TAX COURT OF NEW JERSEY

J OSHUA D. N OVIN **Dr. Martin Luther King, Jr. Justice Building**  Judge **495 Dr. Martin Luther King, Jr. Blvd., 4 th**  **Floor Newark, New Jersey 07102**  **Tel: (609) 815**

**- 2922, Ext. 54680** 

**November 2, 2023 Michael A. Rienzi, Esq.**  **Brach Eichler, LLC 101 Eisenhower Parkway**  **Roseland, New Jersey 07068 Joseph Sordillo, Esq.**  **DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum, P.C. 15 Mountain Boulevard**  **Warren, New Jersey 07059** 
**Re: Leabern Realty, L.P.**  **% Wayne v. Montclair Township**  **Docket Nos. 000166-2020 and**  **007681-2020 Dear Mr. Rienzi and Mr. Sordillo,**  **This shall constitute**  **the court's opinion following trial in the above matters.**  **Lea bern**  **Realty, L.P. (“plaintiff”)**  **challenges the 2019 tax year**  **nine-month prorated**  **added assessment imposed by Montclair Township**  **(“defendant”) ,**  **and the 2020 tax year assessment**  **on plaintiff’s property.**  **At issue is the date when repairs to**  **the property should be deemed**  **“ completed**  **” for**  **purposes of imposing an added assessment under N.J.S.A. 54:4-63.3. For the reasons stated below, the court**  **finds that defendant’s 2019 tax year**  **nine-month prorated added assessment was**  **reasonable and supported by the evidence. In addition, the court**  **finds no basis for**

**reducing the property’s 2020 tax year assessment. Accordingly, the court**  **affirms the 2019 tax year nine-**  **mo nth prorated**  **added assessment and affirms the**  **2020 tax year assessment.**
I. Procedural History and Factual Findings
**Pursuant to R.**  **1:7 -4, the court makes the following factual findings based on the evidence**  **and testimony offered**  **during trial. As of**  **all dates**  **herein ,**  **plaintiff was the owner of the real property and improvements** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-2- loc**  **ated at 19 2 Claremont Avenue, Montclair**  **Township, Essex County, New Jersey. The property is identified on defendant’s municipal**  **tax map as Block 3201**  **, Lot 1 5 (the “subject property”).**  **The subject property’s lot comprises approximately 0.3283 acres. The subject property is improved with a**  **fo ur-story brick,**  **pre -**  **war , 28-**  **unit residential**  **apartment complex**

**. The**  **complex does not have on**  **-site parking. In or about**  **late July 2015, the**  **building experienced a**  **significant fire**  **. Accor d**  **ing to one of plaintiff’s p**  **artners ,**  **the fire “totally**  **decimated ”**  **two of the seven apartment**  **lines in the building** 

**. Moreover, during the efforts to contain and extinguish the fire,**  **several interior walls**  **were broken through**  **, holes were cut in to**  **the roof, holes were cut in to**  **the floor,**  **explo ratory holes were cut**  **into interior walls**  **, and**  **exterior windows were broken . The smoke damage**  **from the fire permeated the**  **entire building.**  **In addition, the building**  **’s basement**  **, where the**  **building systems were located**  **, experienced extensive water damage** 

**. On**  **or about July 28, 2015, defendant issued**  **plaintiff a**  **“N otice of U**  **nsafe S**  **tructure ”**  **due**

**to the extensive fire damage.**  **Following the fire, defendant’s municipal tax assessor reduc ed**  **the subject property’s**  **improvement assessment**  **to approximately $250,000 for the 2016, 2017, and**
**2018 tax year**  **s. In**  **March 2016, plaintiff retained a property restoration firm to commence**  **repairs to the**  **subject property. In total, eighty -four**  **construction permits were sought**  **to effectuate repairs**  **to the subject property.**  **1 T**  **he work undertaken**  **by the property restoration firm includ**  **ed demolition,**  **fire cleaning,**  **structural repairs, construction**  **repairs/replacements (**  **electrical, plumbing**  **, f raming,**  **fire**

  ** proof insulation, drywall,** **and painting),**  **exterior brick rep**  **ointing, updating the building to satisfy** 

**1 N**  **ine of these permits were apparently applications for**  **Certificates of Occupancy.** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-3-**

**current building**  **code requirements (hardwiring smoke detectors, installation of carbon monoxide**  **detectors , etc.**  **) , and**  **window repair**  **s /replacements**  **. However, b ecause**  **the smoke damage impacted**  **the entire building,**  **plaintiff also**  **used this as an**  **opportunity to renovate and**  **upgrade all apartment**  **units, including the installation of**  **new kitchens, bathrooms, and flooring.**  **In addition to**  **contracting with the property restoration firm, plaintiff retained**  **separate**
**contractors to undertake replace**  **ment of the subject property’s elevator**  **and the subject property’s**  **boiler. According to the property restoration company**  **’s representative, it**  **“ substantiall**  **y complete[d]” the initial phase of the repair work**  **identified under their contract with plaintiff in or**  **about January 15, 2018.**  **The representative testified that the term “ substantially complete**  **” is defined under their contract as**  **“t he stage and progress of the work**  **where the work or designated portion of the work is**  **sufficiently complete in accordance with the contract documents so that**  **[the]**

