Bloomingdale's Inc and Bloomingdale's C/O Federated Department Stores, Inc. v. Hackensack City (6 Appeals)

NOT FOR PUBLICATION WITHOUT THE APPROVAL
OF THE TAX COURT COMMITTEE ON OPINIONS
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BLOOMINGDALE’S, INC. and : TAX COURT OF NEW JERSEY
BLOOMINGDALE’S C/O FEDERATED : DOCKET NOS.: 006396-2016
DEPARTMENT STORES, INC., : 007619-2016, 004282-2017
: 006959-2018, 003279-2019
: 004117-2020
Plaintiff, :
: Civil Action
v. :
:
I I
Approved for Publication
HACKENSACK CITY, :
In the New Jersey
: Tax Court Reports
Defendant. :
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Decided: August 8, 2022 1 Publication date: September 28, 2022
Gregory S. Schaffer and Adam R. Jones for plaintiff (Garippa, Lotz &
Giannuario, P.C., attorneys).
Kenneth A. Porro for defendant (Chasan Lamparello Mallon & Cappuzzo, P.C.,
attorneys).
NOVIN, J.T.C.
This shall constitute the court’s opinion following phase one of trial in the above-
referenced local property tax appeals. Bloomingdale’s, Inc. and Bloomingdale’s c/o Federated
Department Stores, Inc. (collectively “Bloomingdale’s”) challenge the 2016, 2017, 2018, 2019,
and 2020 tax year assessments on its improved property located in Hackensack, New Jersey. At
issue in phase one of trial is whether the subject property’s 2016, 2017, 2018, 2019, and 2020 local
property tax assessments are entitled to a presumption of validity. 2
1
This opinion was issued by the court as an unpublished opinion on August 8, 2022. It was
subsequently approved for publication on September 22, 2022. Minor editorial changes have been
made to the original opinion.
2
At trial, Bloomingdale’s counsel informed the court that in addition to issues of property
valuation and discrimination, it contended that no presumption of validity should attach to the
1
For the reasons stated more fully below, the court concludes that the subject property’s
2016, 2017, 2018, 2019, and 2020 tax years local property tax assessments represent the valid
exercise of governmental authority and, therefore, must be accorded a presumption of validity.
I. Procedural History and Factual Findings
Pursuant to R. 1:7-4, the court makes the following findings of fact and conclusions of law
based on the evidence and testimony adduced during trial. 3
As of the valuation dates, Bloomingdale’s was the owner of the real property and
improvements on State Highway Route 4, Hackensack, Bergen County, New Jersey (the “subject
property”). The subject property is identified on Hackensack’s (“Hackensack”) municipal tax map
as block 504.02, lot 12.01. The subject property comprises the Bloomingdale’s retail store at the
Shops at Riverside, a regional shopping mall in Hackensack.
As of each valuation date, the subject property’s tax assessment is set forth below:
Valuation Tax
date assessment
10/1/2015 $41,221,500
10/1/2016 $47,969,600
10/1/2017 $51,098,000
10/1/2018 $70,000,000
10/1/2019 $70,000,000
During phase one of trial, testimony was elicited from Arthur Carlson, Jr., Hackensack’s
subject property’s (as defined herein) tax assessments under Hackensack’s (as defined herein)
annual reassessment program. Bloomingdale’s argued that because Hackensack was ineligible to
conduct an annual reassessment program, all tax assessments determined in accordance therewith
were invalid, arbitrary, and flawed. After conferencing the matter with Bloomingdale’s counsel
and Hackensack’s counsel, the court bifurcated the trial, under R. 4:38-2(a). The court concluded
that it would first determine whether a presumption of validity would attach to the subject
property’s tax assessments. Thereafter, the court would address matters involving the subject
property’s valuation and discrimination claims.
3
Hackensack requested the court conduct an inspection of the subject property. The court
declined Hackensack’s request and placed a statement of reasons on the record.
2
municipal tax assessor, and Ernest F. “Rick” DelGuercio, Jr., former President of Appraisal
Systems, Inc. (“ASI”), the company charged with conducting Hackensack’s full or district-wide
reassessment program for the 2016 tax year, and annual reassessment program for the 2017, 2018,
2019, and 2020 tax years.
II. Conclusions of Law
In New Jersey, all “[p]roperty shall be assessed for taxation under general laws and by
uniform rules. All real property assessed and taxed locally . . . shall be assessed according to the
same standard of value. . . .” N.J. Const. art. VIII, § 1, ¶ 1(a). That “tenet has been a construct of
the New Jersey Constitution since 1844.” City of Elizabeth v. 264 First St., LLC, 28 N.J. Tax 408,
425 (Tax 2015) (citing N.J. State League of Municipalities v. Kimmelman, 105 N.J. 422, 428
(1987)). Our Supreme Court has interpreted said provision as affording taxpayers a right to
“[e]quality of treatment in sharing the duty to pay real estate taxes.” Murnick v. Asbury Park, 95
N.J. 452, 458 (1984). In sum, taxpayers must be treated in a manner commensurate with “other
similarly-situated taxpayers.” Regent Care Ctr., Inc. v. Hackensack City, 362 N.J. Super. 403, 412
(App. Div. 2003).
Echoing those constitutional principles, our statutes require that “[a]ll real property subject
to assessment and taxation . . . shall be assessed according to the same standard of value. . . .”
N.J.S.A. 54:4-2.25. Moreover “[a]ll property . . . within the jurisdiction of this State . . . shall be
subject to taxation annually under this chapter. Such property shall be valued and assessed at the
taxable value prescribed by law.” N.J.S.A. 54:4-1. Against that backdrop, a municipal tax assessor
is charged with the duty of “determin[ing] the full and fair value of each parcel of real property
situate in the taxing district at such price as, in his judgment, it would sell for at a fair and bona
fide sale. . . .” N.J.S.A. 54:4-23. Nonetheless, a tax assessor’s “fulfillment of the statutory
3
obligation cannot, of course, conflict with constitutional limitations.” Regent Care Ctr., Inc., 362
N.J. Super. at 415; see e.g. Twp. of West Milford v. Van Decker, 120 N.J. 354, 362 (1990)
(concluding that “arbitrary intentional discrimination . . . is unconstitutional”). Rather, tax
assessors bear “a statutory obligation to monitor all available indicia of property value and
to correct inequities in tax years other than years of district-wide revaluations” or district-wide
reassessments. Schwam v. Cedar Grove Twp., 228 N.J. Super. 522, 528 (App. Div. 1988). As
expressed by our Appellate Division, the “means best designed to meet” the dictates of the
Uniformity Clause would necessitate district-wide revaluations or reassessments each and every
year; however, such an approach is “simply not feasible.” Regent Care Ctr., Inc., 362 N.J. Super.
at 415 (citing Bergen Cty. Bd. of Taxation v. Borough of Bogota, 104 N.J. Super. 499, 507 (Law
Div. 1969), aff’d. o.b., 114 N.J. Super. 140 (App. Div. 1971)).
