Tag Archives: Revaluation

Tax Court gives cold shoulder to Freeze Act application.

In a recent unpublished opinion, Newton West Ltd. v. Town of Newton, the Tax Court denied a motion for the application of the Freeze Act, N.J.S.A. 54:51A-8.  Under the Freeze Act, a judgment by the Tax Court is “conclusive upon the municipal assessor” for the year under appeal and the next two years immediately thereafter.  In other words, the assessment is frozen for two years following the judgment.  There is an exception to the act where there has been a revaluation or complete reassessment of all real property in the municipality.

In this case, the plaintiff, Newton West Ltd., owner of a 169 unit apartment complex, sought a judgment under the Freeze Act for tax years 2011 and 2012 based upon a 2010 Tax Court judgment. The Town of Newton opposed the motion arguing there was a complete reassessment of all property within the town for the 2011 tax year and, as such, the property owner was not entitled to protection under the Freeze Act.  Newton West argued that the 2011 reassessment was not a “complete reassessment” although the opinion does not provide the specific basis for the Newton West’s position.

The opinion does however go into detail regarding the Town’s argument that it met the necessary preconditions for a reassessment.  There was a public hearing before the Sussex County Board of Taxation (the “Board”) in September of 2010; a month later, the Board approved the Town’s application for the reassessment; the governing body for the Town of Newton adopted a resolution authorizing the reassessment; and the State Division of Taxation approved the reassessment contract.

Therefore, the Court held the application of the Freeze Act to the 2011 and 2012 tax years was not appropriate and denied Newton West’s motion.

A copy of the court’s decision in Newton West Ltd. v. Town of Newton may be found here.


Related articles:

Morristown Hotel Wins Freeze Act Application and Refund

Appeals Court Upholds Freeze Act Protection From Added Assessment


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Township’s Error Saves Taxpayer from Tax Increase

The owner of a mobile home park in Fairfield Township, Cumberland County, challenged the 2011 and 2012 tax assessments on the park in the Tax Court following a Township-wide revaluation. The Township filed a “cross complaint” alleging that it reserved its rights to apply added assessments for each of the tax years. The mobile home park consisted of 203 “pads” with water, electrical service, and sewer hook-ups where a mobile home owner could place the mobile home for a monthly rental fee. Other buildings such as an office and shop on the property were used by the owner, and the buildings did not generate a monthly fee.

At trial, both parties presented appraisal experts who utilized the income approach to determine the fair market value of the property which is appropriate for rental properties. However, the appraisers’ methods varied on how they utilized the income approach. The property owner’s expert only examined the actual income generated by the mobile home park without looking to the market place to establish fair market rental values for similar types of property. The Township’s expert located and analyzed nine other mobile home parks to determine a rental market value for the individual pads, and also determined that other types of income would typically be generated by a mobile home park like the subject property which were not actually generated at the subject property. At trial, the Tax Court found the Township’s expert provided a more reliable opinion of value because he went into the market place which provides a more accurate view of how much income a comparable property can generate.

The Township did take an odd approach to how it handled filing its “cross complaint.” The Township alleged that added assessments may be applied as a result of the investigation related to the tax appeals. The Tax Court determined that what the Township filed was not a counterclaim pursuant to R. 8:3-2(b), which might permit the assessment to be increased if the evidence supported one, but a claim to file an added assessment which is a term of art in the Tax Court. An added assessment is filed when work has been completed after the October 1st date of value which would increase the property’s value for the relevant tax year. Here, no such work was discovered, so the Township’s “added assessment” claim was irrelevant.

A copy of the Tax Court’s unpublished opinion in Tip’s Trailer Park, Inc. v. Township of Fairfield can be found here.

For more how determining market value has been addressed previously by the Tax Court, please see the following blog posts:

Court Rejects Property Owner’s Unverified Sales Evidence at Trial–Affirms City’s Value

Taxpayer Fails to Overcome “Presumption of Correctness”

Taxpayer Clears One Hurdle But Trips Over Another

Property Owner’s Appeal Dismissed for Failure to Follow Court Rules

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Apartment Complex Wins Assessment Reductions at Trial

A New Jersey Tax Court judge reduced the assessment for two of the three years under appeal on an apartment complex in the Town of Phillipsburg.  The Subject Property contained 96 apartment units on a 4.19 acres parcel in a residential zone.  At trial, the parties agreed that the highest and best use of the property was as an apartment complex, and that the income approach to value was the appropriate method of valuation.  The parties differed though on the appropriate vacancy and collection loss, reserves for replacements, and capitalization rates.  Upon review of the testimony and evidence set forth at trial, the judge agreed with the property owner’s vacancy and collection loss, and reserves for replacements.  However, the judge found the Town’s expert’s capitalization rate analysis more credible.  Once these expenses were applied to the property’s income, the court affirmed the assessment for 2009, but found reductions were necessary for the 2010 and 2011 tax years.

