RIDGE & VALLEY CHARTER SCHOOL, INC. v. FRELINGHUYSEN TOWNSHIP

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0109-05T10109-05T1

RIDGE & VALLEY CHARTER

SCHOOL, INC.,

Plaintiff-Appellant,

v.

FRELINGHUYSEN TOWNSHIP,

Defendant-Respondent.

__________________________________

 

Submitted August 29, 2006 - Decided September 25, 2006

Before Judges Lintner and C.L. Miniman.

On appeal from the Tax Court of New Jersey, Docket No. 00-7747-2004.

William J. Gold, attorney for appellant.

Wacks & Hartmann, attorneys for respondent (James M. Cutler, on the brief).

PER CURIAM

This is an appeal from a determination of the Tax Court that plaintiff Ridge & Valley Charter School, Inc. (the school) is liable for roll-back taxes under N.J.S.A. 54:4-23.8 assessed by defendant Frelinghuysen Township based on an alleged change of use when the Ridge School acquired the subject property from a working farm. Because we conclude that the school is not qualified for the exemption from roll-back taxes provided by N.J.S.A. 54:4-23.8, we affirm.

On March 23, 2004, the school purchased 17.7 acres of land located in Frelinghuysen in order to locate and operate a charter school in an ecological setting. In 2004 and for several years prior to that year, the subject land was assessed as farmland on the tax rolls. On August 11, 2004, Frelinghuysen filed a complaint with the Warren County Board of Taxation seeking to impose roll-back taxes pursuant to N.J.S.A. 54:4-23.8 with respect to five acres of the tract on which improvements had been constructed, alleging that a change in use had occurred. After a hearing, the Board entered a judgment assessing roll-back taxes for 2002 through 2004. The school appealed this decision to the Tax Court. The matter was tried before the Honorable Harold A. Kuskin on July 6, 2005, and judgment was entered affirming the decision of the Board. This appeal followed.

The facts developed at trial were undisputed. The school operates a public charter school in Frelinghuysen pursuant to a charter granted in 2004 by the New Jersey Commissioner of Education. It operates under the aegis of the County Superintendent of Schools, not the local board. The school takes a non-traditional approach to education. The students are immersed in ecological study of the "natural world" so that they will learn to create and manage an "ecologically sustainable future." This is accomplished by using the outdoors as the classroom, and having the students learn through hands-on, project-based experience. Through the study of local geology and biology, the children observe the "connection between the physical environment and bioscape" and learn the importance of conservation of natural resources. The school meets the New Jersey core curriculum content standards mandated by the Department of Education by using an experiential, rather than a classroom/text-based, framework for learning. State-mandated tests are administered.

The school's charter application was preliminarily approved by the Commissioner of Education in January 2002. Thereafter, the school searched for a site to be used as its outdoor ecological laboratory. A 17.7-acre tract found in Frelinghuysen was deemed perfect for ecological study. Prior to the purchase of the land, an organic farming operation was conducted on the tract, which is located in the Kittatinny Ridge area and has views of the Delaware Water Gap. After the closing of title, in accordance with zoning approvals, the school made some improvements to the property to facilitate its use as an educational conservation area. Ancillary modular buildings were added to a small portion of the site for indoor educational use, a septic and water system was installed, a parking lot and bus turnaround were paved, a playground was installed, and foundations were laid for a greenhouse. Final approval of the school's charter was granted on September 7, 2004, and school began that month.

Carol Barnett, a founding member of the school and the president of its Board of Trustees, was the only witness who testified at the de novo hearing before the Tax Court. She testified that the mission of the school is ecological literacy, sustainability, and outdoor experiential education. It took many years to locate the right setting for the program so that the students would be able to study outdoors, to work with natural habitats, and to experience daily the biological region of Kittatinny Ridge and the valley on a first-hand basis. An important consideration in the selection of the property was its proximity to Paulinskill Trail State Park, which the students use as an extension of their outdoor classroom space.

Barnett testified that only a small section of the five acres identified for roll-back taxes actually houses the ancillary buildings. The majority of the five-acre parcel is dedicated to biological and ecological study. The school received a grant from the United States Department of Agriculture under the Habitat Incentives Program to restore the ecology of the portions of the site that were disturbed by the improvements made by the school. Photographic exhibits show tilled acreage, a fire circle, and a tractor all located within the five-acre area. A large portion of the 17.7-acre tract continues to be actively farmed.

