Full Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS AMEREAM LLC, TAX COURT OF NEW JERSEY Plaintiff, DOCKET NO. 007852-2025 v. BOROUGH OF EAST RUTHERFORD, Defendant. Decided: October 30, 2026 Romal D. Bullock, for plaintiff (McManimon, Scotland, & Baumann LLC, attorneys). Kenneth A. Porro, for defendant (Brach Eichler LLC, attorneys). David J. Shipley, for amicus curiae (Stevens & Lee, attorneys). GILMORE, J.T.C. In the State of New Jersey, when a tax appeal results in a judgment reducing the assessment, N.J.S.A. 54:51A-8 (the “Freeze Act”) precludes the taxing district from raising the assessment for the following two years, subject to specific exceptions. This case asks whether that protection extends to the American Drean Mall, whose developer makes payments in lieu of taxes (“PILOT”) and would not otherwise be subject to conventional property taxes. It does. This case also asks whether any of the statute’s exceptions apply. They do not. Background Plaintiff Ameream LLC (“Plaintiff”) is the owner and developer of the American Dream Mall in East Rutherford, New Jersey. After a July 2025 trial, this court reduced the properties’ cumulative 2025 assessments to $1,653,960,000. For tax year 2026, defendant, Borough of East Rutherford (“Borough”), increased the cumulative assessments to $1,899,992,100, resulting in Plaintiff’s present motion to freeze the court’s 2025 judgment into tax year 2026. The court is urged to deny the motion by the Borough and amicus curiae US Bank and Trust Company (“US Bank”).1 They argue that the properties’ PILOT status, the Borough’s yearly reassessment for the 2026 tax year, and a substantial change in value each bar application of the Freeze Act. Availability of the Freeze Act to Properties Subject to PILOT Agreements The first question is whether the Freeze Act even applies to the court’s 2025 judgment, given that Plaintiff operates under a PILOT agreement. Traditional PILOT agreements set payments on a fixed schedule. The subject PILOT is different; its payments equal 90% of the conventional property taxes that would otherwise be due based on the properties’ assessments. Thus, the assessments drive the calculation of the payments. Section 4.02(b) of the PILOT agreement accordingly provides that the Borough covenants to maintain current property assessments for the Leasehold Estate and Improvements in accordance with Applicable Law, and as applicable, to reassess such interests in the same manner and at the same time as other real property within the Borough is reassessed, as if the same were subject to conventional property taxes in the Borough . . . . To the extent that such provisions set forth herein conflicts with generally applicable principles of conventional property taxation, the principles of conventional property taxation shall control, including but not limited to, the determination of the assessment by the Tax Assessor in the exercise of his or her sound discretion under Applicable Law and rights of the Developer to contest any assessment so determined. 1 US Bank serves as the trustee for the bondholders. The bonds financed the subject development, and the majority of funds from the PILOT are used to repay the bonds. Given this interest, the court permitted US Bank to appear as amicus curiae, brief the issues, present limited testimony, and participate in argument. 2 Nothing in the agreement bars application of the Freeze Act. Rather, the agreement explicitly requires the Borough to assess the properties as if they were subject to conventional property taxes, and preserves Plaintiff’s right to contest those assessments under principles of conventional property taxation.2 US Bank argues that Plaintiff cannot seek Freeze Act protection because it is not a “taxpayer,” meaning that Plaintiff does not pay conventional property taxes. But the relevant portion of the Freeze Act does not mention taxpayers or taxes, instead focusing on the conclusiveness of a Tax Court judgment: Where a judgment not subject to further appeal has been rendered by the Tax Court involving real property, the judgment shall be conclusive and binding upon the municipal assessor and the taxing district . . . for the assessment year and for the two assessment years succeeding the assessment year covered by the final judgment . . . . [N.J.S.A. 54:51A-8(a).] For tax year 2025, the Borough assessed the properties pursuant to principles of conventional property taxation, the Plaintiff challenged the assessments pursuant to principles of conventional property taxation, and the court entered judgment reducing the assessments pursuant to principles of conventional property taxation. The court therefore finds no basis to deny Plaintiff the right to seek application of the Freeze Act simply because the properties are subject to a PILOT agreement. Plaintiff did not challenge the PILOT; it challenged the assessments, as the agreement expressly contemplates. That being settled, the court turns to whether any of the statute’s exceptions require denial of relief. 