1 / 35

Flip flops

Flip flops. Proper assessments vs. spot assessments Moderator: Ernie Scheidemann, CTA Speakers: George F. Librizzi, CTA, ASA/IFAS, SCGREA Matthew Rinaldi, CTA, SCGREA Fred Semrau, Esq. Thomas Olsen, Esq. DCA RULES – SIGNIFICANT CHANGES TO MINOR WORK & ORDINARY MAINTENANCE

natashaj
Download Presentation

Flip flops

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Flip flops Proper assessments vs. spot assessments Moderator: Ernie Scheidemann, CTA Speakers: George F. Librizzi, CTA, ASA/IFAS, SCGREA Matthew Rinaldi, CTA, SCGREA Fred Semrau, Esq. Thomas Olsen, Esq.

  2. DCA RULES – SIGNIFICANT CHANGES TO MINOR WORK & ORDINARY MAINTENANCE • ADDED ASSESSMENT LAW N.J.S.A. 54:4-23, N.J.S.A. 54:4-63.1 • N.J.A.C. 18:12A-1.14(e)(viii), 32 VALUE CHANGES THAT DO NOT REQUIRE A Ch. 251 COMPLIANCE PLAN • HOT MARKET CONDITIONS Important Background information

  3. BUILDING  Finishes – Painting (interior/exterior), wall papering, trim/molding (interior/exterior) and flooring material repair, replacement or installation.  Siding – For other than polypropylene siding, existing siding may be repaired or replacement with like material not exceeding 25 percent of the total building exterior wall. The installation of any amount of polypropylene siding requires a permit.  Windows/Doors o Glass may be replaced in any window or door.  The replacement glass must be of a type and quality that complies with the code;    Windows and doors (including garage doors) may be replaced in the same rough opening without altering the dimensions or framing; this includes means of egress elements (such as emergency escape openings) when dimensions and framing are not altered, and the height, width or net clear opening is maintained. o Screens may be repaired, replaced or installed.  Cabinets – Non‐structural elements such as a cabinet may be repaired, replaced or installed.  Decks – Any part of a deck, porch or stoop that does not provide structural support for any roof or portion of a building may be repaired or replaced.  Insulation – The installation of insulation when installed adjacent to or not more than one and a half inches from an interior finish, except that the installation of foam plastic insulation requires a permit (Note: ordinary maintenance used to be limited to roll or batt insulation, now any insulation other than foam plastic is allowed as ordinary maintenance).  Gutters – Exterior gutters and leaders may be repaired, replaced or installed.  Spas/Hot Tubs – Storable spas and hot tubs may be installed when provided with a lockable safety cover that complies with ASTM F1346. DCA RULES – SIGNIFICANT CHANGES TO MINOR WORK & ORDINARY MAINTENANCE

  4. PLUMBING  Fixtures and fixture parts – Fixtures may be replaced with a similar fixture provided that there no change in the piping arrangement (Note: the replacement of fixtures was previously limited to single family dwellings, now fixtures may be replaced in all uses as ordinary maintenance); faucets and working parts of faucets may be replaced; existing fixtures may be refinished (relining fixtures is not ordinary maintenance).  Valves – Hose bib valves may be replaced provided that an approved atmospheric vacuum breaker is provided (Note: the replacement of hose bibs used to be limited to single family dwellings, now they may be replaced in all uses as ordinary maintenance); valves and work parts of valves may be replaced including shower or combination bath/shower valves (Note: the replacement of shower valves used to be limited to single family dwellings now they may be replaced in all uses as ordinary maintenance).  Ball Cocks – Ball cocks may be replaced provided that an approved anti‐siphon type is used.  Piping repair/replacement – Piping may be replaced to repair a leak (Note: the repair of leaks used to be limited to replacement of piping between any two adjacent joints, that is no longer the case).  Appliance Replacements – Domestic clothes washers and domestic dishwashers may be replaced.  Traps – Traps including traps on culinary sinks may be replaced.  Drain cleaning – Stoppages may be removed. ELECTRICAL  Receptacles, switches and outlets – Receptacles, switches, or lighting fixtures that do not contain emergency battery packs, may be replaced with a similar item. However, receptacles in locations where ground‐fault circuit interrupter protection, damp/wet, or tamper‐resistant must comply with Section 406.4(D) of the electrical subcode (Note: The limitation on 20 amps or less has been removed).  Equipment – Repairing any installed electrically operated equipment such as doorbells, communication systems, and any motor‐operated device (In the event of a fire protection system being interrupted for repairs, the fire official is to be notified in accordance with the building subcode).  Communications Wiring – Communications wiring may be installed (i.e. Ch. 8 and data circuits between computers/information technology equipment from Article 725 of the electrical subcode) in a Class 3 structure (see N.J.A.C. 5:23‐4.3A), provided that the rearrangement does not involve penetration of a fire‐rated assembly and is not in a hazardous location (see Ch. 5 of the electrical subcode).  Appliances – Domestic dishwashers may be replaced.