The school's charter requires that a minimum of twenty-five percent of all learning time be spent outdoors, but the actual time spent outside far exceeds that goal. Ecological studies conducted on the property include planting and tending organic gardens. Maintaining good nutrition and growing healthy food are among the central principles outlined in the charter application. A greenhouse was constructed on the five-acre parcel to support the organic gardens, many of which are also within that tract. In addition, compost bins are also located on the five-acre parcel. The bins were constructed by the students as part of the curriculum. As part of the curriculum, the students built bird houses and an agricultural fence on the five-acre parcel.

The greenhouse serves as a teaching lab for the students to work with seed germination, seedling transplants, and other biological processes. Barnett testified that the school's charter specifies that its primary purpose is environmental and ecological education. The property was acquired for biological and ecological study and for conservation and preservation of natural areas and wildlife. All subjects taught at the school have environmental applications, such as the use of math to measure and build compost bins.

The school submitted evidence that the site is sufficiently undeveloped to meet the criteria for inclusion in the Wildlife Habitat Incentives Program conducted by the United States Department of Agriculture. It is the subject of a $9,264 grant from that department to restore the portion of the site that was disturbed in connection with the improvements made to the property, particularly the installation of the septic and water system. Those grant monies have been used to plant native grasses, trees and shrubs to restore the disturbed portion of the tract.

Barnett explained that the students' outdoor experience informs any activity undertaken indoors. The traditional subjects are not taught separately, but are integrated into the context of outdoor experience. The site was not chosen simply because a space was needed to house the school, but because the school needed a certain type of location. Students are engaged in outdoor study every day, even during the winter months. Barnett identified the photographs in evidence showing the interior of one of the modular classroom buildings. The photos show the indoor spaces used to support the ecological and biological studies conducted outdoors. The photographs depict drying flowers and plants; gardening tool storage; and journals prepared by the students based on their outdoor ecological studies. Indoor spaces are an integral part of the outdoor experience and do not resemble traditional classrooms.

Biological and ecological studies conducted by the students might include studying the ecosystem of a stream or field by framing out one square foot and examining the contents. Field guides are used to examine plants and animals, and notebooks are kept of the students' observations and experiments. The work being conducted pursuant to the Habitat Incentives grant forms part of the outdoor ecological studies conducted by the students. The students measure and observe the existing habitat and study the effect on the ecosystem caused by the reintroduction of the native grasses and species. The New Jersey core curriculum requirements are incorporated into the school's curriculum in a manner that is compatible with the environmental purpose of the school.

The tax judge found that the property was expressly purchased to establish the school, and that the students of the school receive their core-curriculum education in a manner related to environmental and ecological concerns. The judge also found that the students make extensive observations within the five-acre parcel and within the remaining twelve acres relating to ecological and conservation issues. The judge accepted as fact that the ecological or environmental focus and mission of the school serves as a framework for teaching the core curriculum subjects. The tax judge also found that the evidence demonstrated that the students spend a minimum of twenty-five percent of their time outdoors conducting experiments, making observations and other environmentally associated activities.

The tax judge noted that N.J.S.A. 54:4-23.8, enacted in 1964, was amended in 1999 to provide that land acquired by a local government unit for recreational and conservation purposes is exempt from the imposition of roll-back taxes. The judge found that the improvements made to the five-acre parcel did not, in and of themselves, subject the property to roll-back taxes. Rather, he found that the improvements made to the property facilitated an educational purpose, and did not constitute the preservation of open space within the meaning of the statute. The judge found that the school did not qualify as a local government unit and did not use the land for recreational and conservation purposes. The judge explained:

[T]he biological or ecological study in which [the school] engages is not the kind of biological or ecological study to which the statute refers which I construe as referring to a scientific effort to learn more about the environment and ecology . . . . The education provided by plaintiff is innovative, creative and appears fascinating, but it is an education of children from grades K through eight. It is not a biological or ecological study as I understand the definition of . . . recreation and conservation purposes to mean.

