L.P. v. City of East Orange

NOT FOR PUBLICATION

------------------------------------------------------x SUPERIOR COURT OF NEW JERSEY

NORTH ORATON URBAN RENEWAL, CHANCERY DIVISION-ESSEX COUNTY

L.P, DOCKET NO. C-146-14

: DOCKET NO. C-147-14

Plaintiff, DOCKET NO. C-148-14

v. : OPINION

CITY OF EAST ORANGE, and

BOCA ENVIRONMENTAL, INC.,

Defendants.

:
and

THE MARY COCOZIELLO

IRREVOCABLE TRUST,

Intervener.

------------------------------------------------------x

Dated: October 20, 2014

Andrew M. Baron, Esq., for plaintiff North Oraton Urban Renewal, L.P. (Kochanski, Baron & Galfy, P.C., attorneys)

John F. Casey, Esq., for defendant City of East Orange (Wolff & Samson, P.C, attorneys)

Jerrold S. Kulback, Esq., for defendant Boca Environmental, Inc. (Archer & Greiner, P.C., attorneys)

J. Barry Cocoziello, Esq., for intervener The Mary Cocoziello Irrevocable Trust (Podvey, Meanor, Catenacci, Hildner,

Cocoziello & Chattman, P.C., attorneys)

DeALMEIDA, P.J.T.C. (t/a)

This is the court s opinion after trial on Count I of each of the Complaints in the above-referenced matters. Plaintiff, the owner of real property in the City of East Orange, challenges the city s unilateral revocation of a tax abatement for improvements at the property based on plaintiff s failure to make payments in lieu of taxes in accordance with a contract with the city. The tax abatement and associated contract were issued pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 to -22, in connection with plaintiff s construction of low- and moderate-income housing for elderly and disabled residents on the property. After revocation of the abatement, the city issued a tax sale certificate with respect to the property. Through a series of transfers, defendant Boca Environmental, Inc. ( Boca ) now holds the certificate. Plaintiff demands that the abatement for improvements at the property be reinstated and that Boca s tax sale certificate be vacated. Boca does not contest plaintiff s claims that the tax sale certificate is invalid. It demands, however, that it be made whole financially should the court vacate the certificate.

For the reasons explained more fully below, the court concludes that both plaintiff and the city breached the contract concerning taxation of the subject property. While it is readily apparent that plaintiff breached the contract by, for more than a decade, not making any of the payments in lieu of taxes required by the agreement, the city also breached the contract by unilaterally removing the tax abatement on the property and issuing a tax sale certificate. As a result of these conclusions, the court orders that the benefits bargained for in the contract be restored to each of the parties. Thus, the court orders that the tax abatement for the improvements at the subject property be reinstated commencing with the issuance of the 1995 certificate of occupancy for the improvements at the subject property and that the city be awarded damages in the amount of all outstanding payments in lieu of taxes required by the agreement, with appropriate interest.

In addition, because the court determines that the revocation of the tax abatement at the subject property was unlawful, the court also concludes that the tax sale certificate held by Boca is invalid. The court vacates the tax sale certificate and orders the city to make Boca whole by refunding to Boca the price paid for the tax sale certificate, with appropriate interest, along all taxes subsequently paid on the tax sale certificate with interest at a rate to be determined after further briefing.

I. Findings of Fact and Procedural History

The court makes the following findings of fact based on the testimony and other evidence admitted at trial. R. 1:7-4.

Plaintiff North Oraton Urban Renewal, L.P. ( North Oraton ) is the owner of real property in defeNorthndant City of East Orange. The property is designated in the records of the municipality as Block 261, Lot 50 and is commonly known as 170 North Oraton Parkway (the subject property ).

On March 21, 1995 the East Orange City Council approved a resolution pursuant to the New Jersey Housing and Mortgage Finance Agency Law, N.J.S.A. 55:14K-1, et seq., authorizing North Oraton to construct and operate a 42-unit residential building at the subject property. The building would provide affordable housing to senior and disabled residents with low and moderate incomes. The resolution provides that

the proposed Development, including the land and all improvements to be constructed thereon, will be exempt from real property taxation as provided in N.J.S.A. 55:14K-1 et seq. and that, in lieu of taxes [North Oraton] shall make to the Municipality payment of an annual service charge for municipal services supplied to the Development in such amounts and manner as set forth in Agreement for Payments in Lieu of Taxes attached here to as Exhibit B . . . .

