Vena v. Borough of North Haledon. ( 2017 )

NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
TAX COURT OF NEW JERSEY
Kathi F. Fiamingo 153 Halsey Street
Judge Gibralter Building –8th Floor
Newark, New Jersey 07101
(609) 815 2922 EXT 54600
Fax: (973) 648-2149
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT
COMMITTEE ON OPINIONS
June 2, 2017
Joyce W. Murray, Esq.
33 Stockton Court
Newtown, PA 018940
Michael P. De Marco, Esq.
De Marco & De Marco
912 Belmont Avenue
North Haledon, NJ 07508
RE: Vena v. Borough of North Haledon
Docket No. 014550-2012
Counsel:
This is the court’s opinion in the above-referenced matter. This matter was submitted to
the court pursuant to R. 8:8-1(b) for resolution without a trial.
Because plaintiff has failed to overcome the presumption of correctness of the tax
assessment, the judgment of the Passaic County Board of Taxation is affirmed.
*
I. Facts and Procedural History
The following facts are obtained from the Joint Stipulation, including attached exhibits, submitted
by the parties.1
Plaintiff purchased a condominium unit known as 6 Peachtree Lane, North Haledon, New
Jersey (Block 58.03, Lot 29.04 on the official tax map) (the “subject property”). The condominium
association had been formed by Master Deed recorded in the Passaic County Register’s Office on
March 14, 2003. The deed by which plaintiff took title reflects that plaintiff purchased the subject
property from the developer on September 28, 2004, for a purchase price of $38,196. The deed
further reflects that plaintiff’s title is
subject to the terms, conditions, restrictions, limitations and provision (sic) as set
forth in the Affordable Housing Agreement dated, September 28, 2004, to be
recorded simultaneously herein (sic) in the office of the Clerk of Passaic County
and is also on file with the Clerk of the Borough of Haledon. This is a Low income
unit (sic)
The “Affordable Housing Agreement” (“AHA”) reflects that it is entered into by plaintiff
and the “Borough of North Haledon, or its designated assignee.”2 The AHA further provides that
the subject property is designated “low and moderate income housing” as defined by the Fair
Housing Act, N.J.S.A. 52:27D-301, et seq. (“FHA”) and that certain “covenants, conditions and
restrictions” are imposed upon the subject property for a period of “at least thirty (30) years.” In
particular, the AHA provides that:
[t]he Owner . . . shall not sell the unit at a Resale Price greater than an established
Base Price plus the allowable percentage of an increase as determined by the Index
applicable to the municipality in which the unit is located. However in no event
1
The Stipulation was initially submitted by plaintiff without the signature of defendant. Defendant’s counsel
orally represented to the Hon. Joshua D. Novin that defendant concurred with the Stipulation. Counsel subsequently
confirmed in writing that he joined in the stipulation of facts submitted by plaintiff. At the request of the court the
stipulation of facts was supplemented to include the date of COAH certification for the municipality’s affordable
housing plan which included the subject property.
2
Uncertified copies of the deed and Affordable Housing Agreement submitted by the parties suggest that the
deed and AHA were recorded in the Passaic County Register’s office on October 6, 2004.
2
shall the approved resale price be established at a lower level than the last recorded
purchase price.
“Index” is defined under the AHA as the “measured percentage of change in the median
income for a Household of four by geographic region using the Income guideline approved for use
by [the Council on Affordable Housing (“COAH”)]” and “Base Price” is defined as the initial sales
price.
North Haledon submitted a petition for COAH certification of its “fair share housing plan”
and received substantive certification on May 2, 2001. The municipality received credit for the
subject property as part of the plan included in the petition for which certification was granted.
Prior to 2012, the subject property was assessed as follows:
Land: $10,000
Improvements: 3,400
Total $13,400
As a result of a municipal-wide revaluation conducted in North Haledon (the
“municipality”) for tax year 2012, the assessment on the subject property was set as follows:
Land: $20,000
Improvements: 27,700
Total $47,700
Plaintiff appealed the assessment to the Passaic County Board of Taxation (“PCBT”) which
affirmed the assessment. The code noted on the Memorandum of Judgment was “2A.” At the
hearing before the PCBT, the Assessor testified that the subject property’s tax assessment had been
determined in accordance with an “online calculator” published by the New Jersey Department of
Community Affairs (DCA) on its website. Use of the referenced calculator indicated that the
3
“maximum allowable sale price” for 2011 was $47,723.3 Plaintiff thereafter filed a timely appeal
of the PCBT judgment with the Tax Court
II. Legal Standards
The court reviews this matter pursuant to R. 8:8-1(b), which provides that:
A party may at any time upon notice to all other parties move the submission of a
case for decision without trial, on the ground that sufficient facts have been
admitted, stipulated, established by depositions or otherwise included in the record.