  5. MECHANICAL  Motors, pumps and fans – Motors pumps and fans of the same capacity may be replaced.  Heating, supply and return piping and radiation elements – The repair or replacement of heating supply and return piping and radiation elements where there is no rearrangement of the piping system.  Duct work – Duct work may be repaired or replaced.  Air Conditioning Equipment – Repair of air conditioning equipment and systems along with the repair or replacement of control devices for heating and air conditioning equipment.  Liquid applied chimney lining – The application of liquid applied lining material inside an existing chimney. 3 Ordinary maintenance:  For all dwellings, any work listed above is applicable to residential uses plus the following: ELECTRICAL/MECHANICAL  Kitchen range hoods – Kitchen range hoods may be replaced provided that the replacement hood exhaust rate does not exceed the exhaust rate of the existing hood or the exhaust rate of the replacement hood does not exceed 400 cfm.  Replacement of domestic appliances –   o Domestic clothes dryers may be replaced provided that no change in fuel type, pipe size, or location or electrical characteristics is required. o Domestic stoves and domestic ovens may be replaced provided no change in fuel type, pipe size, or location or electrical characteristics is required.  Exhaust fans – Bathroom exhaust fans may be replaced. Ordinary maintenance in one‐ and two‐family dwellings: Any work listed in the two categories above applicable to residential uses plus the following: ELECTRICAL/MECHANICAL  Kitchen range hoods – Kitchen range hoods may be replaced provided that the replacement hood exhaust rate does not exceed the exhaust rate of the existing hood or the exhaust rate of the replacement hood does not exceed 400 cfm.  Replacement of domestic appliances –   o Domestic clothes dryers may be replaced provided that no change in fuel type, pipe size, or location or electrical characteristics is required. o Domestic stoves and domestic ovens may be replaced provided no change in fuel type, pipe size, or location or electrical characteristics is required.  Exhaust fans – Bathroom exhaust fans may be replaced.

  6. Ordinary maintenance in one‐ and two‐family dwellings: Any work listed in the two categories above applicable to residential uses plus the following: BUILDING  Finishes – Installation, repair or replacement of interior finishes of less than 25 percent of the wall area of the dwelling. This shall include plastering and drywall installation. (1) Vinyl wall covering of any amount is ordinary maintenance; (2) Paneling is not ordinary maintenance.    Non‐structural components – The repair or replacement of any non‐structural component, such as a partition.  Roofing – The repair or replacement (including total replacement) of any amount of existing roof covering on detached one‐ or two‐family dwellings.  Siding – The repair or replacement of any amount of existing siding. Exception: The repair or replacement of polypropylene siding is not ordinary maintenance. For other than dwellings, the following has been designated as minor work: BUILDING  Porches – The construction or total replacement of any porch or stoop that does not provide structural support for any roof or portion of a building.  Repair and/or renovation work – Repair and/or renovation work in a Group B, Group F, Group M, or Group S occupancy performed in accordance with N.J.A.C. 5:23‐6, not including work categorized as ordinary maintenance pursuant to N.J.A.C. 5:23‐2.7.  Radon – The installation of a radon mitigation system provided no new electrical work is required. (Note: this used to be limited to one‐ and two‐family dwellings.  Now the installation of radon mitigation systems is minor work in all buildings, provided no new electrical work is required).  Elevators – Minor work on elevator devices shall also mean and include work as outlined in N.J.A.C. 5:23‐ 12.8(b) and not involving any structural modification to a building.  Partitions – Repair or replacement with no reconfiguration of space or of any non‐structural component such as a partition in structures other than one‐ and two‐family dwellings (see ordinary maintenance one‐  and two‐family dwellings).