Thus, absent implementation of a district-wide revaluation or district-wide reassessment,
when a municipal tax assessor has a reasonable basis to believe that “property comprising all or
part of a taxing district has been assessed at a value lower or higher than is consistent with the
purpose of securing uniform taxable valuation . . . the assessor shall, . . . make a reassessment of
the property in the taxing district that is not in substantial compliance” with the law. N.J.S.A.
54:4-23. It is unreasonable to expect “[a]ssessors . . . to do nothing in years between district-wide
revaluations or [district-wide] reassessments. Their role is not that of a caretaker.” Regent Care
Ctr., Inc., 362 N.J. Super. at 416.
A. District-wide or Full Reassessment Program, N.J.A.C. 18:12A-1.14(c)
Although several mechanisms are available for taxing districts and their municipal tax
assessors to achieve equality amongst taxpayers in sharing the burden to pay real estate taxes, one
of those tools is a district-wide or full reassessment of all property in the taxing district. As
4
concisely summarized by Judge Lasser,
a [district-wide] reassessment is an important change in assessment
practice in a taxing district, other than a revaluation, which results
in a significant difference in the aggregate assessed valuation of that
taxing district from one year to a following year, other than that
caused by inclusion of added assessments or other new construction,
and, further, which results in a variance in values from one year to a
following year in a substantial number of individual parcels of real
property in that same taxing district. Like a revaluation program, a
proper [district-wide] reassessment program seeks to spread the tax
burden equitably throughout a taxing district.
[Ennis v. Alexandria Twp. (Hunterdon Cty.), 13 N.J. Tax 423, 426-
27 (Tax 1993) (citing New Jersey Div. of Taxation, Handbook for
New Jersey Assessors, §801.13 (3d ed. 1989)).]
The equality sought to be achieved by performing a district-wide or full reassessment
program stems from making “adjustments to 100 percent of the line items,” conducting an
inspection of “the exterior of all properties in a municipality,” and attempting to conduct an
inspection of “[t]he interior of all properties” in a municipality prior to imposing the revised
assessments. N.J.A.C. 18:12A-1.14(c)(3).
However, before proceeding with a district-wide or full reassessment program,
[a]n assessor . . . shall submit an application to perform the
reassessment with the county board of taxation and the Director of
the Division of Taxation.
1. The application for district-wide reassessment shall be completed
on Form AFR (Application for Full Reassessment) as prescribed by
the Director of the Division of Taxation.
2. Prior to filing Form AFR, an assessor must notify, in writing, the
mayor and local governing body, the county board of taxation, and
the county tax administrator of the basis for the assessor’s
determination that the proposed reassessment is needed.
...
4. The county board of taxation shall review the application and
within 45 days of its submission, forward a copy to the Director of
the Division of Taxation and the assessor with a notation of approval
5
or disapproval. In the case of a disapproval, the Director and the
assessor shall be advised of the reason.
5. Within 45 days of receipt of the application from the assessor, the
Director shall advise the county tax administrator and assessor of his
or her determination as to whether the assessor may proceed with
the reassessment program. In the case of disapproval, the Director
shall specify the reason for his or her determination.
[N.J.A.C. 18:12A-1.14(c).]
Here, the record reveals that for the 2016 tax year, Hackensack implemented a district-
wide or full reassessment program. First, Mr. Carlson notified, in writing, Hackensack’s mayor
and local governing body of “my suggestion that this [district-wide reassessment] program should
be undertaken.” Hackensack’s mayor and governing body apparently then adopted a resolution
to begin the district-wide or full reassessment program, retaining ASI to carry it out. On or about
May 29, 2015, Mr. Carlson signed an Application for Full Reassessment Program, Form AFR,
and submitted it to the Bergen County Board of Taxation and the Director, New Jersey Division
of Taxation (the “Director”). The Form AFR certified that: (i) inspections of the interior and
exterior of all improvements within Hackensack will be performed; (ii) the Real Property
Appraisal Manual for New Jersey Assessors will be used to develop appropriate depreciated
replacement costs for all residential improvements as of October 1 of the pretax year; (iii) all land
assessments will be updated; (iv) all exempt property tax assessments will be updated; (v) all
property sales occurring within the past three years will be analyzed; (vi) all applicable approaches
to value will be employed and reconciled; and (vii) that “the valuation updating process will be
performed by individual(s) other than the assessor and his or her municipal staff.”
On or about June 10, 2015, the Bergen County Board of Taxation’s Administrator
approved, and on or about June 26, 2015, the Director approved Hackensack’s Form AFR,
Application for Full Reassessment Program.
6
Accordingly, based on the record and testimony presented, the court is satisfied that
Hackensack adhered to the conditions precedent necessary to implement a district-wide or full
reassessment program for the 2016 tax year.
In addition, the court finds, based on the testimony and evidence adduced during phase one
of trial that Hackensack adhered to the requirements under Form AFR and N.J.A.C. 18:12A-1.14
(the “Regulations”) in conducting the 2016 district-wide or full reassessment program.
Specifically, Form AFR requires that “a taxpayer orientation program . . . be conducted to
generally describe the reassessment program and its purpose.” Form AFR further demands that a
“notice . . . be sent to all taxpayers to inform them of their proposed assessed value. . . .” Moreover,
subsections (d) and (e) of the Regulations demand that following approval by the Director of a
district-wide or full reassessment program,
(d) [t]he assessor . . . submit a plan of work to the county tax
administrator within 30 days of such approval. Thereafter, a report
on the status of the revaluation or reassessment shall be filed with
the county tax administrator every 30 days until the program has
been completed and the tax list has been filed with the county board
of taxation.