The court may require the filing of any additional materials and briefs and oral
argument, or it may direct that the matter be placed upon the trial calendar.
“Subparagraph (b) of the rule is akin to a summary judgment practice and is particularly
appropriate in those cases, such as exemption cases, where the operative facts are not in dispute
but only the manner in which the law applies thereto.” Pressler and Verniero, Rules Governing
The Courts of the State of New Jersey, comment 1.1 on R. 8:8-1 (2017).
Summary judgment should be granted where “the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine
issue as to any material fact challenged and the moving party is entitled to a judgment or order as
a matter of law.” R. 4:46-2(c). In Brill v. Guardian Life Ins. Co., 142 N.J. 520, 523 (1995), our
Supreme Court established the standard for summary judgment as follows:
[W]hen deciding a motion for summary judgment under Rule 4:46-2, the
determination whether there exists a genuine issue with respect to a material fact
challenged requires the motion judge to consider whether the competent evidential
materials presented, when viewed in the light most favorable to the non-moving
party in consideration of the applicable evidentiary standard, are sufficient to permit
a rational factfinder to resolve the alleged disputed issue in favor of the non-moving
party.
3
The exhibit submitted by the parties was captioned “2014 COAH Re-Sale Price Indicator” and appears to
be dated 9/30/16. Although the parties submit to the court that the exhibit was “produced” by the municipal tax
assessor at the PCBT hearing, the court questions whether this exhibit could have been produced at a hearing held in
2012.
4
“The express import of the Brill decision was to ‘encourage trial courts not to refrain from
granting summary judgment when the proper circumstances present themselves.’” Township of
Howell Twp. v. Monmouth Cnty. Bd. of Taxation, 18 N.J. Tax 149, 153 (Tax 1999) (quoting Brill,
supra, 142 N.J. at 541).
“[T]he determination [of] whether there exists a genuine issue with respect to a material
fact challenged requires the motion judge to consider whether the competent evidential materials
presented, when viewed in the light most favorable to the non-moving party in consideration of
the applicable evidentiary standard, are sufficient to permit a rational factfinder to resolve the
alleged disputed issue in favor of the non-moving party.” Id. at 523. Brill, supra, 142 N.J. at 523.
The material facts, as set forth above, are not in dispute. The resolution of this matter turns
on the interpretation of regulations issued by the COAH and the New Jersey Housing and
Mortgage Finance Agency (“HMFA”).
III. Conclusions of Law
A. Plaintiff’s Procedural Challenge to the PCBT Judgment
As an initial matter, plaintiff first argues that the judgment of the PCBT was procedurally
deficient. The memorandum of judgment issued by the PCBT referenced Judgment Code “2A” in
affirming the assessment. The form of judgment provides various explanations for the codes
utilized by the Board in issuing judgment. The explanation for judgment code category 2 is:
2. Assessed Valuation Affirmed
A. Assessment within range (N.J.S.A. 54:3-22)
B. Presumption of Correctness not overturned
C. Personal Property
N.J.S.A. 54:3-22 provides generally for the hearing of any appeal made to the County
Board of Taxation and allows for the revision of the “taxable value” of the property being appealed
in circumstances where the percentage of assessed value to true value is above or below the
5
common level range (subsection (c)), or exceeds the county percentage level (subsections (d) and
(e)). Plaintiff correctly notes that those adjustments are inapplicable to “any tax year in which the
taxing district shall have completed and put into operation a district-wide revaluation program.”
N.J.S.A. 54:3-22(f). Plaintiff thus argues that the use of Judgment Code 2A, “Assessment within
Range” is contrary to the statute, and the basis for the judgment of the PCTB is “erroneous.”
It appears that plaintiff is correct that Judgement Code 2A was not a correct basis to affirm
an assessment set during a district-wide revaluation. That error, however, is of no consequence in
the matter before this court. This court determines all issues of fact and of law de novo. N.J.S.A.
2B:13-3(b). All Monmouth Landscaping & Design, Inc. v. Manalapan Tp., 23 N.J. Tax 250, 260
(Tax 2006).
A de novo hearing offers the reviewing court the opportunity to consider the matter
"anew, afresh [and] for a second time." Romanowski v. Township of Brick, 185
N.J. Super. 197, 204 (Law Div. 1982), aff'd o.b., 192 N.J. Super. 79,
(App.Div.1983). It is incumbent upon the reviewing court, in a de novo proceeding,
to make its own findings of fact. All relevant facts must be considered, "whether or
not they were previously considered...in making the assessment." Middlesex Water
Co. v. Director, Division of Taxation, 3 N.J. Tax 233 (Tax 1981). In tax appeal
matters, the reviewing court is required to review an assessment and "apply the
same statutory criteria that direct the assessor in the discharge of his statutory duty."
