NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS
TAX COURT OF NEW JERSEY **M ARY**  **S IOBHAN**  **B RENNAN** 

**JUDGE Essex County Dr. Martin L. King Jr. Justice Bldg.**  **495 Martin Luther King Blvd.**  **- 4 th**  **Floor Newark, New Jersey 07102** 

**- 0690**  **609 815**

**- 2922, Ext.**  **54560**

**July 17, 2024 Charles Blau, Esq.**  **Eileen Toll , Esq.**  **Blau & Blau 223 Mountain Avenue**  **Springfield, New Jersey 07081**
**Thomas J.**  **Cafferty, Esq.**  **Lauren James -Weir, Esq.**  **GIBBONS P.C.**  **One Gateway Center Newark,**  **New Jersey**  **07102**

**Re:** City of Jersey City v. 575 Pavonia, LLC **Docket No**  **.: 008090-2020 Block 9606, Lot 29.01**  **Counsellors: This letter constitutes the court’s opinion following trial of the local property tax a**  **ppeal filed by plaintiff, City of**  **Jersey City (“Jersey City”) and the counterclaim filed by defendant, 575 Pavoni a, LLC**  **1 (“Taxpayer”) for the 2020 tax year.**  **For the reasons stated more fully below, and based upon the specific facts of this case, the court**  **finds that the property in question is underassessed. Furthermore, its true**  **market value shall be established using the sales comparison**  **approach and shall**  **be calculated “as is”**  **with a unit of comparison based on**  **square footage and**  **shall not be calculated based on potential density.** 

**1 Pleadings originally filed against prior owner**  **/related entity 532 Summit Avenue Holdings, L**  **LC. 2** 

**Pursuant to R.**  **1:7- 4, the court makes the following findings of fact and conclusions of law based**  **on the evidence and testimony adduced during trial.**
**I. Findings of Fact** 
**A. Property Information**  **This appeal concerns a 19, 521**  **square foot property 2**  **located at the corner of Summit Avenue and Pavonia Avenue in the city of Jersey City, Hudson County, New Jersey ("**  **Subject Property"). Previously**  **identified on the tax map as Block 9606, Lots 29, 32, 33, 34 and 35, in 2019 it was changed to Block**  **9606, Lot 29.01. The street address is 532 Summit Avenue. By way of background, Jersey City is situated across the Hudson River from New York City**  **and compromises part**  **of the New York metropolitan area . I**  **t shares significant mass transit connections with Manhattan and**  **is the second most populous city in New Jersey. The Journal Square section of Jersey City**  **where the Subject Property is located ,**  **is a business district, residential area, and transportation hub, which takes its name from the newspaper**  **The Jersey Journal who**  **located its headquarters there from** 
**1911 to 2013. The Subject Property**  **lies one block from the Journal Square Transportation Center and**  **PATH station, which provides direct access to Manhattan. In late 2008, the Jersey City Municipal Council determined the greater Journal Square a**  **rea to be an "area in need of rehabilitation," pursuant to the New Jersey Local Housing and Redeve**  **lopment Law (N.J.S.A. 40A:12A-1 et seq.)**  **The creation of the**  **Journal Square 2060**  **Redevelopment Plan Area**  **followed this determination. The plan had the purpose of returning the area to a flourishing centra**  **l business and shopping destination by**  **fostering the redevelopment of Jersey City's central business** 

**2 Taxpayer’s expert reported a square footage of 19,195. In the absence of evidence to the**  **contrary, the court accepts Jersey City’s reported square footage. 3** 

**district . It provided**  **for transit** 

**- oriented development of new housing, offices, commercial**  **spaces , and**  **public open spaces within walking distance of**  **Journal Square and transit facilities** 

**. The Subject**  **Property is located within the boundaries of Zone 3 of the Journal Square 2060 Redevelopment Plan** 

**. The specific p**  **ermitted uses 3**  **within Zone 3 are as follows:**
**(a) Residential: permitted everywhere except on the ground floor of buildings**  **greater than 65 feet in height.**  **(b) Retail Sales of Goods and Services/Financial Services.**  **(c) Offices: permitted everywhere except on the ground floor of buildings greater**  **than 65 feet in height. (d)**  **Houses of worship: Permitted everywhere except on the ground floor of Buildings.**  **(e) Art galleries.**  **(f) Live/Work units and home occupations: except on the ground floor of**  **buildings greater than 65 feet in height. (g)**  **Restaurants: category one and two. (h)**  **Structured Parking: provided the design standards of Section IV: D above are met. Structured Parking is not permitted at any street corner location.**  **(i) Hotels/Bed and Breakfast.**  **(j) Medical Offices** 

**. (k)**  **Child and Adult Day Care Centers. (l)**  **Theatres/Night Clubs/Bars. (m)**  **Schools. (n)**  **Museum. (o)**  **Government uses. (p)**  **Billboards: as per billboard requirements in Section VII: E above. (q)**  **Any combination of the above. On March 30, 2015, 532 Summit Avenue Holdings, LLC purchased the**  **Subject Property**  **from Hugh A. McGuire, Jr. 4**  **and Marie McGuire ,**  **husband and wife (as to 50% interest) ,**  **and Dr. Cataldo Cacaca, Carolina Topolewski, and Teresa Tripodi, tenants in common (as to a 50% i**  **nterest)**

**3 Based upon the comparable sales provided, there are multiple zones in Jersey City that provi**  **de for multi**  **-unit residential redevelopment.**

