What is Revaluation?
A revaluation of real estate seeks to spread the tax burden equitably among taxpayers by appraising each property according to its true value and assessing it based on such value. This is accomplished by the mass appraisal of all real property in a municipality conducted by a professional appraisal or revaluation firm. The local municipality accepts public bids and enters into a contract a few years before the revaluation is to be completed.
To insure the need for professionalism, the State of New Jersey’s Director of the Division of Taxation must approve the contract signed by the local municipality with the revaluation firm. The contract and the revaluation firm must meet certain standards, which have been established by the Director. The revaluation contract is also subject to review by the County Board of Taxation.
In determining taxable values of all real property within a municipality, the revaluation firm must employ one of the three recognized methods to determine value. They are:
- Sales Comparative Method: This method makes use of the sale prices paid in actual sales of real property in an effort to arrive at an estimate of the value of the property being reviewed as if it were listed for sale. The sales used to arrive at an estimate of the value of the property must be bona fide between a willing seller to a willing buyer. Therefore, the sale between members of the same family most likely would not reflect the true value of the property. The revaluation firm has a list of non-usable type of sales.
- Replacement Cost Method: This method uses current building cost to replace the structure and gives an allowance for depreciation.
- The Income Method: This method requires an analysis of the income produced by a property in order to estimate the sum, which might be invested in the purchase of the property.
Will revaluation increase taxes?
Revaluation can cause a decrease or an increase for some property owners, while others can stay the same.
Assuming that local elected officials will not be using the change in each property owners' assessed value for increase spending then in theory each change made in a property owners' assessment will be the reason for any change in the amount of taxes to be paid.
After the entire revaluation process is completed, each property owner has the right to appeal the results. Once the tax appeal is concluded for those who have their taxes reduced, it means that in theory the taxes they paid in prior years were greater than they should have paid. Additionally, those who have their taxes increased means that in theory the taxes they paid in prior years were less than they should have paid.
Besides the possible opportunity city officials will have in blaming revaluation for their increase of spending in 2014, the other concern Hoboken taxpayers will have are with the county and school taxes after revaluation. In Hudson County only Hoboken has been enjoying an unusual increase in value for condos and one through four family buildings during the last few years. No other city in Hudson County is having such a renaissance in value. This could cause a distortion in the state's required formula the County Tax Administrator is required to use to come up with the Total Net Value of Taxable Property for the County to tax each city. Most cities in Hudson County have not had a revaluation done for many years and the state's required formula is just that: a FORMULA.
Then there is the State's school formula for school aid to Hoboken's public schools. It will mostly definitely change how the state evaluates state aid to the Hoboken Public School system, which is heavily relied upon to maintain Hoboken's school tax rate.
What to do if you disagree with the result of the Revaluation Firm!
Once the revaluation firm completes revaluating all property, it will mail a notice to each property owner with the new appraised value of the taxpayer's property, and will advise the taxpayer of his right to attend an individual informal review concerning the value of his property as developed by the revaluation firm.
Taxpayers will be invited to meet with representatives of the appraisal firm to allow the firm sufficient time to fully review and discuss the proposed new assessment with the taxpayer. Guidelines dealing with the taxpayers informal reviews will be issued and provide the following:
- Each taxpayer attending a review must be afforded an individual meeting with a qualified person employed by the firm.
- Sufficient time must be allotted to hear and conclude reviews on or before November 1, 2013.
- The revaluation firm shall provide to Hoboken's Tax Assessor a written record of each review.
- Suggested revisions by the firm resulting from the taxpayer reviews are to be made with the consent of the local assessor.
- Each taxpayer must be informed of the results from the assessment review by the firm in writing once all reviews are completed.
If the taxpayer is not satisfied with the reassessed amount after this process, the property owner can appeal the assessment to the Hudson County Board of Taxation.
How a property owner can appeal their taxes.
After the revaluation process is completed, property owners can appeal the amount the city of Hoboken assessed their property to the Hudson County Board of Taxation. At the time of this posting the filing needs to be done on or before May 1, 2014, but the County Board could change the date so that the filing would have to be done on or before April 1, 2015. When filing the appeal the Hudson County Board of Taxations requires Form A-1 to be used. Once the form is filed with the Hudson County Board of Taxation, a date will be set for a hearing that the property owner must attend. To understand who is permitted to testify at the hearing in order to offer an opinion on the value it is needed to review New Jersey's state law N.J.S.A. 45:14f-21(c).
N.J.S.A. 45:14f-21(c) very specifically provides:
No person other than a State licensed real estate appraiser, a State real estate appraiser or a person who assists in the preparation of an appraisal under the direct supervision of a State licensed or certified appraiser shall perform or offer to perform an appraisal assignment in regard to real estate located in this State including, but not limited
to, any transaction involving a third party, person, government or quasi-governmental body, court, quasi-judicial body or financial institution.
*Please note Real Estate agents are not allowed to represent a petitioner for a tax appeal. Real Estate agents may appear as a fact witness and discuss how they marketed the property, listing price, offers, but may not offer an opinion of value as they are not a licensed real estate appraiser.
Additionally, the real estate agent must have completed an inspection of the property in order to be able to testify.
Most condo and small homeowners hire the services of a licensed appraiser or an attorney to file and present evidence of compatible sales to prove their property was assessed for a greater amount than its true value. Click here to view a list of licensed appraisers and attorneys.
