## Facts

- The Bolger Foundation, a nonprofit private foundation, owned a 2.8-acre tract straddling the Village of Ridgewood and the Borough of Midland Park.
- The tract lay in a residential zoning district and, absent restrictions, was appraised by the municipalities for 1980 and 1981 at its highest and best use as single-family residential building lots.
- In 1979, Bolger granted the New Jersey Conservation Foundation a perpetual conservation easement over the entire tract.
- The easement broadly barred development-related activity and required preservation of the land in its natural state, restricting vegetation removal, excavation, construction, dumping, and other harmful uses.
- The easement bound successors and assigns; the holder’s rights were primarily inspection and enforcement, and if the holder ceased to have a preservation mission, the easement was to be transferred to other conservation organizations or public bodies.
- The municipalities assessed the parcels as if fully developable, while Bolger argued the easement substantially reduced market value and should lower the assessments.

## Issues

1. Whether, for local property tax assessment, a perpetual conservation easement in gross granted for public benefit must be considered in determining the land’s true market value.
2. Whether assessing the fee interest as though unencumbered improperly taxes value no longer possessed by the fee owner due to severed development rights.

## Decision

- The Supreme Court of New Jersey reversed the Appellate Division and Tax Court.
- The Court held that the conservation easement’s value must be taken into account in determining the property’s taxable value.
- The Court remanded for reassessment consistent with a valuation reflecting the diminished market value of the fee interest burdened by the perpetual easement.

## Legal Principles

- Property must be assessed at its “true,” “full,” and “fair” market value—what a willing buyer and seller would agree upon—considering all legally enforceable encumbrances and restrictions.
- A perpetual conservation easement in gross that substantially limits development and is enforceable for public benefit severs valuable property rights from the fee; the remaining fee interest must be valued accordingly.
- Taxing the servient estate as if unencumbered effectively taxes rights removed from the fee owner and conflicts with market-based valuation.
- Assessment authorities may scrutinize claimed conservation easements and need not credit arrangements that lack genuine, enforceable, and practical limiting effect.

## Conclusion

A perpetual, enforceable conservation easement in gross granted to a bona fide conservation organization for public benefit reduces the market value of the burdened land, and that reduction must be reflected in local property tax assessments.


Vill. of Ridgewood v. Bolger Found., 104 N.J. 337, 517 A.2d 135 (1986)