**4 Mr. McGuire, Jr. is well known to**  **the litigants ’**  **attorneys and expert appraisers**  **, and to the**  **court. He has an MAI designation (Member Appraisal Institute) and has testifi ed**  **as an expert in the valuation of commercial, industrial, residential, and other types of property.** **4**

**for $5,050,000 (**  **five**

**- million** 

**- fifty**  **-thousand dollars) , which calculated to**  **$2 58.70 per square foot.**  **At the time of sale, and until**  **2020, the Subject**  **Property consisted**  **of an active commercial**  **parking lot**  **with 100+**  **on- site**  **spaces on a .44- acre**  **lot . Only one building existed on the lot;**  **a small station for the parking attendant.**  **The remainder of the site consisted of asphalt pavement, concrete curb** 

**- cuts, concrete sidewalks**  **and curbing,**  **fencing, metal**  **guard rail/barriers,**  **lighting, and**  **signage. Surface parking as a principal or accessory use**  **is not a permitted use in Zone 3.**  **Thus, o n**  **the valuation date for 2020 local property taxes, October 1, 2019, the**  **Subject Property’s existing parking lot**  **constituted a pre-existing non-confirming use.**
**B. Site Plan Approval**  **On August 15, 2019, Taxpayer applied to Jersey City's Planning Board (“Planning Board”) for Preliminary and Final Major Site Plan**  **approval with design waivers and deviations pursuant to N.J.S.A. 40:55D-70(c)**  **. The application**  **related to the development on the**  **Subject Property of a**  **twenty**

**- five** 

**- story mixed use building, with approximately 2,416 square feet of**  **retail/restaurant/sidewalk cafe space on the ground**  **floor; approximately 1,631 square feet of office space on the ground floor; and 341 residential units on the upper floors.**  **5 On October 29, 2019, the Planning Board heard Taxpayer’s amended application**  **6 with four**  **design waivers and ten deviations. At the hearing, Taxpayer presented the testimony of four witnesses**  **including experts in support of its application. There was no expert testimon y presented in opposition**  **to the testimony and reports provided by Taxpayer’s**  **witnesses and experts. There were members of the**

**5 Remaining square footage is presumed to be for setback**  **, step back requirements, etc.**  **as required by zoning.** 

**6 Taxpayer amended the application at the hearing to include a dog run on the second level whic**  **h resulted**  **in the elimination of a residential unit.** **5**

**public who attended and expressed concerns. Also, a member of the public representing**  **the adjoining church property spoke in favor of the redevelopment.**  **Relying on the testimony, plans, and reports submitted by Taxpayer’s**  **witnesses and experts, the oral and written testimony of the Division of Planning Staff, and the comments**  **of the public, the**  **Planning Board approved the application at the October 29 th**  **meeting by an 8-1 vote, subject to certain conditions, through the adoption of a Resolution.**  **That Resolution (P19**  **-131) was memorialized on**  **November 26, 2019. Shortly thereafter, on December 19, 2019, 532 Summit Avenue Holdings,**  **LLC transferred title to the**  **Subject Property to**  **Taxpayer for $10.00 (ten**  **dollars). Additionally, the parties entered into a contractual agreement that would allow the parking facility to continue in operat**  **ion until such time as the development project could break ground.**  **Resolution P19-31 was amended in 2020 by way of Resolution P20-**  **113 to make material changes, adjust the unit mix, and**  **make several other changes. In 2021, Taxpayer applied for Final**  **Major Site Plan Administrative Amendment Approval to include a reduction in the number of residential units from 340 to 317, façade changes, reconfiguration of the cellar space, and s**  **hifting of the east foundation wall. The Planning Board heard the application on September 14, 2021. The**  **Planning Board approved Taxpayer’s application by a 5-0 vote. That Resolution (P21**  **-090) was**  **memorialized on September 28, 2021.** 
**C. Assessment**  **History Jersey City conducted a city** 

**- wide revaluation in 2018.**  **7 As a result of the revaluation, the**  **Subject Property carried an assessment value of $1,500,000 (one- million** 

**- five**  **-hundred-thousand**

**7 Revaluation is the process of updating the tax assessed values (what the city uses to comput**  **e property tax bills) to equal market values (what a property is worth on the open market)** 

**. 6** 

**dollars) for tax years 2018-2021. For tax year 2022, the assessment was increased to $ 18,800,000**  **(eighteen**

**- million**  **-eight-hundred- thousand dollars), of which $18,700**  **,000 (eighteen** 

**- million** 

**- seven**  **** **hundred- thousand dollars) was attributed to the land value and $100,00**  **0 (one-hundred-thousand dollars) was attributed to the value of improvements.** 
**Th is appeal applies to tax year 2020. Set forth below are the Subject Property’s local**  **property tax assessment, implied equalized value, and the experts’ value conclusion in c ontroversy.**  **Valuation date**  **Local**

**property tax**  **assessment Average** 

**ratio of assessed to**  **true value Implied** 

**equalized V**  **alue Jersey City**  **’s**

**expert’s concluded value**  **Taxpayer ’s** 

**expert’s concluded value** 
**10/1/2019 $1,500,000**  **87.91% $1,706,300**  **$27,200,000 $7,580,000** 

**D. Procedural History**  **On June 10, 2020, Jersey City filed with this Court a direct appeal of the Subject**  **Property's tax assessment for the 2020 tax year.**  **On June 29, 2020, Taxpayer**  **filed an Answer and Counterclaim. After the conclusion of discovery, the court held trial on May 16, 2024. At the conclusion of**  **testimony, documents were moved into evidence. In lieu of closing arguments, the parties**  **submitted closing briefs.** 
**E. Trial Testimony**  **Jersey City offered testimony from a New Jersey certified general real estate appr aiser, who**  **was accepted by the court, without objection, as an expert in the field of property valuation ( “Jersey**  **City’s expert”). The expert**  **testified that the most credible method of determining the true**  **market value of the**  **Subject P roperty is through use of the sales**  **comparison approach. He**  **prepared an 7** 

