Review of Decisions Relating to the Tax Court of New Jersey Sept. 2013 to Sept. 2014

Review of Decisions Relating to the Tax Court of New Jersey

Sept. 2013 to Sept. 2014

Hon. Patrick DeAlmeida, P.J.T.C.

Composition of the Tax Court

• By statute, there can be no less than 6 and no more than 12 Tax Court Judges.

• Statute requires Tax Court Judges to be chosen for their “qualifications, knowledge, and experience” in the area of taxation.

• Nominated by Governor, confirmed by Senate, tenure vote after 7 years.

• Same terms of office, pension rights, and compensation as Superior Court Judges.

Assigned to Tax Court

• Hon. Patrick DeAlmeida, P.J.T.C., Trenton• Hon. Vito L. Bianco, J.T.C., Morristown

• Hon. Mala Sundar, J.T.C., Trenton• Hon. Joseph A. Andresini, J.T.C., Hackensack• Hon. Christine M. Nugent, J.T.C., Newark• Hon. Mary Siobhan Brennan, J.T.C., Newark• Hon. Kathi F. Fiamingo, J.T.C., Newark• Hon. Joshua D. Novin, J.T.C., Newark

Assigned to Appellate Division

• Hon. Marie E. Lihotz, J.A.D.

Assigned to Law Division

• Hon. Angelo J. DeCamillo, J.T.C.(Camden, Family)

• Hon. Joseph L. Foster, J.T.C.(Ocean, Criminal)

Case Filings

• As of August 25, 2014:

14,353 Complaints Docketed during calendar year 2014

Approximately 200 Additional Complaints to be Docketed

Case Filings

Approximately 500 fewer Complaints than last calendar year.

Case Dispositions

• July 1, 2013 to June 30, 2014 Court Year:

• 18,544 Complaints docketed

• 15,432 Matters closed

• Approximately 2,200 per Judge

Case Filings

• As of July 31, 2014

• 47,644 Pending Matters

• 6,000 per Judge

Exemptions

Charitable Purposes Exemption

• Advance Housing, Inc. v. Township of Teaneck, 215 N.J. 549 (2013).

• Supportive housing for individuals with psychiatric disabilities.

• Not only housing, but mental health, occupational and life management services.

Advance Housing, Inc. v. Township of Teaneck

• No question that owner of the property is non-profit. Funded primarily by government agencies.

• Residents must meet income restrictions and have experienced institutionalization, homelessness or risk of homelessness because of psychiatric disability.


• Fair market rent as determined by HUD. However, residents pay 30% of their income – balance paid by HUD.

• Participation in services is encouraged, but not required.

• The municipalities denied exemption under N.J.S.A. 54:4-3.6.


• The Tax Court denied Advance Housing’s appeal, finding insufficient evidence of a nexus between the housing and the supportive services.

• The Appellate Division reversed.


• Supreme Court: The property is actually used for a charitable purpose.

• Without Advance Housing’s services, the residents would likely depend on the State to provide shelter and services at public expense.


• There is no requirement that supportive service be mandatory or that there be an “institutional setting” for the exemption to apply.

• The Court noted that all residence participate in service and left open the question of apportionment of the exemption if some residents opted out.

Moral and Mental Improvement Exemption

• Phillipsburg Riverview Organization v. Town of Phillipsburg, 27 N.J. Tax 188 (App. Div. 2013), certif. denied.

• Key question: Whether use of the property satisfied the requirement that it not be used for profit.

Phillipsburg Riverview Organization

• Non-profit organization owns building including a classroom, gallery-shop space, artist-in-residence studio, office, and ballroom.

• Building used for dance classes, theater workshops, art classes.


• Some groups charged rent.

• Admission fee for gala receptions that showcased artwork.

• Art sold at gala; Plaintiff received a percentage of sales.

• Similar arrangement for local artists on a rolling basis.


• Plaintiff also received 50% of the fee charged or poetry readings and visual art classes.

• Because the artists, dancers, teachers, etc. that used the building were earning a profit, and given a portion of their proceeds to the property owner, the exemption did not apply.

Compliance with Zoning

• Chai Center for Living Judaism v. Township of Millburn, 2013 N.J. Super. Unpublished Lexis 2668 (App. Div. 2013), certif. denied, 217 N.J. 292 (2014).

• Residence used as a synagogue.

• Exemption Granted.

Compliance with Zoning

• Appellate Division reiterated that a religious organization’s entitlement to an exemption does not depend on whether the property is being used in a manner that complies with the local zoning ordinance.

