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    NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT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

TAX COURT OF NEW JERSEY
DOCKET NO. 001036-1997

JAYDOR CORP., *

    Plaintiff, *

v. *

MILLBURN TOWNSHIP, *

    Defendant. *

        Decided: April 20, 1998

        Peter L. Davidson for plaintiff (Mandelbaum &
Mandelbaum, attorneys).

        John R. Lloyd for defendant (Rosenblum, Wolf &
Lloyd, attorneys).

SMALL, J.T.C.

    In this case I am called on to determine the proper application of discrimination relief under N.J.S.A. 54:51A-6 (L. 1973, c. 123, commonly known as chapter 123), when the assessment of only one parcel in a multiparcel, single economic unit is challenged.
    For 1997, the tax assessment of Block 1005, Lot 3, with a street address of 16 Bleeker Street, in Millburn, was as follows:
Land $ 766,600
Improvements 2,908,400
Total $3,675,000

    The plaintiff took an appeal from that assessment to this court pursuant to N.J.S.A. 54:3-21. After a trial, I concluded that the property was overassessed, applied discrimination relief provided by chapter 123, and reduced the assessment to:

Land $ 766,600
Improvements 2,407,000
Total $3,173,600

    The matter is before me on defendant Millburn's post judgment motion for reconsideration, pursuant to R. 1:7-4. See R. 8:7 and R. 8:10 with respect to motions brought pursuant to R. 1:7-4 in the Tax Court.
    The sole basis for defendant's asking me to reconsider my decision to reduce the assessment is the application of discrimination relief provided pursuant to chapter 123. The facts, and this court's finding of fact, are not in dispute. The subject parcel, the assessment of which was appealed, is one of five parcels owned by plaintiff, located in Springfield and Millburn Townships. Those parcels are described in the table which is found at the end of and is an integral part of this opinion.
    After a trial, in a bench opinion on February 5, 1998, I determined that (1) the five separately assessed parcels comprised a single economic unit, and (2) the fair market value of the entire economic unit was $7,325,000. The latter finding was based on an analysis of comparable sales of improved property and of income of comparable property and a reconciliation of those two determinations. At this time, neither party challenges my findings or asks me to rehear or reconsider these two findings.          Subsequent to my determination of value for the entire economic unit, I was obliged to determine whether the taxpayer was entitled to discrimination relief pursuant to chapter 123. See Passaic Street Realty Assoc., Inc. v. Garfield, 13 N.J. Tax 482 (Tax 1993). It is the way in which I applied the chapter 123 test for discrimination which defendant challenges in its motion.
    At trial, the only evidence I had of value for the unimproved parcels was a supplemental report and the testimony of plaintiff's expert, which concluded that the value of the vacant land involved in the economic unit which constitutes the subject property was $300,000 per acre. I found that the sliver property, one of three Millburn properties, had insignificant value. I found that the value of the second Millburn parcel was $300,000, and that the value of the two Springfield parcels was $264,000, for a total of $564,000.See footnote 1 I then subtracted that figure from the gross value of the single economic unit to arrive at a value of $6,761,000 for the subject property. For 1997, Millburn's chapter 123 ratio was 46.94%, with an upper limit of 53.98%. Comparing the value of the subject property to the assessment of the subject property yielded a ratio of 54.35%, which fell outside the chapter 123 corridor. Accordingly, I multiplied the value of the subject parcel ($6,761,000) times Millburn's chapter 123 ratio (.4694) to arrive at a proper assessment for the appealed property for 1997 ($3,173,613). See, generally, Passaic Street Realty, supra, 12 N.J. Tax at 485-6.

