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Monday, September 8, 2008

ABD Independence v. Independence Twp.

The Appellate Division recently affirmed ABD Independence, Inc. v. Township of Independence, --- A.2d ----, 2008 WL 3982681 (App. Div. 2008) (Real Estate Property Tax).

In this case, Plaintiff, ABD Independence, Inc. (ABD), owned property in Warren County that was governed by the Highlands Water Protection and Planning Act (Highlands Act), N.J.S.A. 13:20-1 to -35. After trial, the Plaintiff appealed the value assigned to the property by Judge Kuskin, judge of the Tax Court, and argued that the value assigned by Judge Kuskin was excessive and alleged that Judge Kuskin misinterpreted statutory exemptions and thereby allowed development and regulations permitting an extension of public water to the site. The Township of Independence (the Township), cross-appealed and alleged that Judge Kuskin committed error when he found that the improvements had no value. The Appellate Division dismissed both appeals and affirmed Judge Kuskin’s findings.

The subject property in question was a 122.86 acre parcel located along Petersburg Road (Warren County Route 614) about 1200 feet north of the intersection of Petersburg Road and State Highway 46 in the Township. A substantial portion of the subject property is wooded with moderate to steep slopes. A large pond is located near Petersburg Road. A 1910 square foot farmhouse is located on the property close to Petersburg Road. The farmhouse is occupied but in disrepair. There are also miscellaneous accessory structures, such as a barn, sheds and a springhouse, on the property, all in disrepair.

On June 16, 2003, the Township planning board granted preliminary major subdivision approval to plaintiff for a thirty-nine lot clustered residential development. The project also included a single 10.056-acre parcel with the existing house and out-buildings. Each home would be served by public water and individual septic systems. The approval contained several conditions, including issuance of several permits by the New Jersey Department of Environmental Protection (DEP).

The Highlands Act was adopted in August 2004, but major Highlands developments that received certain approvals and/or permits prior to March 29, 2004, were exempt from its provisions. N.J.S.A. 13:20-28a(3); N.J.A.C. 7:38-2.3(a)3. On October 18, 2004, in response to the Highlands Applicability Determination and Water Quality Management Plan Consistency Determination request filed by ABD, DEP advised ABD that the subject property is located in the Highlands Preservation Area. DEP noted that ABD had not received qualifying approvals before March 29, 2004; therefore, ABD's proposed subdivision fell within the Major Highlands Development category, that it did not meet any of the statutory exemptions, and it would be required to obtain a Highland Preservation Area Approval before it could proceed. The Highlands Act prohibits major Highlands development within 300 feet of any Highlands open waters, i.e., 300-foot buffer, N.J.S.A. 13:20-30b(1), -32a; N.J.A.C. 7:38-3.6(a). The subject property's existing structures fell within that buffer.

At trial, Judge Kuskin found that an addition to the residence on the property could be constructed even though the residence was within the 300 foot buffer area. Judge Kuskin interpreted N.J.S.A. 13:20-28b, which provides that the enumerated exemptions do not alter or obviate the requirements of other statutes or regulations, as not including Highlands Act requirements. Judge Kuskin reasoned that any other interpretation would render the seventeen enumerated exceptions, N.J.S.A. 13:20-28a(1) to (17), meaningless. Consequently, Judge Kuskin held that the taxpayer could renovate or construct a single family dwelling within the 300 foot buffer mandated by the Highlands Act. In so doing, Judge Kuskin rejected Plaintiff's contention that an extension of the water line would be prohibited under N.J.A.C. 7:38-2.5(a), which prohibits “the construction of any new public water system and the extension of any existing public water system to serve development in the preservation area,” because N.J.A.C. 7:38-2.5(a) is inapplicable to a development that is “exempt from the Highlands Act pursuant to N.J.A.C. 7:38-2.3.”

The Appellate Division agreed with Judge Kuskin’s logic and affirmed the assessment that Judge Kuskin placed on the property.


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