The resolution notes that the governing body relied on an attached financial statement, which included an estimated annual PILOT payment, as evidence that the proposed project was financially feasible.

North Oraton and the city memorialized their contract in a Financial Agreement executed pursuant to the Long Term Tax Exemption Law. The Financial Agreement provides that East Orange and Oraton have agreed that in lieu of property taxes East Orange shall impose upon Oraton an annual service charge as provided in the agreement. The contract, which appears to limit the abatement to the improvements at the subject property, provides as follows

[f]rom and after the date of issuance of a valid temporary or permanent Certificate of Occupancy by the Permit Office of East Orange with respect to the Oraton Project (hereinafter, the Substantial Completion Date ), and until the last day of the calendar year during which occurs the thirtieth anniversary of such date, the Oraton Project shall be exempt from taxation on all improvements in accordance with the Law.

The Financial Agreement details North Oraton s obligation to make PILOT payments to the municipality as follows

In consideration of the aforesaid abatement of taxation on improvements, during the term of exemption, for the period commencing with the Substantial Completion Date and ending on the last date of the calendar quarter during which occurs the fifteenth anniversary thereof, Oraton shall pay to East Orange per annum an annual service charge for municipal services (herein Annual Service Charge ) supplied to the Oraton Project in an amount equal to seven percent (7%) of the per annum gross revenue collected as rents by Oraton, or on its behalf, from the tenants of the Oraton Project (hereinafter, Annual Gross Revenue ). Against the Annual Service Charge, Oraton shall be entitled to an annual credit, without interest, for the amount of the real estate taxes on land paid by it for the last four preceding quarterly installment periods. The Annual Service Charge, as adjusted, shall be payable by Oraton to East Orange in four quarterly installments as are nearly equal as practicable on those dates when quarterly real estate tax payments are due East Orange. After expiration of the first fifteen (15) year period, the Annual Service Charge for the remainder of the abatement period shall be determined as provided in N.J.S.A. 40A:20-12 as follows . . . . [the remainder of this provision of the Financial Agreement is omitted as it concerns tax years subsequent to those before the court].

The Financial Agreement also contains a clause providing for a minimum annual PILOT payment by plaintiff: In no event shall the Annual Service Charge for the Oraton Project, together with taxes on the Oraton Project land, in any calendar year including and after the year of the Substantial Completion Date during the term of this Agreement, be less than the total taxes levied against all real property in the area covered by the Oraton Project for the last full calendar year preceding the year of the acquisition by Oraton of the Oraton Project from the prior owner. To effectuate the agreement, plaintiff contracted to provide annual audited financial statements to the Mayor and governing body of East Orange. The agreement includes the address to which the city must send all notices to plaintiff related to the Financial Agreement.

The Financial Agreement provides that it shall terminate at the end of the tax exemption period described in Section 1 hereof, unless sooner terminated in accordance with the procedures under N.J.S.A. 40A:20-13. Nothing in the Financial Agreement requires the city to serve on North Oraton a bill, invoice or other written statement of the amount of North Oraton s quarterly PILOT payments. Nor does the Financial Agreement provide that the city has the authority unilaterally to vitiate the tax abatement provided in the agreement in the event that North Oraton fails to make the required PILOT payments. The Financial Agreement also provides that the parties agree that all disputes arising under this Agreement shall be resolved by arbitration before a qualified arbitrator certified and selected by the American Arbitration Association.

The improvements at the subject property contemplated in the Financial Agreement were completed in 1995 and the city issued North Oraton a certificate of occupancy for the building. It is undisputed that from 1995 to 2005, North Oraton made no PILOT payments to the city. The record also contains no credible evidence that plaintiff submitted annual audited financial statements to the city. Nor is there any evidence in the record that the city made any attempt to collect PILOT payments from North Oraton during that period. For a decade, the subject property, both land and improvements, was listed as exempt from local property taxes and the city realized no revenue from the property.

