Decision on Jersey City ‘reval’ likely to be made in Trenton
State taxation division could rule on controversial property assessments
by E. Assata Wright
Reporter staff writer
Aug 04, 2013 | 4788 views | 0 0 comments | 103 103 recommendations | email to a friend | print
reval
When a city hasn’t done a reval in many years, owners of older properties, like this home on Magnolia Avenue in the Journal Square area, are among those who typically fear the outcome the most.
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Newly-elected Mayor Steven Fulop hadn’t even been sworn into office when, in June, he directed the city business administrator to immediately suspend the property revaluation that had been initiated by his predecessor, Jerramiah T. Healy.

The move was immediately cheered by property owners, particularly residents who own older houses. They feared the assessed value of their homes would be significantly increased as a result of the reval, leading to an increase in their municipal property tax bill.

But the reval was barely in the city’s rearview mirror when Hudson County officials essentially said, “Not so fast.” They declared that a mayor cannot unilaterally suspend a revaluation that is already underway.

The decision whether or not to terminate the revaluation could ultimately rest with the New Jersey Division of Taxation, so anxious residents who thought they were free of the reval may have celebrated prematurely.
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A page on the Realty Appraisal Co. website that had been used to update the status of the Jersey City reval now reads, ‘The mayor has instructed our firm to halt the revaluation.’
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“This is certainly an unusual situation,” said David Wolfe, a real estate attorney who specializes in tax appeals and who has handled appeals in Jersey City. “In terms of logistics, without some intervention from either the county or the state, the revaluation can’t be concluded. But we probably have not heard the end of this, and it’s probable that this will drag on for several months until a decision is reached by either the county or state…So, it might be premature to say now that the revaluation is dead.”

Equalizing the tax burden

The property revaluation that Fulop suspended began in 2011 and was the first to take place in Jersey City since 1988.

In a “reval,” a city reassesses all of its taxable properties so that owners pay taxes on the current market value of their property. Because older properties pay taxes based on an assessment that is more than 20 years old, they contribute a smaller share of the overall tax burden. Newer properties with a more recent assessment (which would have been done when they were built) are likely paying more.

Contrary to what some people believe, a reval does not increase the amount of money a municipality receives from property owners, even though some owners will pay higher taxes as a result. A reval equalizes the tax burden by assessing every property at its current value. The tax rate per $1,000 of assessed value will be adjusted, but local government will collect the same amount of tax revenue.

Once a reval has been completed, taxes on some properties will rise, while others will fall, and taxes on still other properties will remain relatively unchanged.

Because most homeowners and owners of commercial properties can’t be certain how a reval might affect them, many fear the process, believing their taxes will be among those that get raised.

“I think it’s very difficult for a homeowner who is not familiar with the process to do the math to figure out that their taxes may actually go down,” said Wolfe. “They see their assessment go up dramatically. If you see an assessment go from $200,000 to $611,000, the homeowner is going to panic. They have no concept of what the new tax rate will be. All they see is that their assessment tripled. And that leads to a general panic without understanding what the [overall] impact is going to be on taxes.”

Understandably, he adds, property revals then become very unpopular and politically contentious during election years.

Fulop: ‘Flawed from the beginning’

In 2011, the City Council majority, which was at the time allied with Healy, approved a $3.2 million contract to West New York-based firm Realty Appraisal Co. to conduct the reval. Originally the revaluation was supposed to conclude sometime in late 2012, just months before the May 2013 municipal election.

But Healy later sought permission from Hudson County and the state to delay the reval, saying that certain parts of the city had inaccurate tax maps that needed to be updated before property assessments could be completed.

Fulop, however, countered that Healy delayed the reval so that it wouldn’t conclude – and possibly anger voters – until after the election. Under the extended timeline, the reval would not conclude until May 2014.

As a city councilman, Fulop long opposed the reval and likely didn’t want to be encumbered with its impact during his first term. Thus, one of his first priorities as mayor was to suspend the citywide property reassessment indefinitely.

In a letter to Business Administrator Jack Kelly on June 25, Fulop wrote: “I request that you immediately direct that Realty Appraisal suspend all work under this contract until such time that you and my administration can conduct a thorough review of the contract procurement process, Realty Appraisal’s performance, and the efficacy of pursuing a revaluation of the city in the current economic environment.”

Fulop requested that Kelly immediately stop payment on the contract. A page on the Realty Appraisal Co. website that had been used to update the status of the Jersey City reval now reads, “The mayor has instructed our firm to halt the revaluation.”

In a press release that accompanied the June 25 letter to Kelly, Fulop said, “This reval was flawed from the beginning, because it will result in a tax hike for tens of thousands of homeowners who cannot afford it. I will not allow this back-door tax hike planned by the Healy administration to take place.”

Will Trenton be the final arbiter?

Suspending municipal payments to Realty Appraisal effectively halted the reval and the company’s assessors have stopped visiting properties in Jersey City.

But according to Hudson County Tax Director Donald Kenny, the only official way a municipality can suspend an ongoing reval is to petition the county and request a formal decision from the New Jersey Division of Taxation.

Kenny recently gave a presentation to the Hudson County Freeholders in which he offered the county tax board’s position on Jersey City’s reval.

“The county’s position, and our understanding of the law, is that any mayor of a municipality has the right to petition to suspend the revaluation,” said Hudson County spokesman Jim Kennelly. “They would need to petition the Hudson County Board of Taxation and they would explain in their petition the reasons they believe it should be suspended.”

If the tax board agrees, the freeholders can submit a resolution of support to the New Jersey Division of Taxation. The division director would then make a final decision to either halt the reval or let it continue, Kennelly said.

“It is our understanding that this is how Mayor Fulop would officially suspend the revaluation begun under the Healy administration,” Kennelly added. “That’s the procedure we understand municipalities have to follow to get a suspension from the state for a reval [that is] underway.”

When asked whether the city planned to file a formal petition with the county to suspend the reval, Fulop said, “Yes, we will file the paperwork as needed as we explore all our legal options.”

Wolfe, however, noted that it is possible the county or state may disagree with the municipality and may not vote in favor of suspension.

“Again, this is a very unique situation, one you don’t see very often,” said Wolfe. “There is no way to predict how this may play out. But it is not over, most likely, and there is a time sensitive element to all of this. The results of the reval were supposed to be entered onto the tax books next year so people have time to appeal their assessments. The longer this drags on, the harder it will be to meet those deadlines.”

Realty Appraisal principals Neil Rubenstein and Steven Rubenstein did not return phone calls and e-mails seeking comment on Fulop’s decision to suspend the reval.

E-mail E. Assata Wright at awright@hudsonreporter.com.

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