  7. PLUMBING  Piping – Replacement of existing plumbing piping with new and approved material of like capacity.  Drinking fountains – The installation of drinking fountains and condensate drains in existing structures.  Water Heaters – The replacement of existing water heaters with new ones of like capacity.  HVAC Equipment – The replacement of existing boilers, warm air furnaces, air conditioning units and air conditioning condensing units with new appliances of like capacity. ELECTRICAL  Communication wiring – The installation of communications wiring in any Class 1 or Class 2 structure or any Class 3 structure involving the penetration of a fire‐resistance rated assembly. Note: Communications wiring is any wiring covered by Chapter 8 of the electrical subcode, “including data circuits between computers/information technology equipment, which may be classified as communications circuits in accordance with Article 725 of the electrical subcode.”  Alarm systems – The installation of a burglar alarm, security system, or doorbell in structures other than one‐ and two‐family dwellings (see ordinary maintenance for one‐ and two‐family dwellings). Exception: controlled, delayed, or sensor released egress doors.   Minor work in all dwellings:  Any of the work above applicable to residential uses plus the following: PLUMBING  Fixture installation – The new installation of fixtures in an existing space where the new installation of additional fixtures may be accommodated with no increase in the size of the water distribution system, water service, or house drain (Note: this used to be limited to one‐ and two‐family dwellings, now the installation of additional fixtures in existing space is minor work in all dwellings). Minor work in one‐ and two‐family dwellings:  All the work in the two categories above applicable to residential uses plus the following: BUILDING Renovations or Alterations – Renovation or alteration work provided that no primary structural members are altered in any way, and further provided that the work does not constitute reconstruction.

  8. ELECTRICAL  Appliances – Minor work shall also mean and include new electrical work incidental to the installation of air conditioning, equipment, clothes dryers, and ranges or oven.  Outlets – The installation of five or fewer outlets where existing circuits and/or available space for circuits and service are adequate to support the load.  Fishing is considered minor work regardless of the number of fixtures / receptacles. (Note: the limitation that the devices/outlets are limited to 125 or 250 volt has been eliminated; fishing was previously limited to 5 receptacles).  Rewiring – The replacement of existing wiring with new wiring of the same capacity provided that the new wiring shall be of a type approved for the use by the code. FIRE  Detection/Suppression – The installation of a fire detection or suppression device. Finally, though not ordinary maintenance or minor work, the permitting requirements for garden type utility sheds also changed.  No permit is required for a garden type utility shed that is 200 square feet or under provided it does not have electric, water, gas, oil or sewer connections.

  9. Added assessment law Chapter 8 Partial, Added and Omitted Assessments 801. Partial and Added Assessments. All real property must be valued as of October 1 of the pretax year for the next calendar tax year. For structures under construction on pretax year October 1, the assessment is a “partial assessment” based on the portion of final value present on that date. The Added Assessment is based on the value added between October 1 and the date the structure is completed. REFERENCES: N.J.S.A. 54:4-23 and 54:4-35 801.01 Purpose. The Added Assessment Law permits the valuation of real property which becomes taxable during the year after the regular assessment date of pretax year October 1. If there were no Added Assessment Law, many properties would escape taxation until the next regular assessment date. REFERENCES: N.J.S.A. 54:4-63.1 et seq. 801.02 Property Taxable. Two types of property are affected by the Added Assessment Law. 1. Structural Changes. New structures, additions to existing structures, and improvements of existing structures are subject to the Added Assessment Law if they are completed after the statutory annual October 1 assessment date. A structure is “completed” when it is substantially ready for the purpose for which it was intended. The structure need not actually be in use; it is taxable when it is ready for use. 2a. Exempt Properties becoming Taxable. Real property which ceases to be exempt because of changes in use, ownership, nonprofit status or 539 October 2018 anything which alters the basis for exemption, may make the property subject to the Added Assessment Law.

  10. 2b. Real Property Sold by a Municipality. Exempt real property sold by a municipality to a non-exempt owner is treated as an Added Assessment in the same manner as structures completed during the year. Disallowance/Appeal Notice. Upon reinstating formerly exempt property to the tax rolls, the assessor is required to give notice to the owner. The court has held that failure to provide notice is a violation of due process and any resulting Added or Omitted Assessment is invalid. Declining Markets. In a declining market, it is possible that a structural change that “normally” would have increased the assessed value and generated an Added Assessment may not. If this is the case, the property’s structural changes must be recorded on the Property Record Card. REFERENCES: N.J.S.A. 54:4-63.26 through 4-63.29 City of Camden v. Camden Masonic Association, 9 N.J. Tax 331 (Tax Court 1987). Beranto Towers v. City of Passaic, 1 N.J. Tax 344 (Tax Court 1980). Snyder v. Borough of South Plainfield, 1 N.J. Tax 3 (Tax Court 1980). Howell Township v. Monmouth County Board of Taxation, 18 N.J. Tax 149 (Tax Court 1999). Harrison Realty Corp. v. Harrison Town, 16 N.J. Tax 375 (Tax Court 1997) affirmed by 17 N.J. Tax 174 (App. Div. 1997) cert. denied by 153 N.J. 213 (1998). Litton Business Systems, Inc. v. Morris Plains Borough, 8 N.J. Tax 520 (Tax Court 1986) affirmed by 9 N.J. Tax 651 (App. Div. 1988). Otelsberg v. Bloomfield Township, 18 N.J. Tax 243 (Tax Court 1999).