The testimony of Rocco Meola, an officer of North Oraton, did not credibly explain why North Oraton failed to make the PILOT payments or take any steps to address what would have been a glaring gap in the project s financial affairs. In fact, a representative from an investor in the subject property credibly testified about her frustration in attempting to secure a copy of the Financial Agreement from plaintiff or a suitable explanation for why no PILOT payments had been made. Testimony from the tax collector did not provide a credible explanation for how the city could have overlooked for ten years plaintiff s obligation to make PILOT payments on the subject property or explain why the property was listed as entirely exempt from taxation.

At some point during 2005, the city tax collector read a newspaper article detailing the properties in East Orange that are exempt from local property taxes but subject to an agreement providing for PILOT payments. When checking her records against the information provided in the article, the tax collector noticed that plaintiff had never made a PILOT payment with respect to the subject property, that she did not have a copy of the Financial Agreement, and that she had no evidence of plaintiff having ever submitted annual audited financial statements. In light of her investigation, the tax collector determined that the subject property should no longer be listed as exempt.

The trial record contains no evidence explaining the mechanics of how the subject property s exemption was revoked or how it was added to the tax list. There is no evidence in the record that the assessor removed the abatement at the start of a tax year, and provided the required notice of assessment to the property owner. Nor is there any evidence that the tax assessor treated the property as an omitted assessment. See N.J.S.A. 54:4-63.12 (the original method omitted assessment statute) and N.J.S.A. 54:4-63.31 (the alternate method omitted assessment statute). The city produced not one document in which notice was provided to plaintiff at the address included in the Financial Agreement, or at any other address, of the revocation of the abatement or the assessment of taxes on the subject property.

On or about June 14, 2005, the city s tax collector issued a delinquency notice to plaintiff (not at the address provided in the Financial Agreement) indicating a delinquency, including interest, of $251,739.94. It is not clear from the record whether this amount reflects delinquent PILOT payments, delinquent taxes, or a combination thereof. Nor is it clear what periods are covered by the notice, although the notice states figures for 04 and 05. Plaintiff did not pay the amount reported as delinquent.

On July 11, 2005, Mr. Meola met with the Mayor of East Orange. At that meeting Mr. Meola informed the Mayor that North Oraton had long experienced serious financial difficulty, making it impossible to fulfill its PILOT payment obligations under the Financial Agreement.

On or about November 17, 2005, the city published notice that it intended to sell a tax sale certificate with respect to the subject property. The notice listed the outstanding obligation as $270,935.67.

On or about December 14, 2005, North Oraton made a payment to the city of $115,000, an amount insufficient to satisfy the delinquency determined by the tax collector. It appears that the payment was an attempt by plaintiff to demonstrate its good faith intention to fulfill its obligations under the Financial Agreement.

On December 15, 2005, an attorney representing North Oraton wrote to the city s Assistant Corporation Counsel. She stated that her letter will serve as notice to the City of East Orange that it is in violation of the Financial Agreement Between The City of East Orange, New Jersey and North Oraton Urban Renewal, L.P. (the Financial Agreement ) pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq. by placing the Property for tax sale for non-payment of taxes. North Oraton s attorney noted that the Financial Agreement does not contain a provision permitting unilateral termination of the tax abatement by the city. In addition, counsel cited N.J.S.A. 40A:20-18, a provision of the Long Term Tax Exemption Law, which provides

[i]f the Local Finance Board has reason to believe that an urban renewal entity which owns a housing project is faced with financial difficulty, the chairman of the Local Finance Board shall summon an appropriate official of the entity to a hearing before the board.

The statute further provides that, as a result of the evidence gathered at the hearing, the Local Finance Board may modify the terms of a financial agreement executed pursuant to the Long Term Tax Exemption Law. North Oraton s counsel argued that the city should have acted pursuant to N.J.S.A. 40A:20-18 in light of Mr. Meola s notice to the Mayor that North Oraton was experiencing significant financial difficulty. North Oraton s counsel informed the city that North Oraton viewed the 2005 assessment as invalid and urged the city not to issue a tax sale certificate for the subject property.

In late 2005, Fidelity Tax, LLC purchased a tax sale certificate for the subject property.

It is undisputed that the subject property remained on the city s tax roll for tax year 2006. It is also undisputed that plaintiff did not pay the local property taxes on the subject property or make PILOT payments to the city for 2006.