Because the facts are undisputed, our review of the tax judge's interpretation and application of the law to the facts is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Twp. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference."); Rowe v. Hoffmann-La Roche Inc., 383 N.J. Super. 442, 452 (App. Div. 2006). We agree with Judge Kuskin's legal conclusion that the biological or ecological study done by the school is not the type envisioned by the Legislature when it created the 1999 exception to roll-back taxes.

Preliminarily, the school contends that the tax judge misapplied the burden of proof in the case because the tax assessor, not the school, was required to prove that there was a change in the use of the land. Because the tax assessor offered no evidence at the hearing, the school contends the judge should have ruled against Frelinghuysen. Indeed, the burden of proof is upon the assessor to show a change in use. Miele v. Twp. of Jackson, 11 N.J. Tax 97, 99 (App. Div. 1989) ("[T]he burden of proof to establish a change in the use of lands so as to subject the land to a roll-back tax is on the tax assessor."); Belmont v. Wayne Twp., 3 N.J. Tax 382, 386 (Tax 1981) ("The burden of proof to establish that a change of use has occurred is upon the party claiming same.").

That burden of proof, however, does not of necessity require the tax assessor to appear and testify. Rather, the evidence of a change in use may be elicited from the owner of the property, as occurred here. The tax judge did not expressly or tacitly impose the burden to prove a change in the use of the land on the school. In fact, that was undisputed.

What was actually in dispute was the entitlement of the school to the exemption from roll-back taxes. As to that specific issue, the burden to prove an entitlement to an exemption is upon the public body or nonprofit organization claiming the exemption.

The fundamental approach of our statutes is that ordinarily all property shall bear its just and equal share of the public burden of taxation. As the existence of government is a necessity, taxes are demanded and received in order for government to function. Statutes granting exemption from taxation represent a departure and consequently they are most strongly construed against those claiming exemption. The burden of proving a tax-exempt status is upon the claimant.

[Bloomfield v. Acad. of Med. of N.J., 47 N.J. 358, 363 (1966) (emphasis added, citations omitted); accord, Cherry Hill Indus. Props. v. Twp. of Voorhees, 186 N.J. Super. 307, 312 (App. Div.), aff'd in part and modified in part, 91 N.J. 526 (1982); Estell Manor City v. Stern, 14 N.J. Tax 394, 416 (Tax 1995).]

The tax judge did not err in this regard.

On the merits, the school contends that the tax judge erred in concluding that the school was not entitled to the exemption from roll-back taxes afforded by N.J.S.A. 54:4-23.8 to local government units. The Farmland Assessment Act of 1964 (FAA), N.J.S.A. 54:4-23.1 through -23.23, as amended, provides for the taxation of land that is actively farmed for the sale of products based on its value as farmland, rather than on its highest and best use. N.J.S.A. 54:4-23.2. One of the primary goals of the FAA "is to promote open space, the beauty of the countryside, and to slow down the transition of open space to development." Sudler Lakewood Land, LLC v. Lakewood Twp., 18 N.J. Tax 451, 462 (Tax 1999) (citation omitted), aff'd, 19 N.J. Tax 305 (App. Div. 2001). As a consequence, when the use of farmland is changed, the FAA provides in pertinent part for the imposition of roll-back taxes:

When land which is in agricultural or horticultural use and is being valued, assessed and taxed under the provisions of P.L.1964, c. 48 (C.54:4-23.1 et seq.), is applied to a use other than agricultural or horticultural, it shall be subject to additional taxes, hereinafter referred to as roll-back taxes, in an amount equal to the difference, if any, between the taxes paid or payable on the basis of the valuation and the assessment authorized hereunder and the taxes that would have been paid or payable had the land been valued, assessed and taxed as other land in the taxing district, in the current tax year (the year of change in use) and in such of the two tax years immediately preceding, in which the land was valued, assessed and taxed as herein provided.

[N.J.S.A. 54:4-23.8.]