However, some condo and small homeowners appeal their taxes without hiring the services of a licensed appraiser or an attorney. Those homeowners before they begin their research need to first determine what valuation method the revaluation firm used to determine the value of their property. If the method was the Sales Comparative Method and the homeowners agree that is the correct method, they will need comparison sales that will prove that the amount the City of Hoboken assessed their property for is greater than its true value. To view real estate sales information, property owners can visit their local tax assessor's office during regular business hours or can use a reliable and good web site to view sale history in Hoboken, such as njtaxrecords.com. NJTAXRECORDS is a public web site that thousands of REALTORS in New Jersey use as one of their many tools used to research, evaluate and do comparison sales.
What are the Special Threats of Reval for Hoboken?
In New Jersey, periodic revaluations are required by law but are often postponed for only one reason: POLITITCS: resulting in dramatic changes in the tax burden for many property owners. For many property owners in Hoboken are especially vulnerable to a sharp shift in the tax burden. Listed below are only three issues the Hoboken property owners need to be concerned with:
- The nature and value of its housing has changed dramatically since the last revaluation and especially in the last few years. In only the last few years, many areas and certain types of residential property in Hoboken have enjoyed an unusual real estate renaissance in value. Those Hoboken homeowners who purchased their property in the last few years have been enjoying a value increase in their property to a degree unknown to them. When the appraiser firm changes their assessment value, they will have their taxes increased so high it could force some of them to revaluate if they can continue to afford living in Hoboken. Yes, they will have a much greater equity in their home than they ever dreamed but a family needs to pay its monthly bills.
- Taxes in Hoboken are distorted due to artificial influences, especially rent control, which holds down the value of rental units in Hoboken and shifts the burden to other property owners. Over the years, the inherent value of these buildings decline in real terms, whereas one thru 4 family owner occupied housing and condominium units increased. In reevaluation, the actual impact of this effect is realized, and typically the rent control units' tax burden goes down while the market housing goes up, i.e. 1 through 4 family housing and condominiums. The intent of rent control is honorable but the legislative process in Hoboken has become so flawed that the property owners of rent-controlled buildings are not paying as much as they would have if the rent control law were correctly amended. The flaw in the taxing of rent-controlled buildings will become even more noticeable once the revaluation is completed
Hoboken's contribution to support County services has been growing much greater than any other community in Hudson County mainly due to new construction and the increase in value of existing property. In the meantime, other communities in Hudson County do not enjoy the same large increases in value or new construction. In fact, some communities have no growth. Annually the county uses a state mandated formula charging each city its share of taxes to be paid to the county. The greater worth in property value, the greater the taxes paid to the county. The formula determines the true value of property in each community. After the revaluation, the taxpayers in Hoboken will be taxed on real value while other communities in the county will be using a formula. In order for this formula to be fair and accurate, it assumes that each municipality in the county will complete a revulation of property in a timely manner. At the time of this posting only one municipality in Hudson County has done a revaluation of property in recent years and that city is the second smallest community in the County. In fact, beside that community all but 2 other municipities are assessed at greater than 50% of true value and those two are assessed at less than 54% of true value.
Could City Hall increase taxes in 2014 and blame Revaluation ?
Hoboken taxpayers need to be concerned because the local government budgetary process has become so complex. Since local residents are not well enough informed it does not attract their attention to hold their local officials responsible on Election Day. With the press permitting elected officials to parse their words, or in many times just give out wrong information, which is then printed, the taxpayers in Hoboken need to be concerned next year.
Most of the public comments made this year regarding the budgetary issues in Hoboken have come from Mayor Zimmer. On occasion the press may have cut or distorted her quotes, so the public can only be sure that the comments which she signed her name to are really her own words.
A good example is the County tax increase. The headlines and articles always made reference to the amount of the increase the city has to collect from property owners and not the increase each taxpayer in Hoboken has to pay. After the county budget was approved, Hoboken taxpayers paid almost a 5% increase in taxes. However, the press continued to address the increase with the elected officials' statements that was for the amount the city has to collect, which was greater than the amount each taxpayer will have to pay. The first proposed budget called for an increase of more than 10% that the city has to collect. The approved budget called for an increase greater than 7% that Hoboken has to collect from their taxpayers, but the amount the individual taxpayer will really have to pay is an increase of less than 5%. The almost 5% increase is awful enough, but the truth is always better to know.
The reason for the two differing amounts is that Hoboken has more than 500 new taxpayers this year and that the Hudson County Board of Taxation reported that the total of net increase in taxable property to tax in Hoboken for 2013 increased by more than $250 million. This is an exceptional large increase for any city in Hudson County. It would be remise of anyone not to recognized Mayor Zimmer for giving credit where credit was due by mentioning this unusual high increase in new taxable property in her municipal budget statement where she credited this increase as the reason for most of the city's tax rate decrease in 2013. The only problem with the municipal budget document is very few people read it and it is obvious no one at the press read the budget.
But to confirm why Hoboken taxpayers need to be concerned about a spending tax increase in 2014 on top of any increase they may receive from the revaluation is the letter from the Mayor's office mailed to every taxpayer in July 2013. It appears a city hall staff person composed the letter never reading the Mayor's budget statement, the city budgets or the certified tax rate reports from the Board of Taxation; instead it appears he or she selected information from news articles printed in our local press or gossip. Proof of this is in the first two paragraphs of the letter. For example, it omitted the increase in new taxable property and it uses incorrect tax rates to report on the city's achievements over the last four years.