Tax Abatement Court Opinion
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION, CIVIL PART
DOCKET NO. CAM-L-879-00
TRANSCRIPT OF JUDGE'S DECISION
TOWNSHIP OF VOORHEES and H.C. STEANLAND,
Place: Camden County Hall of Justice
101 S. Fifth Street
Camden, New Jersey 08103-4001
Date: November 13, 2000
BEFORE: HONORABLE FRANCIS J. ORLANDO, JR.,P.J.S.C.
MARCO M. AGOSTINI, ESQ. (Sole Practitioner) Attorney for the Plaintiff
JEFFREY S. BEENSTOCK, ESQ. (Levin & Hershenberg) Attorney for the Defendant
Transcriber Pat Hallman
DOMAN TRANSCRIBING & RECORDING SERVICE
P.O. Box 129
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Sound Recorded Recording Operator G. Lomanno
THE COURT: All right, this is an action in lieu of prerogative writs that comes to the Court by way of verified complaint. The action has its genesis in an ordinance enacted by the Township of Voorhees entitled "An Ordinance Authorized in the Execution of a Tax Abatement Agreement between the Township of Voorhees and H.C. Steanland for Premises Block 228, Lot 7." And the ordinance states in pertinent part, "Whereas a tax abatement application for a project pursuant to the act of the ordinance was filed by H.C. Steanland for a proposed skilled care sub-acute nursing facilities to be completed on the premises known as Block 228, Lot 7, the tax abatement application of H.C. Steanland for the project -- for a project -- for the premises is approved," and that was -- that ordinance was first introduced on November the 22nd 1999. It was thereafter adopted on December the 13th 1999.
This -- it was published in the Journal of Camden County on December the 17th 1999 and this law suit was instituted by Mr. Agostini, a resident of the Township of Voorhees and a member of the bar challenging that statute, challenging the -- or challenging that ordinance, challenging the ordinance which I guess created the tax abatement program 748-95 and its successor ordinance 943-99 and alleging a conflict of interest on the part of one of the many people Mr. Coloso (Phonetic) in his participation.
The first issue which the Court needs to address is the township's position that this action is barred because it was not instituted within 49 days. That limitation is set forth in the New Jersey Court Rules, Court Rule 4:69-6. However, the rule clearly provides that -- in subparagraph C that the Court may enlarge the period of time where it is manifest that the interest of justice so requires. And I am going to enlarge the period of time to the extent. Some may argue that it does not need to be enlarged because that there is a hefty tax abatement was granted then each year it's in existence it would continue to exist and, therefore, each tax bill when it comes due would give rise to a new 45-day limitation.
So whether we adopt that analysis or an analysis determining that the -- that the matter is such public importance, which it is a public importance because the -- it challenges the tax abatement program as it exists in Voorhees as well as this particular issue. Moreover in this particular case the applicant had not secured site plan approval yet and, therefore, is not unduly delayed. Both counsel have referenced the Willoughby vs. the Planning Board Township of - Planning Board of the Township of Deptford case, 306 NJ Super. 266 a 1997 Appellate Division case which provides that public interests -- where public interests are concerned the time limitation should be enlarged and this is such a public interest.
So accordingly, I am going to deny the township's application to dismiss the complaint based upon its assertion that it was not timely filed.
The next argument that I -- oh, the first argument made by the plaintiff that I will address is the argument that the ordinance should be stricken because of the use of the Journal newspaper for the publication of the ordinances. First of all I note that this was not raised in the plaintiff's complaint and -- however, because it has been briefed by both sides and has been presented to the Court I think it appropriate that I address it.
The criteria for the eligibility of a newspaper to publish legal notices within New Jersey is set forth in NJSA 35:1-1 et seq. "A newspaper to publish municipal notices must be printed in the English language, printed and published within the State of New Jersey, shall be a newspaper of general page circulation possessing an average news content of less than 35 percent, shall have been published continuously in the municipality where its publication office is situated for not less than two years, and shall have entered for two years as a second class mail matter under the postal laws and regulations. A newspaper that moves its publication to another office within the same county or in an adjacent county remains qualified for a period of two years. The municipality must publish notice that a newspaper published and circulated within the municipality, if one exists, and if not in a municipality published in the county and circulating within the municipality."NJSA 40:49-2 and 40:53-2.
"A governing body of the municipality may designate any newspaper or newspapers that satisfied these requirements as the municipalities official newspaper or newspapers," and that's NJSA 40:53-1.
Each year since 1982 the township has designated the Journal as an official newspaper for notices and advertisements that the township is required to publish by law. I find that the township did not violate the law by designating the Journal. The Journal meets all the statutory criteria that I have just enumerated. The plaintiff's argument is is that there are two few subscribers, the statutory scheme adopted by the legislature does not list any minimum number of subscribers way of numbers either by way of numbers or percentage of households within the township. The only requirement is that the newspaper must circulate within the municipality. It has met all the statutory criteria and, therefore, is deemed appropriate.
