NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
------------------------------------------------------x
FREDA, JOSEPH G. BY ACME AS :
TENANT, : TAX COURT OF NEW JERSEY
: DOCKET NO: 006381-2023
Plaintiff, :
:
v. : Approved for Publication
: In the New Jersey
CITY OF SEA ISLE CITY, : Tax Court Reports
:
Defendant. :
:
------------------------------------------------------x
Decided: March 5, 2024.
Pablo M. Kim for plaintiff (Heinze Law, PA).
Paul J. Baldini for defendant (Paul J. Baldini, PA).
CIMINO, J.T.C.
An unpaid municipal charge prevents a tax appeal from going forward.
Municipal charge is a term of art defined by our Legislature. Since neither the nonresidential development fee nor the planning board escrow fees constitute a
municipal charge in this case, nonpayment cannot bar this tax appeal.
Defendant, City of Sea Isle City (the City), is on a barrier island adjoining the
Atlantic Ocean in Cape May County. The plaintiff, Acme, is a tenant of a property
designated as Block 61.03, Lot 20.01 on the City’s tax map. Acme operates a new
-1-supermarket on the site. Joseph G. Freda owns the parcel. The City issued a
temporary certificate of occupancy to Freda in 2019. Freda still owes the City a nonresidential development fee amounting to $117,154.50 and planning board escrow
fees amounting to $16,162.64. The non-residential development fee funds low- and
moderate-income housing. N.J.S.A. 40:55D-8.2. The escrow fees are for
professional services incurred by a municipality in reviewing applications for
development and for site inspections. N.J.S.A. 40:55D-53.1.
The City seeks dismissal of Acme’s appeal since the fees have not been paid.1
“A taxpayer who shall file an appeal from an assessment against him shall pay to the
collector of the taxing district no less than the total of all taxes and municipal charges
due . . . .” N.J.S.A. 54:3-27; L. 1991, c. 75, § 30. The City asserts the fees constitute
municipal charges. Acme disagrees and asserts the appeal can go forward.
The City essentially urges this court to construe “municipal charge” as a
generic term encompassing a broad array of municipal monetary impositions.
However, “municipal charge” is a term of art used widely in the tax statutes.
Chapters 4 and 5 of Title 54, the taxation title, contain a comprehensive scheme for
the collection of local property impositions and mention “taxes, assessments and
1
Apparently, Acme is responsible for the payment of the property taxes. If paying the taxes, a tenant can file an appeal. See Prime Acct. Dep’t v. Township of Carneys Point, 212 N.J. 493, 506-07 (2013).
-2-other municipal charges” more than thirty times.2 See N.J.S.A. 54:4-67, -70, -99,
-100, -101, -110, -114, -117, -119, -120; N.J.S.A. 54:5-21, -39, -45.1, -45.4, -46,
-46.1, -53.1, -54, -111.1, -122. These chapters were originally part of a series of
laws on municipal finance reform enacted from 1916 through 1918 based upon the
work of the Pierson Commission.3 L. 1918, c. 236, 237. One of the original
enactments from 1918, which later became Chapter 5, is entitled “[a]n Act
concerning unpaid taxes, assessments and other municipal charges . . . .” L. 1918,
c. 237. This enactment mentions “municipal charge” seven more times. See L.
1918, c. 237, §§ 8, 17, 32, 33, 53, 62. Two later adopted sections define “municipal
charges” as “taxes, assessments and other municipal charges . . . .” N.J.S.A. 54:4-110, -120; L. 1936, c. 268, § 4; L. 1937, c. 97, § 7. From the foregoing, three types
of municipal charges are discerned, namely, (1) taxes, (2) assessments, and (3) other
municipal charges.
2
The statutes have slight variations including using “or” instead of “and”; the singular instead of the plural; and “assessments for benefits” instead of assessments. 3
The Pierson Commission formally known as the Commission for the Survey of Municipal Financing “reduced the incomprehensible clutter of preexisting laws to a few simple yet comprehensive statutes . . . .” Edward L. Suffern, Municipal Accounting in New Jersey, 33 J. Acct. 321, 322 (1922). The laws enacted covered local auditing, budgeting, bonding, accounting, taxation and tax sales. See Arthur N. Pierson, Analysis of the Laws Affecting Municipal and County Finances and Taxation 6-7 (1918). The work of the commission is still relevant. In re Ordinance 2354-12 of the Twp. of W. Orange, 223 N.J. 589, 599-600 (2015) (discussing Pierson bond law).
-3-The three types of municipal charges give rise to liens that can be satisfied
through tax sale. For taxes, the lien is continuous. N.J.S.A. 54:5-6. For assessments,
the lien generally arises after authorization of the improvements. N.J.S.A. 54:5-7.
For other municipal charges, the lien attaches as specified by law. N.J.S.A. 54:5-8.
Each year, the tax collector prepares a list of “all taxes, assessments and other
municipal charges which were a lien at the close of the fiscal year.” N.J.S.A. 54:5-21. The tax collector then conducts a tax sale to satisfy the liens. N.J.S.A. 54:5-31,
-32. Whether a tax, assessment, or other municipal charge, the defining
characteristic is a lien arises.