  11. 802. Omitted – Added Assessments. 802.01 Purpose. The courts have held that Added Assessments which, through error, are not made at the proper time may be placed on the tax rolls using the Omitted Assessment procedure. N.J.S.A. 54:4-63.3 does not permit added assessments for the year in which an improvement is discovered. Rather, added assessments are made for the tax year in which an improvement is completed. When an assessor fails to discover an improvement in the year in which it is completed, he or she may, in the following year, make an omitted added assessment. REFERENCES: Schizophrenia Foundation of New Jersey v. Montgomery Township, 6 N.J. Tax 439 (App. Div. 1984) on remand at 6 N.J. Tax 594 (Tax Court 1984). Freehold Boro v. Nestle, USA, 21 N.J. Tax 138(2003).

  12. 803. Omitted Assessments. • 803.01 Purpose. • The Omitted Assessment Law permits the valuation of real property for tax purposes which, through error, is omitted from assessment during the current tax year and the year immediately prior to the current tax year. The Omitted Assessment procedure is also used for valuation and tax collection rollback procedures under the Farmland Assessment Act. • Two methods are available: the regular or original method and the alternate method. For purposes of rollback tax under Farmland Assessment the regular / original method must be used. • REFERENCES: N.J.S.A. 54:4-63.12 et seq. N.J.S.A. 54:4-63.31 et seq. N.J.S.A. 54:4-23.8 Snyder v. South Plainfield, 1 N.J. Tax 3 (Tax Court 1980). Appeal of N.Y. State Realty & Terminal Co., 21 N.J. 90 (1956). SLR Associates of Millville v. Millville City, 11 N.J. Tax 1 (Tax Court 1989). Coastal Eagle Point Oil Co. v. West Deptford Township, 19 N.J. Tax 123 (Tax Court 1999). Chevron U.S.A., Inc. v. Perth Amboy, 9 N.J. Tax 571 (Tax Court 1988).

  13. 804. Determining Added and Omitted Assessments • 804.01 Limited Opportunity to Apply Added and Omitted Assessments, Untimely Added and Omitted Assessments May be Lost. • In a 2005, New Jersey Tax Court decision concerning belated valuation, Van Orden v. Township of Wyckoff, the court referenced an earlier decision, Glen Pointe Associates v. Township of Teaneck. In Glen Pointe, the Tax Court concluded that a three-month prorated assessment for 1984 for improvements completed in 1984 could be imposed as an Omitted - Added Assessment in 1985. The court found, however, that a full-year assessment for 1985 could not be sustained as an Added Assessment “because it was not imposed for a year in which the property was substantially completed within the purview of N.J.S.A. 54:4-63.3.” The court further found that the 1985 assessment could not be sustained as an Omitted Assessment. Judge Crabtree reasoned: (paraphrasing)

  14. While an addition was in fact constructed and was properly the subject of an Added Assessment for the last three months of 1984, because the entire structure was completed and ready for its intended use prior to October 1, 1984, and the property was not omitted as a taxable line item, the assessor simply failed to consider the full value of the subject as of the assessing date for the 1985 tax year. The situation is an erroneous determination of value on the assessing date which the assessor inappropriately attempts to correct using Added and Omitted procedures. In the foregoing scenario, a full regular assessment should have been made as of pretax year October 1, 1984 for calendar tax year 1985. No Added or Omitted Assessment procedure should have been employed. Again, timing is everything. In American Hydro Power Partners v. Clifton, the Tax Court held “Neither city, county board, nor Director of Taxation properly complied with Added Assessment statutes, and thus, 544 October 2018 Added Assessment for property leased by operator of dam and hydroelectric plant was invalid, where Added Assessment was made six to seven weeks after date prescribed by statute, county board failed to deliver certified duplicate of Added Assessment List to tax collector until after date mandated, tax collector was unable to deliver tax bill one week prior to deadline as required, and property owner did not receive tax bill until ten days after expiration of time for appeal to county board.” REFERENCES: N.J.S.A. 54:4-63.3; 54:4-63.5; 54:4-63.7; 54:4-63.8; 54:4-63.11 Van Orden v. Twp. of Wyckoff, 22 N.J. Tax 31 (Tax Court 2005). Glen Pointe Associates. v. Township of Teaneck, 10 N.J. Tax 288 (Tax Court 1988) later proceeding at 10 N.J. Tax 506 (Tax Court 1989) reconsideration denied by 10 N.J. Tax 598 (Tax Court 1989) and affirmed by 12 N.J. Tax 127 (App. Div. 1991). American Hydro Power Partners v. Clifton, 9 N.J. Tax 259 (Tax Court 1987) affirmed by 239 N.J. Super. 130 (App. Div. 1989) cert. denied by 117 N.J. 75 (1989) affirmed in part and remanded in part by 12 N.J. Tax 264 (App. Div. 1991) and superseded by statute in R.C. Maxwell Co. v. Galloway Township, 145 N.J. 547 (1996). New Rock Inv. Partners v. Elizabeth City, 18 N.J. Tax 207 (Tax Court 1999). U.S. Postal Service v. Kearny Town, 17 N.J. Tax 397 (Tax Court 1998). Rockaway 80 Associates v. Rockaway Township, 15 N.J. 326 (Tax Court 1996).

