Tax Court to Tax Assessors: Time to Choose a Side!

A recent opinion by New Jersey Tax Court Mala Sundar, approved for publication, may force at least some of New Jersey’s municipal tax assessors to change the way they do business.  The case, decided April 2, 2019, involved a motion by the Township of Hazlet to bar a property owner’s appraisal expert because that expert is also employed as a tax assessor in another taxing district, Wall Township, within the same county where the property under appeal was located.  It was the position of Hazlet that the appraiser’s employment as an assessor in another town created an “undeniable and impermissible conflict of interest” by appearing on behalf of a taxpayer challenging the assessment of a another tax assessor.  Hazlet thus argued that there must be a “bright-line division so that an assessor cannot testify to an opinion of value on behalf of a property owner” because any such opinion would represent an attack on the validity of an assessment which violates the public trust in the integrity of government officials and their positions.  The property owner opposed the application, contending (a) that its expert had no confidential information from his service to Wall Township as its tax assessor that could prejudice Hazlet or its assessor, (b) that barring any assessor from being able to serve as an appraisal expert for property owners in other towns would create an intolerable litigation disadvantage by limiting the number of appraisers available to taxpayers; and (c) would violate the expert’s First Amendment rights.

The motion was granted by the Tax Court, resulting in an order barring the appraiser from testifying.  The court’s decision focused upon the conclusion that a tax assessor is a public/government employee who acts as an agent of the Legislature, employed by a municipality but subject to supervision by the State and County Boards of Taxation, and who therefore is held to “high levels of public trust” in performing is or her duties, and is expected to exercise a “high level of ethics and professionalism”.  While the local property taxation statute, N.J.S.A. 54:4-1, et seq., and N.J.S.A. 54:51A-1, et seq., contain no standards or codes of ethics or professionalism for assessors, the court noted that applicable regulations to proceedings before County Boards of Taxation do prohibit an assessor from testifying at County Tax Board hearings against another assessor.  N.J.A.C. 18:12A-1.9(1).    In addition, relevant guidelines under the Local Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.25, were found to apply and would bar a public employee such as a tax assessor from engaging in any professional activity which “is in substantial conflict with the property discharge of his duties in the public interest”, of from engaging in any activity which creates even an appearance of a conflict of interest.  Other industry ethical guidelines were also examined in the court’s detailed opinion, as was a 1979 opinion by the New Jersey Attorney General which  found it not advisable to have an assessor undertake any activity which could present “even an appearance of a breach of confidence.”

The Tax Court ultimately granted the motion to disqualify the appraiser.  The court concluded that the potential for a breach of the public trust, or even an appearance of a breach of such public trust, was present and justified holding that the integrity of the office of a local tax assessor required the avoidance of such appearance of impropriety, notwithstanding its acknowledgement that its holding disqualifying an appraiser from testifying for a taxpayer because that appraiser is also a tax assessor in another town, could limit the number of appraisers who will choose to represent taxpayers compared to those appraisers who will choose to serve as municipal assessors in the future.

How this opinion will or may affect the employment decisions of licensed tax assessors in New Jersey is unknown, but absent a different result should the taxpayer in the Hazlet matter file an appeal, this case will seemingly force appraisers who are also tax assessors to choose sides in the future.  Also unknown is whether the decision may have an impact upon an the ability of an appraiser who is also a tax assessor to testify against any public agency in any other type of litigation proceeding.  This will be an interesting one to follow.

A copy of the Tax Court’s opinion  in the matter VNO 1105 State Hwy 36 LLC, v. Township of Hazlet, Docket No. 004038-2013 is available here.