Municipal charges constituting “other municipal charges” can be found in
Titles 40 and 40A concerning municipalities. The key to identifying an “other
municipal charge” is whether a lien attaches to a governmental fee “on the respective
date[] fixed by law.” N.J.S.A. 54:5-8. The Legislature is adept at identifying when
a lien attaches. The statutes specify over a dozen types of “charges” becoming
“liens.” See, e.g., N.J.S.A. 40:14A-21 (sewer); N.J.S.A. 40:14B-42 (water and
sewer); N.J.S.A. 40:48-2.12f (abatement of nuisance); N.J.S.A. 40:48-2.14 (cleanup
of lands); N.J.S.A. 40:48-2.27 (cutting brush and hedges); N.J.S.A. 40:48-2.47
(snow removal); N.J.S.A. 40:48I-1 (cannabis establishment taxes); N.J.S.A. 40:62-14 (light, heat and power); N.J.S.A. 40:64-8 (tree planting); N.J.S.A. 40:65-12
(removal of grass, weeds, snow and ice); N.J.S.A. 40:66A-18 (incinerator service);
-4-N.J.S.A. 40A:26A-12 (sewer); N.J.S.A. 40A:26B-9 (stormwater); N.J.S.A. 40A:31-12 (water);
At times the Legislature does not explicitly use the term “charge,” but still
makes clear there is a lien against the property. See, e.g., N.J.S.A. 40:48-1(15)
(removal of dangerous building, wall or structure); N.J.S.A. 40:48-1.1 (building
demolition); N.J.S.A. 40:48-2.5 (repairs to dilapidated building); N.J.S.A. 40:48-2.59 (graffiti removal); N.J.S.A. 40:62-141 (water); N.J.S.A. 40:66-12 (street
cleaning and disposal of refuge). Finally, in one instance, a lien is inferred when
unpaid property registration fees are municipal charges that can lead to a sale.
N.J.S.A. 40:48-2.12s3(d). The imposition of a lien is the common thread which
differentiates “other municipal charges” from fees.
Previously, this court dealt with the issue of what constitutes a charge barring
a tax appeal in Milltown Indus. Sites v. Borough of Milltown, 12 N.J. Tax 581 (Tax
1992), aff’d o.b., 15 N.J. Tax 144 (App. Div. 1993). The Milltown taxpayer owed
the municipality for electric, water, and sewer service provided to the property. 12
N.J. Tax at 582. This court emphasized the statutes specify when unpaid utility
charges became a lien subject to tax sale. Id. at 587-88. Likewise, the Tax Sale Law
(Chapter 5 of Title 54) is read in pari materia with the provision barring an appeal
for unpaid municipal charges. Id. at 588-89. Based upon the foregoing, the appeal
was dismissed because the utility costs are municipal charges contemplated by the
-5-statute. Id. at 590. Notably, Milltown dealt with statutes explicitly designating the
unpaid utility costs as an unpaid “charge” to which a “lien” attached against the
property.
The statute barring tax appeals uses the term “municipal charge.” N.J.S.A.
54:3-27. The City cannot escape the well-worn usage of the term. “Judges cannot
substitute their own views for terms of art the Legislature has chosen.” In re Plan
for Abolition of Council on Affordable Hous., 214 N.J. 444, 467-68 (2013). “Where
[the Legislature] employs a term of art ‘obviously transplanted from another legal
source, it brings the old soil with it.’” George v. McDonough, 596 U.S. 740, 746
(2022) (quoting Taggart v. Lorenzen, 587 U.S. ____, 139 S. Ct. 1795, 1801 (2019)).
“The point of the old-soil principle is that ‘when [the Legislature] employs a term of
art,’ that usage itself suffices to ‘adopt the cluster of ideas that were attached to each
borrowed word’ in the absence of indication to the contrary.” George, 596 U.S. at
753 (quoting FAA v. Cooper, 566 U.S. 284, 292 (2012)). The old soil defining
“municipal charge” goes back to 1918. Transplanted into the 1991 statute barring
tax appeals is the term “municipal charge” along with the cluster of ideas attached
to it. See N.J.S.A. 54:3-27. A municipal charge is not merely a fee or imposition of
a municipality. It is part of a statutorily specified class giving rise to a lien and
eventual sale of the property.
-6-The mechanics of the non-residential development fee illustrate that fees are
not automatically considered municipal charges. The non-residential development
fee “is imposed on all construction resulting in non-residential development . . . .”
N.J.S.A. 40:55D-8.4(a). Certain properties, such as churches, are exempt from the
fee. N.J.S.A. 40:55D-8.4(b). However, if the property ceases to be used for an
exempt purpose within three years of completion, the “unpaid non-residential
development fees . . . may be enforceable by the municipality as a lien against the
real property of the owner.” Ibid. So long as the property is used for an exempt
purpose, it is just a fee. The loss of exempt status gives rise to a lien elevating the
fee to the status of a municipal charge enforceable through sale of the property.