    Millburn Township challenges that calculation and asserts that since the property was valued as a single economic unit, I was obliged to test that valuation against the aggregate of the assessments of the five parcels constituting the economic unit. That calculation is straightforward when applied to the Millburn properties. Millburn suggests that when applied to the Springfield properties, I could come up with an imputed assessment by taking the original 1997 assessment, dividing it by Springfield's chapter 123 ratio to get an imputed fair market value, and then multiplying that fair market value by Millburn's chapter 123 ratio for a surrogate assessment, with a comparable chapter 123 ratio (what the Springfield property would have been assessed for by Millburn's assessor). Performing these calculations results in an aggregate ratio which falls within Millburn's chapter 123 corridor for 1997 and would lead to the conclusion that there should be no reduction in assessment of the appealed subject parcel.See footnote 2 In other words, since the aggregate fair market value and the aggregate assessments fall within the chapter 123 corridor, no adjustments to any of the five separate assessments need to be made, and in particular, no adjustment to the appealed assessment should be made.
    As authority for its proposed calculation, Millburn relies on

three cases, Purex Corp. v. Paterson, 8 N.J. Tax 121 (Tax 1986), Mobil Oil Corp. v. Greenwich Tp., 9 N.J. Tax 123 (Tax 1986), and Atlantic City v. Ginnetti, 17 N.J. Tax (Tax 1998), approved for publication April 16, 1998.
    In Purex, supra, Judge Kahn found that a taxpayer having appealed the tax assessments of two parcels, which constituted a single economic unit, but which were separately assessed, could not withdraw its appeal with respect to one of those parcels. It appeared from the facts that the parcel which the plaintiff taxpayer wanted to withdraw was substantially underassessed; the other parcel, the property for which the taxpayer wished to maintain the appeal, appeared to have been overassessed. Despite R. 8:3-9's indication that a matter could be withdrawn at any time, Judge Kahn found that R. 1:1-2 permitted him to relax or dispense with the rules in the interest of justice. He found that permitting the withdrawal would cause litigation gamesmanship and would lead to an inequitable result, namely, that the underassessed parcel would remain underassessed, while the taxpayer might achieve a reduction in assessment for the overassessed parcel. He found that the allocation of values as between the parcels was an administrative function, not significantly different from the allocation of assessments between land and improvements. See In re Appeals of Kents, 34 N.J. 21, 34 (1961); Glen Wall Assocs. v. Wall Tp., 6 N.J. Tax 24, 29 (Tax 1983), citing N.J.S.A. 54:4-26, rev'd, 99 N.J. 265 (1985). Allowing cherry picking, or gamesmanship on the part of a taxpayer, (i.e., to

appeal one but not all parts of a single economic unit) would not be appropriate.
    Nine months later, Judge Lario, in Mobil, supra, 9 N.J. Tax 123, 127 (Tax 1986), permitted the withdrawal of one parcel, because he said:
         On appeal of assessments, which have been
        determined to comprise a single economic
        unit it is immaterial whether an appeal
        of the assessment of one of the lots com-
prising the economic unit has been with-
        drawn. Once the correct assessment for
        the entire complex is determined the amount
        of assessment of the withdrawn lot will be
        subtracted from the total correct assessment
        and the balance will be allocated to the lot
        remaining under appeal. [Citing in a footnote
        Kearny Leasing Corp. v. Kearny, 6 N.J.Tax 363
(Tax 1984), aff'd, 7 N.J. Tax 665 (App. Div.
1985), certif.denied, 102 N.J. 340 (1985)]
        (Emphasis added).

    The cited cases, unlike the case before me, were cases in which all lots, at one time, had been appealed, and thus, were within the court's jurisdiction. Implicit in defendant municipality's argument in the motion before me is that the proper way in which a single economic unit must be treated is to in effect, take jurisdiction of all of the lots, even if they are not appealed. The court has no authority to change assessments of properties not appealed. The municipality argues that to compensate for any improper allocation of the values or assessments ascribed to each of the five parcels, the court should make all adjustments to the property which is appealed. If we consider that the total assessment against the taxpayer of a single economic unit is what matters, and that the allocation as between lots is an