(e) The plan of work and revaluation progress report shall be
completed on Form POW/RSR (Plans of Work/Revaluation Status
Report) as prescribed by the Director. . . .
[N.J.A.C. 18:12A-1.14(d) and (e).]
Following approval of the district-wide or full reassessment program, Hackensack and ASI
sent out booklets and letters to all taxpayers notifying them about implementation of the program
and informing them that inspections would be conducted. Admittedly, Mr. Carlson stated that his
memory was “jumbled up.” However, he recalled attending a public meeting that he believed was
the taxpayer orientation program and sat on a dais, answering questions about the district-wide or
full reassessment program.
7
Mr. DelGuercio’s testimony cemented Mr. Carlson’s recollection, stating that in 2015 ASI
conducted at least one public orientation program. According to Mr. DelGuercio, “we might have
had several, but I can’t confirm . . . but I know -- it’s standard procedure for all the reassessments
and reval[uation]s that I do.”
Moreover, information about Hackensack’s district-wide or full reassessment program was
contained on ASI’s website. 4 According to Mr. DelGuercio, ASI’s website,
offers . . . a tool where it’s interactive where appointments can be
made, discussions can be had, information can be exchanged as well
as the viewing of essential reassessment reports and tools such as
neighborhood delineations, assessments. There’s a tax implication
tool and feature to it. There’s a lot of good information.
Mr. DelGuercio further testified that ASI prepared a computerized inspection log sheet for
the 2016 tax year detailing the approximately “10,217 line items” in Hackensack to be inspected.
According to Mr. DelGuercio, the designation of an “x” next to a street address on the inspection
log sheet meant “an attempt was made [to inspect the interior] but it means that we did not get
inside, and we most likely had to estimate the interior, which is the process.” According to Mr.
DelGuercio, ASI was granted access to conduct interior inspections of approximately 7,359 line
items for the 2016 tax year.
During the district-wide or full reassessment program, monthly meetings were conducted
by the Bergen County Board of Taxation to oversee the progress of the program. ASI would
generate monthly plans of work reports and furnish them to Mr. Carlson, who would provide them
to the Bergen County Board of Taxation, identifying the number of properties inspected.
4
Hackensack’s website apparently contained a hyperlink to ASI’s website. According to Mr.
DelGuercio, “there’s a link on the City[’s website] which if you go on the -- at that point in time,
I don’t know if it’s still there, but in that point in time if you went on the City[’s] website you
could find directions to our website.”
8
According to Mr. DelGuercio,
the Bergen County Board of Taxation requires the assessor to submit
a progress report, a monthly progress report, and it’s discussed at
their monthly tax board meetings. We did that and if there are any
questions about our progress by the actual authority that supervises
the assessor, it’s brought up at that time. The tax board meets every
month, I think, with the exception of August. I’m not sure if they
meet in August but they meet 11 times a year.
According to Mr. Carlson, he was responsible for overseeing the reassessment program;
however, the day-to-day operations, including gathering property information, analyzing market
data, identifying the properties to be inspected, conducting the interior and exterior inspections,
and “formulat[ing] the [preliminary] numbers” rested with ASI. Mr. Carlson testified that,
I sit and I meet with the representatives. We go through the deals.
They give me these spreadsheets . . . usually they’re preliminary,
then the ultimate values to go through, the assessed valuations to
double check them with the representatives at ASI. I do that usually
on a monthly meeting with them . . . We sit down and go through
the list before I finalize them and if anything stands out, we try to,
we try to correct it. If it’s too low, we raise it. If it’s too high, we
lower it . . . that’s my role, but of course . . . it’s in conjunction with
my experts too . . . like I said, I’m responsible. I’m the final arbiter.
I make the final decision but in conjunction with my expert[s].
Mr. Carlson further reinforced that “I’m the decision guy . . . if I feel [the assessed value
is] too high, I’ll lower it. If I feel [the assessed value is] too low, I’ll say, why is this low. Why
are we here or, they’ll [ASI] take the initiative and say this assessment’s too low.”
Finally, in Mr. DelGuercio’s estimation,
around [the] end of November, early December [2015] after the
assessor has reviewed and signed off on all of the preliminary
values, my office [ASI] sends out another mailer which informs the
public of the preliminary -- the new preliminary assessment and
what steps to take next. Typically, you can either go on our website
and obtain information as to how this value was arrived at or we do
still hold one-on-one and in-person meetings with any and all
taxpayers who have questions, you know, about what we did. And
a lot of times re-inspections are done, more information is obtained
9
and exchanged and then, ultimately, when that final review process
takes place and the assessor is satisfied again with the values, at that
time it gets submitted to the Bergen County Board of Taxation for
the final tax list.
Bloomingdale’s offered no fact or expert witness testimony contradicting or refuting the
testimony of Mr. Carlson or Mr. DelGuercio. In addition, Bloomingdale’s offered no evidence
that for the 2016 tax year: (i) exterior inspections were not conducted on all properties; (ii) interior
inspections were not attempted on all properties; (iii) 100% of Hackensack’s line items were not
revised; (iv) inclusion of Hackensack on the Director’s “2016 Approved Revaluation and
Reassessments” list was in error; 5 (iv) following the district-wide or full reassessment program,
Hackensack had segmented or general coefficients of deviation for the 2016 tax year exceeding
15%; or (v) that Hackensack’s district-wide or full reassessment program did not result in a
material change in aggregate assessed valuations for the 2016 tax year. 6
Accordingly, based on the trial record and testimony of Mr. Carlson and Mr. DelGuercio,
the court is satisfied that Hackensack conducted a district-wide or full reassessment program for
the 2016 tax year in accordance with the requirements under law, Form AFR, and N.J.A.C.
18:12A-1.14(c).
B. Annual Reassessment Program, N.J.A.C. 18:12A-1.14(i)
In 2013, our Legislature enacted the Real Property Assessment Demonstration Program,
5
2016 Approved Revaluations and Reassessments,
www.state.nj.us/treasury/taxation/pdf/lpt/revaluation/2016RevalList.pdf (last visited July 25,
2022).
6
“[T]he coefficients of deviation used by the Board to assess . . . tax inequality were general,
which measure deviation without regard to property class, property size, or any other property
characteristic. The language of N.J.A.C. 18:12A-1.14(b), however, does not limit the 15%
acceptable deviation standard to any particular type of deviation, whether segmented or general.”