In 2007, East Orange implemented a city-wide revaluation. As part of the revaluation, the assessment on the subject property was set as follows

Land $1,260,000

Improvement $ 991,300

Total $2,251,300
 

On April 27, 2007, North Oraton filed a Petition of Appeal with the Essex County Board of Taxation challenging the 2007 assessment on the subject property.

On August 27, 2007, the county board issued a Judgment affirming the assessment without prejudice to North Oraton seeking Tax Court review.

On October 9, 2007, North Oraton filed three Complaints in the Tax Court. Each Complaint contains two counts and named the city and Fidelity Tax, LLC as defendants.

Count I of each Complaint alleges that the city violated the Financial Agreement by illegally revoking the abatement for the subject property. North Oraton also alleges that the city s sale of a tax sale certificate to Fidelity Tax, LLC was invalid because the abatement on the subject property was unilaterally revoked by the city. North Oraton demands that the court: (1) declare the tax sale certificate null and void; (2) assign the tax sale certificate to the city and order the city to refund the lienholder; and (3) reinstate the Financial Agreement.

Count II of each Complaint alleges that the assessment on the subject property for tax years 2005, 2006 and 2007 exceeds its true market value or is otherwise invalid.

On October 26, 2007, the city filed Counterclaims in response to each of the Complaints. The Counterclaims assert that the Tax Court lacks jurisdiction over North Oraton s Complaints as they relate to tax years 2005 and 2006 due to untimely filing. In addition, the city alleges that in the event the Tax Court does have jurisdiction over those years, the assessments on the subject property should be raised. The city does not make untimely filing allegations with respect to tax year 2007, but alleges that the assessment on the subject property for that year should be raised.

On December 17, 2007, the city moved for summary judgment in its favor on all claims.

On April 8, 2008, the Hon. Vito L. Bianco, J.T.C., denied the city s motion without prejudice. Judge Bianco directed the parties to submit their claims to arbitration, as specified in paragraph 17 of the Financial Agreement.

On February 9, 2009, the court vacated the portion of the April 8, 2008 Order directing the parties to submit their claims to arbitration.

After a period of discovery, a trial was held with respect to Count I of each of the Complaints and the related counterclaims.

Boca ultimately acquired through assignment Fidelity Tax, LLC s tax sale certificate.1 On February 14, 2014, the court entered an Order substituting Boca for defendant Fidelity Tax, LLC. Boca has voluntarily withheld from pursuing foreclosure until the issues raised in these matters are resolved. It is not clear from the record whether and to what extent Fidelity and/or Boca paid local property taxes on the subject property after issuance of the tax sale certificate in order to protect the priority of the lien.

In light of the holding in McMahon v. City of Newark, 195 N.J. 526 (2008), the Tax Court determined that the parties Count I claims and counterclaims are in the nature of contractual allegations properly venued in the Superior Court. As a result, on May 29, 2014, the Hon. Stuart Rabner, C.J., issued an Order transferring these matters to the Superior Court, Chancery Division, Essex County, and temporarily assigning the undersigned to that court for resolution of all issues raised in the Complaints.

II. Conclusions of Law

As the Supreme Court explained in McMahon, supra, a dispute between a property owner and a municipality with respect to the revocation of a tax abatement granted pursuant to an agreement relating to the development of low- and moderate-income housing is [a]t its core . . a contract and estoppel case . . . . properly venued in the Superior Court. 195 N.J. at 544. Such claims raise the fundamental question of whether the tax assessor had the authority to determine unilaterally that the bargained-for tax abatement was no longer operative. Stated differently, plaintiff claims that the City breached the financial agreement, when the tax assessor unilaterally revoked the abatement. Id. at 544-45.

