CAROL CRISPINO VS. TOWNSHIP OF SPARTA (L-0500-16, SUSSEX COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-3063-17T1
CAROL CRISPINO, VILMA
VERBER, MARK EDWARDS,
JORGE CABRERA, STEPHEN
CAPPADORA, PAUL O'KEEFE,
KENNETH GARDNER, and
MARY GARDNER,
Plaintiffs-Respondents,
v.
TOWNSHIP OF SPARTA,
Defendant-Appellant.
Argued April 1, 2019 – Decided May 6, 2019
Before Judges Fasciale and Rose.
On appeal from Superior Court of New Jersey, Law
Division, Sussex County, Docket No. L-0500-16.
Thomas N. Ryan argued the cause for appellant
(Laddey Clark & Ryan, LLP, attorneys; Thomas N.
Ryan and Jessica A. Jansyn on the briefs).
John E. Ursin argued the cause for respondents
(Schenck Price Smith & King, LLP, attorneys; John E.
Ursin and Sandra Calvert Nathans, on the brief).
PER CURIAM
This appeal has its genesis in the imposition of a special assessment by
defendant Township of Sparta on the owners of fifty-eight properties for the
rehabilitation of a private dam owned by the Glen Lake Beach Club, Inc.
(GLBC). Plaintiffs Carol Crispino, Vilma Verber, Mark Edwards, Jorge
Cabrera, Stephen Cappadora, Paul O'Keefe, Kenneth Gardner and Mary Gardner
are eight of those property owners. The assessment was imposed pursuant to
Resolution 6-1, which was adopted by the Township Council following
recommendations by the Township's expert consultant, Scott Holzhauer, CTA,
SCGREA.
Thereafter, plaintiffs filed a complaint in lieu of prerogative writs in the
Law Division. Pertinent to this appeal, plaintiffs challenged the special
assessment, seeking a declaration that the resolution was void. Following oral
argument, the trial court granted plaintiff's application and remanded the matter
to the Council to recommence the special assessment process. The Township
filed a motion for reconsideration, which the court denied as to the issues on
appeal. In sum, the trial court concluded the Council should have "excluded"
A-3063-17T1
2
Holzhauer's report because the expert's method of allocating the assessment was
a "net opinion" and, as such, reliance on the report was "arbitrary and
unreasonable."
On appeal, the Township renews the arguments it raised before the trial
court. Because we conclude the court improperly determined the expert's
opinion was net, and Holzhauer's report provided a sufficient basis to support
the Township's adoption of Resolution 6-1, we reverse.
I.
The GLBC is a private association, which was established to enable its
members and their guests "to enjoy boating, fishing, swimming and socializing
in a peaceful and pleasant environment" on the lake created by the private dam
at issue. Memberships with voting rights are available to property owners who
reside within a certain proximity to the lake; "special membership[s]" without
voting rights are available to members who do not live in that proximity.
Although plaintiffs are not members of the GLBC, their proximity to the dam
qualifies them for membership.
In approximately 2002, the New Jersey Department of Environmental
Protection (NJDEP) mandated repairs and rehabilitation of the dam (project) to
comply with State codes. In 2008, the GLBC applied for a loan to finance the
A-3063-17T1
3
project pursuant to the NJDEP's Dam Restoration and Inland Waters Projects
Loan Program, N.J.A.C. 7:24A-1.1 to -5.1. As required by N.J.S.A. 58:4-12(d),1
the Township cosigned the loan agreement, and planned for its repayment
through a special assessment on the properties benefitting from the project. In
2012, the GLBC noticed "property owners within the surrounding area" of the
lake that the Township would allocate and collect the cost of the project from
"various property owners."
Thereafter, the Council enacted ordinances, which authorized a special
assessment to repay the loan, and established the Assessment Commission to
determine the assessment. 2 Among other things, the Commission was
1
N.J.S.A. 58:4-12(d) provides, in pertinent part:
Loans awarded under this section to owners of private
dams or lake associations shall require local
government units to act as co-applicants. The cost of
payment of the principal and interest on these loans
shall be assessed, in the same manner as provided for
the assessment of local improvements generally under
chapter 56 of Title 40 of the Revised Statutes, against
the real estate benefited thereby in proportion to and not
in excess of the benefits conferred . . . .
2
In its initial decision the trial court also declared void the Township's
ordinance appointing the Commission. On reconsideration, the court
determined that ordinance was valid. The ordinance's validity is not an issue on
appeal.
A-3063-17T1
4
empowered to survey the property after the improvement was completed; hold
a hearing on notice to "all owners of all real estate affected"; and "[c]ertify the
amount of the assessment to the Mayor and Council by a written report duly
signed and accompanied by a map showing the subject real estate."
The Township then appointed Holzhauer to assist in determining the
assessment. Holzhauer made multiple site inspections, during which he
observed the project and the properties identified within the GLBC's boundary.
