Source: http://www.bracheichler.com/?p=9446
Timestamp: 2019-04-21 00:26:49+00:00

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New Jersey Real Estate Tax Appeals | Brach Eichler L.L.C.
In a recent opinion following the filing of a summary judgment motion by Brach Eichler, Judge Dally of the Northampton County Court of Common Pleas in Pennsylvania dismissed an affirmative appeal brought by the Bethlehem Area School District holding that the School District’s action was borne out of a systematic and intentional practice of selectively targeting commercial properties for District-initiated appeal, in violation of the Uniformity Clause of the Pennsylvania Constitution. Judge Dally granted our motion in the matter of Bethlehem Area School District v. The Board of Revenue Appeal of Northampton County and Lehigh Crossing Associates, LP.
In response to our summary judgment motion, the School District asserted that they relied on a policy whereby appeals would only be filed on properties to the extent that there is a reasonable chance of producing at least $10,000 in additional tax revenue. The School District argued that the unwritten policy was not based on property type, therefore it was constitutional.
The taxpayer successfully argued that the evidence did not support the School District’s position. Only commercial properties were targeted for appeal pursuant to the allegedly unwritten policy and therefore the Threshold was merely a proxy for targeting exclusively commercial properties for assessment appeal. Judge Dally agreed and found that no triable issue of fact remained, as it was clear that the School District was focused solely on appealing the assessments of commercial properties in violation of the Pennsylvania Constitution’s Uniformity Clause.
Taxpayers in Pennsylvania have been struggling with the ability of local school districts to target only commercial properties for affirmative tax appeals seeking assessment increases. This practice of cherry picking commercial properties for appeal was for many years approved by Pennsylvania courts. However, in a much anticipated decision, the Pennsylvania Supreme Court deemed this practice under certain circumstances to be an unconstitutional violation of the Pennsylvania Constitution’s Uniformity Clause in 2017. Valley Forge Towers Apartments N, LP v. Upper Merion Area School District, 163 A.3d 962, 978 (Pa. July 5, 2017). The Court held that a school district may not implement a scheme wherein only a certain sub-classification of properties are targeted for appeals, where that sub-classification is drawn according to property type. The ruling in this case is one of the first of its kind following Valley Forge and lays a groundwork for opposing unlawful affirmative appeals in Pennsylvania.
If you own or pay the real estate tax on a property that is the subject of an affirmative appeal, a thorough and immediate review of the appeal is critical to ensure that your rights and defenses in the appeal are protected. Contact Dan Pollak at 973-403-3119 or dpollak@bracheichler.com.
At the close of 2017, the Tax Cuts and Jobs Act was signed into law. While the debate continues on the merits of the law and the speed with which it was enacted, there was seemingly no debate over the fact that New Jersey homeowners will be among those most negatively impacted by its enactment. It was therefore not surprising that only one New Jersey Congress member voted in favor of the bill.
The provision in the law likely to have the greatest impact on New Jersey homeowners is the capping of the real estate tax deduction at $10,000. New Jersey taxpayers pay some of the highest property taxes in the nation. For numerous homeowners in New Jersey, the $10,000 real estate tax deduction cap does not nearly cover their annual tax payments. The loss of this critical deduction, coupled with the potential increase in mortgage rates, will likely drive down home values especially for higher taxed residential properties. In fact, according to Moody’s, 15 of the 30 counties most negatively affected by the new tax structure are located in New Jersey and home prices are projected to dip 7 to 10% due to the loss of the full real estate tax deduction.
Following the Great Recession in 2008, there was a dramatic increase in property tax appeals filed on residential properties. Settlement of these appeals and numerous revaluations and reassessments thereafter worked to adjust the assessments to reflect the new market realities. However, given the projected drop in residential real estate values following enactment of the tax bill, it is possible that New Jersey may be on the verge of another significant increase in residential tax appeals.