**appraisal report expressing his opinion of the Subject Property’s true or fair market value as of the**  **October 1, 2019 valuation date. 8**  **Jersey City’s expert relied on**  **six land sales zoned for development in Jersey City. The expert**  **restricted his sales primarily to properties that had been sold subject to site plan approval or sold with**  **existing site plan approvals. Two of the chosen properties were also used as comparable sales by**  **Taxpayer’s expert (70 Central Avenue and 348 Baldwin Avenue, both of which were sold subject to approval.)**  **The expert categorized**  **Taxpayer’s August 2019 application for preliminary site plan approval as “imminent**  **” prompting him to apply a density-**  **based unit of**  **comparison of price per unit**  **, which he believed was in accord with New Jersey jurisprudence specific to the deve**  **lopment of vacant land.**  **The comparable sales covered the period from May 31, 2018**  **through August 20, 2019.**  **Adjustments were made**  **f or expenditures after purchase, market conditions, location, size, and**  **development approvals. After adjustments, the sales range d**  **in value from $71,916 to $103,481 per market unit**  **. The sales had a mean of $82,882**  **per unit and a median of $79,826 per unit. A**  **fter careful**  **consideration of al l**  **the pertinent factors**  **, the expert concluded that, while no sale can be considered conclusive,**  **it was his opinion t hat**  **the combined weight of all sales provided support for a land value**  **estimate of $80,000 per market unit. When multiplied**  **by 340 units, he opined**  **that the fair market value of the**  **Subject Property,**  **as of October 1, 2019 was $27,200,000.00 (twenty-**  **seven -**  **million**

**- two** 

**** **hundred-thousand dollars.)**

**8 Jersey City’s expert amended his November 30, 2023 report on May 15, 2024**  **to reflect a few minor corrections**  **to his comparable sales**

**. 8** 

**Taxpayer presented three witnesses at trial.**  **Taxpayer offered testimony from a New Jersey certified**  **general real estate appraiser, who was accepted by the court, without objection, as an e xpert**  **in the field of property valuation (“Taxpayer’s expert.”) T**  **axpayer’s expert**  **agreed that the most**  **credible method of determining the true market value of the**  **S ubject**  **P roperty is through use of the**  **sales comparison approach.**  **Taxpayer’s expert prepared an appraisal report expressing his opinion of the Subject Property’s true or fair market value as of the October 1, 2019 valuati**  **on date. 9** 
**Like Jersey’s City’s expert, he focused on vacant**  **properties and**  **properties to be demolished in one of Jers**  **ey City’s multiple redevelopment**  **zones**
**. However, unlike Jersey City’s expert,**  **Taxpayer’s expert unit of comparison was based on a value per square foot**  **, which he believed more accurately reflected the market**  **’s valuation of development properties without preliminary site plan approval**  **in Jersey City**

**. The comparable sales**  **employed by Taxpayer’s expert covered the period from October 2017 through**  **October 2019 . He adjusted**  **for expenditures after purchase, market conditions**  **, location, size, and development approvals. After adjustments, the sales range in value was from $226.69**  **per square foot**  **to $457.52 per square foot. The sales had a mean of $**  **345.82 per square foot and a median of $**  **340.97 per square foot. The expert concluded that upon review of all sales information pertaining to**  **vacant sites in the Journal Square area, a nd considering**  **the multitude of factors**  **that influenced each**  **individual sale, the Subject Property was**  **in the middle range of adjusted value. H e attributed**  **this to**  **its overall size, lack of approvals as of the date of valu ation**  **, shape, location, physical site characteristics and zoning.**  **I t was his opinion that**  **the combined weight of all sales provided support**  **for a n “as**  **is” land value estimate of $**  **395.00 per square foot, which multiplied by 19,195 square feet**

**9 Taxpayer**  **’s expert amended his February 8, 2024 report on**  **May 15, 2024 to reflect a few minor**  **corrections to his comparable sales** 

**. 9** 

**results in a value of $7,582,025. After rounding, he found the fair market value of the**  **Subject Property,**  **as of October 1, 2019, was $7,580,000 (seven-**  **million**

**- five**  **-hundred- and**  **-eighty-thousand dollars.)**  **A representative of the Taxpayer, real estate developer Joseph Panepinto also**  **testified. He has been a partner in Ironstate Development Company for 25 years. His primary job respons**  **ibilities involve acquisition of properties and financing almost exclusively in Jersey City. He negot**  **iated the successful bid on the Subject Property with prior owner, Hugh Maguire**  **, Jr. in 2015. He also testified**  **as to his involvement with another Zone 3 redevelopment project near the Subject Property known as Columbus Towers.**  **Specifically, he recounted the difficulties in obtaining site plan approval for that project due to issues and objections from members of the city council, the city’**  **s engineering staff, and members of the public. The delays and difficulties in that matter**  **were only resolved after almost**  **three years of litigation in both state and federal court. 10** 

