So what does moldy bread have to do with valuing contaminated property?

by: Anthony F. Della Pelle
18 Dec 2013

When I was a boy staying at my grandparents shore house I informed my grandfather that we needed bread because there was mold on the loaf we had. He told me to cut out the mold and eat the “good” bread. Needless to say, I went without bread until later in the week when my grandmother arrived with a fresh loaf. Looking back I have a greater appreciation for where my grandfather was coming from. He had endured the Great Depression as a child and survived 4 years in North Africa and Europe during World War II.

Coincidentally this event from my childhood occurred in Toms River where the Township seems to have taken a page from my Grandfather’s austerity playbook in telling a property owner to cut the mold off the bread and eat the good part. Of course, there the issue did not concern a slice of moldy bread, but rather a local property tax assessment that exceeded $60,000,000 on a contaminated property.

The subject property in CIBA Specialty Chemicals Corp. v. Township of Dover (later renamed Toms River), is a single 1,200 acre lot that was once home to a chemical company’s industrial operations for nearly 40 years. As a result of contamination on sections of the lot, the property landed on the federal Super Fund list.

In this tax appeal, the Township suggested that large parts of the tract were not impacted by the contamination and could be developed independently from those contaminated portions of the property. The Township argued that the impact of the contamination and the cost of remediation on true market value is limited to those portions of the parcel that suffer from environmental damage.

The property owner argued that the value of the entire parcel is affected by these considerations, notwithstanding the fact that portions of the property appear never to have been contaminated directly.

The Tax Court, on cross-motions for summary judgment, rejected the Township’s argument. The Court found that there is no precedent to support the Township’s position. The Court noted that the entire parcel was designated as a Super Fund site and concluded that “[t]he existence of contamination unquestionably had a negative impact on the true market value of the entire parcel….”

A copy of the opinion may be found here.

Related Articles:

Valuing contaminated properties “in use” or ”not in use”, that is the question. . .

Environmental Impacts in Real Estate Valuation Litigation

Refunds for Environmental Remediation?

“Environmental Impacts in Real Estate Valuation Litigation” New Jersey Law Journal, Vol. CXCV, No. 12, Index 862 (March 23, 2009); Thomas M. Olson and Anthony F. Della Pelle