New Jersey taxpayers should carefully review their tax assessment now to determine whether an appeal should be filed this year. Filing an appeal ahead of the April 2, 2018 filing deadline (May 1st for revalued/reassessed municipalities) is the only way to reduce your 2018 real estate tax liability and limit the negative impact of the new law.
Please contact Daniel Pollak at dpollak@bracheichler.com or 973-403-3119 if we can assist.
In a recent Tax Court case we tried to conclusion before Judge Vito L. Bianco, J.T.C., the Court accepted the value proffered by the taxpayer’s expert and reduced the plaintiff’s 2010 through 2015 tax assessments accordingly. The tax refund due to the taxpayer is approximately $250,000.
In adopting the taxpayer’s market value, the Court found that the defendant’s expert failed to adequately verify the comparable sales and leases and therefore afforded the opinion and conclusions of the Township’s expert little weight. As a result, the proof submitted by the Township failed to meet the standard to overcome the presumption of validity of the various assessments at issue.
Judge Bianco acknowledged that the Tax Court, through a series of recent opinions, had perhaps raised the bar for meeting the standard of proof too high for taxpayers in property tax appeals. His acknowledgment, coupled with his findings in this case, may reverse the recent trend in Tax Court decisions to reject expert opinions and decline to find value. This should bode well for taxpayers seeking to reduce their real estate taxes in the future.
Please give Daniel Pollak a call if he can help obtain similar results for your property. He can be reached at 973-403-3119 or dpollak@bracheichler.com. As a reminder, the appeal deadline for 2018 tax appeals is upcoming on April 2nd and May 1st (revalued and reassessed municipalities).
To read a copy of the opinion in the matter of 416 Route 10 Associates v. East Hanover Township, click here.
Note that Lancaster County underwent a Countywide Reassessment for 2018, setting all of the assessments in the County at 100% of true value. The final notices of reassessment were mailed on or about June 9, 2017. The deadline to appeal is 40 days from the date of mailing, thus if the notice has a mailing date of June 9, 2017 the deadline to appeal is July 19, 2017.
In many counties it has been decades since the last reassessment. Thus the assessments must be scrutinized closely to determine whether or not an appeal is worthwhile. This is especially true with income producing properties such as office buildings and warehouses, for which the assessments may indicate a market value not in line with the true value under current economic conditions.
Pennsylvania taxpayers should also be on the lookout for affirmative appeals filed to increase the assessments. These are often filed by school districts, which represent the largest receiver of taxes in most jurisdictions. This practice of cherry picking properties to appeal has thus far been unanimously approved by Pennsylvania courts and more districts each year have been engaging in this practice. For example, Philadelphia’s school district began filing affirmative appeals in 2016 for the 2017 tax year. The Pennsylvania Supreme Court has recently entertained oral argument on the question of appealing certain commercial properties, in this case apartment buildings, to the exclusion of any residential properties which may also be under assessed. A ruling for the school district will likely ensure that this practice will continue. The case is Valley Forge Towers Apartments N, LP, et als. v. Upper Merion Area School District, 49 MAP 2016.
If you own or pay the real estate tax on a property that is the subject of an affirmative appeal a thorough and immediate review of the appeal by a seasoned professional is critical to ensure that your rights and defenses in the appeal are protected.
Towns are more aggressively than ever seeking opportunities to generate additional revenue through revaluations, reassessments, by taxing formerly exempt not-for-profit property and a recent phenomenon of filing affirmative appeals to increase their own assessments.
The State of New Jersey provides you with an opportunity to address your concern through the filing of a tax appeal. Provided you are an owner, tenant, contract purchaser or mortgagee in possession, you may have standing to file an appeal of your property tax assessment, but you only have until April 1, 2017 (or May 1, 2017 in municipalities that are conducting revaluations or reassessments in 2017) to file a tax appeal. If the taxing district files an appeal against your property the filing of a timely Answer and/or Counterclaim (responsive pleading) may be appropriate.
Experience and responsiveness matters. If you would like an immediate no cost review of your tax assessment, please contact us.