**10 On September 25, 2018 the Property Owner filed a Verified Complaint**  **captioned 500 Summit**  **Avenue Mazal, LLC v. City of Jersey City, Annisia Cialone, Director, Jersey City D epartment**  **of Housing, Economic Development and Commerce, Tanya Marione, Director, Division of City Planning, Matthew Ward, Principal Planner, Raymond Meyer, Construction Code Official,** **Jersey City Department of Public Works, and John and Jane Does 1-10, Docket Number HUD L-3805-2018**  **. The First Count sought a court order by way of a prerogative writ in lieu of mandamus to compel various officials and agencies of Jer**  **sey City to both recognize and act upon**  **the Property Owner’s building permit applications because of an “automatic approval” pu rsuant**  **to N.J.S.A. 40:55D-10.3 and Section 345-13 of the Jersey City Land Development ordinance regarding the development and construction of real property located at 500 Summit Avenue.**  **On October 24, 2018, Jersey City filed a Notice of Removal of the case to U.S. Distric t Court**  **for the District of New Jersey under Civil Action No. 2:18- cv**  **-15276- JMV**  **-JBC predicated upon federal claims set forth in the Second Count of the Complaint.**  **In 2020, the parties along with representatives of the Hilltop Neighborhood Association, including residents living near the property, engaged in settlement negotiations, result**  **ing in the dismissal of the actions**  **without prejudice. 10** 

**Following Mr. Panepinto’s testimony, Taxpayer offered testimony from a New Jersey licensed professional planner,**  **who was accepted by the court, without objection, as an expert in the field of municipal planning board procedures and approvals (“Taxpayer’s planning board expert**  **”). 11**  **Taxpayer’s planning board expert addressed the uncertainties of municipal planni ng board approvals**  **as of October 1, 2019 ,**  **based upon her experience in appearing before the Planning Board of Jersey City, and other planning boards.**  **Taxpayer’s planning board expert prepared a report expressing her opinion that while a likelihood existed that site plan approval would be obtained, as of the October 1,**  **2019 valuation date, approval had not yet been obtained, timing of approval was uncertain, and the possibility of a challenge to approval was unknown and uncertain.** 

**II. Conclusions of Law Presumption of Validity**  **Original assessments are entitled to a presumption of validity. MSGW Real Estate Fund,**  **LLC v. Mountain Lakes Borough, 18 N.J. Tax 364, 373 (N.J. Tax Ct. 1998). This presumption can be**  **overcome “by presenting evidence sufficient to demonstrate the value of the subject propert y, thereby**  **raising a debatable question as to the validity of the assessment.” Id.**  **at 376. The evidence must be**  **definite, positive, and certain in quantity and quality to overcome the presumption. The plaintiff bears**  **the burden of overcoming the presumption with respect to its claim, and the defendant must over come**  **the presumption with respect to its counterclaim.**  **Taxpayer argues that Jersey City has failed to overcome the presumption of correction**  **attached to the Subject Property’s 2020 $1,500,000**  **tax assessment . Th**  **e court finds this argument** 

**11 The expert was not involved in Taxpayer’s actual preliminary and final site plan a**  **pproval application**  **process or**  **subsequent hearings. 11** 

**disingenuous at best. While the court will not speculate as to why the assessment was s et at**  **$1,500,000 at the time of revaluation, which was three years after its sale for $5,050,000, there is no**  **question in the court’s mind that the Subject Property as of October 1, 2019 was underassesse d.** 
**As established by the testimony of both expert appraisers, the Subject Property’s 2020 market**  **value is potentially between 4 1⁄2 to 16 times higher than its implied equalized value. The court finds**  **that the 2015 purchase price and the testimony of both experts provide**  **sufficient evidence to**  **overcome the presumption of validity**  **attached to the original assessment. H**  **aving made this determination, the court**  **must now weigh and evaluate all the evidence**  **, decide the appeal on the**  **merits ,**  **and determine the fair mark et value as of October 1, 2019.**  **Highest and Best Use**
**Pursuant to N.J.S.A. 54:4-**  **23, the focus of an appeal of property taxes is on the market value of the property as of the first of October in the applicable pretax year** 

**. To establish market value,**  **consideration must be given to th e**  **price which a hypothetical buyer would pay a hypothetical seller, neither of which**  **is constrained to purchase or sell the property premised upon the property’s highest**  **and best use, either as vacant**  **or improved. The court**  **bases its determination**  **of a property’s highest and best use on an analysis of four**  **criteria: whether the use of the property is: 1) legally permissible; 2) physically possible;**  **3) financially feasible; and 4**  **) maximally productive. Ford Motor Co. v. Edison**  **Twp. , 127 N.J. 290, 312**  **(1992). Critical to any highest and best use analysis is that the use of the property not only**  **be legally permitted but is reasonably probable.**  **A fundamental tenet of the highest and best use analysis is that property, regardless of its**  **character, must be valued and assessed for local property tax purposes in the condit ion in which it is**  **utilized on the assessing date ,**  **and the burden is on the person claiming otherwise to establish 12** 

**differently. Generally, property should be valued for tax assessment purposes based upon what w as**  **known and reasonably anticipated as of the assessment date and**  **should not be based**  **upon speculation or conjecture.** 
**O n the date of valuation (October 1, 2019), the**  **Subject Property consisted of a public parking**  **lot located within Zone 3 of the Journal Square 2060 Redevelopment Plan. Proposed**  **development projects in a highly populated urban area are not simple undertakings. Many factors must be**  **considered when seeking**  **approvals from planning boards**