**owner can utilize the work area**  **for its intended use. ”**  **However, the property restoration company continued to make r**  **epairs to the subject property identified under punchlists**  **bearing the following dates: (i) January 20, 2018 ; (ii)**  **March 24, 2018**  **; (iii) November 30, 2018**  **; (iv) December 6, 2018**  **; and**  **(v) Marc**  **h 12, 2019. 2**  **The punchlists required the property restoration company to address**  **numerous issues**  **(cleaning, paint touch up, removing plastic from appliances,**  **hardware repairs ,**  **etc.) , repairs to vinyl flooring that**  **suffered from an apparent manufacturing defect,**  **and repairs**  **to the exterior**  **windows which either did**  **not open ,**  **or once opened would not stay open**

**. During trial, the property restoration company’s**  **representative detailed t**  **he bubbling that occurred with the newly installed vinyl flooring and the** 

**2 Copies of the punchlists were not offered**  **during trial. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-4- various**  **mechanism s that needed to be replaced and**  **recounted the**  **difficulty encountered in obtaining and installing replacement parts for more than forty windows.**  **3**
**Between January**  **and March 2018, defendant’s Construction Code Division issued Certificates of Approval**  **, reciting that**  **the permitted work is**  **“completed [and]**  **has been constructed or installed in accordance with**  **the New Jersey Uniform Construction Code and is approved.” In addition, on January 26, 2018, defendant’s Construction Code Division issued**  **Certificates of Occupancy for the following areas: (i)**  **“common areas & basement repairs” ; (ii)**  **“repair of fire**  **-damaged Apt. #1-new bathroom fixtures and new kitchen cabinets” ; (iii)**  **“ repair of**  **fire**

**- damaged Apt. #2”**  **; (iv) “repair fire** 

**- damaged Apt. #21-new bathroom fixtures, new kitchen**  **cabinets” ; (v)**  **“repair of fire damaged Unit #22 , new vinyl windows, insulation, drywall, plumbing**  **fixture, lightin[g] fixtures, kitchen cabinetws [sic] and floors”**  **; (vi) “repair fire** 

**- damaged**  **Apt. #31- new plumbing fixtures, new kitchen cabinets”; (vii) “repair**  **of fire**  **-damaged Unit**  **#32- replace**  **damaged windows, insulation, drywall, new plumbing fixtures, new kitchen cabinets and floors**  **”; (v**  **i ii)**  **“repair fire damaged Apt. #4**  **1”; and**  **(i x)**  **“repair of**  **fire damaged Apt. #**  **42.”**
**I n or about December 2018,**  **defendant ’s housing**  **inspector inspected the subject property**  **and issued Certificates of Habitability**  **for several apartments.**  **4 5**  **In addition, in or about March**

**3 According to one of plaintiff’s partners, “many of the kitchen floors . . . were bubbling and the**  **bubbling . . . was significant enough for us to not want to show apartments with big bubbles in the middle of the floor, so that delayed our proceeding with leasing of the property.”**  **4 Under § 213-**  **10 of defendant’s building code, “[i]t shall be unlawful for any property owner** 

**. .**

**. to rent or lease and deliver up for human occupancy any dwelling unit until a certificate of**  **habitability shall have been issued by the Housing Officer indicating that such dwelling uni t is not**  **in violation of the Housing, Building, Fire or Health Codes of the Township of Montclair. . . .”**  **Montclair Township Building Codes,**  **Chapter 213 Multifamily Buildings, No. 80 -12 (adopted**  **April 15, 1980). 5**  **Defendant’s housing inspector issued thirteen Certificates of Habita**  **bility dated December 27, 2018.** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-5- 2019,**  **defendant ’s housing**  **inspector re**  **- inspected the subject property and**  **issued Certificates of**  **Habitability for several**  **additional apartments.**  **6 Although he could not recall the dates when the**  **inspections were performed , p**  **laintiff’s property manager credibly**  **testified that he was present**  **during each of the**  **Ce rtificate of Habitability inspections** 

**. 7** 
**In or about**  **April 2019, the property restoration company and plaintiff agreed**  **to a credit against the balance due in exchange for which plaintiff would complete**  **the remaining punchlist**  **item s**  **. T hereafter,**  **plaintiff’s building, plumbing, and electrical contractors completed the remaining punchlist items.**  **8 On or about June 8, 2019, plaintiff**  **signed an Exclusive Right t**  **o Rent/Lease Agreement with Keller Williams Realty**  **to begin marketing the subject property for lease. According to**  **plaintiff’s property manager, t**  **he marketing of the subject property was scheduled to**  **begin on June**  **13, 2019, and terminate on September 30, 2019. On June 18, 2019, a water supply line valve on the second floor of the building “**  **just let**  **go,” directly**  **causing water damage**  **to two or**  **three a partments and**  **water to infiltrate**  **portions of the**  **building’s common areas**  **. Fortunately, plaintiff’s property manager was on**  **- site at the time**  **of the valve failure**  **and immediately shut off the water**  **service to the building**  **, limit ing the**  **potential damage** 

