Experts’ Opinions Accepted Over Town’s Objections

by: Anthony F. Della Pelle
9 Apr 2013

Plaintiff Route 21 Associates challenged the assessments imposed by Defendant Township of Belleville on vacant land for tax years 2008, 2009, and 2010. The matter was scheduled for trial where the Tax Court accepted each party’s two witnesses as experts, one in real estate appraisal and one in environmental remediation, and admitted their reports into evidence. Both valuation experts agreed that the subject property’s unimpaired value should first be determined by using the sales comparison approach and that the unimpaired value should be reduced by the costs of remediation. The environmental experts agreed that a 6% discount factor should be applied to the subject property’s 10 year remediation costs and that the unimpaired value should be reduced by the discounted costs, plus the actual or already expended environmental costs, plus 10% for entrepreneurial risk. They differed in the method of offsetting the actual and projected costs for the unimpaired value.

At the close of proofs, Belleville moved to dismiss Route 21’s complaints pursuant to R. 4:37-2 on the grounds that Route 21’s experts each provided an impermissible “net” opinion.  Specifically, Belleville argued that Route 21’s valuation expert was unfamiliar with his sales, his adjustments to the sales was too great and rendered the information meaningless, and his reliance on the environmental experts opinion rendered his opinion a net opinion because the environmental report was a net opinion.

The Tax Court denied the motion. First, the court found the opinion was not flawed and inadmissible when some particular facts or conditions were not accounted for there were other substantive bases of support therein.  Similarly, the court noted that excessive adjustments went to the question of the expert’s credibility, and the weight to be given such adjustments depended on the facts and reasons supporting the appraiser’s conclusions.  Finally, the court found that Route 21’s environmental expert supported the conclusions in his report, and adequately explained the facts supporting those conclusions.

After reviewing all of the evidence presented to the court, the subject property’s fair market value as impaired was determined for each of the tax years under appeal, and an assessment was established by applying the Chapter 123 ratio as required.

A copy of the Tax Court’s opinion in Route 21 Associates v. Township of Belleville may be found here.

For more blog posts on environmental issues and appraisal report issues, please see the following:

“Special” Valuation Rules N/A To Environmentally Remediated Property

City of Elizabeth Ordered to Pay Motel Owner from Environmental Escrow

Environmental Impacts in Real Estate Valuation Litigation

Expert’s “Gut Feeling” on Costs Survives Dismissal Claim

Court Disapproves Averaging of Comparable Sales