administrative convenience of little relevance, this argument is most persuasive.
    In Atlantic City v. Ginnetti, 17 N.J. Tax , supra, Judge Rimm determined the assessment of three lots under appeal by first valuing those three appealed lots as well as a fourth unappealed lot which he determined to be part of a single economic unit. He then compared the aggregate value of the four lots to the aggregate assessments of the four lots and found the ratio of assessments to value fell outside the chapter 123 corridor. Next, he applied the chapter 123 ratio to the aggregate value of the four lots to determine the aggregate assessment of the four lots. Since one lot was not under appeal, he subtracted the assessment of that lot from the assessment of the four lots to determine the appropriate aggregate assessment of the three lots whose assessments had been challenged. Finally, he allocated that assessment to the three appealed lots based on the allocation of the original assessments.
    In this case, initially, I allocated value and then tested the value allocated to the single appealed lot against the assessment assigned to that lot and found that the ratio of assessment to value fell outside the chapter 123 corridor. In effect, I ignored the assessments on the other four parcels.
    In this case, the net result of accepting defendant's argument would be that parcels found to be underassessed, namely the unimproved, unappealed parcels, would have their value captured in the assessment of the appealed parcel. This would result in a transfer of assessable value from the four unappealed lots to the

appealed lot. In Mobil, supra, and Purex, supra, all of the parcels were in the same taxing jurisdiction, and all of the assessments of the parcels in the single economic unit had been appealed. In this case, the assessment of only one of the five parcels constituting the economic unit has been appealed. In this case, were I to adopt Millburn's argument, there would be a transfer of assessable value from the Springfield properties to the Millburn property. Nevertheless, Springfield would not be harmed, because its assessment would not be disturbed. It would be free, in future years, to recapture some of that value by reassessing the unappealed, and apparently undervalued, property within its taxing jurisdiction.
    My initial approach, in this matter, was simply to allocate value as between the properties and to perform the chapter 123 calculation with respect to the value and the assessment of the single appealed property. Because not all of the assessments were appealed, this would result in a reduction in the assessment of the appealed property, and a maintenance of the apparently underassessed values of the unappealed properties. As Judge Kahn indicated in Purex Corp., this "would create an inequitable result" (8 N.J. Tax at 125), and would "result in a use of the pleading process as a form of gamesmanship." 8 N.J. Tax at 126.
    One could argue on taxpayer's behalf, that when Millburn received notice that the assessment of the appealed parcel was challenged, Millburn could have brought appeals with respect to the other parcels which constitute the single economic unit. (One

wonders how Millburn would deal with the issue of the Springfield properties and how Springfield would deal with the Millburn properties.See footnote 3)
    It should also be noted that there is nothing in the record in this case to indicate that the taxpayer was attempting to play any sort of litigational game in challenging only one of the five assessments. To adopt taxpayer's position might encourage gamesmanship. To adopt Millburn's position results in a shifting of value and assessment between parcels which constitute a single economic unit, although our courts have said that the proper allocation of values between a single economic unit (at least within a single municipality) is simply an administrative convenience. Purex, supra, and Mobil, supra.
    The law on the issue is not clear cut. On reflection, I have determined that Judge Rimm's approach in Ginnetti, supra, is the better practice, as it better assures that the sum total of the assessments of all parcels constituting the single economic unit is correct. His approach avoids the game playing alluded to in Purex, supra, and is consistent with Mobil's concern that the gross assessments for all parcels constituting a single economic unit be accurate, even if the values assigned to each parcel might not be precise.
    

        Obviously, the allocations made are usually
        arbitrary and the bifurcated assessment is
        not considered binding upon the taxing dis-
        trict, but instead the correct assessment is
        to be based on the total value of the entire
        complex. This requirement for separate tax
        value for each and every lot on a taxing dis-
        trict's map is a record-keeping method devised
        by the Director of Taxation, as mandated by the
        Legislature, to insure that all real property
        within a taxing district is either assessed or
        accounted for. N.J.S.A. 54:4-23.

        [Mobil, supra,9 N.J. Tax at 127].