**. A proposed development must be**  **analyzed with respect to its potential relationship with both existing buildings and proposed or**  **foreseeable buildings**  **in the future. The development must also be analyzed in terms of light, air,**  **useable open space, access to public rights of way, parking and transit, and height and bulk as well** 

**. While it is true that**  **Taxpayer ’s**  **August 2019 application**  **to the Planning Board for Preliminary and Final Major Site Plan approval**  **was for the development of a 25** 

**- story mixed use building, with**  **341 residential units (reduced to 340), it is also true**  **that the Taxpayer’s**  **application sought four design waivers and ten deviations**  **and had**  **not yet**  **endured a public hearing. Therefore,**  **Jersey City’s appraisal expert’s conclusion that the highest and best use of the Subject Property i**  **s for development of multi** 

**- family residential use with a 25 story, 340-unit apartment bui**  **lding, as permitted by zoning**  **and approved by the Jersey City Planning Board, simply could not have reasonably been**  **made on October 1, 2019. This conclusion “jumps the gun” and assumes that Taxpayer’s application as**  **written in August 2019 is an “imminent” given or**  **, colloquially a “done deal”.**  **Jersey City’s**  **apprais er**  **overlooks the multitude of factors**  **common to the application, hearing, and resolution process that**  **could have prevented the October 29, 2019 approval and/or November 26, 2019 memorialization fro**  **m occurring. 13** 

**With respect to a fully developed urban environment ,**  **such as Jersey City, an application without a hearing**  **is merely just that –**  **an application. Despite the zoning, the proposed development**  **has not been subjected to review and scrutiny by the planning board members and the public**  **. It is their**  **function to oversee redevelopment of their community. T**  **he planning board is**  **entitled to consider,**  **object, question, remand, and**  **potentially adjourn the decision on approval to protect**  **their community from random, non-**  **comprehensive redevelopment even within permitted zoning** 

**. Although**  **high density multifamily residences are ,**  **in fact ,**  **permitted by the applicable zoning, the**  **actual density to be approved was an unknown factor**  **until after preliminary site plan approval was obtained.**  **Sales in the market reflect this. To manage risk, developers**  **often contract to buy property**  **subject to approval rather than “as is** 

**. ”**  **In fact, of the six comparable sales submitted by Jersey City’s expert, three were sold subject to approvals**  **, and two were sold with approvals. Many pending**  **conditional sales never close because they are subject to approvals that could not be obtained w ithin**  **a developer’s desired time frame or could not be obtained at all. As stated recently by our A ppellate**  **Division, “**  **As is the case here, there are often many steps a prospective redeveloper must undert ake**  **before being considered for preliminary site plan approval on a redevelopment project. ” See**  **Sackman Enters.,**  **Inc. v. Mayor, 478**  **N.J. Super. 68 (App.**  **Div. 2024).**  **Taxpayer ’s**  **planning board expert ’s**  **testimony and report highlight the uncertainty that**  **attaches to a pending site plan**  **approval application ,**  **and the speculative nature of the timing and**

**s cope of any approval that is ultimately granted. She credibly presented**  **a multitude of**  **factors that can delay**  **, or even derail**  **, a land use application. First**  **ly , an**  **y interested party has standing to challenge the notice of hearing. If such a challenge is rendered, and the board attorney finds that the notice is defective, the hearing must be**  **adjourned 14** 

**to a future date to allow for the publication and/or mailing of a cured notice. Additionally, any**  **meeting that fails to comply with the Open Public Meetings Act, N.J.S.A. 10:4-1, et seq., must be postponed. Further, weather, and other inclement factors can lead a planning board to postpone a**  **previously and properly noticed hearing. The board may also postpone a hearing to secure a la rger**  **room if the number of people in attendance exceeds the hearing room’s maximum occupancy. Secondly, an application may be placed on a hearing agenda, but not reached due to**  **the volume**  **of the agenda. Specifically, as to**  **Jersey City ,**  **the planning board expert related that the**  **planning board is known for having**  **numerous applications on its agenda at each hearing.**  **Further, a majority of board membership is required to be present for a planning board to reach a quorum a**  **nd conduct business. A meeting may not proceed if quorum is not reached. Moreover, conflicts of**  **interest may render the quorum inadequate for a specific application. Even if a quorum is r eached, if**  **it is at the minimum required attendance, an applicant may seek to carry the matter to a la ter date to**  **ensure more board members are present to review the application. Thirdly, the planning board may need to allow additional time for public comments and**  **hearings. An applicant has the right to call as many fact and expert witnesses as necessary. Likewise,**  **all interested parties are entitled to ask questions and/or cross -e**  **xamine each witness. Interested parties are also permitted to provide testimony and call their own witnesses. The applicant**  **is then permitted to question and/or cross-examine all persons who testify.**  **During an application presentation, it is**  **typical for board members and/or board professionals to request additional information that is**  **necessary to render a decision, including but not limited to, information related to operat ional aspects**  **of a use, additional plans/drawings or a redesign, and additional expert testimony. A board mi ght also**  **request its own professionals to prepare additional analyses beyond an initial review t hat would**  **require a mater to continue to another hearing. 15** 

**Lastly, the planning board may**  **also decide to reserve decision on a matter after the hearing is**  **completed and make its decision at a subsequent**  **meeting. If a variance is being requested, objectors**  **can request a continuance of a hearing to**  **secure counsel and develop a case in opposition to the requested variance.**  **A n applicant or an objector can**  **also appeal a decision of the planning board.**  **The appeal process can be lengthy**  **and sometimes t**  **ies up a land-**  **use matter for years. The above factors are neither**  **imaginary nor remote**  **. Taxpayer’s representative testified as to the three** 

