James and Donna Cook v. Bordentown Township

• Court: New Jersey Tax Court
• Decided: November 14, 2018
• Docket: 010020-2017
• Status: Unpublished

Opinion

TAX COURT OF NEW JERSEY

Kathi F. Fiamingo 153 Halsey Street, 8th Floor Judge P.O. Box 47025 Newark, New Jersey 07101 Tel: (973) 648-2921 Fax: (973) 648-2149

NOT FOR PUBLICATION WITHOUT APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS

November 13, 2018

John C. Penberthy, III, Esq. 113 White Horse Road West, Suite 2 Voorhees, New Jersey 08043

Eileen K. Fahey, Esq. 7A North Main Street, Suite 1 Post Office Box 212 Medford, New Jersey 08055

Re: James and Donna Cook v. Bordentown Township Docket No. 010020-2017

Counsel:

This letter constitutes the court’s opinion following trial in the above-referenced matter

challenging the 2017 tax year assessment on the plaintiffs’ single-family residence. For the

reasons stated more fully below, the court affirms.

I. Procedural History and Factual Findings

The court makes the following findings of fact and conclusions of law based on the

evidence and testimony offered at trial in this matter.

James and Donna Cook (“plaintiffs”) are the owners of the single-family home located at

56 Hogback Road, in the Township of Bordentown, County of Burlington and State of New

Jersey. The property is identified on the tax map of the Township of Bordentown as Block 27,

* Lot 10.01 (the “subject property”). For the 2017 tax year, the subject property was assessed as

follows:

Land: 224,000 Improvements: 151,600 Total 375,600

Plaintiffs filed a petition of appeal challenging the 2017 tax year assessment on the subject

property with the Burlington County Board of Taxation, which affirmed the assessment. Plaintiffs

subsequently filed a timely appeal of the county board judgment with the Tax Court. The

Township did not file a counterclaim.

Only plaintiffs offered the testimony of a State of New Jersey certified general real estate

appraiser, who was accepted without objection as an expert in the field of real estate valuation

(“plaintiffs’ expert”). The expert prepared an appraisal report, which was admitted into evidence

without objection. The Township did not offer any testimony nor did it present an expert opinion

at trial.

II. Description

The court finds that the subject property is a single-family home, built approximately 106

years ago. The home consists of a total of eight rooms, including four bedrooms and two full

bathrooms, an unfinished basement containing 509 square feet, and an attached carport. The

floors, walls, bath floor, doors are noted as being in average condition. City water and sewer are

not available and the subject property is serviced by a well and cesspool for waste disposal. The

latter is noted to have a holding tank of 300 gallons. The gross living area of the subject property

is 2,133 square feet.

The subject property is located in an R-40, low density single family, zone and is noted as

in compliance. The subject property consists of approximately 7.39 acres, it has 305 feet of

2 frontage along Hogback Road. The subject property is across the street from the Garden State

Youth Correctional Facility, a New Jersey Department of Corrections state prison (the “DOC

facility”).

III. Conclusions of Law

“Original assessments and judgments of county boards of taxation are entitled to a

presumption of validity.” MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J.

Tax 364, 373 (Tax 1998). “The appealing taxpayer has the burden of proving that the assessment

is erroneous.” Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985) (citing Riverview

Gardens v. North Arlington Borough, 9 N.J. 167, 174 (1952)). The evidence must be “definite,

positive and certain in quality and quantity to overcome the presumption.” MSGW Real Estate

Fund, LLC., 18 N.J. Tax at 373.

The “presumption is not simply an evidentiary presumption serving only as a mechanism

to allocate the burden of proof. It is, rather, a construct that expresses the view that in tax matters,

it is to be presumed that governmental authority has been exercised correctly and in accordance

with law.” Id. at 374 (citing Powder Mill, I Assocs. v. Hamilton Township, 3 N.J. Tax 439 (Tax

1981)). “The presumption of correctness . . . stands, until sufficient competent evidence to the

contrary is adduced.” Little Egg Harbor Township v. Bonsangue, 316 N.J. Super. 271, 285–86

(App. Div. 1998). A taxpayer can only rebut the presumption by introducing “cogent evidence”

of true value. That is, evidence “definite, positive and certain in quality and quantity.” MSGW

Real Estate Fund, LLC, 18 N.J. Tax at 413 (quoting Aetna Life Ins. Co. v. Newark, 10 N.J. 99

(1952)). Therefore, at the close of plaintiff’s proofs, the court must be presented with evidence

that raises a “debatable question as to the validity of the assessment.” Id. at 376.