2 Plaintiff’s right to appeal the assessment is not precluded by N.J.S.A. 54:3-21(b) as the Financial Agreement governing the development is not subject to the provisions of the Long Term Tax Exemption Law. 3 Change in Value and Other Exceptions under the Freeze Act The Freeze Act is a statute of mandatory and automatic application. Fifth Roc Jersey Assocs., L.L.C. v. Town of Morristown, 26 N.J. Tax 212, 222 (Tax 2011). However, it does not apply where there have been “changes in value occurring after the assessment date[,] . . . a complete revaluation or complete reassessment of all real property within the district has been put in effect . . . [or] the property in question has been the subject of an . . . added assessment . . . condominium or cooperative conversion, a subdivision or a zoning change.” N.J.S.A. 54:51A- 8(a). When an assessment is increased in contravention of the statute, the Freeze Act places the burden of proving an exception upon the taxing district. N.J.S.A. 54:51A-8(b). Here, neither the Borough nor US Bank presented substantive evidence of a change in value, of improvements supporting an added assessment, or of a conversion, subdivision, or zoning change. US Bank offered testimony and news articles about previously dark storefronts reopening, related tenant improvements, an improving economy, and declining market capitalization rates. None of this was quantified. Regardless, neither bare evidence of increased tenant occupancy nor general changes in the market serve to defeat the Act. See 160 Chubb Props., LLC v. Lyndhurst Twp., 31 N.J. Tax 192, 202 (Tax 2019) (citing Union Minerals & Alloys Corp. v. Town of Kearny, 11 N.J. Tax 280, 285 (Tax 1990), aff’d, 13 N.J. Tax 114 (App. Div. 1992)); see also Cumberland Arms Assocs. v. Burlington Twp., 10 N.J. Tax 255, 263, 268 (Tax 1988). Thus, the sole remaining issue is whether the Borough’s yearly reassessment program constitutes a “complete reassessment of all real property within the district” under the Freeze Act. 4 Yearly and Annual Reassessments under the Freeze Act The Freeze Act was enacted in 1946, L. 1946, c. 161, to address “repeated yearly increases in the assessed value of property . . . subjecting [the taxpayer] to the trouble and expenses of annual appeals to the county tax board.” Newark v. Fischer, 8 N.J. 191, 199-200 (1951). In 1957, the Legislature amended the Act to end a judgment’s binding effect when a program for a complete revaluation of all real property in the district takes effect. L. 1957, c. 36. In 1999, the Legislature added complete reassessments to this exception. L. 1999, c. 208. The reason for the exception is readily apparent. When the amendments were adopted, district-wide revaluations and reassessments were infrequent, much less annual. They were performed when needed, with subsequent regulations quantifying that need through statistical markers such as a low average ratio, a high coefficient of dispersion, or more than ten years since the last revaluation. N.J.A.C. 18:12A-1.14(b). The Borough’s witness testified that in his experience, prior to the past 10 to 15 years, voluntary reassessments were conducted at most once every five years. With assessments in many districts falling to a fraction of market value over time, a revaluation or reassessment inevitably produced large increases in assessed values, offset by a corresponding drop in the tax rate. Freezing a pre-revaluation or pre-reassessment judgment through that kind of reset would create a disparity unfair to every other taxpayer in the district. Application of Chapter 123, L. 1973, c. 123 (now codified as amended at N.J.S.A. 54:51A- 6), makes the point even clearer. Consider a township with an average ratio of 50%. A property assessed at $400,000, implying a market value of $800,000, is successfully appealed. The court finds a market value of $650,000 and, applying the 50% ratio under Chapter 123, sets the assessment at $325,000. The following year, the township completes a reassessment, and every property is assessed at 100% of market value. Without the exception, the Freeze Act would keep 5 the appealed property assessed at 50% of its true value, while every other property in the township is assessed at 100% of true value. While yearly and annual reassessments3 are a relatively recent phenomenon, our courts have previously considered their interaction with the Freeze Act. In Tartivita v. Borough of Union Beach, 31 N.J. Tax 335 (Tax 2019), aff’d, 33 N.J. Tax 16 (App. Div. 2021), the court carefully and meticulously examined whether an annual reassessment under the Assessment Demonstration Program (“ADP”) was procedurally sufficient to constitute a complete reassessment, concluding that it was not. In Pella Realty, LLC v. City of Paterson, 31 N.J. Tax 474 (Tax 2020), the court held that a non-ADP yearly reassessment program does not, by itself, preclude the Freeze Act, and ordered a plenary hearing on whether the program satisfied the district-wide reassessment criteria of N.J.A.C. 18:12A-1.14(c) and the Application for Full Reassessment, Form AFR. The Borough in this matter is not an ADP district; it conducts its yearly reassessments through Form AFR using a five-year rolling inspection schedule. But this court need not decide whether the Borough’s program satisfied the requisite procedural requirements. No matter the answer, the complete reassessment exception turns on a more basic proposition: whether the district-wide reassessment changed assessments enough that a frozen judgment would leave the resulting assessment out of step with the rest of the district. The Freeze Act does not define “complete,” but the word implies a true district-wide reset, not routine annual updating. The Appellate Division’s affirmance in Tartivita points to the same conclusion. It looked not only at procedure, but at how few assessments changed, and by how little. 