Chevron U.S.A., Inc. v. City of Perth Amboy, 9 N.J. Tax 571, 581 (Tax 1988). The
decisions of the Tax Court "must be based on the evidence before it and the data
that are properly at its disposal.
[City of Elizabeth v. 264 First St., LLC, 28 N.J. Tax 408, 447 (2015)]
Thus regardless of the code utilized by the PCTB, this court will decide the issues de novo.
The use of an incorrect code by the PCBT does not affect the court’s determination in this matter.4
Similarly, plaintiff’s complaint that the PCTB considered an unsigned spread sheet calculating the
4
maximum resale price in issuing its judgment is irrelevant to the court’s determination in this matter.
6
B. Plaintiff’s Substantive Challenge to Assessment
Substantively, plaintiff argues that the defendant’s reliance on COAH’s guidance to value
the subject property was inappropriate. Plaintiff does not argue that the maximum resale price is
an inappropriate basis upon which to determine an assessment for a property subject to the Fair
Housing Act. Plaintiff maintains that the methodology utilized by the on-line calculator published
by the DCA for use in determining the maximum resale price for affordable housing units was
flawed, because that calculator utilized an incorrect Index. Plaintiff submits that the calculation
provided to the court by him utilizing what he asserts is the correct Index should instead be
accepted by the court to set the maximum resale price and the assessment for the subject property.
The following brief history of Affordable Housing developments in this State is set forth
to provide context for plaintiff’s arguments in this matter. It is not, nor is it intended to be, a
detailed discussion of New Jersey’s affordable housing issues. Such a discussion is not required
for the resolution of this matter. 5
1. Brief History of Affordable Housing in New Jersey
In S. Burlington Cnty NAACP v. Twp. of Mount Laurel, 67 N.J. 151, appeal dismissed
and cert. denied, 423 U.S. 808, 96 S. Ct. 18 (1975) (“Mount Laurel I”) and S. Burlington Cnty
NAACP v. Twp. of Mount Laurel, 92 N.J. 158 (1983) (“Mount Laurel II”), the New Jersey
Supreme Court established and reaffirmed the fundamental constitutional and moral general
welfare obligation of municipalities to help people secure a decent home. Mount Laurel II, supra,
92 N.J. at 208. Municipalities satisfy their “constitutional obligation by affirmatively affording a
realistic opportunity for the construction of [their] fair share of the present and prospective regional
need for low and moderate income housing.” Id. at 205.
5
A thorough discussion of the history of affordable housing in this State may be found in the Supreme Court’s
decision at In Re Adoption of N.J.A.C. 5:96, 215 N.J. 578 (2013).
7
In light of the absence of a legislative solution to the provision of affordable housing in
New Jersey, in Mount Laurel II, supra, the court fashioned a judicial remedy to enforce the Mount
Laurel doctrine. It sanctioned a “builder’s remedy” by which builder-plaintiffs could sue
municipalities for “the opportunity to construct housing at higher densities than a municipality
otherwise would allow.” Mount Laurel II, supra, 92 N.J. at 279-281.
In 1985, the New Jersey Legislature enacted the FHA, N.J.S.A. 52:27D-301 to -329,
effective July 2, 1985, which codified the core constitutional holdings of the Mount Laurel
decisions. The FHA created a safe haven from suit for municipalities that bore their fair share of
their region’s low- and moderate-income housing. It created COAH, providing it with rulemaking
and adjudicatory powers to execute the provision of affordable housing in this state. In Re
Adoption of N.J.A.C. 5:96, 215 N.J. 578, 584-85 (2013). By petitioning COAH municipalities
could obtain certification evidencing their compliance with their constitutional obligations.
N.J.S.A. 52:27D-313. COAH was to review such petitions and grant or deny substantive
certification, with or without conditions. N.J.S.A. 52:27D-307 and -314. If granted certification,
the municipality was to be insulated from exclusionary zoning litigation for six years. N.J.S.A.
52:27D-313(a).6
COAH’s charge was to determine the housing needs at state and regional levels and adopt
criteria and guidelines for the determination of a municipality’s present and prospective fair share
of the housing need in a given region. Its assessment of each municipality’s affordable-housing
responsibility was to be updated every six years. N.J.S.A. 52:27D-307(c). In 2002, the FHA was
amended to require updates every ten years. Ibid.6
This period was extended to ten years in 2002.
8
In 1986 COAH adopted substantive rules governing the period of 1987 to 1993 – the First
Round Rules. See N.J.A.C. 5:92-1.1 to -18.20, Appendices A through F. Corresponding
procedural rules were also adopted at N.J.A.C. 5:91. In February 1991, COAH readopted N.J.A.C.
5:91 and 5:92 without change, to expire in February 1996. See 23 N.J.R. 688 (Mar. 4, 1991).
