The Township filed a motion to dismiss the appeal as untimely.  The property owner opposed the motion by arguing that he mailed the complaint on November 8, 2011, which should have arrived before the deadline.  The Tax Court calculated that, pursuant to R. 8:4-1(a)(2) (45 days to file after service of judgment) and R. 1:3-3 (3 additional days when service by regular mail), the property owner had until November 17, 2011 to file the complaint.  The Tax Court recognized that it must have taken longer than usual for delivery of the complaint, but noted that “having waited until the end of the appeal period to mail the complaint, it was the responsibility of the plaintiff to ensure its arrival at the Tax Court before the statutory deadline, using means other than ordinary mail if necessary.

Historically, the Tax Court has strictly enforced the filing deadline prescribed by the Legislature.  Appeals of tax assessments greater than $1,000,000.00 must be filed with the Tax Court by April 1^st for the year under appeal, while those properties with assessments under $1,000,000 must be filed with the County Board of Taxation by the same date.  Appeals in municipalities that have undergone a revaluation may be filed by May 1^st.

A copy of the Tax Court’s unpublished opinion in Healey v. Aberdeen Twp., Docket No. 018628-2011 (Tax Ct. January 23, 2012) can be found here.

For more blog posts where the municipality filed to dismiss the property owner’s appeal, please see the following:

Property Owner’s “False” Responses Lead to Dismissal of Tax Appeal

Calendaring Mistake By Attorney Not Worthy of Dismissal at County Board Hearing

Chapter 91 Strikes Another Taxpayer

An arms’ length transaction is one between a knowledgeable buyer and seller, neither being under any compelling obligation to act.  The Tax Court found the seller was not a typical willing seller, and was instead compelled to sell the property as quickly as possible.  The house had been sitting vacant and the MLS listing noted that the house needed fixing up.  The seller, in a nursing home and selling the house through his daughter by power-of-attorney, accepted the buyer’s offer without negotiations.  Thus, the buyer failed to prove by a fair preponderance of the evidence that the property’s assessment was incorrect.

This case stands for long accepted policy that a single sale cannot “make” a market – whether the sale is high or low – and a successful litigant in a real estate valuation dispute must provide evidence of the market as a whole instead of relying upon a single transaction.

A copy of the Tax Court’s unpublished opinion in Gibbons v. City of East Orange, Docket No. 019151-2010 (Tax Ct. January 17, 2012) can be found here.

For more discussion on New Jersey property tax appeal procedure, please see the following blog posts:

Tax Court to Municipality: Enough is Enough!

Montclair Tax Assessment: Might be Wrong, But Not In Error

Wayne Township Owner Misses the Boat on Property Tax Error

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The City Council adopted the resolution increasing the assessment after the assessor realized that one of two partially adjoining lots was under assessed for the tax year 2009.  The tax assessor placed an assessment on Lot 6 of $687,000 based on her mistaken determination that certain boat slips were on that lot, rather than the adjacent Lot 2.  The assessment on Lot 2 was correspondingly lower.  The assessor realized her mistake after the April 1^st statutory deadline to file a tax appeal had passed.  In an attempt to cure the assessor’s error the City Council on December 1, 2009, adopted a resolution increasing the assessment on Lot 2 by $687,800.  The owner of Lot 2 attempted to file an appeal with the County Board of Taxation which rejected the filing as out of time.  The owner then filed an action in Superior Court seeking an order vacating the $687,800 increase in the assessment on Lot 2.  The Honorable Patrick DeAlmeida, Presiding Judge of the Tax Court, was temporarily assigned to the Law Division of the Superior Court to hear the matter.

The court held that the City Council’s resolution was not authorized by law and must be vacated.  In consideration of the Correction of Errors statute, N.J.S.A. 54:4-54, the court held that it does not authorize a change in an assessment based on an incorrect value determination.  The court also rejected the City’s arguments that N.J.S.A. 54:4-58 to -60 allows the court to relax the ordinary assessment appeals procedures finding that the defendant’s reading of these statutes contravenes legislative intent. The court ordered the City’s tax assessor to restore the assessment placed on the property prior to the adoption of the City Council’s resolution.