New Jersey State Senate Bill S2836 seeks to amend, among other things, a state-wide filing deadline for county board real estate tax appeals from April 1st (or May 1st for revalued reassessment municipalities) to January 15th of each tax year. While the Legislation also amends the date of the mandatory notification of assessment postcards from February 1st to November 15th of the pre-tax year, the Bill more importantly revises the process of notifying taxpayers of the current year assessment by no longer requiring notification by mail to each taxpayer of the year's tax assessment. Rather, the amendment permits notification of all property taxpayers by posting information on the municipality’s internet website. Only if the municipality does not have a website or if the taxpayer makes a written request to the Tax Assessor must the Assessor provide notice of the new assessment by mail to the taxpayer by the amended date of November 15th.
The effect of the seemingly minor revisions concerning real property assessment practices will have a decidedly negative impact on smaller commercial and residential taxpayers asserting their constitutional right to challenge their assessments imposed by a local taxing authority. The practical impact of changing the filing deadline to January 15th will limit the attention of taxpayers to the upcoming filing deadline due to the intervening Holiday Season. More importantly, however, the Bill's proposal to allow posting of assessments on the municipality website rather than individual mailing to taxpayers may effectively eliminate the notice requirement for those taxpayers without access to computers or the internet. Due to the Bill's potential effect of limiting access to the Courts of the taxpayers with the least resources to contest their assessment, the proposed Bill must be opposed and rejected.
If a town where you pay real estate taxes is undergoing a revaluation or reassessment, it is particularly important to review whether or not a real estate tax appeal should be filed this year.
Even if your assessment was not substantially increased, your tax liability may increase dramatically, because many towns are increasing their effective tax rates while performing revaluations or reassessments that lower overall assessments. The new higher taxes may make the assessment excessive even if it was not substantially increased. The full impact of the reassessment will not be known until the new tax rate is established later in 2017 and at that time it will be too late to file an appeal. A list of towns currently scheduled for a revaluation/reassessment in 2017 is below.
The 2017 filing deadline for tax appeals in revalued or reassessed towns is May 1, 2017. For all other towns (outside of Monmouth County which is January 15th), the filing deadline is April 1, 2017. Contact us if you have any questions about the tax appeal process in general or your particular property.
The deadline for filing an appeal of some Monmouth County tax assessments is January 15, 2016.
Monmouth County has undertaken a demonstration project instituting new timeframes for filing appeals and placing assessments that are different from the rest of the state. This year you should have already received notices from your local town or municipality showing a 2016 tax assessment. These are similar to the notices that you have received in the past in January or February. If you feel your property is over-assessed you must file the appeal prior to the appeal deadlines set forth below.
If your property is assessed for $1,000,000 or less, you must file your appeal with the Monmouth County Board of Taxation on or before January 15, 2016. These appeals are slated to be heard in February through April, with the final assessments coming out in May or June.
This deadline is not discretionary and therefore cannot be waived by the town, board of taxation, or the Tax Court of New Jersey. The deadline may be extended if the town is delinquent in sending out the assessment notices due to a revaluation, reassessment or otherwise which delays the proper mailing of the assessment notice.
In addition, direct appeals to the Tax Court of New Jersey of assessments greater than $1,000,000 may be filed at any time prior to April 1, 2016. However, if your assessment is $1,000,000 or less, you must appeal to the Monmouth County Board of Taxation and the appeal must be filed no later than January 15, 2016.
A recent New Jersey Tax Court opinion again establishes that the Court is continuing to scrutinize attempts by municipalities to dismiss taxpayer’s complaints for failure to comply with an assessor’s request for financial information pursuant to N.J.S.A. 54:4-34, otherwise known as Chapter 91. The Chapter 91 statute requires that owners of income producing properties served with such a request are to respond within 45 days or risk dismissal of a tax appeal filed in the subsequent tax year. Given this severe sanction, municipalities have long utilized this statute to dismiss otherwise meritorious property tax appeals.