Substantive rules governing the Second Round covering the cumulative period of 1987 to 1999
were adopted by COAH in 1994 to expire in June 1999. See N.J.A.C. 5:93-1.1 to -15.1,
Appendices A through H.
Various legal challenges to the First and Second Round Rules failed. In Re N.J.A.C. 5:96,
supra, 215 N.J. at 592. The methodologies employed by COAH in the First and Second Round
Rules “largely followed the remedial approaches established in Mount Laurel II.” Id. at 593.
Although the Second Round Rules were due to expire in June, 1999, COAH did not timely
adopt the third round of rules. Instead, in May 1999, COAH readopted the substantive Second
Round Rules at N.J.A.C. 5:93, extending their expiration date to May 2004. See In Re Adoption
of N.J.A.C. 5:94 & 5:95 390 N.J. Super. 1, 11 (App. Div.), certif. denied, 192 N.J. 71 (2007).
COAH first proposed Third Round Rules in October 2003, which were thereafter re-
proposed in August 2004. Revised Third Round Rules were adopted in December 2004 to govern
the period 1999 to 2014 for municipalities that received Third Round substantive certification prior
to January 25, 2007. N.J.A.C. 5:94-1.2.
Parts of the Third Round Rules were invalidated and the matter was remanded to COAH
for the adoption of revised Third Round Rules. In Re N.J.A.C. 5:94 & 5:95, supra, 390 N.J. Super.
at 11. COAH proposed and subsequently adopted a number of amendments to the revised Third
Round Rules, effective June 2, 2008. See N.J.A.C. 5:96-1.1 to -20.4; N.J.A.C. 5:97-1.1 to -10.5,
Appendices A through F. Those rules were challenged and invalidated by the Appellate Division.
9
In Re Adoption of N.J.A.C. 5:96 and 5:97, 416 N.J. Super. 462 (App. Div. 2010). That decision
was stayed by the New Jersey Supreme Court, which thereafter affirmed the Appellate Division
and invalidated the regulations. In Re N.J.A.C. 5:96, supra, 215 N.J. at 586.
In its September 26, 2013 decision invalidating the Third Round Rules, our Supreme Court
endorsed the remedy of the Appellate Division and required COAH to adopt rules compliant with
the legislative intent of the FHA by February 26, 2014. Id. (2015). COAH failed to adopt such
rules, notwithstanding the Court’s order and the grant of extensions of the deadline to November
17, 2014. When brought before the Supreme Court on motions to enforce litigant’s rights, the
Court found that COAH was noncompliant with its statutory obligations and the requirements of
judicial orders entered against it and that further judicial intervention was needed to further the
constitutional mandate of affordable housing. In Re N.J.A.C. 5:96 & 5:97, 221 N.J. 1 (2015).
As a result, the Supreme Court ruled that as before the enactment of the FHA,
municipalities were to be subject to judicial review of their constitutional compliance with their
Mount Laurel obligations. Id. at 19-20. The exhaustion-of-administrative-remedies requirement
of the FHA was eliminated and the courts were to “resume their role as the forum of first instance
for evaluating municipal compliance with constitutional Mount Laurel obligations.” Id. at 20.
The court, while recognizing the plight of those municipalities which had obtained
certification from COAH under early versions of the Third Round Rules, noted that such rules
were invalid. Thus, the court found that despite such certifications, the ordinances of towns
receiving certification under the Third Round Rules must be reviewed to determine if they met the
Mount Laurel obligations of providing its “fair share of the present and prospective regional need
for low and moderate income housing.” Id. at 25. While granting certain concessions to
municipalities which took some action under the Third Round Rules, the housing plans of such
10
municipalities were not immune from judicial review for constitutional compliance. Furthermore,
the court left open the possibility of an administrative remedy, noting that its decision did not
prevent either “COAH or the Legislature from taking steps to restore a viable administrative
remedy that towns can use in satisfaction of their constitutional obligation.” Id. at 34.
The court also provided some guidance to the courts moving forward in reviewing housing
plans, noting the approval of methodologies from the First and Second Round Rules and aspects
of the two earlier versions of the Third Round Rules which were found to be valid. See Id. at 30-
34.
2. Presumption of Validity
“Original assessments and judgments of county boards of taxation are entitled to a
presumption of validity.” MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J.
Tax 364, 373 (Tax 1998). “Based on this presumption, the appealing taxpayer has the burden of
proving that the assessment is erroneous.” Pantasote Co. v. City of Passaic, 100 N.J. 408, 413
(1985) (citing Riverview Gardens v. North Arlington Borough, 9 N.J. 167, 174 (1952)). “The
presumption of correctness…stands, until sufficient competent evidence to the contrary is
adduced.” Little Egg Harbor Township v. Bonsangue, 316 N.J. Super. 271, 285-86 (App. Div.
1998).
