As we wrote earlier in 2020, Jersey City, N.J., is now aggressively pursuing commercial property owners with reverse appeals designed to increase assessments and corresponding property taxes. Despite recently completing a revaluation in 2018, Jersey City is selectively challenging assessments on vacant land, multifamily, and industrial properties. This new initiative is in full swing and has continued unabated through the coronavirus pandemic.
Property Owners Must be Prepared to Defend Themselves against Property Tax Increase Cases
It is vital for commercial property owners to engage legal representation with significant experience defending these types of cases. Skoloff & Wolfe is currently defending increase appeals filed against more than $490 million of Jersey City assessments. The firm also handles increase appeals throughout New Jersey, including in the City of Newark, West Orange, Cherry Hill, Springfield, and Elizabeth.
David Wolfe, NJ Property Tax Attorney, Leads Webinar Discussing Jersey City Initiative
Attorney David Wolfe, Skoloff & Wolfe co-managing partner, recently participated in a webinar panel discussion with commercial real estate news site BizNow entitled “Municipal and Third Party Tax Appeals.” The online audience consisted of property owners and attorneys who were interested in guidance about Jersey City’s reassessment strategy and what it signaled for their properties and clients. Mr. Wolfe was joined on the panel by Gabriel Shiff, COO of Roseland Residential Trust; Michael Oliver, Senior Director of JLL Capital Markets, Americas; and Gene Pride, Sr. Vice President for CBRE.
In a wide-ranging discussion, the speakers noted the short-sightedness of the litigation, their impact on property values, and the uncertainty the appeals create in the market. “When investors are looking at a property, real estate taxes are typically the largest line item expense and they need guidance in order to make a sound judgement now and for the future,” noted Gene Pride of CBRE. “The uncertainty that’s created by frequent reassessments presents a roadblock that makes it harder for investors to do the sophisticated analysis and due diligence that’s required to accurately assess the value of a property. At present, this is particularly true of multifamily and industrial properties which seem to be in the sights of Jersey City taxing authorities.”
Roseland Residential Trust’s Gabriel Shiff questioned the timing and judgment of municipalities such as Jersey City to conduct reassessments at this time of economic instability, especially since reassessments were recently completed. “We are stunned to receive court complaints from Jersey City as we are preparing to argue that our assessments are too high,” he said. “March, April and May have seen expenses rise just to maintain our properties and cleaning protocols during the pandemic. Add in all of the other operational functions such as client services and rent collections, and raising property taxes becomes nonsensical.”
All of the panelists agreed with Michael Oliver of JLL that one of the best strategies property owners have in their toolkit is to negotiate longer term PILOT (Payment in Lieu of Taxes) programs. These programs grant developers exemptions from traditional property taxes in return for their investment in certain areas of a municipality. In exchange, a PILOT program can save the developer real estate taxes and increase the fair market value of the property assuming there is higher net operating income.
“Two years ago we were able to tell our clients there were no spot reassessments in New Jersey,” Mr. Oliver said. “It was illegal for a town to come in and reassess just based on a sales price. That’s why we work with David (Wolfe) and his team on every evaluation. So that we can understand the tendencies of those individual municipalities because, as David knows, there are hundreds of them in New Jersey.”
David Wolfe explained that Skoloff & Wolfe is prepared to fight these court complaints vigorously. “We believe these cases are unconstitutional and violate the Uniformity Clause in the New Jersey Constitution, and the Equal Protection guarantees of the United States Constitution,” said Mr. Wolfe.