  15. 804.03 Added & Omitted Assessments Not to be Used to Correct Inaccurate Valuation • In Freehold Borough v. Nestle USA, the Tax Court ruled that Omitted-Added Assessments and Added Assessments in fictitious amounts of $1, predicated on the fact that assessor had not made a determination as to completion dates of underlying improvements on taxpayer’s property, 545 October 2018 were invalid; assessments were made contrary to statutory scheme for Added Assessments. In 200 43rd Street, LLC v. City of Union City, the Tax Court held that the assessor’s deliberate decision to assign zero value to partly completed improvements because of prior sewer ban on new development represented a deliberate judgment that could not be corrected under the Omitted Assessment law upon discovery that the ban no longer existed. • REFERENCES: Freehold Borough v. Nestle USA, 21 N.J. Tax 138 (Tax Court 2003). 200 43rd Street, LLC v. City of Union City, 16 N.J. Tax 138 (Tax Court 1996). City of South Amboy v. Karpavicz, etal., 28 N.J. Tax 324 (Tax Court 2015) SLR Associates of Millville v. Millville City, 11 N.J. Tax 1 (Tax Court 1989)

  16. 804.06 Calculation of an added assessment • New Jersey Foreign Trade Zone Venture v. Mt. Olive Township, confirms the calculation of Added Assessments as: • 1. Determine the taxable value of the entire property including the improvement which triggered the Added Assessment, that is, as completed (land and improvements combined); • 2. Then subtract the prior existing October 1 assessment; • 3. The difference is the Added Assessment; • 4. The Added Assessment may then need to be prorated for the balance of the year. Van Orden v. Wyckoff, 22 N.J. Tax 31(Tax Court 2005) upholds the Foreign Trade Zone decision in that the entire property value is used, not an incremental value for an addition or improvement. • Calculating an Added Assessment New Assessment – Original Assessment = Added Assessment (IMPROVEMENT ONLY) $182,000 – $150,000 = $32,000 Prorated for the months completed. Completed on April 17, Taxed on 8 months (May 1 – Dec. 31) 8 months divided by 12 months times assessment = prorated value $32,000 X 8/12 = $21,333 (prorated added assessment) • REFERENCES: New Jersey Foreign Trade Zone Venture v. Mt. Olive Township, 10 N.J. Tax 330 (Tax Court 1989) affirmed by 242 N.J. Super. 170 (App. Div. 1990). Van Orden v. Wyckoff, 22 N.J. Tax 31 (Tax Court 2005). 1125-1127 Clinton Avenue Associates v. Town of Irvington, 2 N.J. Tax 386 (Tax Court 1981).

  17. Added/omitted assessment case law • Plaza 23 Station, LLC v Pequannock (Judge Bianco, J.T.C. Letter Opinion dated March 25, 2019) – There was a sale of the subject facility in February 2017 well in excess of the property’s existing assessment. At issue was a 12-month added assessment levied by the Defendant for the 2017 tax year. Defendant justified the added assessment based upon flood proofing at the property which was completed in May 2014, work on tenant PNC Bank’s area completed in May 2014 and on Jersey Mike’s in April 2016 as well as other work completed at the subject property on Vision Works and Smash Burger in January and May of 2017. • The Court found that the work completed in 2014 and 2016 was not properly the subject of an added assessment since it was completed prior to October 1, 2016, the operable evaluation date for the 2017 added assessment. The Court further found that the work completed in 2017 were not the type of improvements that trigger an added assessment. Rather, the work was “mere retrofitting, upgrading or remediation of deferred maintenance and not an addition or improvement to property” (work completed for the tenant, Vision Works, consisted of new bathrooms and fixtures, retail fit-up, lens prep area, and new acoustical ceilings, drinking fountains, water heater, gas piping, lighting, and HVAC service upgrades. The work in the Smash Burger area consisted of construction of a new tenant separation area, vestibule, cueing area, 2 dining rooms, 2 kitchens, 2 bathrooms, walk-in refrigeration units, gas piping and signage). The Court found the work done on the tenant areas in 2017 was de minimis in size and cost, as it only encompassed 2.64% of the entire leasable area and only 2.25% of the overall $20,500,000.00 added assessment levied on the property.

