Opinion
Docket No. 018900-2012
07-09-2014
Re: Alexander Les v. Paramus Bor.
Hon. , J.T.C.
JUDGE
Alexander Les
254 Wilson Avenue
Paramus, New Jersey 07652
David B. Bole, Esquire
Winne, Dooley & Bole, P.C.
A Professional Corporation
240 Frisch Court
Suite 102
Paramus, New Jersey 07652
Dear Mr. Les and Mr. Bole:
This letter constitutes the court's opinion after trial in the above-referenced matter. Mr. Alexander Les ("Plaintiff") challenges the assessment on his one-family residence in Paramus Borough ("Paramus") for tax year 2012. For the reasons explained more fully below, the Judgment of the Bergen County Board of Taxation setting the assessment at $925,000 is affirmed.
I. Findings of Fact and Procedural History
This letter opinion sets forth the court's findings of fact and conclusions of law after trial. R. 1:7-4.
Plaintiff is the owner of a residence in Paramus. The property is designated by the municipality as Block 5609, Lot 2 and is known as 254 Wilson Avenue. The property is in the R-75 Residential District.
For tax year 2012, the property was assessed as follows:
Land $260,400Paramus' ratio for tax year 2012 was 94.35% resulting in an equalized value of $980,392. The lower limit ratio was 80.20% ($1,153,367) and the upper limit ratio was 108.50% ($852,535). The property's assessed land value reflects a ten percent reduction due to traffic conditions affecting the property.
Improvements $664,600
Total $925,000
Also known as the Chapter 123 Ratio, this value is computed annually to determine the ratio of the assessed value to the true value of real property. The "average ratio" is the average ratio of assessed value to true value of real property within a taxing district as of October 1 of the pre-tax year. See N.J.S.A. 54:1-35(a), 3-22(c)-(e), and 51 A-6.
Plaintiff's residence was constructed in 2006 after demolition of a prior residential structure. It is a two story Colonial with four bedrooms, two full and one half bathrooms, and a Jacuzzi. The residence has 2,925 square feet of living space. The home is in excellent condition, has gas heat, central air conditioning, and a two story fireplace. There is a two vehicle attached garage, open porch and patio as well as a full basement which is partially finished.
The house sits on a .25 acre corner lot in a residential area. There is 125 feet of frontage on Wilson Avenue, which is a two-lane 25 mph roadway. There is also 85 feet of frontage on Forest Avenue, which is a four-lane 45 mph main roadway. Paramus imposes a 35 foot setback from houses on corner properties. As a result, Plaintiff must maintain a front and side yard, does not have the benefit of a traditional backyard, and the useable area of the side yard is limited to a 1,600 square foot by 4,000 square foot area.
Plaintiff appealed the assessment to the Bergen County Board of Taxation. On August 23, 2012, the county board issued a Judgment affirming the original assessment.
The Judgment indicated a mailing date of October 31, 2012. Shortly after filing an Answer, Paramus filed a motion for summary judgment requesting the Complaint be dismissed as untimely. By Order dated September 30, 2013, this court denied Paramus' motion and found that the date of service of the county board judgment was December 14, 2012 as evidenced by the post mark on the envelope sent by the county board. There was also evidence to suggest that the indicated October 31, 2012 mailing may have been delayed or effected by "Superstorm Sandy," which arrived in New Jersey on October 29, 2012.
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On December 26, 2012, Plaintiff filed a Complaint in Tax Court challenging the county board's Judgment and seeking a reduction in the assessment. Paramus filed an Answer to the Complaint.
At trial, Plaintiff elected not to call an expert appraiser as a witness. Acting as his own witness, Plaintiff testified that he has a background in finance with training in asset appraisal. He readily admitted that he does not have a background in real property appraisal. Although not qualified as an expert witness, Plaintiff was permitted to testify as to facts and evidence within his knowledge and the court considered the credibility and reliability of that testimony. Plaintiff also produced documents that were marked as evidence in support of the testimony presented.
Plaintiff's challenge to the assessment focused specifically on the location of his property. Plaintiff testified that the assessment of his home did not accurately reflect the impact to value caused by his location on a corner lot with restrictive setbacks, and bordered by a busy thoroughfare.