The settled rule is that there is a presumption that an assessment made by the proper
authority is correct and the burden of proof is on the taxpayer to show otherwise.
And the taxpayer has not met this burden unless he has presented ... sufficient
competent evidence to overcome the presumption, that is, to establish a true
valuation of the property at variance with the assessment. In other words, it is not
sufficient for the taxpayer merely to introduce evidence: the presumption stands
until sufficient competent evidence is adduced to prove a true valuation different
from the assessment. Such evidence must be definite, positive and certain in quality
and quantity to overcome the presumption.
[Aetna Life Ins. Co. v. Newark City, 10 N.J. 99, 105 (1952) (citations omitted).]
11
Thus, at the close of plaintiff’s proofs, the court must be presented with evidence which
raises a “debatable question as to the validity of the assessment.” MSGW Real Estate Fund, LLC,
supra, 18 N.J. Tax at 376.
In evaluating whether the evidence presented meets the “cogent evidence” standard, the
court “must accept such evidence as true and accord the plaintiff all legitimate inferences which
can be deduced from the evidence.” Id. at 376 (citing Brill, supra, 42 N.J. 520 ). The evidence
presented, when viewed under the Brill standard “must be ‘sufficient to determine the value of the
property under appeal, thereby establishing the existence of a debatable question as to the
correctness of the assessment.’” West Colonial Enters, LLC v. City of East Orange, 20 N.J. Tax
576, 579 (Tax 2003) (quoting Lenal Properties, Inc. v. City of Jersey City, 18 N.J. Tax 405, 408
(Tax 1999), aff’d, 18 N.J. Tax 658 (App. Div. 2000), certif. denied, 165 N.J. 488 (2000)). “Only
after the presumption is overcome with sufficient evidence…must the court ‘appraise the
testimony, make a determination of true value and fix the assessment.’” Greenblatt v. Englewood
City, 26 N.J. Tax 41, 51-2 (Tax 2011) (quoting Rodwood Gardens, Inc. v. City of Summit, 188
N.J. Super. 34, 38-39 (App. Div. 1982)).
The court reviews the plaintiff’s presentation with those principles in mind and finds that
the plaintiff has failed to present sufficient evidence to establish a debatable question as to the
correctness of the assessment.
3. Discussion
a. Affordability Controls
Prior to 2001, “[t]hree agencies, COAH, the Department of Community Affairs (“DCA”),
and the [New Jersey Housing and Mortgage Finance Agency (“HMFA”)] each adopted distinct
sets of rules establishing controls on the continuing affordability of housing constructed pursuant
12
to the FHA.” In re Adoption of Unif. Hous. Affordability Controls, 390 N.J. Super. 89, 95-96
(App. Div. 2007). Effective October 1, 2001, the HMFA repealed its rules and adopted the
Uniform Housing Affordability Controls (UHAC), N.J.A.C. 80:26.1 to -26.26. See 33 N.J.R.
230(a).7 Simultaneously, COAH amended its substantive rules at N.J.A.C. 5:93-9.17 to provide
that
[COAH’s Controls on Affordability (Subchapter 9)] shall be effective for
municipalities that petition for substantive certification or amend a certified plan
including an affordable housing development before the effective date of the
Uniform Housing Affordability Controls, N.J.A.C. 5:80-26, October 1, 2001. For
municipalities that petition for substantive certification or amend a certified plan
including an affordable housing development on or after that date, this subchapter,
except for N.J.A.C. 5:93-9.2(f), 9.2(g) and 9.16, shall be inapplicable and the
affordable housing development shall be subject to the Uniform Housing
Affordability Controls set forth at N.J.A.C. 5:80-26.
[N.J.A.C. § 5:93-9.17.]
COAH did not repeal its Affordability Controls, but deferred to UHAC for housing
developments included in housing plans certified after its adoption. See 33 N.J.R. 248(a) (“The
adoption of this COAH proposed new rule and the [HMFA] proposed new rules would have the
effect of replacing COAH's current housing affordability controls . . . with the [HMFA’s] Uniform
Controls with respect to affordable housing developments that are a part of petitions for substantive
certification or amendments to certified plans submitted to COAH on or after the date of the
effective date of the new rule.”).8
North Haledon filed a petition for substantive certification with March 20, 2000. That
petition was reviewed and COAH certification was issued May 2, 2001. The parties have
7
UHAC were further amended in 2004, including the amendment to N.J.A.C. 5:80-26.6(d) at issue here, infra.
8
See also Understanding UHAC, A Guide to the Uniform Housing Affordability Controls for Administrators
of Affordable Housing, at 4, http://nj.gov/dca/services/lps/hss/admin-files/2006uhacmanual.pdf (“Any units in a Plan
that, prior to October 1, 2001, received substantive certification from COAH (N.J.A.C. 5:93-9.17), a Court judgment
of compliance, or were governed by a grant agreement or contract will have its control period governed by the
applicable substantive certification (N.J.A.C. 5:93), judgment or grant agreement or contract.”).
