## Facts

- The Town of Morristown created a Special Improvement District (SID) under N.J.S.A. 40:56-65 to -89 to address declining conditions in its downtown commercial area.
- In 1993 Morristown adopted an ordinance establishing the SID and designating the Morristown Partnership, Inc. (MPI) as district management corporation.
- The SID was funded by a special assessment used for downtown programs and improvements, including advertising, tourism-related efforts, hospitality services, business recruitment, and aesthetic projects.
- The original ordinance drew district boundaries that included residential and mixed-use parcels but exempted residential property from the assessment.
- After an appellate decision in another matter criticized exempting residential property within an assessment district, Morristown amended its ordinance to remove residential properties from the SID boundaries.
- Following the amendment, Morristown imposed an assessment on all property within the revised SID, calculated as 0.105% of assessed value.
- Commercial property owners subject to the assessment challenged the statutory scheme and ordinances, arguing that excluding residential property violated the New Jersey Constitution’s uniformity requirement and was improper because residents also received benefits.

## Issues

1. Whether Morristown’s SID assessment on nonresidential properties violates the New Jersey Constitution’s uniformity clause because residential properties were excluded from the district and assessment.
2. Whether the SID statute and Morristown’s ordinances authorize excluding residential properties from the SID and its assessment consistent with the concept of a special assessment based on special benefits.

## Decision

- The Supreme Court of New Jersey affirmed the Appellate Division and upheld the SID statute and Morristown’s ordinances.
- The Court held the SID charge is a special assessment imposed due to special benefits to assessed property, not a general property tax.
- Because the levy is a special assessment, it is not governed by the constitutional uniformity requirement applicable to property taxation.
- The exclusion of residential property from the SID and assessment was permitted where the municipality reasonably determined the program primarily benefited commercial properties and any residential benefit was incidental.
- The Court recognized municipal discretion to structure assessments to reflect relative benefit, including consideration of mixed-use properties and differentiated treatment, without invalidating the existing assessment.

## Legal Principles

- A levy imposed on specific properties to pay for improvements or services conferring special benefits on those properties is a special assessment, not a property tax.
- Constitutional uniformity requirements applicable to general property taxation do not apply to special assessments.
- A special assessment remains valid if the classification of assessed properties and allocation of costs bear a rational relationship to the special benefits conferred.
- Under the New Jersey SID statute, municipalities may define SID boundaries and determine which property types are assessed, including excluding residential properties when the benefits are reasonably found to accrue primarily to commercial property.

## Conclusion

The court upheld Morristown’s SID assessment as a special assessment justified by special benefits to commercial property, holding that the constitutional uniformity clause governing property taxation does not apply and that residential exclusion is permissible when rationally related to the distribution of benefits.


2nd Roc-Jersey Assocs. v. Town of Morristown, 158 N.J. 581, 731 A.2d 1 (N.J. 1999)