**. The property restoration firm**  **was immediately**  **called back to the subject property, and**

**a ccording to**  **its representative, it took**  **approximately five days for the building to**  **“dry -out”**  **after**

**6 Defendant’s housing inspector issued seven Certificates of Habitability dated M**  **arch 1, 2019. 7**  **Plaintiff’s property manager is also plaintiff’s real estate agent.**  **8 During trial, p**  **laintiff submitted**  **an estimate from its general contractor dated April 1, 2019**  **, detailing**  **many of the**  **remaining punchlist items. In addition, plaintiff offered invoices from their**  **contractors for the punchlist**  **repairs dated March, April, May, and June 2019.** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-6- installation of dehumidifiers and air exchangers. As a result of the**  **valve failure, kitchen cabinetry and drywall**  **in two**  **a**

**partment s**  **was removed**  **to enable plaintiff’s plumbing contractor**  **to make repairs**  **. T he valve failure**  **also caused damage to**  **approximately ten feet of cast iron piping running between**  **two a**

**partments , requiring**  **replacement by plaintiff’s plumber. T**  **hese repairs were completed by plaintiff’s plumber on June 24, 2019. In addition, due to the valve failure, plaintiff’s**  **electrical contractor replaced damaged wiring and electrical fixtures in Apartment 3**

**. This work**  **was also completed on June 24, 2019.** 
**T hereafter, the property restora**  **tion firm replaced the water damaged drywall , flooring**  **, and painted**  **. According to the property restoration firm’s representative, the se**  **repairs were “cosmetic”**  **and not structural. The property restoration company completed its work by July 1, 2019. In or about July 2019, plaintiff and Keller Williams Realty entered into an amended**  **Exclusive Right to Rent/Lease Agreement, to begin on August 1, 2019, and terminate on**  **October 31, 2019. According to plaintiff’s property manager, the commencement date wa**  **s delayed because “**  **we felt that the property was just not ready for showing, there was some issues that we**  **wanted to address.” One of plaintiff’s partners**  **testified that ,**  **“we were quite concerned that, especially in view of what happened in June that, we**  **would have tenants in apartments and that**  **there would be an issue which would require us to shut down that apartment or that line, and we just didn’**  **t want to face that situation.”**  **Accordingly, following the valve leak**  **repairs, plaintiff voluntarily undertook**  **replacement of certain wastewater discharge pipes in the subject property.**  **This work was completed**  **by plaintiff’s plumber in August 2019. Plaintiff welcomed its first tenant back to the subject property sometime in mid**  **- to late**  **Augu st**  **2019. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-7- On October 1, 2019,**  **defendant’s municipal tax assessor imposed an added assessment for**  **the improvements completed to the subject property in the sum of $3,250,400. D efendant’s tax** 

**assessor testified that**  **, in or about the “s**  **pring or s ummer**  **of 2019,”**  **he and an appraiser retained by**  **defendant to perform “commercial apartment valuation**  **s ”**  **conduct ed an**  **inspection of the subject**  **property for purposes of determin**  **ing the**  **subject property’s total**  **added assessment** 

**. Defendant’s**  **municipal tax assessor pro**  **rated the added assessment**  **for nine months ,**  **from April 2019 to December 2019, in the sum of $2,437,800. According to defendant’s tax assessor, he viewed the**  **apartment complex as a single economic unit ; thus,**  **he calculated t**  **he nine-month added assessment from the first day of the month following the month when the last Certificate of Habita**  **bility was issued.**  **For the 2020 tax year, the subject property bore a**  **total local property tax**  **assessment of $4,006,200 (Land: $560,000, Improvements: $3,446,200).**  **On January 24, 2020 and**  **May 22, 2020 ,**  **respectively, plaintiff timely filed complaints with**  **the Tax Court challenging the subject property’s 2019**  **tax year nine-month**  **prorated added assessment and 2020**  **tax year assessment** 

**. Montclair filed counterclaims**  **of the 2019**  **tax year nine**  **month prorated added assessment and**  **2020 tax year**  **assessment. The court tried the matter**  **s to**  **conclusion over one day.**  **Plaintiff does not charge that the added assessment was not authorized**  **under law, nor does**  **plaintiff contend that the added assessment was untimely**  **, under N.J.S.A. 54:4-63.3.**  **In fact, plaintiff does not contest the**  **total 2019 tax year**  **added assessment amount.**  **Rather, plaintiff argues**  **that because of**  **th e ongoing windows repairs, flooring repairs, and**  **water valve failure in June 2019**  **, the subject property was not “substantially ready for the use for which it was intended”**  **until August**  **2019, as such phrase is construed under N.J.S.A. 54:4-63.1. Accordingly, plaintiff maintains that defendant’s 2019 tax year nine-month prorated assessment was inappropriat**  **e. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-8- Addition**  **ally , plaintiff argues that**  **it experienced difficulties leasing the subject property**  **and attaining a stabilized occupancy due to the COVID** 