13
stipulated that the subject property was included in North Haledon’s fair share plan certified on
May 2, 2001. According to N.J.A.C. 5:93-9.17, the affordability controls set forth at N.J.A.C.
5:93-9 et seq. apply to the subject property and UHAC is inapplicable. Plaintiff maintains however
that, despite the plain language of the regulation, UHAC is applicable to the subject property and
should be applied to establish the maximum resale price.
In order to appreciate the essence of plaintiff’s argument, a comparison of the competing
provisions establishing maximum resale prices under COAH’s affordability controls (N.J.A.C.
5:93-9.15) and those under UHAC (N.J.A.C. 5:80-26.d) is necessary.
Specifically, N.J.A.C. 5:93-9.15 provides: “[t]he price of an owner-occupied housing unit
may increase annually based on the percentage increase in the regional median income limit for
each housing region. In no event shall the maximum resale price established by the administrative
entity be lower than the last recorded purchase price.” (Emphasis added.)
The corresponding provision in UHAC, N.J.A.C. 5:80-26.d, provides:
[t]he maximum resale price for a restricted ownership unit, if the resale occurs prior
to the one-year anniversary of the date on which title to the unit was first transferred
to a certified household, is the initial purchase price. If the resale occurs on or after
such anniversary date, the maximum resale price shall be consistent with the
regional income limits most recently published by COAH and calculated pursuant
to N.J.A.C. 5:94-7.2(b). The administrative agent shall approve all resale prices, in
writing and in advance of the resale, to assure compliance with the foregoing
standards. (Emphasis added.)
N.J.A.C. 5:94-7.2(b) provides:
The price and rent of low and moderate income units may be increased annually
based on the percentage increase in the Housing Consumer Price Index for the
United States. This increase shall not exceed nine percent in any one year. Rents
for units constructed pursuant to low income tax credit regulations shall be indexed
pursuant to the regulations governing low income tax credits. (Emphasis added.)
Plaintiff maintains that if the increases in the Housing Consumer Price Index (“HCPI”)
since plaintiff purchased the subject property are utilized, the maximum resale price of the subject
14
property would be $44,142, not $47,723, as determined by the on-line calculator.9 Plaintiff argues
that his calculation of the maximum resale price using the HCPI as required by UHAC’s reference
to N.J.A.C. 5:94-7.2(b) controls to establish the proper tax assessment of the subject property.
In support of his argument that the provisions of UHAC apply, plaintiff refers to N.J.A.C.
5:80-26.1 which provides:
This subchapter is designed to implement the New Jersey Fair Housing Act
(N.J.S.A. 52:27D-301 et seq.) by assuring that low-and moderate-income units
created under the Act are occupied by low-and moderate-income households for an
appropriate period of time. This subchapter provides rules for the establishment and
administration of affordability controls on restricted units that receive COAH credit
under the Fair Housing Act; that receive funding from the Division under the
Neighborhood Preservation Balanced Housing Program; that receive funding from
the Agency under its UHORP and MONI programs; or with respect to which a
municipality or developer contracts with the Agency, HAS or other experienced
administrative agent approved by DCA, the Agency or COAH for the
administration of affordability controls pursuant to the Fair Housing Act. Unless
expressly stated otherwise herein, this subchapter shall apply to all restricted units
described in the foregoing sentence, regardless of the date on which the units were
created; provided, however, that the rules do not apply to units qualifying for the
Federal Low-Income Housing Tax Credit under Section 42 of the Internal Revenue
Code, units that receive Balanced Housing funds under the Agency's Home Express
program or to units receiving assistance under the Federal HOME program, 24
C.F.R. § 92.252(e), § 92.254(a)(4); HUD 202 program, 24 C.F.R. Part 891; HUD
811 program, 24 C.F.R. Part 890; HUD HOPE VI program; or Federal Home Loan
Bank, Affordable Housing Program, 12 C.F.R. Part 60.
[N.J.A.C. 5:80-26.1 (emphasis added).]
Although plaintiff insists that the provisions of UHAC trump those of COAH, it is clear
that N.J.A.C. 5:93-9.17 controls. See In Re Adoption of Uniform Housing Affordability Controls,
supra, 390 N.J. Super. at 101-02 (COAH, not HMFA has primary responsibility of implementing
the Mount Laurel Doctrine. HMFA’s role under FHA is to complement COAH’s interpretation of
Mount Laurel doctrine, not to supersede it.) COAH’s adoption of UHAC was limited to housing
9
The parties presented as a joint exhibit the percent change in the Housing category for the Consumer Price
Index for All Urban Consumers (CPI-U) from 2004 to 2012 to support plaintiff’s calculation of the maximum resale
price in 2011. The court makes no determination as to the accuracy of those calculations.