Essex Cty. Bd. of Taxation v. W. Caldwell Twp., 21 N.J. Tax 188, 196 (App. Div. 2003) (emphasis
added).
10
N.J.S.A. 54:1-101 to -106 (the “RPADP”). A primary goal of the RPADP was to make use of
available technology, creating a “collaborative system” of property assessment between county
boards of taxation and municipal assessors, “result[ing] in a cost-effective and accurate process of
real property assessment to benefit real property owners and property taxpayers.” N.J.S.A. 54:1-
102.
The sponsor and committee statements accompanying the RPADP legislation emphasized
that “all future evaluations and reassessments of real property by municipalities in a demonstration
county will be performed on the county system, and the system will also be used for other
assessment-based functions, such as the development of a compliance plan, maintenance of
assessments, and the calculation of added assessments.” Sponsor’s Statement to S. 1213 19
(January 23, 2012); Assembly Appropriations Committee Statement to S. 1213 1 (December 13,
2012) (emphasis added). “The bill[s] [further] require[] the county board of taxation of each
demonstration county to compel the implementation of a revaluation or reassessment of real
property.” Sponsor’s Statement to S. 1213 20; Assembly Appropriations Committee Statement to
S. 1213 2-3 (emphasis added).
In August 2016, following enactment of the RPADP, the Director promulgated proposed
changes to the Regulations, crafting a “[n]ew subsection (i) [under N.J.A.C. 18:12A-1.14] . . .
proposed for the purposes of equity and reducing costs because of the changes affecting only
certain counties under [the RPADP] N.J.S.A. 54:1-101.” 48 N.J.R. 1605(a) (emphasis added).
In two published opinions, this court has analyzed the similarities and differences between
a full or district-wide reassessment program, under N.J.A.C. 18:12A-1.14(c), and an annual
reassessment program, under N.J.A.C. 18:12A-1.14(i), and their impact with respect to application
of N.J.S.A. 54:51A-8 (the “Freeze Act”).
11
In Tartivita v. Borough of Union Beach, 31 N.J. Tax 335 (Tax 2019), aff’d, 2021 N.J.
Super. Unpub. LEXIS 1022 (App. Div. 2021) (approved for publication in the N.J. Tax Reports),
the Monmouth County Board of Taxation issued a judgment reducing the assessment on the
taxpayer’s home for the 2017 tax year. Id. at 339. The taxpayer argued that she was also entitled
to relief under the Freeze Act for the 2018 tax year. In response, the taxing district maintained that
it implemented an annual reassessment program, under the RPADP and N.J.A.C. 18:12A-1.14(i),
involving all property in the taxing district; therefore, the Freeze Act relief was inapplicable. After
analyzing and scrutinizing the language and intent of the RPADP, Judge Sundar concluded that:
The [RP]ADP law does not support the proposition that the annual
assessments performed under the aegis of the [RP]ADP law are a
‘complete reassessment’ under the Freeze Act, or a ‘district-wide’
reassessment under N.J.A.C. 18:12A-1.14(c).
[Id. at 343.]
The court further observed that a “complete” or “district-wide reassessment,” as
contemplated under the Freeze Act, “’results in a significant difference in the aggregate assessed
valuation of that taxing district from one year to a following year, other than that caused by
inclusion of added assessments or other new construction’” and “’results in a variance in values
from one year to a following year in a substantial number of individual parcels of real property in
that same taxing district.’” Id. at 359 (quoting Ennis, 13 N.J. Tax at 426-27).
After evaluating the evidence presented, the court found the net change in the taxing
district’s aggregate assessed valuations following the annual reassessment program was 4.9%,
which it found, “is not a ‘significant difference in the aggregate assessed valuation of that taxing
district from one year to a following year.’” Ibid. Rather, the court reasoned that in undertaking
the annual reassessment program, the municipal tax assessor was “annually performing what [he]
is obligated to be annually performed under N.J.S.A. 54:4-23, which therefore should result in
12
minimal changes from one year to the next with a non-significant number of properties being
over/under assessed.” Id. at 362. In sum, the court concluded that “[N.J.A.C. 18:12A-1.14]
[s]ubsection (i) does not apply to district-wide reassessments” and that an “annual reassessment is
not the same as the regulatory district-wide [or full] reassessment. . . .” Id. at 365.
In affirming Judge Sundar’s decision, the Appellate Division observed that the trial record
did not support the municipality’s “contention that its [RP]ADP [annual] reassessment constituted
a complete [district-wide] reassessment. . . .” Tartivita, 2021 N.J. Super. Unpub. LEXIS 1022, *2
(App. Div. 2021) (approved for publication in the N.J. Tax Reports). The court emphasized that
under the RPADP annual reassessment program,
only twenty percent of the total line items (properties) were
thoroughly inspected by the tax assessor, and of the total line items,
many had a less than one percent tax assessment change, either
positively or negatively. This is not ‘a significant difference in the
aggregate assessed valuation of that taxing district from one year to
a following year, other than that caused by inclusion of added
assessments or other new construction,’ to qualify as a complete
assessment to circumvent the Freeze Act and to increase the
property's tax assessment for the 2018 tax year.
[Ibid. (quoting Ennis, 13 N.J. Tax at 426-27).]
In Pella Realty, LLC v. Paterson City, 31 N.J. Tax 474 (Tax 2020), the court entered
judgments reducing the taxpayer’s 2017 local property tax assessments. Thereafter, the taxpayer
moved for Freeze Act protection for the 2018 tax year. In response, the taxing district argued that
the taxpayer was not entitled to Freeze Act protection because it was conducting an “on-going
annual reassessment program,” under N.J.A.C. 18:12A-1.14(i), for the 2018, 2019, and 2020 tax
years.
For substantially the same reasons expressed in Tartivita, the court found that
“implementation of an annual reassessment program [under N.J.A.C. 18:12A-1.14(i)] will not
13
serve to bar application of the Freeze Act.” Id. at 499. Importantly, the court observed that “’[i]n
offering the new proposed regulation [N.J.A.C. 18:12A-1.14(i)] for public comment, the Director
explained that ‘[n]ew subsection (i) is proposed for the purposes of equity and reducing costs
because of the changes affecting only certain counties under [the RPADP] N.J.S.A. 54:1-101.” Id.at 490-491 (citing 48 N.J.R. 1605(a)). The court further discerned that N.J.A.C. 18:12A-1.14(i)
“represented a departure from the district-wide [or full] reassessments that had existed since 1979
under N.J.A.C. 18:12A-1.14(c).” Id. at 491.