Justice Rivera-Soto provided a concise recitation of the controlling legal precedents in such circumstances

It has long been the rule in New Jersey that court[s] cannot relieve municipalities from hard bargains[.] City of Newark v. N. Jersey Dist. Waters Supply Comm n, 106 N.J. Super. 88, 103, 254 A.2d 313 (Ch. Div. 1968), aff d o.b., 54 N.J. 258, 255 A.2d 193 (1969). It has been emphasized that [m]unicipal contracts stand on the same footing as contracts between natural persons and courts will not inquire into the reasonableness of the terms of such contracts in the absence of bad faith, fraud or capricious action. Ibid. (citation omitted). See also Port Auth. v. Affiliated FM Ins. Co., 2 000 WL 35572338, 23, 2 000 U.S. Dist. LEXIS 20724 *77 (D.N.J. June 5, 2000)( In the contractual setting, States can bind themselves just like private parties. ); Dworman v. Mayor and Bd. of Aldermen, the Governing Body of the Town of Morristown, 370 F. Supp. 1056, 1071 (D.N.J. 1974)(quoting City of Newark, supra, 106 N.J. Super. at 103, 254 A.2d 313).

Also, the Court repeatedly has hewed to the maxim that [c]ourts cannot make contracts for parties. They can only enforce the contracts which the parties themselves have made. Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161 A.2d 717 (1960) (citation and internal quotation marks omitted). In other words, [w]hen the terms of [a] contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties [because t]he parties are entitled to make their own contracts. Ibid. (citations omitted).

[Id. at 545-46.]

Here, the contract between the parties is clear. The city granted an abatement to the improvements at the subject property beginning from the date of issuance of a valid temporary or permanent certification of occupancy for the improvements and continuing until the last day of the calendar year during which occurs the thirtieth anniversary of such date. In exchange for the abatement, plaintiff agreed to make quarterly PILOT payments that reflect a specified percentage of its gross revenue. In addition, plaintiff agreed to submit annual audited financial statements to the city so that the required PILOT payments could be calculated correctly.

According to the plain terms of the contract: This Agreement shall terminate at the end of the tax exemption period described in Section 1 hereof, unless sooner terminated in accordance with the procedures under N.J.S.A. 40A:20-13. The agreement does not provide for the unilateral revocation of the abatement in the event that the property owner fails to make PILOT payments. N.J.S.A. 40A:20-13, incorporated into the agreement, does not allow for the city to revoke the abatement when PILOT payments are not made. The statute provides, in relevant part, that

[t]he tax exemption provided in this act shall apply only so long as the urban renewal entity and its project remain subject to the provisions of this act, but in no event more than 35 years from the date of the execution of the financial agreement.

* * *

An urban renewal entity may at any time after the expiration of one year from the completion date of the project, notify the governing body of the municipality that, as of a certain date designated in the notice, it relinquishes its status under this act, and if the project includes housing units, that the urban renewal entity has obtained the consent of the Commissioner of Community Affairs to such a relinquishment. As of that date, the tax exemption, the service charges, and the profit and dividend restrictions shall terminate.

[N.J.S.A. 40A:20-13.]

The statute contemplates a long-term agreement not subject to unilateral termination. The property owner may opt out of the agreement, with the consent of the Commissioner of Community Affairs, under specified circumstances. The statute, however, does not vest in the municipality the ability to revoke the abatement agreement if agreed upon PILOT payments are not made.

The plain language of the Financial Agreement requires that the abatement at the subject property will endure for many years. This is an entirely reasonable provision, given that the property owner used public funds to construct housing needed in East Orange for low- and moderate-income residents. In exchange for the public financing, the property owner agreed to restrictions on the rent it can charge, as well as the income the project can earn. The city, on the other hand, enjoys the benefit of having needy residents housed in affordable units. The Long Term Tax Exemption Law indicates that the Legislature intended such arrangements to remain in place for many years.

While the city is entitled to receive PILOT payments to offset the cost of services provided to the residents at plaintiff s facility, the failure of plaintiff to make those payments does not justify abrogating the Financial Agreement and upending the benefits secured through public financing of the project. Instead, the city has the right to bring a breach of contract action to secure monetary damages to compensate for missed PILOT payments and to ensure future compliance by the property owner with the Financial Agreement. The city s revocation of the abatement and its subsequent sale of a tax sale certificate with respect to the subject property constitute breaches of the Financial Agreement.

