EAST RUTHERFORD (Jan. 21, 2010) — Mayor James Cassella said the local borough council is still pondering its options after a New Jersey Tax Court ruling lowered the appraisal of property at 1 Meadowlands Plaza by almost $9 million, during one tax year.
He described the matter as a complex case “where hundreds of thousands of dollars” in revenue could be at stake.
On Nov. 20 of last year, the court entered a judgment against the borough and for SP One Meadowlands Plaza. It pertains to Block 108.03, Lot 1.01 on the municipal tax map.
The site is located off Route 3 East, directly across the highway from Giants Stadium. The tract features an active 15-story office building with 422,470 square feet, situated on 10.49 acres of land. It also features surface and covered parking, the latter through a five-story garage with 1,300 stalls.
Cassella said the facility was once known informally as “the Metromedia building.” That was when it served as the corporate home to the multi-billion telecommunications and media giant, former owners of New York’s Channel 5. The conglomerate has since moved to Hackensack.
Experts for both parties initially appeared in the court’s Newark chambers May 8 of last year to offer testimony.
Cassella said the council must now decide whether it wants to appeal the opinion, reached by state Tax Court Judge Patrick DeAlemida, to the Appellate Division of New Jersey Superior Court or attempt a settlement.
The ruling reversed a 2005 decision by the Bergen County Board of Taxation upholding the borough’s initial appraisal, effective Oct. 1, 2004 (for the 2005 tax year). Thus, the borough served as defendant in the case.
Stephen Sinisi, the borough’s special tax counsel, appeared during a closed session at the Dec. 29 year-end meeting to discuss options.
Neither Sinnisi, nor the plaintiff’s counsel, Michael Donnelly, with the Newark law firm McCarter and English, LLP, returned calls at press time.
For the same case, the court upheld East Rutherford’s $60 million appraisal for tax year 2004 (effective Oct. 1, 2003).
Cassella estimated anywhere between $100,000 to $200,000 might have to be refunded for this one year, due to the decision.
Yet he cautioned the matter is “very complex,” and that even more revenue could be in jeopardy, depending on the case’s future course.
“We’re awaiting further advice from our tax lawyer,” said the mayor, declining to offer an estimate on when any appeal to Superior Court might be filed, if the council indeed approves taking the case that far. “This decision affects only one party which has owned the site.”
“What could complicate the picture is more litigation involving other separate entities which owned the property during other times,” the mayor explained. “If they step forward, more tax years could come under challenge.”
Cassella claimed that in recent years at least “three separate companies have owned the site on different occasions.”
In his 17-page ruling, DeAlemida reduced the site’s tax year 2005 appraisal by $8,624,480, to $51,375,520.
He assessed the land at $7,867,500 and improvements at $43,508,020. East Rutherford similarly appraised the land, but calculated a $52,132,500 valuation for improvements.
DeAlemida’s ruling considered complex factors, including mandated appraisal formulas, the perceived value of adjacent office sites, comparable leases and the building’s income-earning potential via rent the plaintiffs collected.
Both sides offered different views on certain criteria, relating only to tax year 2005, which the Bergen County Tax Board also evaluated almost five years ago.
“The court finds that plaintiff provided sufficient evidence to overcome the presumption of validity attached to the county tax board’s judgment,” DeAlemida wrote.
He cited sufficient cause to reject the borough’s claims that its appraisal was based on valid evidence, including comparable leases and comparable sales of similar properties.
In examining comparable leases from the parties, the judge claimed “SP One Meadowlands Plaza” offered “the more persuasive evidence in the record of market rent.”
He ruled, “Three of the defendant’s comparable leases were older, beginning in 2000 and 2001, while the comparable leases of plaintiff’s expert were more recent and from buildings more similar to the subject property.”
Further, the judge contended East Rutherford failed the test in seeking to use “comparable sales” for tax year 2005 to “confirm and temper” its expert’s opinions regarding income generated via rents. He referred to the latter test as “the income approach to valuation.”
DeAlemida opined, “The court gives little weight to the comparable sales approach in this case,” based on the evidence.
In conclusion, DeAlemida stated that he ruled for the plaintiff in applying Chapter 123 of state statutes covering property tax law.
He noted that part of this chapter states, “In a non-revaluation year, an assessment must be reduced if the ratio of the (property’s) assessed value to its true value exceeds the upper limit of the common level range.”
For tax year 2005, he wrote, the ratio (set by factoring the assessed value of $60 million into the true value of $78,400,000) came out to a ratio of .7653. This was higher than “the upper limit of the range (established at .7536).”
— Contact Chris at 201-438-8700
Article sourced from The Leader. Click here for the original article.