**- 19 pandem**  **ic**

**. Therefore, plaintiff**  **asserts that**  **in arriving at the subject property’s 2020 tax year**  **local property tax assessment, a higher**  **vacancy allowance sh ould have been applied by**  **the defendant, resulting in a lower local property** 

**tax assessment.** 
II. Conclusions of Law
A. Added assessments ; 2019 tax year added assessment
**A s expressed by our Supreme Court, a**  **fundamental ten**  **e t of**  **the New Jersey Constitution**  **of 1947 was**  **to ensur e**  **an “equality of treatment and burden; . . . a means of realizing uniformity**  **and equality, the preeminent consideration [is] in the apportionment of the tax burden in vir tue of**  **the constitutional guaranties of due process and the equal protection of the laws.” Switz**  **v. Middletown, 23**  **N.J. 580, 593 (1957).**  **To adhere to th is**  **constitutional principle, o ur Legislature mandated that:**  **All real property shall be assessed to the person owning the same on October 1 in each year.**  **The assessor shall**

**. . . determine the full and**  **fair value of each parcel of rea l property situate in the taxing district**  **at such price as, in his judgment, it would sell for at a fair and bona fide sale by private contract on October 1 next preceding the date on**  **which the assessor shall complete his assessments, as hereinafter requir**  **ed**

**. [N.J.S.A. 54:4-23.]**  **The added**  **assessment statute**  **is a**  **corollary of N.J.S.A. 54:4-23, designed**  **to capture**  **a property’s**  **increase in**  **value due to**  **the completion**  **of a building, structure,**  **addition, or improvement**  **after the**  **October 1 valuation date**  **, but either**  **by the end** 

**of the pre**  **- tax**  **year ,**  **or**

**during January**  **to October** 

**of the tax**  **year. See**  **N.J.S.A. 54:4-63.2; N.J.S.A. 54:4-63.3. The “purpose of the**  **added assessment**  **law is**  **to permit**  **the taxation**  **of real**  **property which**  **becomes taxable**  **during Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-9- the**  **year following the**  **assessment date**  **of October 1 [under N.J.S.A. 54:4-23],**  **in order**  **to avoid**  **having properties escape**  **taxation until the next**  **assessment date**  **arrives. ”**  **Snyder v. Borough of South**  **Plainfield , 1**  **N.J. Tax**  **3, 7 (Tax**  **1980).**
**For a building or**  **structure that has been constructed,**  **added to, or improved after the October 1 valuation date and before the January 1 start of the tax year, an**  **added assessment will be imposed for the entire subsequent tax year.**  **N.J.S.A. 54:4-63.2. In addition,**  **an added**

**assessment will**  **be imposed for that**  **portion of the pre-tax year of completion from the first day of the month following completion through December 31. Ibid.**  **However, i f a**  **building or structure has been constructed**  **, added to, or improved after the October 1**  **pre -**  **tax year assessment date, and between January 1 and October 1 of the tax year, the**  **added assessment computation slightly differs** 

**. N.J.S.A. 54:4-**  **63.3. The assessor must first determine the taxable value of the improvements as of the first of the month followi**  **ng com pletion**  **of the improvement , and then assess the amount in excess of the assessment made as of the**  **preceding October 1 date. Ibid. The added assessment is**  **then prorated by multiplying the excess**  **value by the months remaining in the tax year, divided by**  **twelve . Ibid.**  **Specifically, N.J.S.A. 54:4-63.3 provides,**  **in part,**  **the following: when any parcel of real property contains any building or other**  **structure which has been erected, added to or improved after O**  **ctober 1 and completed between January 1 and October 1 following, the assessor shall,** 

**. . . determine the taxable value of such**  **parcel of real property as of the first of the month following the date . . . of such completion, and . . .**  **if such value so determined exceeds the assessment made as of October 1 preceding, the assessor shall**  **enter an assessment, as an added assessment against such parcel of real property, in the ‘Added Assessment List, 19. . .**  **,’ which**  **assessment shall be determined as follows: by multiplying the amount of such assessment or such excess by the number of whole**  **months remaining in the calendar year after the date of delivery of such deed, or of such completion, and dividing the result by 12.** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-10-**

**[N.J.S.A. 54:4-63.3.] Here, it is undisputed by plaintiff**  **that added assessments are statutorily**  **sanctioned**