**- year** 

**litigation delay from 2017 through 2020 with respect to the Columbus Towers project located just one block away from the Subject Property.**  **Taxpayer’s expert takes these factors into account expressly stating: [i]t is my opinion that the highest and best use of the subject site “as vacant” and “a**  **s improved” is for the subject to be redeveloped for residential apartment use. T**  **he subject’s current use [10/01/2019] is on a short term interim basis to be used as a**  **p arking lot but ultimately redevelopment of the parcel is likely and the most probable**  **future use. It is noted that site plan approval is anticipated in future years based on various proposals/site plan submissions from the current owner. All of the 4 tests**  **of the highest and best use are completely satisfied.**  **Thus, the value attributed to the Subject Property by Taxpayer’s appraiser appropriately considers that, as of October 1, 2019,**  **while they anticipated**  **approval, no approval had yet been**  **obtained, the timing of any approval was uncertain, and the possibility of a challenge to an approval was unknown and uncertain.**  **All t**  **hese factors would have affected the purchase price that a**  **hypothetical buyer would have paid for the Subject Property on October 1, 2019. The court accepts Taxpayer’s highest and best use analysis as the more accurate and**  **correct method to determine valuation of the Subject Property.**  **Unit of Comparison Sales comparison is the most common technique for valuing vacant land and the court a**  **grees with the experts that it is the most appropriate method to value the Subject Property. T**  **he true 16** 

**discrepancy between the two appraiser’s opinions of value**  **involves the appropriate unit of**  **comparison to be used when comparing sales. Jersey City’s**  **expert used the price per developable**  **unit that can be constructed on the site, while Taxpayer’s expert used the value per square foot.**  **As to this issue, the Appraisal Institute text on land valuation states as follows: The price per square foot of potential building area (also known as the**  **price per floor area ratio or FAR) is appropriate to use when the amount of building space allowed by zoning for a particular use greatly**  **influences property value. One measure of a zo ning density is the**  **number of square feet of building area that can be constructed on the site. This measure of allowable floor space generally relates to land**  **zoned for office or industrial uses, while another density measure governs the number of apartment units that the zoning will allow on a**  **parcel. [Land Valuation, Real Solutions to Complex Issues. Chicago: Appraisal**  **Institute,2022 (p. 44). and**  **The price per buildable unit is appropriate to use**  **when the allowable**

**number of apartment units per acre or the number of apartments the entire parcel will support (either gross or net acres) provides the basis**  **for the indicated value. Investors buy land based on how many apartments can be built rather th**  **an the number of acres a parcel may contain. ... The unit price varies depending on the usual physical**  **features, the probable rental rate of prospective apartments, and how far the parcel has progressed in the zoning and site planning process.**  **[ Land Valuation, Real Solutions to Complex Issues. Chicago:**  **Appraisal Institute,2022 (p. 55 ).**  **The critical date here is October 1, 2019.**  **As of that date, the reasonably probable use of the Subject Property was redevelopment that results in the highest value in conformance w**  **ith the permitted uses of Zone 3 of the Journal Square 2060 Redevelopment Plan. However, w**  **ithout preliminary site plan approval, the specifics of redevelopment and the density**  **measure of apartment units, which**  **would provide the highest and best use as of October 1, 2019 were**  **not known at that** **17**

**time and**  **were not known**  **within a reasonable probability.**  **This truth is exemplified by the Columbus Towers litigation**  **, which as of October 2019 had been in active litigation for over a year (settlement did not occur until 2020).**  **Subsequent approval on October 29, 2019**  **does not change that reality.**  **As of**  **October 1, 2019,** 

**w hile there was a reasonable probability that redevelopment of some measure of dens**  **ity would be approved**  **at some point**  **in the future, there lacks reasonable**  **probability of**  **approval sufficient to** 
**warrant valuation of the property on October 1, 201**  **9 as if the density**  **measure indicated in the**  **application had been approved.**  **This court finds that as to the Subject Property, a current opinion of market value that reflects**  **the existing redevelopment zoning and any premium that market participants would pay beca use of**  **the likelihood of future site plan approval is an “as is” value. Market value would not be based on speculation, hypothetical conditions, or unsubstantiated assumptions.**  **Jersey City argues that using a density- based**  **unit of comparison comports with multiple prior Tax Court decisions.** 
**In Sage**  **v. Bernards**  **Twp. , 5**  **N.J. Tax**  **52 (1982) , the Tax Court valued 292.80 acres of land**  **for $5,490,000 based on the conclusion that it could support 1,098 single family lots, at a value of $5,000 per lot. T**  **he lots under appeal, together with various other lots in the township, were the subject of much zoning litigation for many years,**  **relating to a rul**  **ing that the municipality's three** 

**- acre**  **minimum lot size zoning in the southeastern quadrant of the township (which included the subjec t**  **properties) was inv alid** 

**. The**  **plaintiffs allege d**  **that the assessor markedly increased the 1980 assessments based mainly upon its rumored sale and the subject properties' rezoning from m**  **inimum three** 

**- acre dwelling lots**  **to multi** 

**- family** 

**. They complain**  **ed that since the new zoning ordinance did**  **not receive its final reading and approval until October 2, 1979, one day after the assessing dat e, and,** **18**