3 Typically, taxing districts operating under the ADP conduct “annual reassessments,” while districts conducting reassessments every year outside the ADP describe their programs as “yearly reassessments.” The difference in terminology does not affect the court’s reasoning. 6 In analyzing undefined terms in the Freeze Act, Judge Lario in Cumberland Arms looked to the New Jersey Supreme Court: It is frequently difficult for a draftsman of legislation to anticipate all situations and to measure his words against them. Hence cases inevitably arise in which a literal application of the language used would lead to results incompatible with the legislative design. It is the proper function, indeed the obligation, of the judiciary to give effect to the obvious purpose of the Legislature, and to that end words used may be expanded or limited according to the manifest reason and obvious purpose of the law. The spirit of the legislative direction prevails over the literal sense of the terms. [Cumberland Arms Assocs., 10 N.J. Tax at 268 (quoting New Capitol Bar & Grill Corp. v. Div. of Emp’t Sec., 25 N.J. 155, 160 (1957)) (internal quotation marks omitted).] The Supreme Court then observed that “the statute before us is remedial and should be liberally construed to accomplish the social aim of the Legislature.” New Capitol, 25 N.J. at 160. Similarly, the Freeze Act is a remedial statute. It spares successful tax litigants the burden of filing repeated yearly appeals, giving them some measure of certainty in the judgment they obtained. Any analysis of the statute must keep that purpose in mind. See Fischer, 8 N.J. at 199-200. Yearly and annual reassessment programs with rolling inspection schedules produce annual changes in assessment that track year-to-year market movement, obviating the need for periodic revaluations, and avoiding disparities between assessments and market value. That is what they are intended to do, and that has been the resounding chorus of their advocates. But those year-to-year fluctuations are precisely the kind of incremental, general changes in value that courts have consistently held insufficient to defeat the Freeze Act. See Cumberland Arms, 10 N.J. Tax at 263. And by their very nature, successful yearly and annual reassessment programs eliminate the specific danger the revaluation/reassessment exception was enacted to prevent. 7 Unlike the 50% average ratio example above, which illustrated the necessity of the revaluation/reassessment exception, properly conducted yearly and annual reassessments are intended to keep all assessments at 100% of market value every year. Indeed, the recent amendment to N.J.S.A. 54:51A-6(d), L. 2021, c. 136, excludes “district-wide reassessment program[s], compliance plan[s], or other form[s] of municipal-wide assessment review that require[] the revision of all property assessments to current market value” from application of Chapter 123. Yearly and annual reassessment districts routinely argue before the Tax Court that such programs fall within subsection (d). That only underscores the point. Where assessments are kept at market value every year and Chapter 123 does not apply, judgments are necessarily set at market value. Freezing them creates no disparity, the exception’s purpose is not implicated, and there is no rational reason to deny taxpayers the remedial relief the Freeze Act was enacted to provide. Further, any increase in value that does occur during the freeze period is not lost for an indeterminate number of years until the next revaluation, but is captured in the first yearly or annual reassessment following the freeze period’s end. That is the case here. The Borough’s own testimony and documentary evidence establish that the yearly reassessment changed values district-wide by less than 6% from 2025 to 2026. Freezing the 2025 judgment for 2026 therefore does not leave the properties carrying outdated assessed values while the rest of the district moves on. The court thus finds no basis to avoid application of the Freeze Act in this matter. The Freeze Act is a statute of mandatory and automatic application, and the burden to defeat it falls on the taxing district. There is no meaningful evidence of a substantial change in value of the properties as contemplated by the Act, and general year-to-year market trends do not defeat the Act simply because they come cloaked in the guise of a yearly reassessment. The Freeze Act was 8 enacted to remedy one specific problem: repeated yearly increases forcing taxpayers into Sisyphean yearly appeals. The amendments excepting complete revaluations and complete reassessments were enacted to remedy another: frozen judgments surviving district-wide resets and creating a vast disparity in assessments. Yearly and annual reassessments neither eliminate the first problem nor give rise to the second. Therefore, Plaintiff’s motion is granted, and the court’s July 31, 2025 judgment is binding on the Borough for tax year 2026. * Minor formatting corrections have been made subsequent to this opinion’s issuance. 9