**. Moreover, plaintiff concedes that on October 1, 2019, defendant’s municipal tax asse**  **ssor was permitted**  **to, and lawfully**  **imposed an added assessment on the subject property**  **, under N.J.S.A.** 
**54:4-63.3. At issue is the date when the subject property should be viewed as being “**  **completed ,”**  **under N.J.S.A. 54:4-63.1, for purposes of imposing the added assessment.**
**A structure**  **is deemed** 

**“ completed**  **” when**  **it is**  **“ substantially**  **ready for**  **the use**  **for which**  **it**

**was intended.”**  **N.J.S.A. 54:4-63.1. However,**  **the lack**  **of issuance**  **of a certificate**  **of occupancy**  **does not,** per se **, render** 

**the building, structure**  **, or improvement, not substantially**  **ready for**  ad valorem **taxation purposes.**  **See Beranto**  **Towers v.**  **City of**  **Passaic , 1**  **N.J. Tax**  **344, 349 (Tax**  **1980). 9**  **As succinctly**  **expressed by Judge**  **DeAlmeida, “[a]**  **certificate of**  **occupancy is**  **not an**  **official determination**  **that the structure**  **is substantially**  **ready for**  **its intended use.”**  **Lowe’s Home**  **Ctr., In**  **c. v.**  **City of**  **Millville , 25**  **N.J. Tax**  **591, 600 (Tax**  **2010). Moreover, our courts have**  **expressed that**  **the term**  **substantially ready**  **should not be construed as**  **requiring the building or**

**structure to**  **be “actually** 

**. . . in**  **use.” Howell**  **Twp. v. Monmouth County Bd. of**  **Taxation , 18**  **N.J.**
**Tax 149, 163**  **(Tax 1999).**  **Thus, it**  **is not**  **necessary for**  **the owner** 

**or tenant**  **to have**  **assume d** 
**occupancy and**  **use of the building for**  **its intended purpose,**  **for the**  **court to**  **find that**  **it is**  **substantially ready** 

**.**

**9 A**  **certificate of** 

**occupancy is**  **issued when**  **a project**  **“meets the**  **conditions of the construction permit,**  **and all**  **prior approvals and**  **has been**  **done substantially**  **in accordance**  **with the code**  **and with**  **those portions of the plans and**  **specifications controlled by the**  **code,” when**  **“all required**  **fees have**  **been paid**  **in full,”**  **when “all**  **necessary inspections have**  **been completed,”**  **when “all**  **violations have been**  **corrected and** 

**. . . any**  **assessed penalties**  **have been**  **paid,” and**  **when “all**  **protective devices**  **and**

**equipment” are**  **installed and**  **operational. N.J.A.C. 5:23-2.24. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-11- Rather,**  **our courts have employed two**  **tests to**  **gauge whether**  **the building or**  **structure is**  **substantially ready**  **for its**  **intended use.**  **T he**  **economic viability**  **test requires**  **the court to**  **discern whether**  **construction has**  **“ reached**  **the point whe**  **re an**  **ec onomically**  **viable structure**  **” exists**  **as of**  **the probative evaluation**  **date. Beranto**  **Towers , 1**  **N.J. Tax**  **at 349**  **(citing Forest**  **Hills, Inc.**  **v. Tax**  **Commission , 293**  **N.Y.S. 2d 58 (App.**  **Div. 1968),**  **aff’d o.b., 23 N.Y.2d 949**  **(Ct. App. 1969)).**  **The functionality**  **test centers**  **on whether the building or structure**  **could be used**  **for its**  **intended**
**purposes. Litton**  **Business Sys., Inc.**  **v. Borough of Morris**  **Plains , 8**  **N.J. Tax**  **520 (Tax**  **1986), aff'd**  **, 9**  **N.J. Tax**  **651 (App. Div.**  **1988).**
**In Texas**  **Eastern Trans**  **mission Corp. v.**  **East Amwell**  **, the taxing district**  **imposed an**  **added**

**assessment on**  **seven miles**  **of natural**  **gas transmission**  **pipeline that**  **had been**  **installed in**  **the taxing district** 

**. 82**  **N.J. Super. 593 (App.**  **Div. 1964).**  **As of**  **the assessing**  **date, 79%**  **of the 44-**  **mile pipeline** 

**was “**  **laid and**  **backfilled ”**  **and was**  **hydrostatically tested**  **and 8-**  **miles “remained**  **to be**  **laid and**  **backfilled.” Id.**  **at 596.**  **The taxpayer**  **elected not**  **to remov**  **e the water**  **from ,**  **and to**  **clean the**  **transmission pipe**  **line because**  **“it was**  **more convenient**  **for the**  **company to**  **do those finishing operations**  **at one**  **time for**  **the whole . . . section**  **between pumping stations.”**  **Id. at**  **597. The**  **taxpayer**

**argued that the pipeline was**  **not substantially**  **ready for**  **its intended use**  **because “the**  **line as**  **a whole** 

**. . . was**  **to constitute**  **an integral**  **functional portion, [and] was**  **far from**  **ready to**  **be used** 