Absent statutory authorization creating a lien, the City cannot create a
municipal charge out of thin air. The Legislature allows municipalities to establish
municipal charges for a variety of services including those already set forth above.
See infra pp. 4-5. In the case before the court, the non-residential development fee
does not constitute a municipal charge giving rise to a lien enforceable by sale of the
premises or barring a tax appeal.
The City is not the first to invoke extra-legislative steps to enforce collection
of monies owed to it. For example, in Ocean Cnty. Bd. of Realtors v. Borough of
Beechwood, 248 N.J. Super. 241 (Law Div. 1991), a municipality refused to issue
zoning permits, building permits, and resale certificates of occupancy without
-7-payment of all taxes, water and sewer charges. In another case, Builders League of
South Jersey, Inc. v. Borough of Pine Hill, 286 N.J. Super. 348 (App. Div. 1996), a
municipality would not issue a building permit without payment of past-due real
estate taxes. See also Home Builders League of South Jersey, Inc. v. Township of
Evesham, 174 N.J. Super. 252 (Law Div. 1980) (same issue). The courts held the
municipalities acted beyond their statutory authority. Here, Sea Isle City attempts
to force payment of the fee by barring a tax appeal despite the lack of any statutory
authorization. The City cannot bar a tax appeal just because the fee has not been
paid.
The City is not without remedies. The Legislature provides an effective
remedy to collect the fee. “The payment of non-residential development fees . . .
shall be made prior to the issuance of a certificate of occupancy for such
development.” N.J.S.A. 40:55D-8.4(d). To be sure, the Legislature made clear “[a]
final certificate of occupancy shall not be issued for any non-residential development
until such time as the fee imposed pursuant to this section has been paid by the
developer.” Ibid. In the normal course, the owner needs the certificate of occupancy
to open for business or start collecting rents. The Legislature created an economic
dynamic forcing the owner to pay the fee to get the certificate of occupancy. That
dynamic topples when the property owner is able to use the property without a final
-8-certificate of occupancy. The incentive of the property owner to pay substantially
diminishes.
Acme has been operating for several years under a temporary certificate of
occupancy. It is unclear whether this temporary certificate of occupancy is openended or repeatedly renewed. While the owner may be taking advantage of the grace
of the City for issuing the temporary certificate, it does not open the door to barring
a tax appeal, a remedy not contemplated nor permitted by the Legislature. The
viability of other remedies, such as a suit for the fees or revocation of the temporary
certificate of occupancy, is beyond the scope of this action.
As to the planning board escrow fees, the City is in the same predicament. A
municipality collects escrow fees to cover the professional fees it incurs for
application reviews and inspections. Flama Constr. Corp. v. Township of Franklin,
201 N.J. Super. 498, 505 (App. Div. 1985); N.J.S.A. 40:55D-8(b); N.J.S.A. 40:55D53.1. Nowhere does the statute mention escrow fees constitute a lien or charge.
There is simply no municipal charge enforceable by tax sale, or bar to a tax appeal.
Rather, the statute only speaks in terms of the obligations of the developer to satisfy
these escrow amounts.
As with the non-residential development fee, the Legislature created an
effective method of ensuring payment of the escrow fees. In the normal course, the
fees are paid “[i]n order for work to continue on the development or the application
-9-. . . .” N.J.S.A. 40:55D-53.2(c). The municipality is also able to require escrow fees
for inspections as well. N.J.S.A. 40:55D-53(h). “[T]he municipal engineer shall not
perform any inspection if sufficient funds to pay for those inspections are not on
deposit.” Ibid. In other words, if the escrow is not satisfied, the project stops.
Incomplete final site work is part of the reason the City has not issued the final
certificate of occupancy. It is unclear whether final site work is incomplete because
unpaid escrow fees are holding up inspections.
As to the viability of another remedy, such as a suit seeking the fees or
recission of the temporary certificate of occupancy, that is beyond the scope of the
action here.
The tenant wants to appeal. Tying the payment of the non-residential
development fee and escrow fees to a tax appeal is an extra-legislative attempt by
the City to recalibrate the dynamic established by the Legislature. The law strictly
construes attempts to block an appeal. J&J Realty Co. v. Township of Wayne, 22
N.J. Tax 157, 163 (Tax 2005); See also Great Adventure, Inc. v. Township of
Jackson, 10 N.J. Tax 230, 233 (App. Div. 1988); ML Plainsboro Ltd. P’ship v.
Township of Plainsboro, 16 N.J. Tax 250, 257 (App. Div. 1997). Acme wins nothing
here except the ability to have the tax assessment adjusted if necessary. With the
automatic counterclaim, this could result in an increase. See Campbell Soup Co. v.
City of Camden, 16 N.J. Tax 219, 226-27 (Tax 1996).
-10-The court is not going to upset the balance between the municipality and the
taxpayer established by the Legislature. If the Legislature wanted the non-residential
development fee or planning board escrow fees to be municipal charges blocking a
tax appeal, it would have so specified. It did not. As to collecting the fees, the City
is left to its remedies provided by law.
For the foregoing reasons, the court denies the City’s motion.
-11-