Here, the tax assessor determined that roll-back taxes for the years 2002, 2003, and 2004 should be assessed in the total amount of $12,198.49. The calculation of the amount was not disputed. Rather, the school contended that it was entitled to the following exemption:

Notwithstanding the provisions of any law, rule, or regulation to the contrary, land which is valued, assessed and taxed under the provision of P.L.1964, c. 48 (C.54:4-23.1 et seq.) and is acquired by the State, a local government unit, a qualifying tax exempt nonprofit organization, or the Palisades Interstate Park Commission for recreation and conservation purposes shall not be subject to roll-back taxes. As used in this section, "acquired," "local government unit," "qualifying tax exempt nonprofit organization," and "recreation and conservation purposes" mean the same as those terms are defined pursuant to section 3 of P.L.1999, c. 152 (C.13:8C-3).

[Ibid.]

N.J.S.A. 13:8C-3 is 3 of the Garden State Preservation Trust Act (GSPTA), L. 1999, c. 152, N.J.S.A. 13:8C-1 through -42. In adopting the GSPTA, the Legislature expressly found and declared "that enhancing the quality of life of the citizens of New Jersey is a paramount policy of the State." N.J.S.A. 13:8C-2. The Legislature also found:

that the acquisition and preservation of open space, farmland, and historic properties in New Jersey protects and enhances the character and beauty of the State and provides its citizens with greater opportunities for recreation, relaxation, and education; that the lands and resources now dedicated to these purposes will not be adequate to meet the needs of an expanding population in years to come; that the open space and farmland that is available and appropriate for these purposes will gradually disappear as the costs of preserving them correspondingly increase; and that it is necessary and desirable to provide funding for the development of parks and other open space for recreation and conservation purposes.

The Legislature further finds and declares that agriculture plays an integral role in the prosperity and well-being of the State as well as providing a fresh and abundant supply of food for its citizens; that much of the farmland in the State faces an imminent threat of permanent conversion to non-farm uses; and that the retention and development of an economically viable agricultural industry is of high public priority.

[Ibid.]

The exemption from roll-back taxes at issue here was created as part of the GSPTA. L. 1999, c. 152, 57. As a consequence, the exemption language in the FAA must be construed in light of the legislative intent in adopting the GSPTA. Legislative intent is the paramount goal in construing a statute. Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218, 231 (1988). The statute's language is the "surest indicator" of that intent. Ibid. "If the language is plain and clearly reveals the statute's meaning, the Court's sole function is to enforce the statute according to its terms." Frugis v. Bracigliano, 177 N.J. 250, 280 (2003).

In addressing the school's claim to an exemption, the tax judge first found that the acquisition of property for educational purposes was not per se exempt from roll-back taxes, relying on Board of Education of South Brunswick v. Eckert, 361 N.J. Super. 238 (App. Div.), certif. denied, 178 N.J. 28 (2003), wherein we held that even the government is not exempt from roll-back taxes. The judge then turned to N.J.S.A. 13:8C-3 to determine whether the land was "acquired" by a "local government unit" for "recreation and conservation purposes," terms which have not previously been construed in any reported decision. He concluded that it was not. We agree.

First, the Legislature defined acquire to mean "the obtaining of a fee simple . . . by purchase . . . by . . . a local government unit." N.J.S.A. 13:8C-3. The tax judge found that the school had "acquired" the subject land, and the issue became whether the school was a local government unit.

[W]ith respect to the acquisition and development of lands for recreation and conservation purposes, "local government unit" means a county, municipality, or other political subdivision of the State, or any agency, authority, or other entity thereof the primary purpose of which is to administer, protect, acquire, develop, or maintain lands for recreation and conservation purposes.

[N.J.S.A. 13:8C-3 (emphasis added).]

Certainly, the school as a charter school established pursuant to the provisions of N.J.S.A. 18A:36A-1 through -18 is "a body corporate and politic." N.J.S.A. 18A:36A-6; e.g., 75 Spruce St., L.L.C. v. N.J. State Bd. of Educ., 382 N.J. Super. 567, 575-76 (Law Div. 2005). Thus, the school is an "entity" of the State.

We must determine whether "the primary purpose" of the school "is to administer, protect, acquire, develop, or maintain lands for recreation and conservation purposes." N.J.S.A. 13:8C-3. The latter term is defined as follows:

"Recreation and conservation purposes" means the use of lands for beaches, biological or ecological study, boating, camping, fishing, forests, greenways, hunting, natural areas, parks, playgrounds, protecting historic properties, water reserves, watershed protection, wildlife preserves, active sports, or a similar use for either public outdoor recreation or conservation of natural resources, or both.