The court rejects the city s argument that the abatement on the subject property was void because the Financial Agreement was never ratified through adoption of a separate Ordinance by the governing body. In support of its argument, the city relies on N.J.S.A. 40A:20-9, which provides, in relevant part, that

[e]very approved project shall be evidenced by a financial agreement between the municipality and the urban renewal entity. The agreement shall be prepared by the entity and submitted as a separate part of its application for project approval. The agreement shall not take effect until approved by ordinance of the municipality. Any amendments or modifications of the agreement made thereafter shall be by mutual consent of the municipality and the urban renewal entity, and shall be subject to approval by ordinance of the municipal governing body upon recommendation of the mayor or other chief executive officer of the municipality prior to taking effect.

Although the Financial Agreement was attached to the resolution adopted by the governing body approving the North Oraton project, the city contends that in the absence of a formal Ordinance approving the agreement, the contract and the abatement for improvements at the subject property, were never adopted. Under the square corners doctrine, the court will not permit the city to seize on this technicality to deny the validity of the Financial Agreement.

The Supreme Court examined the square corners doctrine in the local property tax context in F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426-27 (1985). The Court s directive was clear

We have in a variety of contexts insisted that governmental officials act solely in the public interest. In dealing with the public, government must turn square corners. Gruber v. Mayor and Twsp. Com. of Raritan Tp., 73 N.J. Super. 120 (App. Div.), aff d., 39 N.J. 1 (1962). This applies, for example, in government contracts. See Keyes Martin v. Director, Div. of Purchase and Property, 99 N.J. 244 (1985). Also, in the condemnation field, government has an overriding obligation to deal forthrightly and fairly with property owners. See Rockaway v. Donofrio, 186 N.J. Super. 344 (App. Div. 1982); State v. Siris, 191 N.J. Super. 261 (1983). It may not conduct itself so as to achieve or preserve any kind of bargaining or litigational advantage over the property owner. Its primary obligation is to comport itself with compunction and integrity, and in doing so government may have to forego the freedom of action that private citizens may employ in dealing with one another.

[Id. at 426-427.]

The currency of the square corners doctrine in the area of taxation was highlighted by the Court. The statutory provisions governing substantive standards and procedures for taxation, including the administrative review process, are premised on the concept that government will act scrupulously, correctly, efficiently, and honestly. It is to be assumed that the municipality will exercise its governmental responsibilities in the field of taxation conscientiously, in good faith and without ulterior motives. Id. at 427. The doctrine cannot be applied with rigidity or undue technicality. New Concepts For Living, Inc. v. City of Hackensack, 376 N.J. Super. 394, 403 (App. Div. 2005). Equitable relief under the doctrine cannot be exercised or withheld rigidly, but [is] always subject to the guiding principles of fundamental fairness. Id. at 404.

Here, the city s governing body approved the Financial Agreement without dissent through a resolution. The Mayor subsequently signed the agreement, which fulfilled the municipal objective of allowing for the construction of low- and moderate-income housing for senior and handicapped residents. Public funds were used to finance the project because of the existence of the signed Financial Agreement. Common sense dictates that submission of the signed agreement to the governing body for adoption of an Ordinance approving its terms would be in the control of the city government, not plaintiff. The city never took this step. No evidence in the record suggests any opposition to the Financial Agreement, the North Oraton project or the PILOT payments that would explain on a principled basis the failure to submit the matter to the city council for adoption of an Ordinance. The record suggests only an oversight with respect to this final step in the contract approval process.

On the other hand, for ten years the city benefitted from the agreement, as plaintiff, believing that the agreement was in effect, operated the North Oraton project on a non-profit basis, prohibited from renting its units at market rates. Granted, the city did not receive the PILOT payments required by the agreement. This failure, however, can just as readily be attributed to city officials who listed the subject property as exempt and never sought a single payment from plaintiff, as it can be to plaintiff, which was content to operate its facility tax free and without making PILOT payments for many years, even though its President was quite obviously aware that such payments were required by the Financial Agreement. In light of these findings, equity precludes the city from arguing the invalidity of the Financial Agreement merely because a formal Ordinance approving the contract was not adopted. See Lowe s Home Centers, Inc. v. City of Millville, 25 N.J. Tax 591 (Tax 2010)(applying square corners doctrine to preclude city from revoking a tax abatement agreement, the benefit of which the city enjoyed for several years prior to its attempted revocation).

