Appeals Court Upholds Freeze Act Protection From Added Assessment
In an unpublished opinion released last week, Fifth Roc Jersey Associates, L.L.C. v. Town of Morristown, Docket No. A-5643-08T3 (App. Div. June 8, 2010), a New Jersey appeals court upheld a Tax Court decision granting a taxpayer’s application for “Freeze Act” protection against an added assessment. The property in question is a hotel in Morristown’s business district which, after becoming a Hyatt Hotel in recent years, was substantially renovated.
In August 2007, the parties reached a settlement of a 2007 tax appeal for an assessment of $16.5 million. Thereafter, defendant, Town of Morristown, imposed an $8 million added assessment for the 2008 tax year. In an affidavit the Town’s tax assessor stated that he inspected the property in September 2007 and saw that certain renovations were substantially complete and showed change in value between October 1, 2006 (the date of value for purposes of the 2007 tax year) and December 31, 2008. In February 2009, plaintiff, Fifth Roc, filed an application for judgment under the Freeze Act (a New Jersey statute which “freezes” a tax assessment for two years after a successful appeal or reduction in a tax assessment by settlement), in order to fix the assessment at the $16.5 million agreed upon by the parties in August 2007. The Town argued that Fifth Roc was precluded from challenging the validity of the added assessment because it failed to file a timely direct appeal. The Tax Court proceeded with its review of whether the Freeze Act was applicable, declining to address the reasonableness of the amount of the added assessment. The court determined that Fifth Roc overcame the presumption of validity for the added assessment and that the Town failed to demonstrate a change in value necessary to defeat the Freeze Act application and entered a judgment fixing the assessment for 2008 and 2009 at $16.5 million.
On appeal, the Town again argued that Fifth Roc’s failure to file a timely appeal of the added assessment deprived the Tax Court subject jurisdiction to determine the applicability of the Freeze Act. The Appellate Division rejected the Town’s arguments and affirmed for the reasons set forth by the Tax Court.