[N.J.S.A. 13:8C-3 (emphasis added).]

Construing that statutory definition, the judge concluded that "biological or ecological study" was only the type of study done by the Department of Environmental Protection (DEP), the State Agricultural Development Committee (ADC) and the New Jersey Historic Trust (NJHT), the intended recipients of funding from the Trust. The judge then construed the statute as referring only to a scientific effort to learn more about the environment and ecology and not the teaching of the State's core curriculum to elementary students through the framework of ecological study.

The judge further concluded that the primary purpose of the school is to educate and not to administer, protect, acquire, develop or maintain land for recreational and conservation purposes. As a result, the judge found that the school did not qualify as a local government unit as defined by N.J.S.A. 13:8C-3. The judge also found that the five-acre parcel, fifty percent of which was improved, did not constitute the preservation of open space and farmland as envisioned by the Legislature in adopting the GSPTA. As a result, the judge entered judgment affirming the roll-back taxes imposed by the Warren County Board of Taxation.

The school contends that the tax judge erred because its purpose is to immerse its students in the ecological study of the natural world and to create and manage an ecologically sustainable future. It asserts that the purpose of the FAA is to maintain open spaces. The roll-back provision was meant to protect municipalities from foregoing the collection of full taxes when the true intent of the owner is to hold the land for speculation and development. The school asserts that it acquired the property for conservation purposes as defined by N.J.S.A. 13:8C-3, and that all of the subjects it teaches are environmental in nature. Furthermore, the grant it received under the Habitat Incentives Program is further evidence of the conservation purpose of the school. Thus, it asserts that its purpose in acquiring the land furthers the spirit of the GSPTA. Additionally, it contends that the tax judge erred in narrowly construing "biological and ecological study," words which should have been "given their ordinary and well understood meaning." Levin v. Parsippany-Troy Hills Twp., 82 N.J. 174, 182 (1980).

Of course, the terms "biological and ecological study" and "natural areas" are very broad and read literally would seem to encompass the various activities in which the school engages. However, we must read the words in the statute "in context with related provisions so as to give sense to the legislation as a whole." DiProspero v. Penn, 183 N.J. 477, 492 (2005) (citing Chasin v. Montclair State Univ., 159 N.J. 418, 426-27 (1999)). Accordingly, we may not read the words in a vacuum but must determine their meaning in context with related provisions in the GSPTA.

The GSPTA created a trust fund with public monies to be used solely to:

Provide funding to the Department of Environmental Protection, the State Agriculture Development Committee, and the New Jersey Historic Trust for all or a portion of the cost of projects undertaken by those entities or by grant or loan recipients in accordance with the purposes and procedures established by Article VIII, Section II, paragraph 7 of the State Constitution and this act.

[N.J.S.A. 13:8C-5a.]

The GSPTA established within the General Fund special accounts known as the "Garden State Preservation Trust Fund Account," N.J.S.A. 13:8C-17; the "Garden State Green Acres Preservation Trust Fund," N.J.S.A. 13:8C-19; and the "Garden State Historic Preservation Trust Fund," N.J.S.A. 13:8C-21. The Act required the Department of Environmental Protection (DEP) twice each fiscal year to submit to the Garden State Preservation Trust a list of projects that the DEP recommends to receive funding from the Garden State Green Acres Preservation Trust Fund for the acquisition or development of lands for recreation and conversation purposes. N.J.S.A. 13:8C-23a(1). Similarly, the State Agriculture Development Committee (ADC) is to submit such a list of projects that it recommends for receiving funding from the Garden State Farmland Preservation Trust Fund on a semi-annual basis. N.J.S.A. 13:8C-23b(1). Finally, the New Jersey Historic Trust (NJHT) is to once each year submit such a list with respect to funding from the Garden State Historic Preservation Trust Fund. N.J.S.A. 13:8C-23(1).

The Garden State Preservation Trust must biennially, after consultation with the DEP, the ADC and the NJHT, report to the Legislature the total acreage for the entire State and for each county and municipality "of lands acquired for recreation and conversation purposes and of farmland preserved for farmland preservation purposes." N.J.S.A. 13:8C-25.