After reviewing the Director’s responses to the public comments to N.J.A.C. 18:12A-
1.14(i), the court concluded that an annual reassessment program “was something unlike and
different from a district-wide reassessment, and the terms should not be used synonymously.” Id.
at 491-92. The court concluded that “the Regulations conceiving of Annual Reassessment
Programs under ‘[n]ew subsection (i)’ were drafted to directly respond to and address the newly
created requirements under the RPADP and to serve as a cost savings vehicle for those counties
and taxing districts participating under the RPADP.” Id. at 493.
Based on the court’s plain reading of 48 N.J.R. 1605(a), the Regulations, and the Director’s
responses to public comments, the court found that the annual reassessment program memorialized
under N.J.A.C. 18:12A-1.14(i), was designed for and “derived . . . under the RPADP.” Id. at 494.
Thus, the court reasoned that annual reassessment programs, under N.J.A.C. 18:12A-1.14(i), were
“not intended to apply to every county and taxing district statewide; rather, they were applicable
only to those ‘demonstration count[ies]’ participating under the RPADP.” Id. at 494-95. However,
because the taxing district was not located within an RPADP demonstration county, the court
found that the taxing district’s adoption and implementation of an annual reassessment program
14
was inappropriate. 7
Here, in Mr. Carlson’s opinion, the goal of implementing what he termed as a “rolling”
annual reassessment program for the 2017, 2018, 2019, and 2020 tax years was to avoid the tax
appeals “just piling up year after year” and “alleviate the tax refunds.” It afforded him “flexibility,
that’s the main goal . . . in real time to make the changes based on the current conditions of the
market.” According to Mr. Carlson, Hackensack implemented a “four year[] [annual reassessment
program] this time -- we want to do four years. The reason is . . . I think, one of the main reasons
is because it’s cheaper to do -- to do, like, to do it over multiple years because they [ASI] get paid
every year.”
It is uncontested that for each of the 2017, 2018, 2019, and 2020 tax years, Mr. Carlson
signed and submitted a Form AFR-A, Application for Annual Reassessment Program to the
Bergen County Board of Taxation and the Director. 8 Each Form AFR-A explicitly recited that
Hackensack’s last “100% [district-wide] reassessment was implemented [in] 2016.” 9 Moreover,
it is undisputed that despite not being designated a demonstration county participating under the
RPADP, the Bergen County Board of Taxation, and the Director, approved Hackensack’s
7
The court did not reach a conclusion on whether the taxing district’s annual reassessment
program met the parameters of a district-wide or full reassessment program. Rather, the court set
the matter down for a plenary hearing to decide that issue.
8
For the 2017 tax year, Form AFR-A was signed by Mr. Carlson on April 15, 2016, approved by
the Bergen County Board of Taxation Administrator on April 13, 2016, and approved by the
Director on May 5, 2016. However, for the 2018, 2019, and 2020 tax years, only copies of the
Form AFR-A, signed by Mr. Carlson respectively on April 1, 2017, April 1, 2018, and February
27, 2019, were offered into evidence. Copies of Form AFR-A, approved by the Bergen County
Board of Taxation and Director, for the 2018, 2019, and 2020 tax years were not offered into
evidence.
9
It is undisputed that Bergen County was not a demonstration county participating under the
RPADP for the 2017, 2018, 2019, or 2020 tax years. Therefore, Hackensack was not eligible to
conduct an annual reassessment program under N.J.A.C. 18:12A-1.14(i) for the 2017, 2018, 2019,
and 2020 tax years.
15
application for an annual reassessment program for the 2017, 2018, 2019, and 2020 tax years.
Accordingly, applying the holding reached in Pella Realty, LLC to the instant matter,
Hackensack was not eligible to conduct an annual reassessment program for the 2017, 2018, 2019,
and 2020 tax years, under N.J.A.C. 18:12A-1.14(i). 10 Thus, Bloomingdale’s charges that due to
such ineligibility, no presumption of validity should attach to the subject property’s 2017, 2018,
2019, and 2020 local property tax assessments.
However, the court finds that whether Hackensack was, or was not, authorized to embark
on an annual reassessment program is not singly decisive on the issue of whether a presumption
of validity should attach to the local property tax assessments in these matters. Despite the
nomenclature or title that may be assigned the task or program of annually evaluating all
improvements or line items on a taxing district’s tax roll, Hackensack’s assessor nonetheless bore
a constitutional and statutory duty to annually ensure that all property within the taxing district
was assessed at a value “consistent with the purpose of securing uniform taxable valuation of
property according to law for the purpose of taxation. . . .” N.J.S.A. 54:4-23.
10
In Mr. DelGuercio’s opinion, Hackensack’s annual reassessment program, under N.J.A.C.
18:12A-1.14(i), should be viewed as a full or district-wide reassessment program under N.J.A.C.
18:12A-1.14(c). According to Mr. DelGuercio, “[w]e’ve learned now that the State no longer
wants us to fill out that form [AFR-A]. They want us to fill out the AFR form because the
confusion was that we were applying for a full reassessment. We did complete and did all the
work for a full reassessment in 2017 but now this is the form they wanted us to put it on at that
point in time so we put it on that. And, unfortunately -- not unfortunately, but I no longer fill out
those forms [AFR-A] for these reassessment programs . . . What we’re doing now is, if you
remember the AFR form or the first two statements -- first one speaks to exterior [inspection] and
there’s two boxes you can check, agree or disagree. The second one is the interior inspections and
there’s two boxes you can check, agree or disagree. What we’re doing now is we’re checking the
first statement agree and then the second statement where it speaks to the attempt for interior,
we’re checking disagree and we’re including an addendum which says we’re not going to knock
on -- we’re not going to attempt to get into 100% because we just did this the year before, we got
into “x” amount, in some cases three, four, six months earlier, and so they can either accept that
or they can tell us we’re not going to approve it -- you have to do -- at that point, I let them dictate
what they’re requirement is.”
16
Thus, if the court finds that for the 2017, 2018, 2019, and 2020 tax years Hackensack’s
municipal tax assessor, with the assistance of ASI, relied on available market data and employed
reasonable methodologies in carrying out his constitutional and statutory duties, under N.J.S.A.
