Two Recent Tax Court Opinions – One Focuses on Procedure, the Other on Substance

by: Anthony F. Della Pelle
15 Nov 2016

Here’s the latest, concerning two recently published opinions from the Tax Court of New Jersey:

In 1959 Highway 24, LLC v. Twp. of Wall, the Tax Court clarified the ambiguity as to the filing deadline for counties participating in the Assessment Demonstration Program (“ADP”).  The Legislature had enacted the ADP in 2013 and with the passage of this new law, the filing of appeals in counties participating in the ADP had also been amended to accelerate the deadline.  Here, the taxpayer received the notice of assessment for tax year 2016 on or about Feb. 4, 2016.  Thereafter, the taxpayer filed a direct appeal to the Tax Court on April 27, 2016.  Given that the Township had undergone a district-wide revaluation, the taxpayer presumed that the filing deadline of May 1 would control.  However, the filing deadline for counties participating in the ADP requires an appeal be filed by Jan. 15 or 45-days from the date of the bulk mailing of notification of assessment.  See N.J.S.A. 54:3-21(a)(2).

The Township filed a motion to dismiss taxpayer’s complaint for being untimely.  The Tax Court agreed that despite the district-wide revaluation, counties participating in the ADP are governed by the accelerated deadline in the amended statute.  Nonetheless, the Tax Court was persuaded that notice was not sufficiently provided instructing the taxpayer on how to appeal their assessment and thus violated plaintiff’s due process rights.  Although the notice of assessment received by the taxpayer here contained appeal instructions, there was no explicit language notifying the taxpayer about the appeal deadline for direct appeals to the Tax Court.  Moreover, the notice simply provided a link to the New Jersey courts online site which does not instruct or display a deadline with respect to direct appeals to the Tax Court.   Therefore, notwithstanding the taxpayer’s untimely filed complaint, the Tax Court extended the statute of limitations and denied the Township’s motion to dismiss in light of the Township’s defective notice of assessment.

The second published opinion by Judge Bianco in Merrill Creek Res. Co. Proj. Direct v. Harmony Twp. addressed the valuation of an approximately 840-acre property being used to support a water storage reservoir.  Both parties presented expert witnesses and both experts utilized the cost approach.  The opinion addressed the two variations of the cost approach utilized by the experts, the reproduction cost and the replacement cost.  The court found the Township’s expert more credible wherein the original costs of construction were trended forward to ascertain the current cost of reproducing the existing reservoir.  The court also noted that an entrepreneurial incentive should not have been included given that the motivation for developing the subject was not for profit.  The court however did accept plaintiff’s expert’s 15% deduction for functional obsolescence due to an “incurable superadequacy.”  In the end, the court arrived at a true value that was within the Ch. 123 limits and thus affirmed the assessments.

The published opinion of 1959 Highway 24, LLC v. Twp. of Wall can be read here, and the analysis of the cost approach and functional obsolescence of the second published opinion can be found here.