A reduction in an assessment is only possible after a property owner rebuts the presumption of correctness granted to the assessment.  To be successful, a property owner must present sufficient evidence to rebut the validity of the assessment, and then the burden is on the taxpayer to prove, by a preponderance of the evidence, that the assessment is erroneous.  Ford Motor Co. v. Twp. of Edison, 127 N.J. 290, 312-315 (1992).  The municipality will then have an opportunity to present its own evidence to support its value of the subject property before the judge weighs the evidence to decide which witness presents the more credible evidence and establish an assessment based on the information before the court.

A copy of the Tax Court’s unpublished opinion in Corliss Apartments L.L.C., v. Town of Phillipsburg, (November 1, 2013), can be found here.

For more on evidence issues in condemnation cases, please see the following blog posts:

Appeal Involving Apartment Complex Reaffirms Presumptions

Hilton Hotel Assessment Reduced Following Trial

Unreliable Testimony Dooms Taxpayer’s Appeal

Taxpayer Clears One Hurdle But Trips Over Another


Filed under Court Decisions

Despite Threat, Jersey City Reval Still Not Cancelled

Despite threatening to cancel the city-wide property revaluation in Jersey City, Mayor Steven Fulop has not followed through with any formal action to cancel the City’s first revaluation since 1988.  Fulop had voted against the revaluation contract in 2011 as a member of the Jersey City Council, at which time the revaluation company had a former City business administrator on its payroll.

According to Hudson County spokesman Jim Kennelly, the formal process would involve the Mayor writing a letter to county tax officials seeking approval from the state Division of Taxation to cancel the revaluation.  No such request has been sent to date.

The average equalization ratio, used to translate the assessed value to market value, for 2013 is about 33%, meaning that a property assessed at $100,000 has an indicated true value of approximately $300,000.  The average assessed value of a property in the city is about $93,000. The average annual property tax bill is about $6,500.

We’ll keep an eye on this story as the situation develops.  For more on this story, please see the following articles:

Jersey City Mayor Fulop has not officially canceled property revaluation two months after promising to do so

Jersey City mayor-elect Fulop putting halt to property revaluation

For more on revaluations, please see the following blog posts:

Mercer County Board of Taxation Orders Four Municipalities to Undertake Revaluations

Monroe Township Ordered to Undertake Revaluation

Municipalities Reassessing Properties Despite Recent Revaluations

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Mayor Voting with His Feet: Selling house because his taxes are too high

The mayor of Egg Harbor Township is selling his home after a revaluation in his municipality caused his taxes to increase 60% to over $31,000.  The home was assessed in 2012 for $463,800, which equated to a market value of roughly $750,000.  The new assessment values the home at $1,100,400.  Currently five homes are on the market in his neighborhood with an average price of $1.3 million which suggests that the new assessments may be too conservative because the asking prices are about 60 percent higher than the new assessments.  McCullough plans to look for a place in Egg Harbor’s West Atlantic City section, but has a back-up plan in place—relocating to his 1,200-foot waterfront condominium in North Palm Beach, Florida where the taxes are only $2,569.

For articles discussing the topic, please see the following:

Egg Harbor Township mayor priced out of home by taxes

Egg Harbor Township mayor is selling his home because taxes are too high, report says

Sandy damage complicates Egg Harbor Township revaluation; even the mayor has filed an appeal

For articles discussing actions taken by other property owners because of high property taxes, please see the following:

High property taxes force owner of historic Ocean City mansion to knock it down – Star Ledger

High taxes force demolition of Ocean City estate – Press of Atlantic City

For previous blog posts on property taxes, please see the following:

Will Income Tax Be Used to Offset Property Taxes?

Senate Passes Tax Appeal Reform for Monmouth County

Property Owner Keeps Tax Abatement After Municipality Failed to “Turn Square Corners”

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Jersey City Revaluation Imperiled?

English: This is a picture of Steven Fulop

Steven Fulop (Photo credit: Wikipedia)

Jersey City Mayor-elect Steven Fulop has announced that the city-wide property revaluation has been halted, and warned that an audit of the revaluation company hired by the prior administration may be performed because of alleged ties to a former city business administrator.

Fulop’s campaign had impugned outgoing Mayor Jeremiah Healy for ordering the revaluation, suggesting that it would result in property tax hikes that property owners could not afford.

Fulop officially becomes Mayor next week and has indicated that the City will not finish paying for the revaluation, at least not yet.  He had voted against the revaluation contract in 2011 as a member of the Jersey City Council, at which time the revaluation company had a former City business administrator on its payroll.

Jersey City has not undertaken a revaluation since 1988, and the average equalization ratio, used to translate the assessed value to market value, for 2013 is about 33%, meaning that a property assessed at $100,000 has an indicated true value of approximately $300,000.  

More information about this story is available in this story by Terrence McDonald in today’s Jersey Journal.

