Property Tax: Does “Mere Retrofitting or Upgrading” Trigger an Added Assessment?

Judge Vito Bianco, pursuant to R. 2:5-6(c), filed an amplification letter expanding on his reasons for deciding to grant plaintiff, Plaza Twenty Three Station, LLC’s (“Plaza”) motion for summary judgment for tax year 2017 and denied its motion for summary judgment for tax year 2018. Plaza’s motion was to invalidate a 2017 added assessment imposed on its property by the Municipal Assessor and to reduce the 2018 assessment to the original 2017 assessment. This letter focused on the year 2017 added assessment.

Plaza’s arguments were: 1) the 2017 added assessment was prohibited by law because any work was completed outside the statutory time frame (prior to October 1, 2016); 2) any work completed was de minimis in nature; and 3) the added assessment was an unconstitutional spot assessment. Defendant, Township, argued the added assessment was appropriate and Plaza merely misinterpreted and misapplied the law.

In February 2017, Plaza purchased the Subject Property for $51,050,000. It was assessed at $24,446,100. The Municipal Assessor imposed an added assessment for $20,500,000 claiming it was for 1) flood proofing completed in May 2014, 2) work completed on tenant’s, Jersey Mike’s property in April 2016, 3) work completed on tenant PNC Bank’s property in May 2014, 4) work completed on tenant Vision Works’ property in January 2017 and 5) work completed on tenant Smash Burgers’ property in May 2017.

Judge Bianco held summary judgment was proper as the facts provided by Plaza were sufficient to meet the Brill v. Guardian Life Is. Co. of Am., 142 N.J. 520 (1995) standard and there was no genuine issue as to a material fact. An addition may only be imposed for a specific tax year when construction is completed after October 1 of the preceding year. Glen Pointe Assocs. V. Teaneck Twp., 10 N.J. Tax 598 (Tax 1989).  Here, the flood proofing was completed in 2014, work on PNC Bank completed in 2014 and work on Jersey Mike’s completed in early 2016 and thus, should not have been incorporated into the 2017 added assessment as they were completed before October 1, 2016. Only Vision Works and Smash Burger should have been considered for the 2017 added assessment.

However, Vision Works and Smash Burger do not constitute improvements to trigger an added assessment within N.J.S.A. 54:4-63.2 to 63.3. Judge Bianco held the work completed constituted “mere retrofitting, upgrading, or remediation of deferred maintenance. Fifth Roc Jersey Assoc., LLC v. Town of Morristown, 26 N.J. Tax 212 (Tax 2011). The work completed does not raise to the level of an “improvement” or “addition.” The work done at Vision Works included construction of two new bathrooms, water heater, gas piping, HVAC and lighting. The Smash Burger construction included two dining rooms, two kitchens, two bathrooms, gas piping and walk in refrigerators. Combined, the work constituted only 2.64% of the entire lease-able area and was considered de minimus. Moreover, the total cost of the work done was $461,700 which represents just 2.25% of the $20,500,000 added assessment placed on Subject Property. Accordingly, the 2017 added assessment was vacated.

A copy of Plaza Twenty Three Station v. Township of Pequannock can be found here.