**by that**  **date for**  **its intended purpose of**  **transmission of**  **gas .”**  **Ibid. However,**  **our Appellate Division**  **flatly rejected the taxpayer’s**  **argument finding th**  **at it amounted to a** 

**“ misapprehend[ing] both**  **[of] the underlying purpose of the Added Assessment Act and the basic**  **philosophy of** ad valorem **taxation.” Ibid. The court**  **stated that :** 

**Assum ing for the moment . . . that the portion of line . . . was**  **physically completed by October 1 to the degree that it was substantially ready to be incorporated into the line as a whole when** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-12- the latter should be ready to receive it as an operating segment, .** 

**. .**

**this is all that is required to meet the intent of the statute in respect of the assessability of the portion of the line situate in the taxing**  **district . . . . Ad valorem taxation is imposed in respect of the physical presence of property in a taxing**  **district, by reason of which it is in presumptive enjoyment of the**  **protective and other benefits of local government. And the statement appended to the bill which**  **was enacted in 1941 as the Added Assessment Act evinces the same philosophy in relation to construction newly completed which**  **would otherwise escape taxation. The general policy of our taxing**  **statutes is that all property within the jurisdiction of the State should be taxed unless expressly exempted . . . .**  **Thus, if**  **as of**  **October**

**1 the portion of the pipe line** 

**. . . was**  **itself substantially**  **ready for**  **incorporation into**  **the pipe**  **line as**  **an entirety**  **and for**  **use as**  **such, and**  **was merely**  **awaiting the readying of the**  **line outside**  **that municipality**  **to receive**  **it as**  **part of the**  **total operating**  **mechanism, in**  **the meantime**  **fully enjoying the**  **benefits of**  **local government,**  **there is**  **no justification**  **for delaying the**  **taxation of the**  **. . . portion in**  **the interim.**  **This, we**  **take it,**  **accords with**  **the statutory**  **intent in**  **relation to**  **a situation**  **of this**  **kind. [**  **Id. at**  **597-98 (internal citation**  **s omitted).]**  **Significantly, the court e**  **mphasized that**  **the taxpayer’s**  **argument “ in**  **effect ignores the**  **word ‘**  **substantially ’. .**  **.[i ]f** 

**the Legislature**  **meant to**  **require 100%**  **completion or**  **readiness for**  **use it**  **obviously would have employed the qualifying adverb.” Id.**  **at 598.**  **Because the**  **court was**  **satisfied from**  **the evidence**  **presented that**  **the section**  **of the pipeline in**  **the taxing district**  **was substantially**  **complete , the court upheld the added**  **assessment. Here,**  **credible testimony was offered by**  **the property restoration company’s representative, that it**  **had “substantially complete[d]” the initial phase of the repair work**  **identified under their contract with plaintiff in or about January 2018. Moreover, the evidence further disclosed**  **that o n**  **or about December 27, 2018, defendant’s housing inspector inspected the subject property and issued Certificates of Habitability to p**  **laintiff for thirteen apartments.**  **In addition, on or about**  **January 26, 2018, defendant’s Construction Code Division issued Certificates of Occupancy for Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-13- eight a**  **partments . The evidence further disclosed that on or about March 1, 2019, defendant’s**  **housing inspector re**  **inspected the subject property and issued Certificates of Habitability for**  **seven additional apartments.**  **Admittedly, the property restoration company remained on site until April 2019, and**  **continued to make**  **re pair**  **s to the subject property**  **identified under five separate punchlists**

**. Thereafter,**  **plaintiff’s own contractors**  **performed the balance of the**  **punchlist repair**  **s. Notably**  **however , t**  **he court’s review of the estimate**  **for work to be performed, and invoices**  **for work performed by**  **plaintiff’s contractors in March, April, and May 2019**  **discloses the relatively**  **minor nature of**  **the repairs being undertaken**  **to the property including replacement s**  **of shower valves, kitchen sink valves, toilet flushometers, radiator valves, lighting fixtures, and the clea**  **ning of various apartments.**  **The court readily**  **acknowledges p laintiff’s**  **laudable goal to “**  **to make sure that the building was ready for occupancy**  **,” a nd that “you put your best foot forward when you start leasing up, and**  **you can’t start leasing unless you are confident that the physical building won’t have any setbac ks.** 
**. . .” However, that is not the barom**  **eter by which the court measures whether a building**  **or**
**structure is**  **substantially ready**  **and subject**  **to taxation, under N.J.S.A. 54:4-63.1.**  **Rather, the**  **inquiry center**  **s on whether**  **the building or structure**  **could be**  **used for**  **its intended purposes, or**  **whether it**  **is an**  **ec onomically**  **viable structure.**
**P laintiff**  **’s choice**  **to delay leasing until**  **all potential repair issues in the subject property were resolved**  **was purely**  **a business decision. P laintiff**  **’s election**  **to attempt to**  **minimize the**  **risk s**  **associated with operating a multi** 