The next argument which the plaintiff raises is that Voorhees Township lacks the authority to have a tax abatement program. The basis for Voorhees Township enacting its tax abatement ordinance has its genesis in -- current genesis in 40A:21-1 which is known as the -- an act which is known as the five year exemption and abatement law.
And the legislative findings which are set forth in subsection 2 of the law provide that there are various statutes authorized by Article VIII, Section I, Paragraph 6 of the New Jersey Constitution which permit municipalities to grant for periods of five years exemptions or abatements or both from taxation in areas in need of rehabilitation or proven to effective in promoting the construction or rehabilitation of residential, commercial and industrial structures in areas threatened with economic and social decline.
There exists, however, a need to consolidate or make more coherent the most useful features of those various statutes in order to promote the most effective and coordinated use of the various authorizations afforded to municipalities and to include in-fill construction in a comprehensive strategy of rehabilitation of those areas by permitting exemptions and abatements for construction of new family and multiple family dwellings.
We go to Subsection 3 of the statute, the definitional section, and under Subsection b of 3 it defines an area in need of rehabilitation means a portion or all of the municipality which has been determined by law to be an area in need of rehabilitation or redevelopment. And then it refers to the Local Redevelopment Housing Law, the blighted area, or which has been determined to be in need of rehabilitation pursuant to public law. Chapter 104, which is formerly NJSA 54:4-3.72 et seq., public law Chapter 1254:4-3.95 et seq. or Public Law 1979 Chapter 233 which is NJSA 54:4-3.12.
Voorhees Township had enacted a resolution in October -- on October 10, 1978 pursuant to Public Law Chapter 104 which is one of the statutory basis that is NJSA: -- 54:4-3.72 which is one of the references under 40A:21-3 for the tax abatement program. It referred that ordinance to the County of Camden and the County of Camden enacted a resolution on January the 16th 1979 that provided that it has been established to the satisfaction of Camden County Planning Board that the Township of Voorhees contains area which may be designated as deteriorating, that has been established to the satisfaction of the Camden County Planning Board, that the Township of Voorhees has experienced a deterioration of its housing stock evidenced by statistics, this has determined by the 1970 U.S. census, that Voorhees Township has a lower moderate income housing need of 1,137 units, and therefore, the Planning Board resolved that the Township of Voorhees has neighborhoods which are endangered by deterioration and is entitled to qualified municipality status pursuant to Public Law 1977, Chapter 284 and is hereby formally granted such status.
The effect of that was -- the effect of those actions taken in 1978 and 1979 and thereafter the subsequent adoption of the five year exemption and abatement law is that the area in need of rehabilitation definition as defined in the five .year tax abatement law at 48:21-3 incorporates the determination that Voorhees is in need of rehabilitation pursuant to Public Law 1975, Chapter 104 and Public Law 1979, Chapter 233 and Public Law 1977, Chapter 12, thereby conferring on Voorhees Township the right or the qualification to grant tax abatements under the statutory scheme.
The argument that the statutory scheme requires a ten year renewal or only lasts for .ten years and thereafter must be renewed as applied to the 1978 and 79 act -- enactments is not persuasive. First of all it would have expired before the 1991 requirement with a ten year -- with the ten year renewals came into play.
Secondly, it makes more sense and makes common sense to say that it is part of the five year tax -- five year exemption and abatement law. That is the ten year renewal. There was a 1995 enactment which satisfies that criteria.
The issue which I do not reach today and perhaps the most interesting issue because I find that the plaintiff has not presented any persuasive proofs is that the factual underpinnings which gave rise to the 1978 and 1979 determinations do not presently exist in Voorhees Township. The plaintiff has made vague references to master plans which have not been supplied to the Court and has attached some sort of survey or publication by PSE&G which the Court finds wholly unpersuasive.
So the -- an issue which is perhaps a different issue or another issue for a different day is does one -- can one successful -- can one successfully challenge the Voorhees tax abatement program if one is able to demonstrate that the factual basis on which the 1979 and 1978 township resolution of 1979 Planning Board resolution are no longer in existence today. It seems to me that such litigation would require and would need an analysis that compares the factual basis on which the '78 and '79 resolutions were adopted with the factual setting that exists here today in the year 2000. You would need expert testimony. It also seems to me that the county planning board would have to be a necessary party to any such litigation because it would also be their determination which is being challenged.
I next turn to some specific challenges to the ordinance in question which we may call the Steanland Ordinance, Ordinance 966-99. And the tax abatement ordinance 943-99 establishes an approval process at Subsection 34.35A provides that an application for the five year tax exemption must be filed with the township clerk no sooner than the date the applicant receives preliminary site plan approval for the project from the applicable reviewing board.
Here the applicant -- while it's conceded that the applicant is required to secure site plan approval, this application was not only filed but it was approved prior to receiving preliminary site plan approval. It clearly violates the base of the town's own ordinance and, therefore, must be stricken on that basis. That is 966-99.
