Appellate Division: For Tax Purposes, a Property’s Prospective Zoning Change Must be “Reasonable”

by: Thomas Olson
17 May 2021

From 2004-2018, the Township of Dover (now officially known as Toms River) decided to impose a property tax upon a 1211-acre tract of land in their municipality with its highest and best use as a residential property. However, at the time of Dover’s assessments the property’s zoning designation was for manufacturing, had been declared a superfund site by the EPA, and a forced environmental cleanup had commenced. The property’s owners, CIBA, and its predecessor BASF Chemicals (BASF), argued that the residential property designation was not reasonable given the superfund site declaration. The Tax Court agreed with CIBA for the assessment years 2004-2018. The Appellate Division has now also agreed with CIBA, too.

In CIBA Specialty Chemicals, Corp., v. Township of Dover, the land in issue had been used since 1952 for the creation of “dyes, pigments, resins, and additives,” as well as appropriate waste disposal and management. By 1989, the property had become contaminated, and the EPA issued its first of two Records of Decisions (ROD) which designated the land contaminated. Together, the EPA’s RODs provided environmental remediation schedules which would eventually permit the land in question to be developed for a variety of uses once the necessary clean ups were required. Manufacturing activities ceased on the property in 1996.

The Township’s reasoning behind the residential tax designation was that once the property was remediated, the zoning schedule would be changed to residential and allow homes, apartments, and small stores to be built. CIBA, and eventually BASF, challenged the assertion of a residential designation from the Township from 2004 through 2018 because as a superfund site and the ongoing environmental remediation, the designation of residential was inappropriate at the time of the assessment. The Tax Court determined that the environmental cleanup was still ongoing from the year 2004 through at least 2017. Additionally, another issue was that the EPA had not yet changed the designation of a superfund site and removed the property from the National Priorities List (NPL), which was required by law once the EPA determined the land to be usable and no longer an environmental threat. After the trial testimony, the Tax Court determined that the land in question could not reasonably be found suitable for residential purposes during the years 2004-2018. The Tax Court held that even if a zoning change my be adopted in the future, at the time of the assessment the EPA’s designation and redmediation requirements made the residential property designation unreasonable.

The Appellate Division agreed with the Tax Court’s findings. The Appellate Division concluded that while at some point there will be a designation and eventual use of the land for residential purposes, at the time of the assessment it was not reasonable that the change would occur within a reasonable and foreseeable time. The Appellate Division therefore held that the property in question should be assessed pursuant to its then-current zoning status.

To read the full decision of CIBA Specialty Chemicals, Corp., v. Township of Dover, please click here.

The author acknowledges the assistance of William Olson, a Law Clerk at McKirdy, Riskin, Olson & DellaPelle, in preparing this article. Mr. Olson is a member of the Class of 2021 at Rutgers Law School.