Apartment Complex Wins Assessment Reductions at Trial
A New Jersey Tax Court judge reduced the assessment for two of the three years under appeal on an apartment complex in the Town of Phillipsburg. The Subject Property contained 96 apartment units on a 4.19 acres parcel in a residential zone. At trial, the parties agreed that the highest and best use of the property was as an apartment complex, and that the income approach to value was the appropriate method of valuation. The parties differed though on the appropriate vacancy and collection loss, reserves for replacements, and capitalization rates. Upon review of the testimony and evidence set forth at trial, the judge agreed with the property owner’s vacancy and collection loss, and reserves for replacements. However, the judge found the Town’s expert’s capitalization rate analysis more credible. Once these expenses were applied to the property’s income, the court affirmed the assessment for 2009, but found reductions were necessary for the 2010 and 2011 tax years.
A reduction in an assessment is only possible after a property owner rebuts the presumption of correctness granted to the assessment. To be successful, a property owner must present sufficient evidence to rebut the validity of the assessment, and then the burden is on the taxpayer to prove, by a preponderance of the evidence, that the assessment is erroneous. Ford Motor Co. v. Twp. of Edison, 127 N.J. 290, 312-315 (1992). The municipality will then have an opportunity to present its own evidence to support its value of the subject property before the judge weighs the evidence to decide which witness presents the more credible evidence and establish an assessment based on the information before the court.
A copy of the Tax Court’s unpublished opinion in Corliss Apartments L.L.C., v. Town of Phillipsburg, (November 1, 2013), can be found here.
For more on evidence issues in condemnation cases, please see the following blog posts:
Appeal Involving Apartment Complex Reaffirms Presumptions
Hilton Hotel Assessment Reduced Following Trial