**since the agreement of sale was dated October 17, 1979, which was also after the assessing date, the**  **assessor had no legal reason for increasing the assessments. The county board affirmed the assessment, and the court affirmed the judgment of the c**  **ounty board. The court noted that the value of a property, pursuant to N.J.S.A. 54:4**  **-23, was the price which**  **the assessor believed could be obtained for the property, in money, at a fair sale, between a willing**  **seller and a willing buyer**  **, as**  **of the first day of October of the year in which the assessment was made**

**. The local assessor had the authority to use his knowledge and judgment in valuing taxable property,**  **and he was not confined by the law to base his value on recorded deed transactions. Additionally, so**  **long as a proffered sale was not remote, the sale of the subject property occurring s hortly after its**  **assessing date was admissible for its rational probative valuation inference. The court found that the**  **assessor had followed the statutory directives,**  **and the evidence supported his valuation.**  **The court finds the facts presented in Sage**  **, distinguishable from those in this appeal. The**  **assessment in Sage**  **related to a lengthy and highly litigated process to rezone development**  **for residential use in a rural community as set forth in specificity in the development pla**  **n ( The plan will**  **consist of 1,222 units, 1,016 of which will be multi-family, 206 of which will be single- family**  **residences. )**  **Thus factually, the Sage**  **case bears little resemblance to the factual scenario presented by Jersey City’s redevelopment plan**  **because there exists no reasonable knowledge of approval or specificity.**  **Jersey City**  **notes that**  **in Berkley**  **Arms Apartment**  **Corp. v. Hackensack**  **City , 6**  **N.J. Tax**  **260 (1983), the court**  **held**

**that, g enerally speaking, the size of a lot bears no necessary relationship to the**  **number of units that can be place on a property which is controlled by the applicable zoning, bulk,**  **and height requirements. However, the use of this holding is taken out of context. 19** 

**Berkley Arms was**  **a n existing**  **mid**

**- rise apartment building consisting of 120 units, situated**  **on approximately 1.56 acres. There were**  **60 one-bedroom and 60 two-bedroom apartments with each unit being virtually identical to all others in the same bedroom category. The improvements, w**  **hich were constructed in 1954-1955, consist**  **ed of an eight-**  **story complex with a two** 

**- story reinforced**  **concrete parking structure containing 126 parking spaces and an in-ground concrete pool. The property was conveyed on April 28, 198**  **1, to**  **convert ownership from**  **income-producing to**  **cooperative ownership. Since**  **it remained**  **a multi** 

**- family**  **residential use property, this ownership**  **conversion did not change**  **the highest and**  **best use**  **ascribed to**  **the property in**  **any way.**  **Fa ctually,**  **the Berkley**  **Arms case**  **is completely**  **distinguishable from**  **the Subject**  **Property ,**  **which involves**  **vacant land**  **to be improved**  **in an**  **urban redevelopment**  **zone. In**  **Linwood Props., Inc.**  **v. Fort**  **Lee Borough, 7**  **N.J. Tax**  **320 (1985) the subject property was** 

**a 5-**  **acre vacant lot. It was zoned R**  **-10, which permitted the construction of high-**  **rise**

**- residential**  **buildings with a maximum height and number of units that depended on the size of the lot. The two experts relied on a total of seven sales all of which were zoned for high rise**  **apartment buildings. No**  **new high-rise apartment buildings had been built in many years. There were no approvals in place for the subject property. The defendant’s expert analyzed the sales based on the number of**  **apartment buildings permitted under the zoning ordinance. The municipality’s appraiser based his value on the**  **square footage of the subject. The Tax Court rejected the square footage analysis. T he Court found**  **that the subject could accommodate 276 apartment units in a 15- story**  **building and found a value of $12,325 a unit.**  **Like Jersey City, Fort Lee is situated in one of the premier**  **high- rise** 

**- apartment communities**  **in the northern part of New Jersey. Residents have instant access to New York City by w ay of the**  **George Washington Bridge. Additionally, occupants of high-rise structures particularl y enjoy the** **20**

**view of the New York City skyline**

**. The property’s**  **R-10 zoning permit**  **ted the construction of high**  **rise**

**- residential buildings with the maximum height and number of units dependent upon the size of**  **the lot. It is in very close proximity to the George Washington Bridge and is immediately a ccessible**  **to public transportation facilities. According to**  **Fort Lee’s expert witness there**  **were approximately 125 apartment structures of**  **significance in the borough. The site was**  **one of four remaining vacant sites in the borough zoned for such use. No new high-**  **rise -apartment buildings had been constructed in the borough for many years**  **(the proliferation of condominium and cooperative apartment units resulted from conversions of**  **rental apartment buildings).**
**The court in arriving at its decision stated: It is not the mere opinion of appraisers as to highest and best use that**  **is important but rather the activities of buyers and sellers in the market place. Without purporting to set forth all of such factors, some of the**  **more significant to be considered in determining highest and best**  **use may be the rezoning of nearby property, growth patterns, change**  **of use patterns and character of neighborhood, demand within the area for certain types of land use, sales of related or similar properties at**  **prices reflect ing anticipated rezoning and physical characteristics of**  **the subject and of nearby properties. [Linwood**  **at 327-328]**  **These exact types of factors distinguish the holding in**  **Linwood from the Subject Property.**  **The property in Fort Lee was being developed with a focus on the use of one of four remaining vaca nt**  **lots in the borough. Jersey City’s expansive redevelopment plan runs counter to that. Jersey Cit y’s**  **plan is based upon a broad**  **"area in need of rehabilitation," and**  **encompasses a large section of the municipality, which is geographically much**  **denser and larger than Fort Lee**