The complexity introduced by the fact that the five parcels are in two separate municipalities has been accounted for by the two-step process of determining imputed values and surrogate Millburn assessments. There is a rough measure of justice in what is being done here. Ford Motor Co. v. Edison, 127 N.J. 290, 313 (1992).
    Although not argued by Millburn, another calculation to test the assessment of the subject for discrimination under chapter 123 would be to subtract from the value of the entire economic unit found by the court the implicit fair market value of the four unappealed parcels based on their assessments (i.e., the values found in Column 3 of the attached table.) This calculation avoids the complexity of converting the Springfield assessments to Millburn assessments.
            Thus: $7,325,000
            Less: ( 408,394)
( 8,735)
                 ( 43,668)
                 ( 17,724)
Equals $6,846,479

The result is the value of the subject for purposes of applying discrimination relief in accordance with chapter 123.

    Applying the test in this case yields a result that falls within the chapter 123 corridor.
        Assessment $3,675,000 = 53.67 (upper
Value $6,846,479 limit is 53.98)

    The "values" used for the four unappealed parcels are no more accurate than their assessments. For purposes of determining the assessment of a single parcel which is part of a single economic unit where not all parcels are appealed, this is appropriate. My determination of the value of the whole unit cannot be spread among the five parcels, because only one parcel was appealed. By not appealing the four other parcels, the parties are implicitly accepting the accuracy of those four assessments. The appropriate conclusion of this court is the proper assessment of the single lot appealed giving consideration to the assessments of the four unappealed lots. The result is different from what the result would be if the subject were not part of a single economic unit comprising more than one assessable lot.
    Thus, three separate calculations testing the assessments of the single economic unit against the value of the entire unit,
    (1) Total assessments
Total value of economic unit

    (2) Total assessment (converting Springfield assessments to
Millburn assessments)     
Total value of economic unit

    (3) Assessment of subject
     Value of subject less implicit value of the four unappealed lots, based on their assessments,
     divided by their municipalities' chapter 123 ratios,

yield ratios which fall within the chapter 123 corridor and warrant

affirmance of the original assessment. The only basis for reducing the assessment of the subject is to ignore the apparent underassessments of the four unappealed lots. In light of Purex, supra, Mobil, supra, and Ginnetti, supra, that is simply wrong.     Clearly, an appropriate, logical, and fair result would be to grant to this court the authority to consider not only the value, but the assessments of all properties which constitute a single economic unit when one of those parcels is appealed. But see fn 3, supra,and related text. In effect, a statute or rule which says that one part of a single economic unit cannot be challenged, similar to the decisional law that says that a land assessment may not be challenged independently of an improvement's assessment (only the entire assessment on a given parcel may be challenged). See Appeal of Kents, supra, 34 N.J. at 34, and Glen Wall Associates, supra, 6 N.J. Tax at 29. Absent such a rule, I am persuaded that Millburn's approach for the application of chapter 123 to a multi-parcel single economic unit in which not all of the assessments have been challenged is a better approach. I am persuaded that any one of the three calculations presented in this opinion is better than the calculations used in my initial determination.
    The total assessment of the taxpayer's property, when looking at the assessments on all five lots, does not exceed fair value.See footnote 4

The allocation of value between lots may be skewed and is not reflective of the proper allocation of fair value. Within the Township of Millburn, that creates no problem. As for the capture, by Millburn, of some of the taxable value of the Springfield properties, Springfield is not harmed, as its assessment was challenged neither by Springfield nor by the taxpayer, and the assessment originally made is maintained. With respect to the recapture of that value, Springfield is free to reassess the properties within its taxing jurisdiction.
    Unique factual situations cause difficulty in judicial determination. The facts which make this case unique are (1) only one of five parcels comprising a single economic unit was appealed; generally, that is not the case, and (2) the single economic unit exists and is separately assessed in more than a single taxing jurisdiction.
    For the reasons expressed above, the assessment appealed from will be affirmed. I will sign defendant's form of order submitted with its motion papers. The previously entered judgment will be voided, and a new judgment affirming the original assessment will be issued.