Among other documents, Holzhauer reviewed the GLBC's by-laws, the
governing statutes for private and public improvement projects, and the co -
borrower agreement between the Township and the GLBC.
In an eleven-page report, exclusive of exhibits, Holzhauer recommended
the Commission allocate the special assessment among fifty-eight properties
within the boundary of the GLBC because only those properties derived a
"specific benefit" from the project. Holzhauer defined the boundary by
transposing the perimeter description contained in the GLBC's by-laws onto the
Township's "most current [t]ax [m]aps[.]" Holzhauer did not include those
properties "excluded by law, by the [c]o-[b]orrower [a]greement, or by the terms
of the NJDEP [l]oan [a]greement, or that have otherwise been deemed to not be
viable for building and/or lake access . . . ."
A-3063-17T1
5
In designating properties for assessment, Holzhauer considered the
Commission's "function," i.e.,
to "allocate" the complete cost of the project in a logical
manner – based on incremental benefit as judged or
warranted – among ALL of the property owners within
the project boundary that c[ould] be reasonably
perceived as gaining a "peculiar benefit" or
"advantage" (as per [N.J.S.A. 40:56-273]). In this
community, the benefit attributable to the . . . lake is
based on the recreational amenity (through optional
membership) it provides to any desirous owner within
the reserve boundary, and the scenic vistas that are
available to a great majority of the properties that
surround it.
Pertinent to this appeal, Holzhauer selected fifty-eight properties based on
the owners' "right . . . to become a member of the [GLBC] and therefore have
access to the lake and other [GLBC] amenities." Holzhauer opined that the right
to membership "enhance[d the] property value for these property owners" that
was not otherwise available to anyone outside the GLBC boundary.
3
Pursuant to N.J.S.A. 40:56-27:
All assessments levied under this chapter for any local
improvement shall in each case be as nearly as may be
in proportion to and not in excess of the peculiar
benefit, advantage or increase in value which the
respective lots and parcels of real estate shall be
deemed to receive by reason of such improvement.
A-3063-17T1
6
Holzhauer's allocation among the selected property owners was based on
a "[three]-tier approach," under which he assigned values for: (1) basic
membership option lots; (2) lake access lots; and (3) lakefront lots. Because all
fifty-eight properties were eligible for membership in the GLBC, Holzhauer
"assigned a single 'share value' of 1.0." The properties located "immediately
across the street from the lake, enjoying direct pedestrian access to the lake and
generally unobstructed views, were assigned an incremental 0.5 share value over
the base share value." The lakefront properties, "which enjoy unimpeded direct
access to the lake, along with the potential for establishing lake edge
improvements (docks, etc.), were assigned an incremental 1.0 share value over
the base share." Holzhauer allocated the total cost of the assessment to each
property based on its share value.
In June 2016, the Commission recommended that the Council adopt
Holzhauer's "formulaic approach . . . result[ing] in the special assessments as
reflected in the spreadsheet" set forth in his report. During the next two months,
the Council held public meetings concerning a proposed resolution to adopt the
special assessment. During the July 26, 2016 meeting, after some affected
property owners commented that the Commission failed to consider certain
A-3063-17T1
7
information concerning the GLBC's boundaries, the Council carried the
resolution.
The Commission then considered the information and determined it did
not affect Holzhauer's special assessment allocation, and recommended that the
Township adopt Holzhauer's report. On August 23, 2016, the Council held a
final public meeting, during which it adopted Resolution 6-1 permitting the
Township to impose the special assessment.
Relevant here, in its ensuing decision the trial court rejected Holzhauer's
opinion as net for failure to "provide a methodology for including the houses
that were selected to be a part of the special assessment." Recognizing the expert
need not employ a "fair market benefit analysis," the court nonetheless
determined Holzhauer's methodology was arbitrary because it was based on
eligibility for membership in the GLBC. The court elaborated:
[S]uch indiscriminate power on behalf of the GLBC
invites ludicrous results. Under that theory, the GLBC,
a private entity, could have amended [its] by-laws to
include the whole Township of Sparta, and that could
have been used as a methodology by the expert,
requiring all property owners in the Township to
contribute to the assessment.
A-3063-17T1
8
II.
A.
We begin our review by recognizing we ordinarily defer to a trial court's
decision to admit expert testimony to "ensure that the proffered expert does not
offer a mere net opinion." Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J.
344, 371-72 (2011); N.J.R.E. 703. An expert is required to "'give the why and
wherefore' that supports the opinion, 'rather than a mere conclusion.'" Townsend
v. Pierre, 221 N.J. 36, 54 (2015) (quoting Borough of Saddle River v. 66 E.
Allendale, LLC, 216 N.J. 115, 144 (2013)).
Arguably, however, the Rules of Evidence do not apply to hearings
conducted by a municipality seeking to impose a special assessment. Cf.