Plaintiff agreed that the comparable sales approach is generally accepted as an appropriate method of estimating value for a residence. See Brown v. Borough of Glen Rock, 19 N.J. Tax 366, 377 (App. Div. 2001); Appraisal Institute, The Appraisal of Real Estate, 419 (12th ed 2001)(the comparable sales approach "usually provides the primary indication of market value in appraisals of properties that are not usually purchased for their income-producing characteristics."). This method of valuation has been defined as "[a] set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sales prices of the comparables based on the elements of comparison." Brown, supra, 19 N.J. Tax at 417. The court finds that this approach is the best method for determining the true market value of Plaintifaçade residence.
Plaintiff's analysis was frustrated by the fact that he could not identify any sales of exterior residential properties (i.e. properties bordering a busy street) with similar square footage to his home. For this reason his analysis employed two sets of comparable sales of properties located within the boundaries of Paramus.
The first set of comparable sales was composed of larger sized homes in a different neighborhood, where Plaintiff could identify both interior home sales and an exterior home sale with similar gross living space. Plaintiff then computed the average cost per square foot of the interior homes and compared it to the cost per square foot of the exterior home to derive a location deduction. No adjustments were made to compare the physical characteristics of the interior properties to the exterior properties.
The exterior property identified was 393 Spring Valley Road. This property was on the market for 100 days and sold on July 5, 2011 for $850,000. It is situated on a 100 by 250 foot lot located on a two-lane roadway in Paramus. Plaintiff testified that the property sold at a discount of $204 per square foot and that, to his knowledge, it was an arms-length transaction. He submitted as evidence the property record card as well as the NJMLS Customer Report on the property dated February 8, 2014. The property record card indicates that the Spring Valley Road property is located in an R100 zone and that it has 4,159 square feet of livable area on a .550 acre lot. It lists seven rooms with three bedrooms and two full and one half bathroom as well as a Jacuzzi. It lists a one story fireplace, a two vehicle attached garage, a deck, and an open porch.
The Spring Valley Road property is not located on a corner or on the same main roadway as Plaintifaçade property. Its proximity to Plaintifaçade property is unknown. No evidence of traffic conditions was presented for the court to consider whether traffic conditions on Spring Valley Road are in any way similar or comparable to Forest Avenue.
Plaintiff next testified to sales of interior properties located at 349 Harrison Street, 187 Concord Drive, 152 Cumberland Court, and 199 Homestead Road. Property record cards and NJMLS Customer Reports for these properties were admitted into evidence.
| Location | Square Feet | Acreage | Sale Price | Sale Date | Number of Days on Market |
| 349 Harrison Street | 3,579 | .248 | $950,000 | 8/15/2011 | 53 |
| 187 Concord Drive | 4,242 | .328 | $1,080,000 | 4/8/2011 | 115 |
| 152 Cumberland Court | 4,612 | .376 | $1,250,000 | 8/12/2011 | 160 |
| 187 Concord Drive | 3,648 | .292 | $995,000 | 5/23/2011 | 25 |
After compiling this data, Plaintiff took an average of the four interior sales which amounted to $1,068,750, and divided it by the average square foot to determine an average price of $266 per square foot. He compared that calculation to the price per square foot of the Spring Valley Road exterior property ($204) to arrive at a .23 percent reduction in the value of a square foot between a residence located on a main street and a residence located on an interior street.
On cross-examination, Plaintiff acknowledged that the Spring Valley Road sale was designated as a Non-Usable ("NU") sale on the property record card. He did not verify the sale with the parties or the broker of record nor did he inquire as to the details of the transaction or the reason why the assessor marked the sale as non-useable. Plaintiff admitted that he made no adjustments when comparing the properties and did not rely on any cost or market data in his evaluation. He focused solely on obtaining the cost differential per square foot of livable space in similarly sized homes, between an exterior house on a busy street and interior properties on less travelled streets. He conceded that this is not a generally accepted method of appraising property and that he had no foundational support for this methodology.
The second group of comparable sales introduced by Plaintiff was of interior properties with similar square footage to the subject property. He used this group as a base and argued that since his property was an exterior property, its value could not be greater than a similarly sized interior property.