The use of monies from the various funds is limited by statute. Monies appropriated from the Garden State Green Acres Preservation Trust Fund to the DEP may be used to "[p]rovide grants and loans to assist local government units to pay the cost of acquisition and development of lands for recreation and conversation purposes." N.J.S.A. 13:8C-26a(2). Upon use of Green Acres funds, the local government unit may not "convey, dispose of, or divert to a use for other than recreation and conversation purposes any lands held by the local government unit for those purposes at the time of receipt of the grant or loan without the approval" of the DEP Commissioner and the State House Commission. N.J.S.A. 13:8C-32b. Parallel provisions and restrictions govern the use of monies from the Garden State Farmland Preservation Trust Fund, N.J.S.A. 13:8C-37a and -39; and the Garden State Historic Preservation Trust Fund, N.J.S.A. 13:8C-41.

The GSPTA also governs lands held by a local government unit for conservation and recreation purposes that were neither acquired nor developed with any financial assistance from the State, but which were included in an inventory of lands prepared for the purposes of administering or enforcing 32 of the GSPTA. N.J.S.A. 13:8C-33(a). A local government unit may only change the use of such land if it has held at least one public hearing on the proposed change in purpose or use. Ibid. Furthermore,

A local government unit may convey lands held by the local government unit for recreation and conservation purposes to the federal government, the State, another local government unit, or a qualifying tax exempt nonprofit organization, provided that (1) the lands will continue to be preserved and used for recreation and conservation purposes, (2) the restrictions on the lands when they were held by the local government unit are maintained by the new owner, and (3) at least one public hearing on the proposed conveyance is held by the local government unit at least 90 days prior to final approval thereof by the local government unit.

[N.J.S.A. 13:8C-34(a).]

It is in the context of these provisions that the GSPTA addresses the impact of land acquisitions for the purpose of recreation and conservation on municipal tax rolls. N.J.S.A. 13:8C-29(a)(1)(a) provides for payments in lieu of taxes "[t]o the end that municipalities may not suffer a loss of taxes by reason of the acquisition and ownership by the State of lands in fee simple for recreation and conservation purposes . . ., using constitutionally dedicated moneys in whole or in part . . . ." That section further provides:

In the event that land acquired by the State, [or] a local government unit . . . for recreation and conservation purposes was assessed at an agricultural and horticultural use valuation in accordance with provisions of the "Farmland Assessment Act of 1964," . . . at the time of its acquisition by the State [or] local government unit . . ., no roll-back tax . . . shall be imposed as to this land . . . .

[N.J.S.A. 13:8C-29(b).]

It becomes clear from the entire context of the Garden State Preservation Trust Act that an exemption from roll-back taxes is available only for local government units that have in one fashion or another permanently restricted the use of the land in futuro in accordance with the provisions of the GSPTA. This interpretation of the exemption is also consistent with the explanation given by the sponsor of the bill: "The bill would exempt the State, local government units, and nonprofit organizations from the payment of any farmland assessment roll-back tax in connection with any acquisition of land for open space or farmland preservation purposes." The "Garden State Preservation Trust Act," L. 199, c. 152, Sponsor Statement by Donald T. DiFrancesco and Henry P. McNamara, p. 59; Assembly Agriculture and Nature Resource Committee Statement to A.1000000, dated May 20, 1999, p. 4; Senate Environment Committee Statement to S.9, dated June 17, 2999, p. 4. There is no evidence to suggest that the school acquired its land with constitutionally dedicated monies nor is there any suggestion that its land was included in any inventory of land prepared to complaint with N.J.S.A. 13:8C-32. We need not address the issue of the schools "primary purpose" because its acquisition of the land is not subject to the provisions of the GSPTA, and it is only land governed by the GSPTA that is exempt from roll-back taxes.

Affirmed.

 

There, we were presented with the "narrow issue" of "whether a property owner-condemnee is responsible for roll-back taxes when the use of the property is changed as a result of a condemnation." Id. at 240. We concluded that the condemning authority was responsible for such taxes. Ibid.

(continued)

(continued)

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A-0109-05T1

 

September 25, 2006