As a result of these conclusions, the court determines that the city breached the Financial Agreement when it revoked the abatement on improvements at the subject property. It follows that the tax sale certificate held by Boca, based as it was on the revocation of the abatement, is void. Brinkley v. Western World, Inc., 292 N.J. Super. 134 (App. Div. 1996). Indeed, the sale of the tax sale certificate was itself a breach of the Financial Agreement. In addition, the court concludes that plaintiff breached the Financial Agreement by failing to make the quarterly PILOT payments to the city required by the agreement.

In light of the court s conclusion that both parties to the Financial Agreement breached the terms of the contract, the court holds that North Oraton and the city are entitled to legal and equitable relief. The court will enter Judgment on Count I of each of the Complaints

(1) restoring the tax abatement provided for in the Financial Agreement for the improvements at the subject property commencing with the issuance of the 1995 certificate of occupancy; and

(2) awarding damages to the city in the amount of any and all delinquent PILOT payments under the Financial Agreement, with appropriate interest, and credit for plaintiff s 2005 payment in the amount of $115,000. Plaintiff and the city shall, on or before December 1, 2014, submit to the court proposed calculations of the amount of damages to which the city is entitled from plaintiff.

Given the court s conclusion that the tax sale certificate held by Boca is void, the court will enter Judgment on Count I of each of the Complaints

(1) vacating the tax sale certificate held by Boca; and

(2) directing the city to pay to Boca

(i) the price paid to the City for the tax sale certificate together with interest on that amount from the date paid at the rate set forth in R. 4:42-11(a); and

(ii) all subsequent taxes paid to the City on such tax sale certificate together with interest on those amounts from the dates paid, at a rate to be determined by the court after further briefing by the parties.2

Presently pending in the Superior Court, Chancery Division, Essex County are FT Properties, LLC v. North Oraton Urban Renewal, LP, et al., Docket No. F-21036-09 and Tower Lien, LLC v. North Oraton Urban Renewal, LP, at al., Docket No. F-031334-13, in which the holders of tax sale certificates seek to foreclose on the subject property. The parties have asked the court to consolidate those matters with the above-captioned matters. The consolidation request has been granted. An appropriate Order will be issued.

In addition, The Mary Cocoziello Irrevocable Trust is a lien holder by virtue of a Note and Mortgage given to it by plaintiff, as well as a Judgment entered against plaintiff on May 31, 2011 in the amount of $399,458.75. The Cocoziello Trust has not been a party to nor participated in the matters that originated in the Tax Court. It is, however, a party to and has filed an Answer in one of the above-referenced foreclosure proceedings. With the consent of the parties, the court this day signed an Order permitting The Cocoziello Trust to intervene and file an Answer in the matters that originated in the Tax Court.

This opinion does not address the claims raised in Count II of each of the Complaints originating in the Tax Court and the related counterclaims.

1 3 On March 26, 2009, Fidelity Tax, LLC transferred the tax sale certificate to FT Properties, LLC. On November 20, 2013, FT Properties, LLC transferred the tax sale certificate to Boca.

2 After issuance of this opinion in preliminary form, the city and Boca disputed both the rate at which interest should be paid on this provision of the Judgment, and a proposed 30-day period in which the city would be required to make Boca whole. The city argues that Boca should receive interest on tax payments it made on the tax sale certificate at the standard R. 4:42-11(a) judgment rate. Boca argues that it is entitled to interest on its tax payments on the rate set forth in N.J.S.A. 54:4-67(c), which applies to tax delinquencies. In addition, the city argues that the court s decision with respect to the validity of the tax sale certificate would result, in effect, in a simple money judgment which does not carry with it an automatic court-ordered payment period. The city also argues that a 30-day timeframe, if allowed by law, would be untenable, and unrealistic. According to the city, the Court is well aware that the City is required to bond even ordinary tax refunds, never mind the significant sums involved here. No Affidavit supports this assertion. In addition, the city argues that it would be unfair to require it to pay a money judgment to Boca when it has no effective remedy against the virtually bankrupt PILOT holder, the entity whose willful failure to live up to its PILOT obligations started the cavalcade of unfortunate events leading to the present pass. Boca shall submit supplemental briefing on these points on or before November 7, 2014. The city s response shall be submitted on or before November 21, 2014. Boca may file a reply on or before December 5, 2014.