Plaintiff provided four comparable sales of interior properties. He testified that the properties were very close to his home in square footage and were all built in the Colonial style. Property record cards and NJMLS Customer Reports for these properties were admitted into evidence.
| Location | Square Feet | Acreage | Sale Price | Sale Date | Number of Days on Market |
| 295 Buttonwood Drive | 3,096 | .215 | $818,000 | 7/28/2011 | 117 |
| 252 Jolene Court | 2,824 | .416 | $742,017 | 7/18/2011 | 133 |
| 237 Bogert Place | 2,872 | .215 | $783,881 | 9/30/2011 | 31 |
| 203 Brookfield Avenue | 3,360 | .241 | $806,405 | 9/7/2011 | 63 |
Plaintiff testified that 237 Bogert Place is the most similar to his property in square footage (53 square foot differential) and in description with the same number of bedrooms, bathrooms, fireplaces, patios and car spaces in the garage. Given these similarities, Plaintiff asserts that his property must be valued lower than $774,500, the sale price of Bogert Place, because Bogert Place is located on a quiet residential street, while his lot is on a busy corner.
Plaintiff did not make adjustments to any of the comparable properties including the Bogert Place property, either with regard to land value or improvement value, nor did he testify as to why such adjustments were not necessary. His comparison was limited to the square footage of the improvement and the number and classification of rooms.
Using these two comparable sales groups Plaintiff argued in his brief:
...my property's market value is at most $774,500 which was the September 30, 2011 sale price of the most similar comparable sale. However, said price does not account for my property being located on a main road. Plaintiff further contends that a further discount of twenty percent (20%) of true value in the amount of $154,900 should be adjusted downward to the sale price thus establishing a fair market value of my property at $619,600.00. ...Arguendo, even if the Court should reject Plaintiff's calculations as to the twenty (20%) adjustment, the Court should at minimum, downwardly adjust the fair market value by ten (10%) in the amount of $77,450 to $697,050 as a ten
percent (10%) "traffic" discount has already been accepted and established as evidenced by the current tax records of the municipality.
At the conclusion of Plaintiff's proofs, Paramus moved to involuntarily dismiss the complaint under R. 4:37-2 asserting that Plaintiff failed to overcome the presumption of correctness.
II. Conclusions of Law
The court's analysis begins with the well-established principle that "[o]riginal assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). As Judge Kuskin explained, our Supreme Court has defined the parameters of the presumption as follows:
The presumption attaches to the quantum of the tax assessment. Based on this presumption the appealing taxpayer has the burden of proving that the assessment is erroneous. The presumption in favor of the taxing authority can be rebutted only by cogent evidence, a proposition that has long been settled. The strength of the presumption is exemplified by the nature of the evidence that is required to overcome it. That evidence must be "definite, positive and certain in quality and quantity to overcome the presumption."
Ibid. (quoting Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985)(citations omitted)).
The presumption of correctness arises from the view "that in tax matters it is to be presumed that governmental authority has been exercised correctly and in accordance with law." Pantasote, supra, 100 N.J. at 413 (citing Powder Mill, I Assocs. v. Township of Hamilton, 3 N.J. Tax 439 (Tax 1981)); see also Byram Twp. v. Western World, Inc., 111 N.J. 222 (1988). The presumption remains "in place even if the municipality utilized a flawed valuation methodology, so long as the quantum of the assessment is not so far removed from the true value of the property or the method of assessment itself is so patently defective as to justify removal of the presumption of validity." Transcontinental Gas Pipe Line Corp. v. Township of Bernards, 111 N.J. 507, 517 (1988)(citation omitted).
"In the absence of a R. 4:37-2(b) motion . . . the presumption of validity remains in the case through the close of all proofs." MSGW, supra, 18 N.J. Tax at 377. In making the determination of whether the presumption has been overcome, the court should weigh and analyze the evidence "as if a motion for judgment at the close of all the evidence had been made pursuant to R. 4:40-1 (whether or not the defendant or Plaintiff actually so moves), employing the evidentiary standard applicable to such a motion." Ibid. The court must accept as true the proofs of the party challenging the assessment and accord that party all legitimate favorable inferences from that evidence. Id. at 376 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 535 (1995)).