54:4-23, then the presumption of validity will attach to the subject property’s tax assessments.
Conversely, if the court finds that Hackensack’s assessor arrived at the subject property’s tax
assessments for the 2017, 2018, 2019, and 2020 tax years employing an arbitrary, capricious, or
inherently flawed process, then the presumption of validity will not attach.
Accordingly, the court must examine and scrutinize the reasonableness of the data and
methodology employed by the assessor in determining each year’s local property tax assessments.
As stated by our Supreme Court, such evaluation should
focus solely on whether the valuation could reasonably have been
arrived at in light of the data available to the assessor at the time of
the valuation. Encompassed within this inquiry are (1) the
reasonableness of the underlying data used by the assessor, and (2)
the reasonableness of the methodology used by the assessor in
arriving at the valuation.
[Ocean Pines, Ltd. v. Borough of Point Pleasant, 112 N.J. 1, 11
(1988).]
C. Presumption of validity
In addressing local property tax grievances, our courts have adhered to a longstanding
principle that a
presumption [exists] in favor of the correctness of the estimation
made by the assessor, the sworn officer, and before a tax can be
disturbed on the ground alleged, the burden is put upon the objector
to show by his proofs a clear error in such estimation. When the
testimony does not decidedly bear against the correctness of the
assessor's action, the court cannot disturb it.
[State v. Hawkens, 50 N.J.L. 122, 125 (1887).]
See also L. Bamberger & Co. v. Div. of Tax Appeals, 1 N.J. 151, 159 (1948); Riverview Gardens,
17
Section One, Inc. v. Borough of N. Arlington, 9 N.J. 167, 175 (1952); Aetna Life Ins. Co. v.
Newark City, 10 N.J. 99, 104-05 (1952); Rodwood Gardens, Inc. v. Summit City, 188 N.J. Super.
34, 38 (App. Div. 1982).
As explained by the court in City of Elizabeth v. 264 First St., LLC, the rationale
underpinning this core principle is that government action should be presumed valid,
the public [has an] expectation that a municipal tax assessor will act
scrupulously, correctly, efficiently and honestly in complying with
statutory provisions and adhering to standards of fairness when
making assessments. Our Supreme Court has demanded that
‘government officials act solely in the public interest. In dealing
with the public, government must ‘turn square corners’. . . [i]t may
not conduct itself so as to achieve or preserve any kind of bargaining
or litigational advantage over the property owner. Its primary
obligation is to comport itself with compunction and integrity. . .’
the ‘[p]roper administration of our tax laws and the successful
implementation of statutes [are] designed to . . . demand consistency
and fairness from municipal officers in their dealings with property
owners.’ Legislative goals could be undermined if a municipality
was permitted to exercise its duties inconsistent with the concepts of
fundamental fairness. Taxpayers have a right to expect the
municipal assessor to comply with statutory provisions and adhere
to standards of fairness when making assessments. A taxing district
‘does not stand in the same shoes as an ordinary citizen [and] the
municipality and the aggrieved taxpayer are not to be analogized to
private litigants competing through the judicial machinery for a
tactical advantage.’
[28 N.J. Tax at 448-49 (citations omitted).]
In carrying out those goals, a municipal tax assessor is charged with the annual duty of
reviewing and adjusting local property tax assessments. N.J.S.A. 54:4-23 provides, in part, that
after examination and inquiry, [the assessor shall] determine the full
and fair value of each parcel of real property situate in the taxing
district at such price as, in his judgment, it would sell for at a fair
and bona fide sale by private contract on October 1 next preceding
the date on which the assessor shall complete his assessments. . . .
[N.J.S.A. 54:4-23.]
18
The statute “neither requires nor excludes any specific formula for measuring fair value.”
Riverview Gardens, Section One, Inc., 9 N.J. at 175. The tax assessor’s duty to determine the full
and fair value of all property in the taxing district arises annually, and “[e]ach annual assessment
and . . . each annual valuation, of property for taxation constitutes a separate entity, distinct from
valuations and assessments of previous or subsequent years.” Rodwood Gardens, Inc., 188 N.J.
Super. at 38.
Here, according to Mr. Carlson, for the 2017, 2018, 2019, and 2020 tax years, ASI
“attempted 25% [interior inspections] each year . . . over a four-year period.” Mr. DelGuercio’s
testimony further confirmed that exterior inspections of 100% of Hackensack’s line items were
conducted each year and that 25% interior inspections were attempted each year during the 2017,
2018, 2019, and 2020 tax years. 11 According to Mr. DelGuercio,
knowing that I have a contract for, say, four years, knowing that I
have to accomplish 25% percent per year, meaning that at the end
of the four years . . . everybody has an attempt at an interior at least
once within that four-year period. What I do is I break out -- split
the town into, say, four quadrants, right? But we do skip around
because a lot of time we’re getting into these homes because added
assessments are done. A lot of times we’re getting in through these
homes because, you know, they’re current county or tax court
appeals pending. A lot of times people call because they want us to
11
Initially, Mr. DelGuercio testified that “[t]he attempt to physically do the interior aspect is made
on only 20% as opposed to 100% percent the year before [2016].” However, his later testimony
confirmed that interior inspections were attempted each year on 25% of Hackensack’s line items.
Mr. DelGuercio testimony revealed that interior inspections were attempted on: (i) 2,449 line items
for the 2017 tax year; (ii) 2,549 line items for the 2018 tax year; (iii) 3,180 line items for the 2019
tax year; and (iv) 3,204 line items for the 2020 tax year. Moreover, Mr. DelGuercio credibly
explained why there were discrepancies between ASI’s inspection logs and the Plans of Work
submitted to the Bergen County Board of Taxation. According to Mr. DelGuercio, ASI’s
inspection logs are “living documents” that “change[] daily based on . . . phone calls that come in
to do inspections, inspections that take place.” Conversely, the Plans of Work submitted to the
Bergen County Board of Taxation represented interior inspections performed as of a fixed date.
Thus, the court concludes that Mr. DelGuercio’s initial statements as to the percentage of interior
inspections attempted under Hackensack’s annual reassessment program were a misstatement.
19
get in when we didn’t before. So, we do skip around and that’s why
we kind of keep track of everything. By the end of the four-year
period, everybody will have been attempted at least once. And I
think that the relief is I think it’s a little too egregious to be
demanding to get into the same home each and every year four years
straight.
