Court Opinion

ID: 9900288
Source: CourtListenerOpinion
Date Created: 2023-11-18 22:08:39.166056+00
Date Added: 2024-06-11T09:21:03.547034
License: Public Domain

TAX COURT OF NEW JERSEY
JOSHUA D. NOVIN                                                 Dr. Martin Luther King, Jr. Justice Building
     Judge                                                       495 Dr. Martin Luther King, Jr. Blvd., 4th 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. Leabern

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-month 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
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located at 192 Claremont Avenue, Montclair Township, Essex County, New Jersey. The property

is identified on defendant’s municipal tax map as Block 3201, Lot 15 (the “subject property”).

The subject property’s lot comprises approximately 0.3283 acres.

         The subject property is improved with a four-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. According to one of

plaintiff’s partners, 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 into the roof, holes were cut into the floor, exploratory 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 “Notice of Unsafe Structure” due

to the extensive fire damage. Following the fire, defendant’s municipal tax assessor reduced the

subject property’s improvement assessment to approximately $250,000 for the 2016, 2017, and

2018 tax years.

         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 The work undertaken by the property restoration firm included demolition, fire

cleaning, structural repairs, construction repairs/replacements (electrical, plumbing, framing, fire-

proof insulation, drywall, and painting), exterior brick repointing, updating the building to satisfy

1
    Nine of these permits were apparently applications for Certificates of Occupancy.
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current building code requirements (hardwiring smoke detectors, installation of carbon monoxide

detectors, etc.), and window repairs/replacements. However, because 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 replacement of the subject property’s elevator and the subject property’s

boiler.

          According to the property restoration company’s representative, it “substantially

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 “the 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 repairs 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) March 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 the bubbling that occurred with the newly installed vinyl flooring and the

2
    Copies of the punchlists were not offered during trial.
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various mechanisms 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”;

(viii) “repair fire damaged Apt. #41”; and (ix) “repair of fire damaged Apt. #42.”

       In 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 unit 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 Habitability dated December 27,
2018.
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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, plaintiff’s property manager credibly testified that he was present

during each of the Certificate 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

items.    Thereafter, plaintiff’s building, plumbing, and electrical contractors completed the

remaining punchlist items. 8

         On or about June 8, 2019, plaintiff signed an Exclusive Right to Rent/Lease Agreement

with Keller Williams Realty to begin marketing the subject property for lease. According to

plaintiff’s property manager, the 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 apartments 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, limiting the potential

damage.

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

according 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 March 1, 2019.
7
  Plaintiff’s property manager is also plaintiff’s real estate agent.
8
  During trial, plaintiff 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.
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installation of dehumidifiers and air exchangers. As a result of the valve failure, kitchen cabinetry

and drywall in two apartments was removed to enable plaintiff’s plumbing contractor to make

repairs. The valve failure also caused damage to approximately ten feet of cast iron piping running

between two apartments, requiring replacement by plaintiff’s plumber. These 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.

       Thereafter, the property restoration firm replaced the water damaged drywall, flooring, and

painted. According to the property restoration firm’s representative, these 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 was 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

August 2019.
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       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. Defendant’s tax

assessor testified that, in or about the “spring or summer of 2019,” he and an appraiser retained by

defendant to perform “commercial apartment valuations” conducted an inspection of the subject

property for purposes of determining the subject property’s total added assessment. Defendant’s

municipal tax assessor prorated 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 the nine-month added assessment

from the first day of the month following the month when the last Certificate of Habitability 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 matters 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 the 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 inappropriate.
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Docket Nos. 000166-2020 and 007681-2020
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       Additionally, plaintiff argues that it experienced difficulties leasing the subject property

and attaining a stabilized occupancy due to the COVID-19 pandemic. Therefore, plaintiff asserts

that in arriving at the subject property’s 2020 tax year local property tax assessment, a higher

vacancy allowance should 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

       As expressed by our Supreme Court, a fundamental tenet of the New Jersey Constitution

of 1947 was to ensure 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 virtue 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 this constitutional principle, our 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 real 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
               required.

               [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
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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, if 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 following completion

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
               October 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.
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               [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 assessor 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., Inc. 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 assumed

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.
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       Rather, our courts have employed two tests to gauge whether the building or structure is

substantially ready for its intended use. The economic viability test requires the court to discern

whether construction has “reached the point where an economically 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 Transmission 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 remove the water from, and to clean the

transmission pipeline 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 that 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:

               Assuming 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
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               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 citations omitted).]

       Significantly, the court emphasized 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 on

or about December 27, 2018, defendant’s housing inspector inspected the subject property and

issued Certificates of Habitability to plaintiff for thirteen apartments. In addition, on or about

January 26, 2018, defendant’s Construction Code Division issued Certificates of Occupancy for
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eight apartments. The evidence further disclosed that on or about March 1, 2019, defendant’s

housing inspector reinspected 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 repairs to the subject property identified under five separate punchlists.

Thereafter, plaintiff’s own contractors performed the balance of the punchlist repairs. Notably

however, the 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 replacements of shower valves,

kitchen sink valves, toilet flushometers, radiator valves, lighting fixtures, and the cleaning of

various apartments.

       The court readily acknowledges plaintiff’s laudable goal to “to make sure that the building

was ready for occupancy,” and 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 setbacks.

. . .” However, that is not the barometer 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 centers on whether the building or structure could be used for its intended purposes, or

whether it is an economically viable structure.

       Plaintiff’s choice to delay leasing until all potential repair issues in the subject property

were resolved was purely a business decision. Plaintiff’s election to attempt to minimize the risks

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
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substantially complete a fallacy.

       After considering all the above-stated evidence, the court finds that in March 2019, the

subject property was substantially ready for the use for which it was 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 water valve failure was truly an unfortunate event,

the court’s review of plaintiff’s invoices 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 to 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 affected apartments needed

to be conducted.

       Additionally, 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 was unclear
from the trial record when Certificates of Habitability were issued for the other eight apartments.
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month prorated 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 property tax assessment

       “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 correctly and

in accordance with law.” Pantasote Co. v. Passaic City, 100 N.J. 408, 413 (1985).                The

presumption of validity applies “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 obligation. 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 legitimate 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).

However, the evidence presented, when viewed under the Brill standard “must be ‘sufficient to

determine the value of the property under appeal, thereby establishing the existence of a debatable

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).

       Only after a court has concluded that it been presented with evidence sufficient to overcome

the presumption of validity, must it “appraise the testimony, make a determination of true value

and fix the assessment.” Rodwood 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, were 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 plaintiff’s partners. That testimony revealed that after commencing

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) eleven 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-

       Plaintiff’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 surrounded by buildings that

have on-site parking, and it is very difficult to park in the town.” The property manager added that

“there were other factors that came up as far as renting, people not meeting criteria, thresholds for

income, etc.”

       Plaintiff’s partner similarly shared that the feedback received 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, following 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

subject property’s stabilized operating expenses or the capitalization rate that should be employed

in deriving a value to the subject property for the 2020 tax year.

       In short, plaintiff has offered no meaningful evidence demonstrating that the subject

property’s 2020 tax year assessment was inaccurate, or that defendant’s method of assessment was

so palpably egregious and defective that the presumption of validity should not apply. Plaintiff

has not presented any cogent evidence of the subject property’s value 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 plaintiff 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.