15
developments that are a part of petitions for substantive certification submitted to COAH after
October 1, 2001. Such a determination was completely within the discretion and authority of
COAH. UHAC, N.J.A.C. 5:80-26.1 to -26.26, was adopted by the HMFA “pursuant to the
authority of the New Jersey Housing and Mortgage Finance Agency Law of 1983, N.J.S.A.
55:14K-1, et. seq.” N.J.A.C. 5:80-1.1. What plaintiff miscomprehends is that but for the
incorporation of UHAC by COAH pursuant to N.J.A.C. 5:93-9.17 the affordability controls set
forth in subchapter 9 would have continued to apply in all COAH certified housing and UHAC
would be wholly inapplicable.
Plaintiff’s citation to U.S. Bank, N.A. v. Hough, 416 N,.J. Super. 286 (App. Div. 2010),
rev’d and remanded 210 N.J. 187 (2012) is unpersuasive. In that matter, the court was reviewing
the application of UHAC to a mortgage placed on an affordable housing unit. The unit had been
purchased by the property owner prior to the adoption of UHAC by the HMFA, but the mortgage
was placed on the unit after its adoption. The court, without discussion,10 applied the provisions
of UHAC to the mortgage under review in that matter. On appeal, the New Jersey Supreme Court,
also without discussion, applied the provisions of UHAC to the mortgage. U.S. Bank, N.A. v.
Hough, 210 N.J. 187 (2012). It is unquestionable that the matter under review in those cases
involved the application of a regulation regulating excessive mortgages to a mortgage directly
under the authority of the HMFA. Plaintiff’s reliance on those cases to support his conclusion that
UHAC applies for all purposes to all affordable housing units “regardless of the date on which the
units were created” is misplaced. The HMFA was free to propose and adopt regulations to assist
10
Plaintiff refers to 416 N.J. Super 286, FN4 at 297 to support his position that the court concluded that the
provisions of UHAC were applicable notwithstanding the fact that the unit had been created prior to the adoption of
UHAC. The footnote merely indicates that, “Plaintiff does not contest that it was on constructive notice that the
property was an affordable housing unit, subject to the UHAC regulations.” If anything, this supports only that the
plaintiff concluded that UHAC was applicable.
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it in meeting its statutory oblilgations. Similarly, COAH was free to propose and adopt regulations
applicable to matters within its purview.
“The FHA vests COAH with ‘primary jurisdiction’ over the administration of housing
obligations and COAH’s power ‘is extremely broad.’” In Re Adoption of Uniform Housing
Affordability Controls, supra, 390 N.J. Super. at 101. Administrative regulations are presumed to
be valid. See New Jersey State League of Municipalities v. Dep't of Cmty. Affairs, 158 N.J. 211,
222, (1999); In re Adoption of Amendments to N.J.A.C. 5:93-1.3 and 5:93-5.3, 339 N.J. Super.
371, 383 (App.Div.2001). The party challenging a regulation has the burden of overcoming that
strong presumption. See Medical Soc'y of N.J. v. Department of Law & Pub. Safety, 120 N.J. 18,
25 (1990). An “agency's interpretation of the operative law is entitled to prevail, so long as it is
not plainly unreasonable.” Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 327 (1984).
“Whether construing a statute or a regulation, it is not [the court’s] function to ‘rewrite a plainly-
written enactment,’ or to presume that the drafter intended a meaning other than the one ‘expressed
by way of the plain language. U.S. Bank, N.A. v. Hough, supra 210 N.J. at 24.
The regulation at issue here is clear. Plaintiff has not met its burden to overcome the strong
presumption that the decision of COAH to retain its affordability controls for affordable housing
units which were part of a plan certified prior to October 1, 2001 was valid. Plaintiff has presented
nothing to this court which would lead it to conclude that the responsibilities devolved upon COAH
by the FHA were subsumed by those entrusted to the HMFA when it adopted UHAC. N.J.A.C.
5:93-9.17 is clear on its face. The provisions of UHAC are inapplicable to the subject property.
The court rejects plaintiff’s position to the extent that plaintiff relies on UHAC to support its
argument that the HCPI applies to calculate the maximum resale price of the subject property.
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b. Failure of Plaintiff’s Proofs
Furthermore, from a proof standpoint, plaintiff has not provided this court with any reliable
evidence that the on-line calculator is incorrect as applied to the subject property. That is, the court
has nothing before it to determine what measuring stick was used by the on-line calculator in the
calculation of maximum resale prices. The only evidence regarding the Index alleged to be utilized
in the on-line calculator is an unauthenticated email from an individual identified as a
representative from “Plan Administration, Council on Affordable Housing,” responding to a query
from counsel.11 The response from the COAH representative does not identify the Index used by
the on-line calculator in determining the maximum resale prices. Instead, the response indicates,
in part, that “[t]he calculator and the Maximum Resale Price is exactly what should be used in a
revaluation. Subchapter 94 is no longer a valid set of rules, it was replaced by 5:97 which
references the Uniform Housing Affordability Controls for administration of units, which states
that the resale prices should be based on the COAH calculator.”
