Appeal Involving Apartment Complex Reaffirms Presumptions

by: Anthony F. Della Pelle
18 Sep 2012

A New Jersey Tax Court judge recently issued a decision reducing the 2006, 2007 and 2008 property tax assessments regarding a 32-unit apartment building in Bergen County.   In Uni0n Manor Associates v. Rutherford, the Honorable Patrick DeAlmeida, PJTC relied upon and reaffirmed two important precedents in ordering reduced assessments for this income-producing property.

First, the Tax Court recognized that while municipal property tax assessments are presumed to be valid in New Jersey, once the that presumption is overcome with sufficient evidence to rebut the validity of the assessment, then the burden is on the taxpayer to prove, by a preponderance of the evidence, that the assessment is erroneous.  Ford Motor Co. v. Tp. of Edison, 127 N.J. 290, 312-315 (1992).

Second, the court affirmed that the income method of valuation is the preferred method of appraising income-producing properties such as apartment buildings.  Parkway Village Apartments v. Tp. of Cranford, 108 N.J. 266, 270 (1987), and recognized that there is a presumption in real estate tax appeals that apartment buildings are well-managed and actual rents realized represent prima facie evidence of the market rent, or “economic” rent in performing an income method of appraisal.  Parkview Village Apts. v. Borough of Collingswood, 62 N.J. 21, 34-35 (1972).  This holding was particularly important because, in the Union Manor case, the municipal tax assessor relied in part upon imputed rents which exceeded the actual rental history of the subject property in arriving at the assessed value.

After applying these principles and weighing the evidence presented by the experts for both the taxpayer and the municipality, the Tax Court rendered judgment reducing the assessment for each of the three years under appeal.  While the amount of reduction was not significant, the resulting assessments represented more of a “win” for the taxpayer because the municipality had filed counterclaims to raise the assessment in 2 of the 3 years under appeal, and those counterclaims were therefore denied.