NEW JERSEY TURNPIKE AUTHORITY VS. TOWNSHIP OF MONROE (TAX COURT OF NEW JERSEY), A-4333-14T1

Background

The New Jersey Turnpike Authority (Turnpike) purchased ~397.47 acres (the Brookland Mitigation Site) to satisfy DEP-required mitigation for a highway widening project; deed recorded Feb. 23, 2010.
The Township of Monroe assessed the land under the Farmland Assessment Act (FA-Act) and sought roll-back taxes for 2008–2010 after Turnpike acquired the property and offered it to the DEP.
The Turnpike is an instrumentality created by statute, with the Governor appointing most commissioners, authority to borrow, sue, contract, and to pay its own debts; statute also exempts Turnpike-owned transportation projects from taxes.
DEP permits required mitigation; Turnpike bought the site (≈$4 million) and offered it to DEP rather than using condemnation; no transfer tax was paid initially.
The Middlesex County Board of Taxation granted Monroe’s roll-back tax application; Turnpike appealed to Tax Court. Both parties moved for summary judgment on whether Turnpike qualified for the FA-Act roll-back tax exemption as “the State” or a qualifying local government unit.
The Tax Court granted summary judgment for Monroe, holding Turnpike did not fall within the statutory definition of “the State” for the roll-back exemption; the Appellate Division affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Turnpike qualifies for FA-Act roll-back tax exemption as "the State" or an alter ego of the State	Turnpike: it is an instrumentality/subordinate to State and thus should be treated as "the State" (or a local government unit) so land acquired for conservation by it is exempt from roll-back taxes	Monroe: Turnpike is separate from the State, pays its own debts, cannot compel State to pay fees in lieu of taxes, and is not within the statutory definition of "the State" for roll-back exemption	Court: Turnpike does not qualify as "the State" for the roll-back exemption; summary judgment for Monroe affirmed
Whether statutory/regulatory scheme (including GSPTA definitions) supports treating Turnpike as "the State"	Turnpike: legislative intent to exempt state-related acquisitions from roll-back taxes should include instrumentalities	Monroe: statutory definitions (N.J.S.A. 13:8C-3) and the Garden State Preservation Trust Act (GSPTA) show exemptions are tied to the State proper and its ability to obligate fees in lieu; Turnpike lacks that power	Court: Interpreting FA-Act together with GSPTA supports exclusion of Turnpike; Legislature did not amend to include Turnpike when it revised statutes in 1999
Whether Tax Court’s legal interpretation merits deference	Turnpike: (implicit) Tax Court erred in legal interpretation	Monroe: Tax Court correctly applied de novo review to law and its interpretation accords with related statutes and precedent	Court: De novo review applied to legal issues; Tax Court’s interpretation is correct and consistent with statutory context
Whether Turnpike met burden to show it is a "local government unit" under statute	Turnpike: asserted it met the three statutory requirements (local government unit; acquired property; for conservation/recreation)	Monroe: Turnpike did not establish statutory status and failed to brief certain definitional issues on appeal	Court: Did not decide Turnpike’s status as local government unit because Turnpike failed to brief those issues on appeal

Key Cases Cited

Toll Bros. v. Twp. of W. Windsor, 173 N.J. 502 (de novo review applies to legal questions in tax cases)
Manalapan Realty v. Twp. Comm. of Manalapan, 140 N.J. 366 (court interpretations of law not entitled to special deference)
Ford Motor Co. v. Twp. of Edison, 127 N.J. 290 (appellate review standards for tax court valuation and legal issues)
Glenpointe Assoc. v. Twp. of Teaneck, 241 N.J. Super. 37 (deference to Tax Court factual findings; substantial-evidence standard)
Quaremba v. Allan, 67 N.J. 1 (continued use of statutory language or failure to amend indicates legislative assent to judicial construction)