966-99 must also be stricken because of the participation of Mr. Schlosser. The attack on Mr. Schlosser' s participation is two-fold by the plaintiff. One, the plaintiff asserts that Mr. Schlosser own property which he characterizes as being adjacent to the subject property. The information provided by the township officials reveals that Mr. Schlosser, the property in which he is a partner is some 8/10ths of a mile away from the subject site. While there hasn't been any demonstration by the plaintiff that Mr. Sarkisian would benefit from the development of this project because of the property he owns 8/10ths of a mile away. Mr. Schlosser, excuse me. Thank you.
It it mere speculation on his part that Mr. Schlosser would benefit.
It's undisputed that Mr. Schlosser is a business partner of a John Sarkisian. The property in question is owned by Mr. Sarkisian's parents and Mr. Sarkisian is a realtor by profession. Mr. Sarkisian has provided the Court with a certification which I accept. And he indicates that -- in the certification that he is not receiving any financial benefit. He says there is no written agreement between himself and his parents for his involvement with the sale of the property. He will not receive a commission nor will his employer receive a commission.
However, Mr. Sarkisian marketed the property, negotiated the terms of the agreement of sale, and is indeed a central participant in the transaction. He has actively been working towards a consummation of the sale of the property. The -- in the leading most recent Supreme Court case of Wyzykowski vs. Rizas 132 NJ 509, a 1993 case, the Court noted that an actual conflict of interest is not the decisive factor nor is it whether the public servant succumbs to temptation but rather where there is a potential for conflict. A conflicting interest arises when the public official has an interest not shared in common with other members of the public.
Another way of analyzing the issue is to understand there cannot be a conflict of an interest where they do not exist -- realistically contradictory desires tugging the official in opposite directions. The Court notes that a commentator has distilled conflicts of interest situations which require disqualification into four different categories. And one of those categories is direct personal interest which is when an official votes on a matter that benefits a blood relative or close friend in a nonfinancial way but a matter of great importance. That is the case in which we have here.
Mr. Schlosser has a business partnership relationship with Mr. Sarkisian and he is -- and in voting on this tax abatement ordinance he' s voting on an issue that benefits Mr. Sarkisian in a nonfinancial way accepting Mr. Sarkisian's affidavit and certification that he receives no pay but is a matter of great importance and it seems to me that Mr. Sarkisian is, as I indicated, a central participant in attempting to consummate this transaction, he marketed the property, he negotiated the terms of the agreement of sale, and the conclusion of his transaction would be a benefit to Mr. Sarkisian since he would be able to achieve his goal. And it seems to me that in working to achieve this goal for the benefit of his parents is of interest to Mr. Sarkisian.
Therefore, it was improper for Mr. Schlosser to have participated in the discussions as well as to have voted on the ordinance. Accordingly because the internal procedures of the ordinance were not followed, that is the applicant did not secure preliminary final site plan before the ordinance was adopted and because of Mr. Schlosser's participation it is the decision of this Court to invalidate the ordinance which granted the tax abatement status to Mr. Steanland, and I believe that's Ordinance 966-99.
Mr. Agostini, you'll prepare an order consistent with the Court's judgment?
MR. AGOSTINI: Yes, I would appreciate -- do you want me to submit it or --
THE COURT: Yes. Thank you.
MR. AGOSTINI: Could I have --
THE COURT: Usually the prevailing party does that.
MR. AGOSTINI: Could I have a written opinion as enunciated by the Court or should I --
THE COURT: You can listen to the tape, you prepare the order, but - -
MR. AGOSTINI: Okay.
THE COURT: Thank you, and submit it to your adversaries under the five day rule. Any other issues, Counsel?
MR. BEENSTOCK: Just so I'm clear. Judge, you're leaving intact 748-95?
THE COURT: Yes, I'm leaving intact 748-95. I'm not -- Mr. Agostini did not carry the day on that today, but I guess if in the future what I wanted to make clear is if in the future the township passes another ordinance somebody may challenge it based upon the premise that the facts that exist in Voorhees are fundamentally different today than they were in 1978 and 1979. That would have to be dealt with at that time and it would seem to me it would involve a twofold analysis. One, f actually, can they demonstrate it; and two, and this is the legal discussion you and I had, even if they are able to demonstrate it, can they set it aside. Do they -- is there any legal precedent for them to set it aside.
MR. BEENSTOCK: Your Honor isn't making that decision today?
THE COURT: I'm making the decision that Mr. Agostini has not carried the burden in this case -- in this case by mere reference to some master plans and to some PSE&G document.
MR. BEENSTOCK: And it's Your Honor's decision that the township does have the authority to continue with this program pending the resolution of that issue that you've not decided today?
THE COURT: And so nobody may have raised that, but I just want everybody to let, you know, that I wasn't addressing that in its entirety today and that it's an issue that may or may not come up in the future.
MR. AGOSTINI: Your Honor, in support of that clarification may I ask you a question? Under the ten year limitation that the Court alluded -- referred to, the question of areas in need of rehabilitation would expire -- the program would automatically expire in 2001, am I correct, that when ten years kicks in?
THE COURT: You can make whatever arguments you want to make in 2001.
MR. AGOSTINI: Thank you very much.
THE COURT: Thank you, counsel. Thank you for your help.