This increase was at a significantly slower rate of growth than has been experienced over the last several years.  In 2010, the property tax rate rose 4.1% on average across the State and the year-to-year increases from 2007 through 2009 exceeded 7%.

The lower increase in 2011 is the result of a new State law that imposed a 2% cap on property tax collections for towns, schools and counties that started last January.  While the cap is flexible and allows local officials to exceed the 2% to cover expenses related to a state of emergency, debt service costs and employee pensions and health benefits payments, it seems to be stemming the tide that led to a nearly 70% increase in property taxes over the preceding decade.  312 towns exceeded the cap last year, while 165 stayed within 2 percent and 89 held their taxes at the same or lower level.  This is quite an improvement compared to 2010, when 529 towns had an increase in their total tax rate, 425 of which went over 2 percent.

Notwithstanding the slower rate of growth, New Jersey residents continue to bear a crushing property tax burden.  In addition to the tax rate, taxes are calculated based on the property tax assessment which is supposed to reflect the fair market value of the property.  Many properties in New Jersey, residential and commercial alike may be assessed based on inflated market values.  One way property owners can realize relief from inflated assessments is by challenging the assessment by filing a tax appeal.  The deadline to file a tax appeal for 2012 is April 1, 2012.  Property owners will be receiving their notice of assessments in a few weeks, so now is a good time to evaluate whether a tax appeal is warranted.

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At trial, the golf club’s expert utilized the income approach to value, while the Township’s expert relied on the cost approach.  The golf course’s expert created a pro forma revenue from the club’s golf fees, pro shop sales, food/beverage sales, and miscellaneous income by set percentages calculated from the “overall rent” to “gross revenue” of nine leased courses.  The expert then created a capitalization rate using the band of investment method to capitalize the “rental” generated by the pro forma approach.  The Township’s expert utilized four land sales ranging from 20 acres to 74 acres to establish his land value before relying on Marshall & Swift Cost Estimators to value the improvements.

The judge held both parties failed to overcome the presumption of correctness necessary to increase or decrease the appealed assessment.  The opinion identified the inability of the golf club’s expert to provide any relevant supporting data for his “cap rate” analysis.  The judge also concluded that the golf club was a special purpose property for which the cost approach was the appropriate method to value the property.  However, the judge found that the Township’s expert failed to provide the comparable sales necessary to value the land as part of the cost approach.  Specifically, the expert failed to make any adjustments to the comparables for size which were noticeably smaller than the subject, and three of the four sales were deed restricted sales that were potentially not market rate sales because they were purchased by the New Jersey Department of Environmental Protection for conservation purposes.  Thus, the judge affirmed the 2008 and 2009 assessments.

A copy of the New Jersey Tax Court’s opinion in Gale & Kitson Fredon Golf, L.L.C. v. Twp. of Fredon, Docket Nos. 007539-2008; 004341-2009 (Tax Ct. 2011), can be found here.

For more on opinions discussing expert testimony, please see the following blog posts:

Expert’s “Gut Feeling” Survives Dismissal Claim

Apples and Oranges? Another Tax Appeal Dismissed

The Tax Court rejected the property owner’s argument that Great Adventure, Inc. v. Twp. of Jackson, 10 N.J. Tax 230 (App. Div. 1988), was controlling because the Great Adventure court was not asked to resolve what impact the concession leases had on the theme park’s status as owner-occupied, and Jackson conceded that it was considering the park’s value based on its totality and not its parts.  Instead, the Tax Court noted that the language of the Chapter 91 statute “plainly requires a property owner to report all incomes realized from the subject property, and no de minimis exception exists in the statute which would permit a tax payer to only provide the information when the entire property generates rental income.  Instead, a tax payer must always “render a full and true account” to the assessor because it is the assessor’s job to determine what information is relevant, and not the tax payer’s.  Additionally, the information must be provided directly to the tax assessor because the courts will not require an assessor to “be charged ‘with knowledge of information in the hands of other municipal entities.

Municipalities often use N.J.S.A. 54:4-34, or Chapter 91, to attack property owners’ tax appeals procedurally, rather substantively on the question of whether the property is over-assessed.  The statute requires tax assessors to meet certain burdens when requesting income and expense information from property owners, and is often an effective weapon in the municipal arsenal to counter tax appeals.