3 The court, in evaluating whether the evidence presented meets the “cogent evidence”

standard, “must accept such evidence as true and accord the plaintiff all legitimate inferences

which can be deduced from the evidence.” Ibid. (citing Brill v. Guardian Life Insurance Co. of

America, 142 N.J. 520 (1995)). However, the evidence presented, when viewed under the Brill

standard “must be ‘sufficient to determine the value of the property under appeal, thereby

establishing the existence of a debatable question as to the correctness of the assessment.’” West

Colonial Enters, LLC v. City of East Orange, 20 N.J. Tax 576, 579 (Tax 2003) (quoting Lenal

Properties, Inc. v. City of Jersey City, 18 N.J. Tax 405, 408 (Tax 1999), aff’d, 18 N.J. Tax 658

(App. Div. 2000), certif. denied, 165 N.J. 488). “Only after the presumption is overcome with

sufficient evidence . . . must the court ‘appraise the testimony, make a determination of true value

and fix the assessment.’” Greenblatt v. Englewood City, 26 N.J. Tax 41, 52 (Tax 2011) (quoting

Rodwood Gardens, Inc. v. City of Summit, 188 N.J. Super. 34, 38–39 (App. Div. 1982)).

Here, defendant moved to dismiss at the close of plaintiffs’ case. The court found that

plaintiffs’ expert and the facts upon which he relied, raised a debatable question regarding the

correctness of the assessments. However, concluding the presumption of validity has been

overcome does not equate to a finding by the court that the assessment is erroneous. Once the

presumption has been overcome, “the court must then turn to a consideration of the evidence

adduced on behalf of both parties and conclude the matter based on a fair preponderance of the

evidence.” Ford Motor Co. v. Edison, 127 N.J. 290, 312. The court must be mindful that “although

there may have been enough evidence [presented] to overcome the presumption of correctness at

the close of plaintiff’s case-in-chief, the burden of proof remain[s] on the taxpayer…to

demonstrate that the judgment under review was incorrect.” Id. at 314-15 (citing Pantasote Co.,

100 N.J. at 413).

4 IV. Valuation

“Whenever a market value opinion is developed, highest and best use analysis is

necessary.” Appraisal Institute, The Appraisal of Real Estate, 42 (14th ed. 2013); see also Ford

Motor Co., 127 N.J. at 300–01. “Even the simplest valuation assignments must be based on a solid

understanding of . . . the highest and best use of the real estate.” Id. at 41. At a fundamental level,

the value of a parcel of land is dependent upon use and should therefore “be examined for all

possible uses” and the use “yield[ing] the highest return should be selected.” Inmar Associates

Inc. v. Township of Edison, 2 N.J. Tax 59, 64 (Tax 1980) (citing The Appraisal of Real Estate, at

43 (7th ed. 1978)).

Here, plaintiffs’ expert testified and submitted in his report that the highest and best use of

the subject property was residential. Through cross-examination, the expert noted that subdivision

was possible but not ideal, and perhaps cost prohibitive, given the location of the subject property’s

cesspool and the requirement for a variance due to the limited frontage available. The report details

the various factors that support the expert’s conclusion and a summary of his of highest and best

use analysis, albeit brief, was included in the appraisal report. The court accepts the appraiser’s

highest and best use as residential.

V. Plaintiffs’ Proofs

The plaintiffs’ proofs were made up of the testimony and report of their expert appraiser.

His report indicated that the market approach was employed due to the reliance on recent

comparable sales. Plaintiffs’ expert testified that he relied on six “comparables” in reaching his

conclusion of value 1. Neither the cost nor income approach was developed for his report. The

1 Plaintiff’s expert testified, and his report noted, that comparable “#6”was in fact a listing and at the time of his inspection of the subject property it had not sold or gone under contract. Accordingly the court will not consider this a comparable.

