Property Owner Keeps Tax Abatement After Municipality Failed to “Turn Square Corners”

 The New Jersey Tax Court recently rejected the City of Millville’s  argument that a five-year tax exemption and abatement awarded by the City’s tax assessor and ratified by its governing body should be rescinded because the property owner filed for the abatement four days late.  The property houses a Lowe’s Home Center, and is located in both an Urban Enterprise Zone  and in an “area in need of rehabilitation” pursuant to the Five-Year Exemption and Abatement Law, N.J.S.A. 40A:21-1 et seq.  Lowe’s decided to build at the property following a financial analysis that included the subject tax exemption and abatement, and after it entered into a development agreement with the City and a developer.

The Tax Court found that the late filing was caused by errors on the part of the assessor.  Specifically, the assessor erred by claiming the filing deadline started when the certificate of occupancy issued rather than when the property was actually ready for its intended use.  Additionally, the assessor’s office mailed the exemption paperwork to an office in Washington instead of the North Carolina address provided in the development agreement between Lowe’s and the City.   Finally, the Tax Court disagreed with the City’s position that it should be able to rescind an exemption or abatement that it approved if the City later learns that the application was filed passed the applicant’s deadline.  The Tax Court found it more equitable to place the burden on the City to investigate these matters before approving an application, rather than later imposing an added tax burden on the property owner.  The Tax Court also stated that the statutory framework and development process would be undermined if municipalities could reverse its position after an application has been approved.

 A copy of the Tax Court’s opinion in Lowe’s Home Centers, Inc., v. City of Millville, ___ N.J. Tax ___ (Tax Ct. 2010) can be found here.

 The author wishes to acknowledge the assistance of Cory K. Kestner, Esq., of McKirdy & Riskin, PA, in the preparation of this article.