  18. Added/omitted assessment case law ~ Continued • University Heights v Franklin Lakes (Judge Fiamingo, J.T.C. Opinion dated March 16, 2016, Affirmed, Appellate Division, May 26, 2017) – New tax assessor became aware of the fact that only 60 out of 100 units in an apartment complex were actually being assessed. Assessor changed the assessment for the 2014 tax year and filed an omitted assessment for the 2013 tax year. The Court found that the municipality could not impose an omitted assessment for the 2013 tax year where the improvements were completed 5 years prior thereto and were the subject of a prior Stipulation of Settlement filed for the 2008-2010 years. • Fifth Roc Jersey Associates, LLC v Town of Morristown 26NJTax2012 (Tax Court 2011) – Court found it could review the validity of an added assessment under the Freeze Act, even where no appeal has been filed from the added assessment. Court further found that most of the improvements which were the subject of the added assessment were completed outside the timeframe for the added assessment or were de minimis (smoke and heat detectors installed in elevators at the subject hotel were mere “retrofitting, upgrading or remediation of the deferred maintenance”). • Otelsberg v Bloomfield Township, 18 N.J. Tax 243 (Tax Ct. 1999) and Harrison Realty Corp. v Harrison 16 N.J. Tax 375 (Tax Ct. 1997) Affirmed 17 N.J. Tax 174 (Appellate Division 1997) Cert denied 153 N.J. 213 (1998). Otelsberg court declined to adopt Harrison Realty Corp’s interpretation of “improved” to mean solely physical additions to the property, although it did distinguish between improvements that are mere retrofitting, upgrading or remediation from those improvements that substantially increase the value of the property. In Otelsberg the taxpayer replaced carpet in the living room, dining room, hallway and three bedrooms, renovated the kitchen including new cabinets, appliances, countertops, new linoleum floor, new electrical and light fixtures, new sheetrock walls in kitchen and removal of upper half of wall separating the kitchen and dining room. The Otelsberg court found that the evidence presented established that the improvements created an increase in value and upheld the added assessment as valid.

  19. Added/omitted assessment case law ~ Continued • Parikh v. Livingston, (Unpublished Judge Sundar opinion dated January 25, 2018) The court invalidated an added assessment levied upon the property by the municipality for the 2016 tax year where the improvements made to the property were completed and a CO issued on August 7, 2015. The tax assessor did not receive a copy of the CO until November 4, 2015 and did not include the improvements in the 2016 regular assessment but rather levied an added assessment for 2015 in 2016. The court found that the assessor had sufficient time to include the improvements in the regular 2016 assessment or else the municipality could have filed an appeal from the 2016 assessment. It was not proper procedure to utilize the added/omitted process for the 2015 tax year.

  20. N.J.A.C. 18:12A-1.14(e)(viii),32 VALUE CHANGES THAT DO NOTREQUIRE A Ch. 251 COMPLIANCE PLAN • Clerical, typographical, transpositional, physical descriptive or mathematical errors, • Added assessments, omitted assessments, omitted-added assessments, • Exemptions, demolitions, • Governmentally imposed restrictions, planning board and/or zoning board of adjustment approvals, • Approved revaluations & reassessment programs, • Site contamination, removal of contaminated soil and property remediation; • Storm, cyclone, tornado, earthquake, fire, flood, hurricane, vandalism, or other casualty, • Qualified farmland, • Subdivisions, mergers • Changes resulting from appeals or settlement agreements, do not require the filing of a compliance plan.

  21. Hot market conditions& CAUTIONARY REMINDERS • TENDENCY TO CHASE THE MARKET? • BUILDING PERMIT COST VS. MARKET VALUE/ADDED ASSESSMENT AMOUNT • MAINTAIN UNIFORMITY / BASE YEAR CONCEPT – BEING MINDFUL OF THE ASSESSMENT OF SIMILAR PROPERTIES (CAMA COST METHODOLOGY) • SALES RATIO VS. UNIFORMITY • CHAPTER 123 RATIO RANGE - SETTING THE ASSESSMENT