**- family dwelling**  **is of no moment to the court and does not render issuance of the Certificates of Habitability a fiction**  **. Moreover, it does not**  **result in a finding**  **by the court**  **that defendant’s**  **municipal tax assessor**  **’s determination**  **that the subject property was Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-14- substantially complete a fallacy.**  **After considering**  **all the above-**  **stated evidence**  **, the court finds that**  **in March**  **2019, the subject**  **property w as**  **substantially ready**  **for the use**  **for which**  **it w**  **as intended, under N.J.S.A. 54:4-**  **63.1. Following issuance of the balance of the**  **Certificates of Habitability and the property**  **restoration firm concluding its services ,**  **the subject property was functional for its intended purpose, as a multi-**  **family dwelling. 10**  **Additionally, although the June 18, 2019 wa**  **ter valve failure was truly**  **an unfortunate event ,**  **the court ’s review of**  **plaintiff’s in**  **voices demonstrates that the**  **direct damage was**  **limited to two**  **or three apartments**  **and limited**  **common areas**
**. Although**  **credible testimony was offered that it**  **took several days for** 

**the affected**  **interior surfaces t**  **o thoroughly dry, that did not render the other twenty** 

**- five or twenty-**  **six apartments**  **uninhabitable, nor impact plaintiff’s ability to lease those**  **other apartments. Although plaintiff**  **’s partner testified that**  **plaintiff had to have the electrical and**  **heating systems in the basement re**

**- inspected, no evidence or testimony was offered that any of**  **those building systems suffered any damage resulting in the inability to**  **provide basic tenant**  **needs, including water,**  **electric ,**  **and heat to the subject property. Moreover,**  **plaintiff offered**  **no testimony**  **or evidence that**  **, due to**  **the June 18, 2019 water**  **valve failure**  **, additional building permits**  **were required**  **or that**  **additional Certificate**  **of Habitability**  **inspections of the a ffected**  **apartments needed** 

**to be conducted.**  **Addition ally**  **, the court finds that defendant has offered no credible evidence warranting an**  **expansion of the 2019 tax year nine-month prorated added assessment on the subject property. Accordingly,**  **the court rejects plaintiff’s claims for relief from the 2019 tax year**  **nine**

**10 The court was provided with copies of only twenty Certificates of Habitability. It wa**  **s unclear from the trial record when Certificates of Habitability were issued for the**  **other eight apartments** 

**. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-15- month pror**  **ated added assessment, denies**  **any relief sought by defendant under**  **its counterclaim**  **, and**  **affirms the 2019 tax year nine-month prorated added assessment.**
B. 2020 local p roperty tax a ssessment **“Original assessments and judgments of county boards of taxation are entitled to a presumption of validity.” MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18**  **N.J.**
**Tax 364, 373 (Tax 1998)** 

**. The presumption of validity is “**  **a construct that expresses the view that in tax matters, it is to be presumed that governmental authority has been exercised cor**  **rectly and in accordance with law.”**  **Pantasote Co. v. Passaic City**  **, 100 N.J. 408, 413 (1985).**  **The presumption**  **of validity appli es “**  **until sufficient competent evidence to the contrary is adduced.” Little Egg Harbor Twp** 

**. v. Bonsangue, 316 N.J. Super. 271, 285-86 (App. Div. 1998).**  **Accordingly, the plaintiff**  **shoulders the burden of proving that a**  **local property tax assessment is incorrect. Only through the introduction of**  **“cogent evidence” of true value; that is, evidence “definite, positive and certain in quality and quantity to overcome the presumption**  **,” that a**  **plaintiff fulfills this obligatio**  **n. Aetna Life Ins. Co. v. Newark City, 10 N.J. 99, 105 (1952). The court, in evaluating whether the evidence presented meets**  **the “cogent evidence” standard, “must accept such evidence as true and accord the plaintiff all legit**  **imate inferences which can be deduced from the evidence.”**  **MSGW Real Estate Fund, LLC, 18 N.J. Tax**  **at 376 (citing**  **Brill v. Guardian Life Insurance Co. of Am., 142 N.J. 520 (1995))**  **; see also**  **Estate of Roach v. TRW, Inc., 164 N.J. 598**  **(2000) ;**  **Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 (1997).** 
**How ever, the evidence presented, when viewed under the**  **Brill standard “must be ‘s**  **ufficient to**  **determine the value of the property under appeal, thereby establishing the existence of a de batable**  **question as to the correctness of the assessment.’” West Colonial Enters, LLC v. City of East** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-16- Orange**  **, 20 N.J. Tax 576, 579 (Tax 2003)(quoting Lenal Props., Inc. v. City of Jersey City, 18 N.J. Tax 405, 408 (Tax 1999),**  **aff’d , 18 N.J. Tax 658 (App. Div. 2004).** 
**O nly after**  **a court has**  **concluded that it been presented with**  **evidence sufficient to overcome**
**th e pr**  **esumption of validity,**  **must it**  **“ appraise the testimony, make a determination of true value**  **and fix the assessment. ”**  **R odwood Gardens, Inc. v. City of Summit, 188 N.J. Super. 34, 38**  **-39 (App. Div. 1982))**  **; Greenblatt v. Englewood City, 26 N.J. Tax 41, 52 (Tax 2011). Even in the**  **absence of a motion to dismiss , under**  **R. 4:37-2(b),**  **the court is nonetheless tasked with**  **determining if the plaintiff has overcome the presumption of validity. If the court independently**  **concludes that a**  **plaintiff has not carried its**  **burden, dismissal of the action is warranted, and the court need not engage in a**  **further evaluation of the evidence to make an independent determination**  **of value. Ford Motor Co. v. Edison Twp., 127 N.J. 290, 312 (1992).**
**Here ,**  **plaintiff argues that in arriving at the subject property’s 2020 local property tax assessment,**  **defendant’s appraiser**  **and assessor should have applied a higher vacancy allowance**  **to the**  **income capitalization approach , resulting in a lower local property tax**  **assessment. Specifically, plaintiff contends that due to**  **the COVID**