A copy of the New Jersey Tax Court’s opinion in Community Sports Partners II, LLC v. Twp. of Mount Laurel, Docket No. 009012-2011 (Tax Ct. 2011), can be found here.

For more on Tax Court opinions in Chapter 91 cases, please see the following blog posts:

Property owner survives Verona’s “Chapter 91″ attack

Chapter 91 Strikes Another Taxpayer

Tax Court Denies Phillipsburg’s Chapter 91 Motion to Dismiss

For reservations or any questions regarding this seminar, contact the Community Builders and Remodelers Association at (973) 887-2926, or at www.cbanj.org.

1112 Tax Appeal Seminar

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The property at issue in this case is operated by PRO as an Arts Center.  The building is 5,500 square feet and includes classroom space, an art gallery, artist studio space, and dance studio space.  There is also 100 square feet of office space used by PRO’sEnvironmentalResourceCenter, which promotes the organizations environmental causes.

The court, relying on Paper Mill Playhouse v. Millburn Township, 95 N.J. 503 (1984), found that PRO failed to demonstrate that the use and operation of the property was not conducted for profit.  In fact, the court found that the artist studio, the dance studio, art gallery and classroom space were used for profit and that only the basement office space used by PRO Environmental Resource Center satisfied the three criteria for property tax exemption under the test set forth in Paper Mill Playhouse.  As such, the court concluded that PRO was entitled only to a partial exemption for the PRO office space, which is less than two percent of the entire building.

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The plaintiff here, a tenant, filed this action against defendant, its landlord, alleging breach of contract and unjust enrichment after learning that the landlord had filed complaints in the Tax Court challenging the assessments on the property for four of the five years during which the tenant had paid the real estate taxes.  The breach of contract claim was predicated on the tenant’s allegation that the landlord refused to allow the tenant to control the disposition of the tax appeals and collect any refund of taxes for the years under appeal.  The unjust enrichment claim was grounded in the tenant’s argument that the landlord would be unjustly enriched if permitted to retain a portion of any tax refund.  The actions were consolidated and the tenant was joined as a plaintiff in the tax appeals.  The tax appeals were resolved in a published opinion, Aperion Enters, Inc. and Quo Non Ascendet, Inc. v. Bor. of Fair Lawn, 25 N.J. Tax 70 (Tax 2009), in which the court also determined that the tenant had standing as an aggrieved taxpayer to challenge the assessments and was entitled to the refund of taxes which ultimately resulted.

In this more recent action, the court found that the tenant’s breach of contract claim was rendered moot by resolution of the tax appeals and that the unjust enrichment claim never materialized since the landlord was not awarded a refund of any of the taxes paid by the tenant.  The court granted the landlord’s motion for summary judgment on both claims.

photo courtesy of expedia.com

The owner of the Morristown Hyatt hotel has prevailed in a challenge to an $8,000,000 “added assessment” for 2009 levied by the Town of Morristown onto the property’s local tax assessment.  The property owner, Fifth Roc Jersey Associates, LLC applied for protection under the “Freeze Act”, N.J.S.A. 41:51A-8, which provides that a successful tax appeal claimant is protected from changes to a reduced property tax assessment for the tax year in question and two years thereafter, unless there are changes in value to the property after the assessment date or the municipality undergoes a town-wide revaluation.

The New Jersey Tax Court granted the owner’s application, thereby precluding the town from raising the property tax assessment from $16,500,000 to $24,500,000, over the town’s objection which was made on the basis that the property owner had not filed a separate complaint challenging the added assessment by the town.  The court rejected Morristown’s contention that Fifth Roc’s failure to appeal its 2009 added assessment deprived the Tax Court of jurisdiction, and found that changes to the property, which was undergoing renovations during the time in question, were either de minimus or took place after the statutory deadline applicable to “added assessments”.

As a result of this decision, the property owner will receive a property tax refund in excess of $200,000.

A copy of the Tax Court’s opinion in Fifth Roc Jersey Associates, L.L.C. v. Town of Morristown is available here.

We previously covered this matter in our New Jersey Property Tax Law Blog in a story regarding a prior year’s application of the Freeze Act.   The prior decision had a similar outcome.

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