While one might argue that the email supports the conclusion that UHAC (and therefore
the HCPI) was in fact utilized by the on-line calculator, plaintiff instead argues that the
representative’s reference to “5:97” supports his position that an incorrect Index was used.
N.J.A.C. 5:97-9.3(b), adopted as part of the now invalidated Third Round Rules established the
maximum resale price for COAH restricted units and provides that “[t]he price of owner-occupied
low- and moderate-income units may increase annually based on the percentage increase in the
regional median income limit for each housing region.” From that reference plaintiff concludes
that the HCPI was not used in the on-line calculator. Since plaintiff maintains that the use of any
11
The email included in the submission of the parties to the court does not include the entirety of the email
“chain.” The question posed by plaintiff’s counsel to which the COAH representative is responding in the email is
not included in the submission. Without the question being posed, it is difficult to assess the context of the answer.
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index other than the HCPI is contrary to the direction of UHAC (and specifically N.J.A.C. 5:80-
26.6), plaintiff contends that the results obtained from the on-line calculator must be rejected.
Since the assessment was derived from the online calculator, plaintiff then concludes that the
presumption of correctness of the assessment has been overcome.
A vague reference to a regulatory provision in an unauthenticated email is insufficient
proof to establish that the results obtained in the on-line calculator are invalid. Plaintiff provided
no testimony or certification from any source that reliably establishes the bases upon which the
annual increases in the on-line calculator were determined. There is nothing before this court upon
which to determine what methodology was used in determining the resale prices in the on-line
calculator. The reliability of the email provided by plaintiff intending to establish this fact is
questionable, at best.
Further, as determined above, the court rejects plaintiffs argument to the extent plaintiff
relies on the application of UHAC to support his position that the on-line calculator is incorrect.
c. Misapplication of Prowitz
Finally, the court finds plaintiff’s reliance on what it has determined is the maximum resale
price as the basis to overcome the presumption of correctness is misplaced. In Prowitz v.
Ridgefield Park Vill., 237 N.J. Super. 435, aff’d 122 N.J. 199 (1991), the court reviewed the real
property tax assessment on a single-family residential property which was a part of the
municipality’s affordable housing program. Although the program preceded the enactment of the
FHA, the unit was “creditable to [the municipality’s] affordable housing units within the
intendment of the [FHA].” Id. at 438. The court determined that “while the maximum resale price
obtainable under the deed restriction does not necessarily define assessable value, the resale price
is a factor that must be considered in fixing the assessment.” Id. at 439. See also, Elizabeth Center
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Apartments Urban-Renewal Corp. v. City of Elizabeth, 28 N.J. Tax 280 (App. Div.
2014)(limitations on sale imposed by a regulatory agreement with the Federal Housing Authority
must be considered in valuing the property for assessment purposes).
In setting the assessment during the district-wide revaluation, defendant relied upon
COAH’s advice that the results obtained from its on-line calculator was the correct manner to
determine the assessment. That was in keeping with the definition of Index as set forth in the AHA
governing the subject property and the unquestionable submission of the subject property to the
overall governance by COAH.
Plaintiff has provided nothing to this court to establish “a true valuation of the property at
variance with the assessment.” Aetna Life Ins. Co v. Newark City, supra, 10 N.J. at 105. The
evidence provided tends to establish only that the increases in the HCPI since plaintiff purchased
the subject property would result in a maximum resale price of $44,142. The court cannot
determine the relevance of that conclusion to the matter at hand. Plaintiff has neither established
that the HCPI is the appropriate Index to determine the maximum resale price of the subject
property under the applicable regulation, nor that the methodology utilized by COAH and the
municipality in setting subject property’s 2012 local property tax assessment was incorrect.
Furthermore the resale price is merely a factor in determining the assessable value of the
subject property under Prowitz, supra. Without more the court has nothing upon which to
determine the true value of the subject property. That the parties stipulated “at the County Tax
Board hearing” that the “subject property is unique and has no comparable sales available under
which it may be valued,” is of little assistance in determining the true value of the subject property
in the matter before this court.
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Viewing all of the evidence presented, plaintiff has failed to present sufficient competent
evidence to prove a value different from the assessment. As a result, plaintiff has failed to
overcome the presumption of correctness of the assessment. The assessment is affirmed.
IV. Conclusion
Plaintiff has failed to overcome the presumption of correctness of the assessment. The
court will enter judgment affirming the assessment.
Sincerely,
/s/Kathi F. Fiamingo, J.T.C.
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