of constitutional rights and suggest that the

violations will go unremedied absent consideration of the

affects the present tax scheme on constitutional grounds.

On the contrary, the order to revalue property pres-

ently at issue is based entirely on plaintiff's recognition of

the adverse and inequitable impact of the present level of

assessment of residents of Perth Amboy.

The defendants have attempted to create a public inter-

est exception to the 45-day limitations period by alleging

that the public interest rests on constitutional grounds and

can only be adjudicated by a substantive consideration of

the constitutional attacks presented in the counterclaim and

third-party complaint. As I have previously indicated,

defendant’s attempts must fail for two reasons.

15a

First, as has already been stated, the constitutional

issues raised do not rise to the level necessary to overcome

the 45-day limitation period.

Secondly, absent any constitutional issues, there are no

issues in this case that require judicial resolution. Although

a revaluation affects the public interest, there is no dispute

that it is appropriate in Perth Amboy in consideration of the

uniformity provision in our State Constitution from which

defendants are not excluded.

Enforcement of plaintiff's revaluation order will not

work an injustice, but rather will advance the constitutional

goal of equality in sharing the burden of government.

In light of the defendants’ failure to successfully pre-

sent an exception to the 45-day limitations period, I con-

clude that the policy considerations relating to limitation

periods are paramount and mandate a conclusion that the

tax — excuse me — that the counterclaim and third-party

complaint are untimely. It is well settled that tax determina-

tion should reviewed in a manner in strict conformity with

statutory time limitations.

Accordingly, plaintiffs motion for summary judgment

is granted. In view of my ruling, I find it unnecessary to pass

upon the issue which has been raised of whether Perth

Amboy as a municipal corporation had the standing to chal-

lenge the constitutionality of a statute.

I have reviewed the order submitted by Mr. Haushalter

and I find that it is appropriate in this particular case, to

include the provision that Perth Amboy and its tax assessor

shall accomplish a complete revaluation to be effective not

for the 1986 tax year as originally envisioned by the order of

the County Board, but for the 1987 tax year and thus must

be completed by November 1, 1986.

l6a

As indicated in the order that I will sign, this Court will

retain jurisdiction of this matter in order to ensure full

compliance with the mandate and permit any party to make

application for further relief. And I recite this provision

because of Mr. Levine’s concern with regard to perhaps the

Town will not be able to comply with the requirement for a

complete revaluation by November 1, 1986. However, I

think it’s implicit within the order as submitted by plaintiff

that all that the County Board is seeking is that Perth

Amboy, with all due haste, proceed with the implimentation

of the revaluation which is sorely needed in Perth Amboy.

And if there are any good reasons as to why it cannot be

accomplished by this stated date. This Court is available to

listen to those reasons.

Absent any substantial reasons for a delay, it is the

order of this Court that Perth Amboy impliment revaluation

to be effective for the 1987 tax year.

I think that about covers it. Thank you very much,

gentlemen.

MR. HAUSHALTER: Thank you, Judge.

MR. KOVACS: Thank you, Judge.

MR. LEVINE: Thank you, Judge.

(Court adjourned.)

eek KKK *