  22. SPOT ASSESSMENTS • Township of West Milford v Van Decker 120 N.J. 354 (1990)- New Jersey Supreme Court found that increasing the assessments only of homes which were recently purchased and leaving other assessments unchanged was an unconstitutional spot assessment. See also Centarino v Tewksbury Township, 20 N.J. Tax 35 (Tax Ct. 2001) Schumer v Bernardsville 20 N.F. Tax 46(App. Div. 2001); Brunetti v Cherry Hill, 21 N.J. Tax 80 (App. Div. 2002) Cert. denied 175 N.J. 547 (2103). Mountain View Crossing Investors v Wayne, 20 N.J. Tax 612 (Tax Ct.2003). • BASF Corp. v Belvidere 22 N.J. TAX 550 (Tax Court 2005) – Court found that Chapter 101 does not apply to the change of a tax assessment on a single property located in a municipality, provided it did not involve arbitrary or intentional discrimination. • Regent Care Center Inc. v Hackensack 362 N.J. Super 403 (App. Div. 2003) – Assessment maintenance is “the practice by which an assessor changes some assessments in a year when a district wide re-evaluation or reassessment is not performed” and is not an impermissible and unconstitutional spot assessment. See N.J.S.A.54:4-23 (Assessment Maintenance). See also trial court decision at 19 N.J. Tax 455 (Tax Ct. 2001).

  23. SPOT ASSESSMENTS ~ Continued • Mountain View Crossing Investors, LLC v Wayne, 20 N.J. Tax 612, 620 (Tax Ct. 2003). “A prohibited spot assessment occurs only when the assessor has no basis for revising the assessment other than a sale of the property. An assessor may revise assessments for “legitimate reasons” independent of a sale even in the absence of a municipal-wide revaluation. “ • Jovsim LLC v New Brunswick (Judge Sundar Letter Opinion January 24, 2017)- Subject property was assessed at an equalized value of $3,873,900.00. The property sold in December 2014 for $9,370,000.00. The municipality filed an appeal with the Middlesex County Board of Taxation to increase the assessment, and the county tax board increased the assessment to an equalized value which reflected the purchase price. Plaintiff appealed and claimed an unconstitutional spot assessment. Court disagreed and upheld the assessment, finding that the municipality’s actions were taken pursuant to a proper resolution adopted by the municipality, and were not arbitrary or discriminatory. There was also nothing improper with the assessor recommending an appeal, as such a recommendation is entirely within the assessor’s responsibility of reviewing assessments and ensuring their uniformity. N.J.S.A. 54:4-23. • Borough of Freehold v WNYPROP.LP, 20 N.J. Tax 588 (Tax Ct. 2003) – An appeal filed on behalf of a municipality to increase an assessment is not an act of assessment by the municipality or the assessor. When an assessor changes an assessment on a property, the burden is on the taxpayer to prove that the assessment is incorrect. When a municipality files an appeal, the municipality has the burden of proof to show that the assessment is incorrect. As long as the municipal decision to appeal is not arbitrary or unreasonable, it is acceptable if a recent sale cause the municipality to appeal.

  24. Scenario #1 • A property initially sells in a private sale 10/25/2018 for $317,535. The sales ratio was 123%. After investigating the sale, you determined the home never was exposed to the market and needed renovation. You attempted to make the sale NU 26 since it wasn’t expose to the market. The State reverses your determination. Approximately a month later you get two building permits: One for HVAC replacement and the other for a reroof. An interested party stops by your office to find out about the taxes. They indicate the home is beautiful, the kitchen and baths are fully renovated, and the home was vinyl sided. They want to know what the taxes are? The home resells 4/13/2019 for $539,000. You stopped by to inspect the home and no one was home. You left an inspection notice, and no one responded.

  25. Scenario #2 • A property sells 2/14/2019 on MLS. The MLS states the home features renovations to all areas of the house including the eat-in-kitchen (stainless steel appliances, Quartz countertops and custom cabinets), renovated bathrooms, new roof, updated siding and windows, new flooring and much more!

  26. Scenario #3 • Your municipality’s equalization ratio is 95%. A home sells February 3, 2019 with a 105% sales ratio. You investigate the sale and realize the revaluation company never got in to view the interior. However, all physical quantities (bath count, fireplaces, finished basement, etc.) are accurate as you have compared them to the MLS. You question if the effective age is accurate?

  27. Scenario #4 • Similar set of facts as in the previous example except the property sells for substantially more than the assessment. The sales ratio was 75% which is outside the corridor of value. However, all physical quantities (bath count, fireplaces, finished basement, etc) are accurate as you have compared them to the MLS. You question if the effective age is accurate?

  28. Scenario #5 • A property sells, the CAMA file indicates the revaluation company got in to inspect the interior of the property. However, the sales ratio is either grossly overstated or understated. Upon investigating of the sale in MLS you find only a discrepancy with the condition of the interior. Does Ch 123 ratio range come into play?