Moreover, Mr. Carlson testified that under Hackensack’s annual reassessment program,
ASI bore responsibility to,
formulate[] the values. They’re the contracted employee[s] . . . we
pay them money to go out and inspect the properties and then after
they inspect the properties the first time around they come up with
25% inspections after that over the four-year period, . . . they come
up with the values, . . . and they give [me] the spreadsheets, what
they’ve come up with, the old assessment and then the new
assessment, the type of property, the address, . . . the sale prices,
they analyze the sale prices . . . So I’m on top of it, you know, and
like I said we sit down. ASI is the one that formulates the numbers.
They do the sales analysis, I don’t, and then I’ll double check [it].
During his testimony, it became clear to the court that Mr. Carlson relied on ASI’s
appraisers and Hackensack’s appraiser, McNerney & Associates, Inc., to provide him with the
market data and analysis to determine the subject property’s 2017, 2018, 2019, and 2020 tax year
assessments. According to Mr. Carlson, ASI presents him with “a spreadsheet on the residential
. . . and the commercial properties. We go through them. We certainly go through the assessed
valuations, usually, you know, in a timely manner obviously before the final [tax assessment]
numbers are finalized.”
Mr. Carlson explained that the spreadsheets contain, “an analysis and a listing. It’s a
courtesy [cursory] glance. It’s not as detailed, but it is an analysis. It has the square footage and
the percentages, and how much it is per square foot, and the sale prices and so forth.” According
to Mr. Carlson, the spreadsheet
breaks it down to residential properties, condominium properties,
commercial properties, 4A, 4B, 4C categories for the commercial
20
properties. It gives me the block, the lot, name of the owner, the
taxpayer, the address. It gives me the square footage. It gives me
the price per square foot. It gives me sale price per square foot. It
gives us the sale price. It gives me the assessment of the prior year
and the following year. It gives me the percentage increase or
decrease. It gives me the assessed valuation per unit basis, and it
also gives me per square foot basis. It has notes that could be applied
to it, you know, individual properties.
Specifically, “on . . . a residential neighborhood or a condominium complex, it would give
you all the sales that occurred within the last year and a half, . . . so I could have some type of idea
what the market is, which direction or trend the market is going on the residential properties.”
However, with respect to the commercial properties,
[it] is segmented more . . . it would give me a range. It would give
me . . . the block and lot, address, the square footage of the property.
If there was a sale, how much it had sold for per unit, if there’s an
apartment, if there was a sale, what the square footage per -- say if
it was retail, how much -- what it sold for per square foot, and then
it would give me the assessed valuation per square foot, so it would
give an indicator of where we are as far as in coordination with the
sale prices.
Mr. Carlson further offered that after he is provided with the “spreadsheet. I go through
it with experts to go through it if it’s correct or not.” After being furnished with the annual
reassessment worksheets by ASI, Mr. Carlson testified that he,
ask[s] questions. I ask questions. I ask is this the right value, and is
this the right square footage, do you have the, you know, the right
numbers, how come this one is a little bit higher than last year --
how come this one is a little lower than last year. It’s not like I walk
into the room and say, okay, whatever you guys give me, I’m fine
with it. I do ask questions, and I ask the experts. You know, we all
sit down with [Mr.] McNerney’s office and we go through them.
In addition to being provided worksheets, Mr. Carlson testified that ASI provides him with
Marshall & Swift cost worksheets for each of the approximately 1,600 commercial properties.
Admittedly, Mr. Carlson offered,
21
[d]o I go into microscopic detail on every single one [commercial
property cost worksheet]? No, that’s why I have experts. That’s
why I have appraisals. That’s why I ask for an analysis to make sure
I get the numbers correct. If the numbers aren’t correct, I raise them.
If a mistake is made, I lower them.
Moreover, although the Marshall & Swift cost worksheets in his files did not contain a
land value analysis, Mr. Carlson stated that,
yeah, there’s . . . an analysis . . . There’s an analysis of percentage
increase, or percentage decrease, or the sale price differentials.
There’s a range of like what an apartment -- how much a unit would
be, like for per unit value based on sale price. Yeah, there’s an
analysis done, but it’s done by ASI.
Moreover, when a property was the subject of a local property tax appeal, Mr. Carlson
offered that,
[t]he discussion would be more elaborate. The discussion would be
more in detail if they were under appeal because . . . I want to get
the assessments correct. So, if the assessments too high or too low,
and under appeal especially, I want to know if I should hold the
assessment, should I raise the assessment -- what do you guys [ASI
and Mr. McNerney’s office] think. It’s an open-ended discussion
on all the commercial properties.
Mr. Carlson further explained that “[Mr.] McNerney’s office is my expert where . . . I go
through the numbers with them also multiple times to make sure they’re correct . . . [for the]
commercial properties . . . we have a separate spreadsheet for the commercial properties and we
look at them.”
The court found particularly telling, Mr. Carlson’s opinion that,
I have 1,600 [commercial] properties. If I had ten errors of 1,600
[commercial] properties year after year, I think that’s pretty good. I
mean, I’m not saying I’m perfect, but, again, the [Director’s sales]
ratio will bear me out. I’m at 93%, 94% with the county ratio . . .
Again, it’s mass appraising. We’re doing -- looking at numbers.
We’re looking at the evaluation each year separately.
With respect to the subject property’s local property tax assessments, Mr. Carlson testified
22
that other than discussions with ASI’s appraisers, Mr. McNerney’s office’s appraisers,
spreadsheets prepared by ASI, the Marshall & Swift cost worksheets, and the appraisal reports
prepared by Mr. McNerney’s office, he did not rely on any other documents in determining the
subject property’s local property tax assessments during the tax years at issue.
Specifically, with respect to the subject property’s 2016, 2017, and 2018 local property
tax assessments, Mr. Carlson testified that ASI determined that value, and he “reviewed it. I didn’t
change it. I reviewed it. Went through it.” Mr. Carlson expressed that ASI furnished him with
the subject property’s “Marshall & Swift [cost worksheet data for the] property record card.”
However, according to Mr. Carlson, the cost worksheets,
will not match -- I don’t think it will match the [tax] assessment.
Those three years [2016, 2017, and 2018] -- it looks like I went from
the spreadsheet, the . . . numbers they [ASI] gave me for the first
three years, [20]16, [20]17, and [20]18, that won’t match the [local
property tax] assessment[s]. That’s [the cost worksheets are] higher
than the assessment[s]. As a matter of fact, probably the assessment
should have been raised sooner, but we missed it.