Land Owned by Public Authority

• Red Bull Arena, Inc. v. Town of Harrison, 2014 N.J. Super. Unpublished Lexis 1062 (App. Div. 2014).

• County Improvement Authority acquired land for redevelopment through construction of a sports stadium.

Red Bull Arena v.Town of Harrison

• Sports team leased the real property and constructed a stadium. Stadium used for profit making activities, occasionally made available for public use.

• Team had ownership of stadium during term of lease (30 years with options to 50 years). Stadium, however, will revert to county authority at conclusions of lease.


• Exemption sought under N.J.S.A. 40A:37A-85 and 40A:12A-36.

• Tax Court denied exemption, holding that authority owned the land and the sports team owned the building and neither were dedicated to a public purpose.

• Appellate Division affirmed.


• Appellate court held that the authority owned the stadium for purposes of the exemption statute even though the sports team had ownership interest during term of lease.

• It was the reversionary interest of the authority that controlled.


• Where a government entity leases property to a private entity, an exemption applies only if the property is devoted to a public use.

• Because the statute creating the public authority did not specifically authorize the construction and operation of a sports stadium, the exemption does not apply.

Golf Course/Country Club

• Sakima Country Club v. Township of Carney’s Point, Letter Opinion Feb. 10, 2014, appeal pending.

• Is a country club dedicated to the recreational activities of its members or does it promote the moral and mental improvement of men, women and children.

Golf Course/Country Club

• Club not open to the public.

• Membership dues collected.

• No evidence of public use, part from occasional use of golf course by high school and college golf teams.

Valuation Cases

Valuation of Sale Restricted Cooperative Apartments

• Elizabeth Center Apartments v. City of Elizabeth, 27 N.J. Tax 196 (Tax 2013), appeal pending.

• Sales price regulated by law.

• Income-restricted, cooperative apartments are a unique market.

Value of Sale Restricted Cooperative Apartment

• Value determined using sales comparison approach based on sales of membership certificates within the cooperative property.

• No evidence from the marketplace.

Valuation of Contaminated Property

• Orient Way Corp./Red Roc Realty v. Township of Lyndhurst, 27 N.J. Tax 361 (Tax 2013), appeal pending.

• Tax Court held that incidental use of property by party with obligation to remediate contamination does not preclude remediation adjustment.

Orient Way Corp. v. Township of Lyndhurst

• Plaintiff purchased the property “as is” after market exposure and negotiations. Both parties to the transaction were sophisticated and were aware of the contamination.

• The study estimating remediation costs was made available to the purchaser at the time that the sale was negotiated.

Contamination AdjustmentLarge Parcel

• CIBA v. Township of Toms River, Tax Court, Dec. 2013.

• 1,200-acre parcel.

• Contamination on a portion of the parcel. However, large constituent elements not impacted by contamination.

CIBA v.Township of Toms River

• Does an Inmar adjustment for the cost of remediation apply only to the contaminated parcels or to the entire parcel.

• One parcel; entire plot declared a Superfund site.

CIBA v.Township of Toms River

• The contamination will have an impact on the value of the entire parcel, light of the stigma.

Farmland Exemption:Corporate Headquarters

• BMW of North America, LLC v. Borough of Woodcliff Lake, Tax Court Dec. 17, 2013.

• Tax Court held that orchard located on corporate headquarters did not qualify for farmland assessment – predominate use of the property was not agricultural or horticultural.

Highest and Best Use

• Clement v. Township of South Hackensack, 27 N.J. Tax 255 (Tax 2013), appeal pending.

• Baking facility with a small retail component.

• Detailed discussion of highest and best use analysis.

Highest and Best Use

• Surf Corp. v. City of North Wildwood,

Valuation of Electricity Generating Plant

• Atlantic City Electric Co. v. Township of Pennsville, Tax Court, Jan. 2014, appeal pending.

• Cost approach taken.

• Discussion of need for market data to support adjustments in the land value component of the cost approach.

Reasonableness Hearing

• 510 Ryerson Rd., Inc. v. Borough of Lincoln Park, 2014 N.J. Tax Lexis 13 (Tax 2014).

• Opinion after a reasonableness hearing.

• Court permitted disclosure of the Chapter 91 responses from other taxpayers, subject to a Protective Order.

Reasonableness Hearing

• Not necessary for the assessor to personally inspect every property.

• Reasonable to rely on the analysis of the revaluation company.

Review of Decisions Relating to the Tax Court of New Jersey Sept. 2013 to Sept. 2014

Documents

Transcript of Review of Decisions Relating to the Tax Court of New Jersey Sept. 2013 to Sept. 2014