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Town’s Failure to Treat Property Owner Fairly Leads to Reversal by Appellate Division

A New Jersey appellate court recently reversed a trial court’s dismissal of a tax appeal, and found that the City of North Wildwood failed to act fairly in litigation with the property owner.  The property at issue is improved with a seven-story mixed-use tower, a 160-slip marina and a 3900 square-foot marina services building, and a one-story restaurant.  Plaintiff Beach Creek owns the land underlying the Towers but not the condominium units. The owner of the tower has a ninety-nine-year lease for the land underlying the Towers, and the rent is income to Beach Creek.  Following a revaluation in 2006, the City increased the assessed value of Beach Creek’s property from $1,526,200 for 2005, with an equalized value of $3,225,247, to $14,612,900 for 2006. The City assessed the property at $14,288,900, for 2007 and 2008. Beach Creek filed a timely challenge to its 2007 assessment on March 15, 2007 and a timely challenge to its 2008 assessment on March 24, 2008.  Beach Creek filed tax appeals for 2007 and 2008, and an action in the Chancery Division to challenge the 2006 assessment.

In connection with the pending Tax Court actions, the City obtained an appraisal report from its expert on March 12, 2009 which concluded that the “retrospective market value of [Beach Creek’s] property for 2006-2009 tax years” was $4.6 million.  The City provided its appraisal to Beach Creek in discovery and filed it with the Tax Court.  As of March 2009, the City had information that the full and fair value of the property in 2007 and 2008 was nearly $10 million lower than the assessed value for those years, and the City thereafter assessed the property at $4.6 million for 2010.

At trial before the Tax Court, Beach Creek’s expert separately valued the different uses on the property after determining that the most reliable appraisal would be one reached by using the valuation method most appropriate for each of the property’s several components.  Beach Creek’s expert used the income approach in valuing the marina and the land underlying the Towers, the cost approach to value the marina services building, and the sales comparison approach to value the restaurant. The value he assigned to the entire property for 2007 and 2008 is the total of the separate values of the components in each of those years.

At the conclusion of Beach Creek’s case, the Tax Court granted the City’s motion to dismiss concluding that Beach Creek had not produced evidence sufficiently definite, positive and certain in quality and quantity to overcome the presumption of validity that attaches to the assessment under New Jersey law. R. 4:37-2(b); Pantasote Co. v. City of Passaic, 100 N.J. 408, 412-14 (1985).  The court first determined that the hybrid approach used by Beach Creek’s expert of “taking one approach for each of the three or four aspects of the property and then somehow just adding them together and coming up to value,” was unprecedented.  Next, the court found Beach Creek’s expert’s application of the cost and comparable sales approaches flawed, and therefore the court had no basis for assigning a true value to the property based on Beach Creek’s evidence.

On appeal, the Appellate Division found Beach Creek’s evidence was adequate to withstand the City’s motion. As to a lack of precedent for the hybrid valuation approach, the Appellate Division cited to Livingston Mall Corp. v. Livingston Twp., 15 N.J. Tax 505, 508-09 (Tax 1996), where the court was faced with valuing a mall that included three anchor department stores and non-anchor mall stores that were leased. The Livingston Mall court concluded that the income approach failed to capture the value of the anchor stores because of a lack of data, and therefore it would be appropriate to use the cost approach for the anchor stores, and the income approach for the non-anchor stores which were leased.

Finally, the Appellate Division found the City’s moving for dismissal based on Beach Creek’s failure to overcome the presumption of validity raised a serious question about the City’s performance of its obligation under F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426 (1985), to “turn square corners” in litigation.  The City, intending to rely on the $4.6 million appraisal at trial, was in possession of evidence that the 2007 and 2008 assessments were grossly erroneous. The Appellate Division found the City’s actions were inconsistent with its obligation to “comport itself with compunction and integrity.”  Thus, the Appellate Division rejected the court’s conclusion that Beach Creek failed to overcome the presumption of the validity afforded to the quantum of these $14.3 million assessments for 2007 and 2008.  The undisputed evidence in the City’s report established that the $14.3 million assessments for 2007 and 2008 were well off the $4.6 million report value, and that sufficient to overcome any presumption that the assessments’ quantum was valid.

As outlined in F.M.C. Stores, the square corners doctrine requires that no government action be taken in litigation with the aim of gaining an unfair advantage over a private citizen.  Thus, the government may not “conduct itself so as to achieve or preserve any kind of bargaining or litigational advantage” over a member of the public.  As the F.M.C. Court observed, this means that “government may have to forego the freedom of action that private citizens may employ in dealing with one another.”Litigation strategies and actions that may be expected in litigation between two private parties will be scrutinized when taken on behalf of a government agency in litigation with a provide citizen.

The property owner in Livingston Mall Corp. v. Livingston Twp., 15 N.J. Tax 505, 508-09 (Tax 1996) was represented by Thomas Olson, Esq. of McKirdy & Riskin, P.A.

A copy of the Tax Court’s opinion in Beach Creek Marina v. North Wildwood City may be found here.

For more blog posts on appraisal report issues, please see the following:

Experts’ Opinions Accepted Over Town’s Objections

Real Estate Tax Appeal Evidence: Admissible in Eminent Domain Case?

Expert’s “Gut Feeling” on Costs Survives Dismissal Claim

Court Disapproves Averaging of Comparable Sales


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