N.J.R.E. 101(a)(3) ("proceedings before administrative agencies shall not be
governed by the [R]ules"); N.J.S.A. 50:55D-10(e) (providing planning boards
are not subject to the Rules); Baghdikian v. Bd. of Adjustment, 247 N.J. Super.
45, 49 (App. Div. 1991) (stating that a zoning board "cannot be equated with
courts" and "procedural safeguards employed in judicial proceedings" should
not be "imported wholesale" into proceedings before a land use board (quoting
City of Hackensack v. Winner, 82 N.J. 1, 29 (1980))). On that basis alone, the
court's application of the net opinion rule to bar Holzhauer's unrefuted
A-3063-17T1
9
methodology was misplaced. Indeed, a non-testimonial hearing by a municipal
body considering a special assessment, should not be subject to the stringent
evidential standards applicable to judicial proceedings. See N.J.R.E. 101(a)(2).
Nonetheless, assuming arguendo that the net opinion rule applies here,
Holzhauer's report clearly sets forth the "why" and "wherefore" of his
methodology. For example, Holzhauer limited the universe of properties
affected by the assessment to those "within the boundary of the [GLBC][,]" thus
dispelling the trial court's concern that the GLBC's by-laws could have been
amended to include every property in the Township. Nor do we discern
Holzhauer's methodology was arbitrary where, as here, it was based on those
properties that "have access to the lake and other [GLBC] amenities." Indeed,
Holzhauer selected the assessed properties because they met the statutory
definition of "peculiar benefit" or "advantage" by virtue of their proximity to the
lake and its recreational amenities "through optional membership[.]"
Holzhauer's report further detailed his analysis and methodology for his "share
value" allocation. We therefore agree with the Township that its expert's
opinion was not net and was properly considered by the Council in adopting
Resolution 6-1.
A-3063-17T1
10
B.
Moreover, the standard of judicial review applicable to actions of
municipal governments is highly deferential. Courts do not sit in judgment of
the wisdom of municipal actions. Municipal ordinances and resolutions are
presumed to be valid and rational. See First Peoples Bank of N.J. v. Twp. of
Medford, 126 N.J. 413, 418 (1991); Hutton Park Gardens v. Town Council of
W. Orange, 68 N.J. 543, 564 (1975). In the absence of a constitutional or
statutory violation, municipal action may be overturned only if it was arbitrary,
capricious, or unreasonable. See, e.g., Ten Stary Dom P'ship v. Mauro, 216 N.J.
16, 33 (2013); Powerhouse Arts Dist. Neighborhood Ass'n v. City Council of
Jersey City, 413 N.J. Super. 322, 332 (App. Div. 2010); Cohen v. Bd. of
Adjustment, 396 N.J. Super. 608, 615 (App. Div. 2007).
However, "municipal action is not arbitrary and capricious if exercised
honestly and upon due consideration, even if an erroneous conclusion is
reached." Bryant v. City of Atl. City, 309 N.J. Super. 596, 610 (App. Div. 1998).
Further, municipal actions enjoy a presumption of validity. Ibid. Accordingly,
"a challenge to the validity of a municipal . . . action must overcome the
presumption of validity—a heavy burden." Ibid. Thus, courts focus on whether
there was substantial evidence to support the decision. See Concerned Citizens
A-3063-17T1
11
of Princeton, Inc. v. Mayor & Council of Princeton, 370 N.J. Super. 429, 453
(App. Div. 2004).
In exercising its review, the court presumes assessments were regularly
made and confirmed. See N.J.S.A. 40:56-33.4 A property owner bears the
burden of rebutting that presumption by clear and convincing evidence.
McNally v. Teaneck Twp., 75 N.J. 33, 44 (1977); In re Pub. Serv. Elec. & Gas
Co., 18 N.J. Super. 357, 364 (App. Div. 1952). On the one hand, the court does
not simply search the record to determine if there is sufficient, credible evidence
to support the municipality's decision as it would in review of an administrative
agency decision. See, e.g. Brady v. Bd. of Review, 152 N.J. 197, 210 (1997)
(reciting the scope of review of administrative agency fact-finding). On the
other hand, the court does not conduct a trial de novo on the proper assessment.
Instead, the reviewing court is required to determine whether it is persuaded, by
clear and convincing evidence, that the challenged decision was not "just and
fair." N.J.S.A. 40:56-54.
4
Although N.J.S.A. 40:56-33 pertains to public assessments, as noted above,
loans made for private dams under N.J.S.A. 58:4-12(d) are assessed "in the same
manner as provided for the assessment of local improvements generally under
chapter 56 of Title 40 of the Revised Statutes."
A-3063-17T1
12
Because we have concluded Holzhauer's opinion was not a net opinion,
and the methodology utilized in his report was properly considered by the
Council, we further conclude the Township's decision to adopt Resolution 6 -1
was neither arbitrary nor unreasonable. Rather, the municipal action here was
just and fair.
Reversed.
A-3063-17T1
13