  29. Scenario #6 • Revaluation completed several years ago. It was noted in the notes that two (2) family houses existed on the lot. Due to the tax lot being a corner lot, the main house has frontage on one street while the second home has frontage on the side street. The main house is a two-family cape that was built in 1942. The 2nd house is a small two-family house built approximately 1942. Due to a data entry error at the time of the revaluation, the 2nd house was not properly entered and only an apartment conversion factor was entered for additional buildings of $5,400. Owner never contested the assessment and owner never did any permit work since the revaluation. Owner came in as he needed a letter from the Tax Assessor for the property tax reimbursement. During a review of his file it was discovered that the property was not properly assessed and in fact that he had 4 units total (not only a two-family). Should this only be corrected for the following year or can a current year added be performed or can an added/omitted be performed. Owner acknowledged that he has been living in the one apartment and renting the other three apartments.

  30. Scenario #7 • Revaluation completed two years ago. It was noted in the notes that the property consisted of 16 two-bedroom units and 4 one-bedroom units. Due to a data entry error at the time of the revaluation, only the 16 two-bedroom units were calculated in the INCOME APPROACH. The first year after the revaluation, Chapter 91 Income and Expenses were not sent. The 2nd year after the revaluation, the assessor sent out Chapter 91 statements. Upon review of the Chapter 91, the assessor saw the income discrepancy and referred back to the property records and the Chapter 91 from the revaluation. Owner never contested the assessment and owner never did any permit work since the revaluation. Should this only be corrected for the following year or can a current year added be performed or can an added/omitted be performed.

  31. Scenario #8 • Assessment records indicate that the property is a two-family colonial with a full basement that is 50% above grade with a separate rear entrance. Records indicate that the basement had a 2-fixture bathroom with minimal finish. The house has three electric meters and three separate gas meters. One for each apartment and one for the owner’s common area, which also operates the basement. The last revaluation was performed 5 years ago and the property was fully inspected including the basement area. Owner never contested the assessment and owner never did any permit work since the revaluation. • The housing department is contacted by a tenant of a basement apartment at the property. There is dispute as the owner has increased the rent from $1,000 to $1,300. There is no rent control; however upon review the housing department notes that the basement apartment appears to be illegal. Building department fines the owner, which the owner pays and subsequently the owner applies for a variance to legalize the apartment, which is subsequently granted. What appropriate procedure and when should the improvements be picked up? As an current year added when the variance was approved? As an Added/omitted. Change the book for the following tax year. File an appeal with the county tax board.

  32. Scenario #9 • The fire department notifies you that a fire occurred in a two-family house on November 17, 2019 and you inspect the damage and note that the 2nd floor kitchen is damaged, however the remainder of the house remains intact and remains occupied. An adjustment is made for the damage for the 2019 Tax Year. A permit is pulled to fix repair the kitchen. The building department does it final inspection and you receive a certificate of approval on March 15, 2020. Prior to your re-inspection, the property sells on March 21, 2020 and you receive the deed. The indicated sales ratio is 67%, which is outside the allowable lower limit corridor for the municipality. You attempt to inspect the property for the permit and note that not only the 2nd floor kitchen was repaired; however the 1st floor apartment kitchen has all new cabinets, tile backsplash, granite counters; and new tile floors. Both the 1st floor and 2nd floor bathrooms have all new tile floors and new plumbing fixtures that were replaced in the same location. Since no permits were necessary for this additional work due to DCA, do you do a current year only added for the 2nd floor kitchen or does the assessor include all the additional work in the current year added? Or does one correct the record for the following year? Do you file an appeal to raise the assessment?

  33. Scenario #10 • The subject property consists of a 5,000 SF industrial condominium in an eight-unit complex that were built in 2005 and all sold by the end of 2006. The assessments for the whole complex were set for the 200 Tax Year at a market value of $80 per SF. The subject property was part of a 2013 county tax board appeal and the basis of the appeal was the subject sale of $60 per SF, which was the only re-sale in the complex. The subject property re-sold in 2018 for $92/SF and the indicated sales ratio is 71%, which is outside the allowable corridor. The freeze act has expired and all the other units were assessed equitably, except for the subject property, which had the 2013 county judgment. There was one other sale in the complex that occurred in 2015 at $80 per SF. In order to keep all the units uniform does one remove the county judgment and let the assessment go back up to the original assessment.

  34. AFFIRMATIVE APPEALSThe Assessor and the Filing of Municipal Appeals for Increase • Maintain independence in the decision-making process since the book has been signed and finalized; • The municipality should hire an appraiser to review such an assessment and make a recommendation as to the filing of an appeal to the Governing Body; • A resolution should be adopted by the Governing Body authorizing the appeal based upon the recommendations of an appraiser; • It is best that the Assessor does not participate in the decision-making process or the prosecution of an appeal.

  35. This Photo by Unknown Author is licensed under CC BY-NC-ND This Photo by Unknown Author is licensed under CC BY-ND

More Related