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In Newark, revaluation is spurring action

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The number of tax appeals in Newark has grown dramatically in the past six years.
The number of tax appeals in Newark has grown dramatically in the past six years. - ()

Last year's property tax revaluation in Newark sent ripples through the state's largest city. But for many commercial property owners, they felt more like shockwaves.

Take the case of one of Newark's largest apartment complexes, whose assessed value more than tripled to $116 million as a result of the citywide appraisal. A county tax board later cut that number significantly after the landlord appealed, but that was just one chapter in a case that's now headed for New Jersey's backlogged tax court system.

"It's illustrative of the types of increases that occur," said David Wolfe, a Livingston-based property tax attorney who represented the owner. "And they were not alone."

Wolfe declined to name his client, but it's an issue facing scores of commercial property owners after Newark's first revaluation since 2003. The process stunned many landlords in the city, experts said, sparking a rush of tax appeals that's likely to continue.

Frank Ferruggia, an attorney with McCarter & English, said the tax burden on commercial property owners rose to 60 percent from 40 percent after last year's revaluation, shifting away from single-family homes and small apartment buildings. That has raised alarm among owners with properties ranging from downtown office towers to warehouses in the Ironbound, who are all grappling with a market that still has not fully recovered.

"We think the numbers are really not supported by the market, and that will be resolved in tax court, either through settlement or trial," said Ferruggia, who represents many downtown property owners in the Brick City. With a mayoral election coming in May, he said, "it's something that the new administration … is going to have to face."

Esmeralda Cameron, a City Hall spokeswoman, said the shift in the tax burden resulted from market conditions for homeowners.

"The nationwide reduction in residential property values over the last few years has affected the proportionate share of the tax burden borne by the various property classes," Cameron said in an emailed statement. "Because residential properties saw the sharpest decline in values, the revaluation in 2013 understandably led to an adjustment in the tax burden."

New filings with New Jersey's tax court show the reaction to that shift.

Newark property owners entered 1,407 new appeals between July 2012 and June 2013, more than three times the volume from the 2007-08 court year, according to data provided by the tax court. The most recent total accounts for nearly one-third of all tax appeals in Essex County.

Cameron also noted that large commercial properties generally file a tax appeal each year whether or not there is a revaluation, adding that Newark "took measures to ensure that assessments are consistent with the values determined by previous year tax appeal settlements."

Cameron added that the city this year anticipates fewer appeals than it faced in 2013, but experts say plenty of cases are still on the way.

Wolfe, a member of Skoloff & Wolfe P.C., said many property owners didn't appeal last year — even after their assessments were increased in March — because they expected to see a corresponding dip in the tax rate.

But that never came, he said. When they received their first updated tax bills in August, some found their payments had doubled and tripled. That will mean a flurry of activity before the April 1 deadline for filing appeals, he said.

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

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