The court is concerned with the existence of the evidence, not its weight. Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969). In order to overcome the presumption, the evidence "must be 'sufficient to determine the value of the property under appeal, thereby establishing the existence of a debatable question as to the correctness of the assessment.'" West Colonial Enters, LLC v. City of East Orange, 20 N.J. Tax 576, 579 (Tax 2003)(quoting Lenal Props., Inc. v. City of Jersey City, 18 N.J. Tax 405, 408 (Tax 1999), aff'd, 18 N.J. Tax 658 (App. Div.), certif. denied, 165 N.J. 488 (2000)).
Only after the presumption is overcome with sufficient evidence at the close of trial must the court "appraise the testimony, make a determination of true value and fix the assessment." Rodwood Gardens, Inc. v. City of Summit, 188 N.J. Super. 34, 38-39 (App. Div. 1982)(citations omitted). If the court determines that sufficient evidence to overcome the presumption has not been produced, the assessment shall be affirmed and the court need not proceed to making an independent determination of value. Ford Motor Co. v. Township of Edison, 127 N.J. 290, 312 (1992); Global Terminal & Container Serv. v. City of Jersey City, 15 N.J. Tax 698, 703-704 (App. Div. 1996).
After a careful consideration of the record, the court concludes that Plaintiff's opinion of value is void of sufficient evidence to overcome the presumption of correctness. A comparative analysis of properties requires that adjustments be made to address the multiple similarities and differences that affect value. These may include variations in property rights, financing terms, market conditions, and physical characteristics of the land and improvements built on it. Adjustments to value between similar properties sold during the relevant time frame are fundamental to the valuation process upon which the sales comparison approach is based. There are significant differences between the comparable sales identified by Plaintiff that warrant adjustment.
Unless the comparable sales are almost identical properties, which they clearly are not, the reliability of such a singular methodology as is used by Plaintiff is suspect. See, Wedgewood Knolls Condominium Ass'n v. Borough of West Paterson, 11 N.J. Tax 514, 522-523 (Tax 1991) (averaging the unadjusted sale prices of comparable sales "presupposes a fungibility within each category of unit model . . . i.e., that each unit model is identical in all respects to every other unit model" and where such fungibility is not proven to exist, the arithmetical averaging of sales prices is an improper and incorrect appraisal methodology). Valuation of real property is not a mere mathematical exercise.
Each of the comparable sales identified by Plaintiff has similarities and dissimilarities that must be acknowledged and accounted for. Plaintiff made no time adjustment and offered no support for the proposition that the market conditions did not call for an adjustment. Plaintiff offered no testimony with respect to the condition, age, or amenities of the comparable sales, and did not quantify in any meaningful fashion the calculations he used to arrive at the conclusion that his property had a true market value of $619,600 or even $697,050 on October 1, 2011.
Furthermore, the property record card introduced into evidence by Plaintiff demonstrates that the effect of traffic on value was considered as to the land component of Plaintiff's property and his property was given a ten percent reduction in the land value of the assessment.
The court accepts and acknowledges that considerations for the size and shape of a lot, as well as frontage, are relevant physical characteristics of property that influence value. Corner properties with frontage on two or more streets may have a higher or lower unit value than neighboring properties with frontage on only one street. The advantage of easier access to corner sites may be diminished by loss of privacy or a loss of utility due to setback requirements.
Residences on corner sites often pay higher costs for front footage, sidewalks, and assessments. Noise, dust, and fumes emanating from a heavily traveled road are likewise not desirable for most low density, residential lots. However, site improvements such as grading, landscaping, fences, curbs, gutters, paving, drainage and irrigation systems, walks and other improvements to the land also impact value and must be considered.
The court finds that Plaintiff's use of unadjusted comparable sales based solely on undocumented traffic conditions is at best an incomplete appraisal methodology for real property valuation and does not constitute evidence of sufficient quality and quantity whereby this court can determine the market value of Plaintiff's property. Plaintiff has not provided sufficient evidence to demonstrate how Paramus' ten percent reduction to land value based on traffic is defective or to show how the assessment is significantly at odds from the true value of the property. Plaintiff has not overcome the presumptive correctness of the county board's judgment and consequently Plaintiff's complaint is dismissed.
III. Conclusion
For the foregoing reasons, the court finds that Plaintiff has not overcome the presumptive correctness of the county board's judgment. A final Order and Judgment affirming the assessment accompanies this letter opinion.
Respectfully Submitted,
Hon. Mary Siobhan Brennan, J.T.C.