**- 19 pandemic, they encountered difficulty**  **in leasing the subject property, and thus, w ere**  **not able to immediately**  **attain full occupancy**

**. In support**  **of plaintiff’s contention, plaintiff offered only**  **factual testimony from its**  **property manager and one of p laintiff’s partner**  **s . Th**  **at testimony revealed that**  **after commenc ing**  **leasing activities on the subject property**  **, in or about July 2019,**  **plaintiff gained**  **the following tenants: (i)**  **one tenant, as of the end of August 2019**  **; (ii) nine**  **tenants, as of the end of September**
**2019 ; (iii)**  **e leven**  **tenants, as of the end of October 2019 ; (iv)**  **fourteen tenants, as of the end of**  **November 2019; and (v) seventeen tenants, as of the end of December 2019** 

**. The subject property**  **did not attain one hundred percent occupancy until September 2021. Leabern Realty, L.P. % Wayne v. Montclair Township** 

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-17-**
**P laintiff’s property manager testified that**  **“one of the biggest themes that occurred throughout [**  **the leasing of the subject property] was that we had no on-site parking, that I would**  **say was pretty major, and it definitely created a challenge, we are surr ounded by buildings that**  **have on-site parking, and it is very difficult to park in the town.” T**  **he property manager added**  **that “there were other factors that came up as far as renting, people not meeting criter**  **ia, thresholds for income, etc.”** 
**P laintiff’s partner**  **similarly shared**  **that the feedback receiv**  **ed from prospective tenants**  **included that, “we didn’t have parking” and “additional concerns were that . . . it’s a pre-**  **war building, it’s not new enough for us, . . . we’re looking for something more modern.”**  **Moreover, according to**  **plaintiff’s partner, foll owing the COVID**  **-19 outbreak in or about February/March**  **2020, leasing activities on the subject property materially diminished.**  **Notably however, plaintiff**  **offered no**  **expert testimony**  **or evidence**  **regarding what**  **potential gross income should be attributed**  **to the**  **subject property**  **for the 2020**  **tax year**  **, or what**  **stabilized vacancy**  **and collection**  **loss factor**  **was reasonable**  **for multifamily**  **dwellings in**  **the marketplace.**  **Moreover, plaintiff**  **offered no**  **expert testimony**  **or evidence with**  **respect to**  **the**

**su bject**  **property’s stabilized**  **operating expenses**  **or**

**the capitalization**  **rate that**  **should be employed**
**in deriving a**  **valu e**  **to the**  **subject property**  **for the 2020**  **tax year.**  **In short,**  **plaintiff has**  **offered no meaningful evidence**  **demonstrating that the subject** 
**prop erty’s 2020 tax year assessment was inaccurate**  **, or**  **that defendant’s**  **method of assessment was**  **so palpably egre**  **gious and defective that the presumption of validity should not apply.**  **Plaintiff has not presented**  **any cogent evidence**  **of the subject property’s v alue**  **sufficient to overcome the**  **presumption of validity**  **that attached to the 2020 tax year assessment.** **Leabern Realty, L.P. % Wayne v. Montclair Township**

**Docket Nos. 000166-2020 and 007681-2020 Page**  **-18- Accordingly,**  **for the foregoing reasons, the**  **court affirms the subject property’s 2020**  **tax year assessment** 

**.** III. Conclusion**For the above stated reasons, the court finds that the subject property’s 2019 tax year nine month**  **prorated added assessment was reasonable and**  **supported by the evidence. In addition, the court finds that no credible**  **and cogent evidence was offered by pla**  **intiff to overcome the**  **presumption of validity that attaches to the subject property’s 2020 tax year assessment. Therefore,**  **the court affirms the 2019**  **tax year nine-month**  **prorated added assessment and 2020 tax year assessment.** 
**Very truly yours,**

**Hon. Joshua D. Novin, J.T.C.**