Our firm recently defeated such an attempt. Judge Nugent’s opinion in Villager Realty Associates v. Irvington Township emphasized the need for municipalities to strictly follow the guidelines set forth in the statute as well as the Court Rules. Here, we argued that the motion was filed too late, as the Court Rules required any Chapter 91 motion to be filed within 180 days following the filing of the complaint. In this case the motion was filed 184 days following the filing of the complaint, thus taxpayer’s argument was that the clear language of the rules must be followed and the motion denied on this basis. The municipality argued that the 180 day time limit should be counted from the date of service, rather than the date of filing. Under such a scheme, the motion would be considered timely.
Judge Nugent agreed with taxpayer’s position that there was no basis in law to support Irvington’s position and denied the motion. The Court emphasized the need for strict adherence to the statutory timelines and refused to relax the rule for the municipality here, even though they were merely four days late in filing the motion. This harkens back to the decision our firm obtained in another Chapter 91 motion last year, this time before Judge Andresini. In 440 Rt 17 Ptrns, LLC v. Hasbrouck Heights we successfully argued against dismissal by asserting that our client’s failure to respond to the Chapter 91 request was excused by the failure of the municipality to issue the request 45 days before the January 10 deadline to submit its assessment list. In a case of first impression, Judge Andresini agreed with our position that this deficiency on the part of the municipality remains even where a municipality is granted an informal extension of this deadline beyond January 10th.
Thus while a Chapter 91 Motion often results in the loss of a taxpayer’s ability to appeal, it does appear via these recent opinions that the Tax Court will not grant such a motion without clear adherence to the letter of the statute and rules. It remains vital that timely response to Chapter 91 demands be provided to the tax assessor and that any Chapter 91 motion is inspected closely to determine whether or not the municipality has strictly adhered to statutory requirements.
Over the last week you have undoubtedly read about the recent case decision and settlement involving Morristown Medical Center’s real estate tax exempt status. Judge Bianco of the Tax Court of New Jersey held with limited exceptions that the entirety of Morristown Hospital was not exempt from real estate taxation. The tax court decision and settlement of the Morristown case should serve as a warning to hospitals throughout the State that municipalities will in all likelihood be seeking similar type payments by way of real estate taxes or in lieu payments. In fact, at this week’s League of Municipalities Conference, taxation of exempt properties were a hot topic of discussion among New Jersey’s Township leaders.
What does all of this mean for the hospitals of New Jersey? Hospitals should pay particularly close attention to their assessment before the upcoming December 1st filing deadline for added/omitted appeals and the regular April 1st tax appeal filing deadline (or May 1st in revalued/reassessed municipalities) and any requests for information received from the municipality. Brach Eichler is uniquely situated in cases like this with a strong health care law background and real estate tax appeals department who has been following the latest developments in this case from the beginning.
Contracts entered into by the hospital and its employed physicians indicated a profit making purpose as they included incentive components which resulted in profit splits between the hospital and physicians.
While the Judge ruled that the Hospital was no longer exempt from real estate tax, he reserved on the issue of valuation pending a further trial. In a recent development last week, the town of Morristown and Morristown Medical Center settled the pending litigation. In general, the settlement provides for an initial payment of $10,000,000 for back taxes along with another $5,500,000 in penalties and interest payable over ten years. These payments settle the pending tax appeals. In addition the hospital will pay another $1,050,000 per year over the next ten years in prospective real estate tax payments.
The agreement further provided that the property will be taxed an assessed value of $40,000,000 to arrive at the tax payments. The taxable portion of the property amounts to approximately 440,000 square feet and includes: space leased private physicians and doctors groups, privately operated restaurants and cafes, gift shops, space used by doctors/groups to deliver emergency room, radiology, anesthesiology and pathology services, and garage space.
The winds of change are upon us and hospitals should be proactive in understanding the implications of this decision. If we can be of assistance in reviewing and responding to any tax assessment changes or overtures by municipal officials, please do not hesitate to contact us.

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