5 expert notes in his report that the cost approach was “judged to be unreliable due to the lack of

recent land sales and of and of available single family building lots” in the area. Likewise, the

income approach was deemed inappropriate due to lack of data and the minimal local rental

market. The primary parameters for the search of comparables included properties in similar

neighborhoods and properties with similar functional utility and appeal. To this end the appraiser

selected comparables in and around Bordentown and Chesterfield Townships and specifically

looked for those with similar bedroom count, age, and style.

The comparable sales chosen by plaintiffs’ expert all occurred within an eighteen-month

period preceding the valuation date and the sales prices ranged from a high of $250,000 to a low

of $210,000. The adjusted sales prices ranged from $210,000 to $266,300. He reached a

conclusion of value of $255,000 on the subject property.

Plaintiffs’ expert testified that he attempted to locate comparable sales of property within

a close proximity to a DOC facility but encountered difficulty. Indeed, he noted in his report that

aside from the more urban setting of facilities in Trenton, NJ, the facility adjacent to the subject

property is the only one that has proximate residential uses. The expert testified that comparable

“#5” was selected due to its similarity to the subject property, being both similar in acreage and

closeness to the DOC facility. Plaintiffs’ expert did concede however that comparable “#5” was

not exposed to the open market and that he was unable to find much information on the particulars

of the improvement thereon. Nonetheless, in his report the expert notes that he found the sale

“significant” and the sale was “given some weight.”

The expert made gross adjustments to each of his comparable sales, ranging from 0.8% to

18%. The expert report notes that “some sales may have had superior or inferior updates” and

“were adjusted accordingly for condition when necessary.” He made living area adjustment at $67

6 per square foot. The expert report revealed that the comparable sales data used in his appraisal

report was collected from the MLS, assessor records, and supported by interviews with local real

estate agents.

Plaintiffs’ expert testified that he made no explicit adjustment for the proximity of the DOC

facility. On cross examination the expert was challenged on this, the defendant contending that he

did in fact make an adjustment. The expert testified, and his report reflects, that while he did not

make an itemized adjustment, the DOC facility’s proximity pushed his conclusions to the lower

end of the range. He noted again, the dearth of comparables with the same conditions.

However, despite the expert’s testimony that there was no adjustment for proximity to the

DOC facility and that his consideration was “quantitative” and not qualitative, it is clear from his

report that an unexplained and undisclosed adjustment was made. In his narrative, the expert stated,

“[s]ome comparables had inferior acreage. A trade-off of acreage for proximity to prison was taken

and no adjustments for location, site, or view were made.” Thus, the expert is stating that an

adjustment for the proximity of the DOC facility was effected. Due to the other adjustments

creating a washing out affect he chose, perhaps for the sake of brevity, to leave his numbers

undisturbed. However, the quantification of the “trade-off” of acreage for proximity to the DOC

facility was not presented to the court nor set forth in the report and the court cannot evaluate the

credibility of the adjustment made by the expert.

“[D]ifferences between a comparable property and the subject property are anticipated.

They are dealt with by adjustments recognizing and explaining these differences, and then

relating the two properties to each other in a meaningful way so that an estimate of the value of

one can be determined from the value of the other.” U.S. Life Realty Corp. v. Jackson Township,

9 N.J. Tax 66, 72 (1987) (emphasis added). The problem in the case at bar is the failure of the

7 plaintiffs’ expert to fully recognize and explain the differences in his chosen comparables. The

court is unable to determine with any certainty an estimate of value from the comparable of the

subject property. Since the adjustment was made, but not quantified and disclosed, his estimate of

value is unsupported and must be rejected.

The court acknowledges its obligation “to apply its own judgment to valuation data

submitted by experts in order to arrive at a true value and find an assessment for the years in

question.” Glen Wall Associates v. Township of Wall, 99 N.J. 265, 280 (1985) (citing New

Cumberland Corp v. Borough of Roselle, 3 N.J. Tax 345, 353 (Tax 1981)). In order to do so,

however, the court must be presented with credible and competent evidence from which a finding

of true value may be adduced. Plaintiffs failed to provide this court with competent evidence from

which true value can be obtained.

VI. Conclusion

The court affirms the judgment entered by the Burlington County Board of Taxation.

Very truly yours,

Honorable Kathi F. Fiamingo