**. The court was not**  **concerned with site plan approvals in Linwood.**  **Rather ,**  **it focused on a highest and best use determination based upon a potential variance or zoning change to allow for the development**  **of office 21** 

**space. It’s determination of unit of comparison related to those factors which are dif**  **ferent than the factors involved with the Subject Property.**  **Likewise, this court finds the factual scenarios i n**  **Romulus Development Corp. v. Weehawken Tp.**  **, 15 N.J Tax 209**  **(1995) and i**  **n Jersey**  **City, Div. of**  **Water v.**  **Parsippany**

**- Troy**  **Hills Tp.**  **, 16 N.J.** 
**Tax 504 (1997)**  **distinguishable from the market factors present in Jersey City in October 2018-2019**

**. An educated buyer and an educated seller would not have**  **assumed that**  **P reliminary and Final Site**  **Plan approval at the density requested in the application would be imminent or forthcoming. Such instability would have driven the purchase price and the computation of value.**  **Evidence of this is found in the history of the Subject Property as presented in the record.**  **The Subject Property has been in Zone 3 of the Journal Square**  **2060 Redevelopment Plan since**  **approximately 2010. It is apparent**  **that with the existing zoning in place for almost five years,**  **the**
**2015 purchase price**  **of $5,050,000 was not based upon a density unit of comparison.**  **Likewise, t he**  **2018 revaluation figure of $1,500,000 was not based on a density unit comparison. In fact, it would**  **appear that the**  **Jersey Ci ty assessor did not value the Subject Property based on a per unit density**  **comparison until October 1, 2021, when the land portion of the assessment was increased to $18,700,000.**  **Accordingly, t he court accepts Taxpayer’s highest and best use analysis as the more accurate**  **and correct method to determine valuation of the Subject Property.**  **The court rejects Jersey City’s methodology to determine valuation based upon a density analysis and accepts Taxpayer’s**  **methodology based upon square footage. Valuation**  **Of the properties presented by both experts, and incorporating a square footage unit of 22** 

**comparison, the court relies upon**  **the comparable sales**  **of 70 Central Avenue**  **12 and**  **348 Baldwin**
**Ave 13**  **, which were provided by both Jersey City and Taxpayer ;**  **as well as the T**  **axpayer’s comparable sales of 711 Montgomery**  **Street, 425 Hoboken Avenue**  **, and 175- 177 Academy Street**  **; and Jersey’s**  **City’s comparable sale at 55 Jordan Avenue.**  **The court accepts the adjustments made by Taxpayer’s expert for market conditions, size, physical characteristics, corner influen**  **ce v. non- corner and status**  **of approvals as credible. Since 55 Jordan Avenue sold with approvals, the court applied a 20% negative adjustment for the property.**  **The adjusted range of value is $226.69 per square foot to $538.42 per square foot. The adjusted mean value is**  **$385.55 per square foot and the adjusted median is $382.55 per square foot;**  **however , the court**  **finds that the Subject Property is in the high range of the adjusted value due to its**  **density potential**  **and its proximity**  **to the Journal Square Transportation Center. After weighing the evidence, the court determines that the Subject Property had a tr**  **ue market value of $450 per square foot as of October 1, 2019. This conclusion results in**  **a true market value of $8,784,450 ($450 x 19,521), which the court will round to $8,785,000.**  **Corrected property tax assessment Having reached a conclusion of the S**  **ubject P**  **roperty’s true or fair market value for the 20 20**  **tax year , the court will determine the correct assessment. Under N.J.S.A. 54:51A-6(a),**  **commonly referred to as Chapter 123, when the court is satisfied in a non-**  **revaluation year by the evidence presented “that the ratio of the assessed valuation of the subject property to its true**  **value exceeds the**

**12 The court accepted Taxpayer’s square footage of 11,395 square feet as opposed to Jerse**  **y City’s square footage of 12,458 square feet.** 

**13 The court accepted Jersey City’s square footage of 9,148 square feet as opposed to**  **Taxpayer’s square footage of 10,157 square feet. 23** 

**upper limit or falls below the lower limit of the common level range, it shall enter judg ment revising**  **the taxable value of the property by applying the average ratio to the true value of the property. . . .” N.J.S.A. 54:51A-6(a). This process involves application of the Chapter 123 common level range** 

**. N.J.S.A. 54:1-**  **35a(b). When the ratio of assessed value exceeds the upper limit or falls below the lower limit, the formula for determining the revised**  **taxable value of property, under N.J.S.A. 54:51A 6(a), is as follows:** 

**True market value x**  **Average ratio =**  **Revised taxable value**

**For the 2020 tax year, the ratio of total assessed value, $**  **1,500,000, to true market value, $8,785,000**  **, yields a ratio of 17.07 % which**  **falls below the lower limit of the Chapter 123**  **common level range for Jersey City (74.72%**  **). Consequently, the total assessment calculation**  **for the S**  **ubject P**  **roperty is:** 

**$8,750,000 x .8791 = $7,692 ,000 [ROUNDED]** 
**III. Conclusion**  **For the reasons expressed above, the court finds that the Subject Property is underassessed, and**  **that its true market value when calculated “as is” on a square footage unit of compa rison is $8,785,000.** 

**/s/ Mary Siobhan Brennan, J.T.C.**

**Contemporaneously with the issuance of this opinion, the court is entering final**  **judgment for**  **the 2020**  **tax year appeal.**