According to Mr. Carlson, the subject property’s 2016, 2017, and 2018 tax year “assessed
valuation on the [ASI] spreadsheet was less, significantly less than the [Marshall & Swift] cost
approach [worksheets] that I had gotten from ASI.” Although Mr. Carlson recognized the
inconsistency between the ASI spreadsheet values and the Marshall & Swift cost worksheet
values, in his opinion, “the inconsistency is in favor of, . . . the taxpayer,” thus, he accepted the
lower assessed value
Mr. Carlson testified that during each year that the subject property’s local property tax
assessment was adjusted upwards (2017, 2018, and 2019), he relied on market data, analysis, and
advice furnished by ASI and Mr. McNerney’s office. In his own words,
I rel[ied] on my experts to give me advice on the malls and the
anchors. I don’t have the detailed information as the assessor to go
23
through microscopically every single mall or sale or transaction or
the trends . . . the analysis was, you know, it was done for a purpose.
It was to verify that the [assessment] numbers should be increased.
During a meeting discussing the 2019 tax year assessments, Mr. Carlson stated that,
when I sat down with McNerney’s office and ASI . . . we went
through the commercial properties, the spreadsheets, and it came to
our attention, actually it came from . . . [Mr.] McNerney’s office,
they said that Bloomingdale’s is underassessed, it should be higher,
and that’s what we talked about . . . and then I had an analysis done
to make sure because before I raise something, especially if I raise
something that’s, you know, going to be an impact, I like that
analysis done. So I had McNerney’s office . . . [perform] an
analysis, and they came in with a higher number than --
Bloomingdale’s was I think at $41 million or $42 million the first
year . . . [t]hen it moved up to $47 [million], then to $51 [million]
over a three-year period, and then in [20]19 it was moved up to $70
[million], even though McNerney’s office, the appraiser said it was
worth between $77 to $80 million. I thought that was too high.
Again, I used my judgment here and said that impact is too much,
and I like to go a little light on commercial properties, so, you know,
just in case they have an appeal, or just in case they run into some
financial problems. I don’t like to hit people really, really hard, a
hundred percent. I try to nuance it a bit. So I brought the assessment
down to $70 million even though the numbers they [McNerney’s
office] I believe were $77 and $80 million. Even the appraisals I
think are at that number.
Finally, Mr. Carlson stated that before he increased the subject property’s 2019 tax year
assessment he asked,
[Mr.] McNerney’s office to do an analysis on this particular
[subject] property . . . before I raised [it] in [20]19 because it was --
it went from a, you know, $47 to $50 million to $70 million
[assessment]. They came in with a number I believe was $77 million
or $80 million, but of course I asked for an analysis.
In gauging the reasonableness of the local property tax assessments, “[b]oth the underlying
data and the methodology used by the assessor are entitled to [a] presumptions of correctness.”
510 Ryerson Rd., Inc. v. Borough of Lincoln Park, 28 N.J. Tax 184, 193 (Tax 2014). The taxpayer
shoulders the burden of proving “the methodology utilized in [arriving at] the original assessment
24
manifested an arbitrary or capricious discharge of the assessor’s responsibilities and “provide[d]
no reliable indication that the quantum of the assessment [was] itself reasonable.” Transcon. Gas
Pipeline Corp. v. Bernards Twp., 111 N.J. 507, 538 (1988). As stated above, the focus of the
court’s inquiry centers on whether the valuation of the property, and determination of
the tax assessment, was reasonably related to sound assessment practices, based on reasonable
data and information, were sensitive to changing market conditions, and considered physical
factors uniquely applicable to the property. Id. at 537-38.
Accordingly, Bloomingdale’s bore the burden of proving that Hackensack arrived at the
subject property’s 2017, 2018, 2019, and 2020 local property tax assessments in an arbitrary or
capricious manner or were the result of an inherently flawed assessment process. However,
Bloomingdale’s offered no evidence that the market data, analysis, and/or methodology employed
by ASI and Mr. McNerney’s office and relied on by Hackensack’s tax assessor in determining the
subject property’s assessments were flawed.
Rather, the court finds from the testimony and evidence elicited during phase one of trial
that for the 2017, 2018, 2019, and 2020 tax years, Hackensack’s tax assessor adhered to his
statutory obligations, under N.J.S.A. 54:4-23. Data about each property in Hackensack was
collected and analyzed by ASI and presented to the assessor for review, including information
about each property’s block and lot, address, the size of the improvements, the price per square
foot, the sales price per square foot (if any), the prior year assessment information, and the assessed
value on a per unit basis. In addition, an analysis of Hackensack’s land values was undertaken by
ASI and presented to the assessor. Moreover, with respect to the residential properties, data and
information on comparable residential sales occurring within the prior eighteen months was
analyzed by ASI and presented to Mr. Carlson. Further, with respect to commercial properties,
25
information was collected and analyzed about property sales, unit prices, and values per square
foot. Additionally, a cost approach analysis was undertaken by ASI of all of Hackensack’s
properties, deriving the estimated replacement cost value of the improvements. Finally,
Hackensack retained its appraiser to perform an independent analysis and appraisal of the subject
property before determining the subject property’s 2019 tax year assessment. In sum, the court
finds that Hackensack’s assessor complied with his statutory obligations, under N.J.S.A. 54:4-23,
of annually revisiting and revising Hackensack’s local property tax assessments, as reasonably
necessary, to account for changing market conditions to ensure equality in the sharing of the tax
burden.
Therefore, for the above-stated reasons, the court rejects Bloomingdale’s argument that no
presumption of validity should attach to the subject property’s 2017, 2018, 2019, and 2020 tax
assessments. During phase two of trial, Bloomingdale’s will shoulder the burden of rebutting the
presumption of validity that attaches to the subject property’s local property tax assessments by
introducing “cogent evidence” of true value. That is, evidence “definite, positive and certain in
quality and quantity to overcome the presumption.” Aetna Life Ins. Co., 10 N.J. at 105.
III. Conclusion
For the above-stated reasons, the court rejects Bloomingdale’s argument that no
presumption of validity should attach to the subject property’s 2016, 2017, 2018, 2019, and 2020
tax year assessments.
26