Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McCrory Stores Corp. v. City of Asbury Park

Decided: November 8, 1965.

MCCRORY STORES CORPORATION, PETITIONER-RESPONDENT,
v.
THE CITY OF ASBURY PARK, RESPONDENT-APPELLANT



Sullivan, Lewis and Kolovsky. The opinion of the court was delivered by Kolovsky, J.A.D.

Kolovsky

For the year 1962 property known as 632-644 Cookman Avenue, Asbury Park, was assessed for taxation at a valuation of $521,000 (land $277,200, improvements $243,800). The county board of taxation affirmed the assessment. The Division of Tax Appeals (Division) reduced the assessment to $325,000 (land $200,000, improvements $125,000). The city appeals.

The petitioner named in the appeal from the assessment is McCrory Stores Corp. (McCrory), describing itself as "Tenant, Taxpayer and Agent of the Owners," recited to be "Realty Improvement Inc. and Frall Realty Co." The property, which is occupied by McCrory's subsidiary, H.L. Green Co. (Green) as a retail variety store, was leased to McCrory in 1956 for a term of 40 years, at an annual net rental of $41,000. By deed dated December 14, 1960 the owner of the entire property sold the westerly half thereof to Frall Realty Corp. and The Ritter Foundation for $288,000.

632-644 Cookman Avenue is in the heart of the downtown Asbury Park retail shopping area, although, according to McCrory's experts, land in the 500 block to the east, influenced by the presence of the Steinbach Department Store on the north side of the street, is more valuable. The property consists of a rectangular tract of land extending from the south side of Cookman Avenue to the north side of Lake Avenue, a depth of 200 feet, with a frontage of 100 feet on each avenue. Entrance to the building on the property, a part one- and part two-story building and basement, is afforded from both avenues. Originally consisting of two 50-foot wide buildings, one of which had been occupied for years by Green, the two

buildings were altered and remodeled in 1956 into one building, described by Hannoch, one of the taxpayer's experts, as "an attractive building" with an "aluminum, plate glass, face brick and marble store front, asphalt tile covered wood floor, fluorescent lights, painted walls, unit heaters and fully air conditioned."

The entire first floor (estimates of whose area vary from 18,000 to 18,500 square feet) and some 4500 to 5000 square feet of the basement are used as selling space. Some 3500 square feet of the basement area are used for storage. The second floor portion (estimated by the city's expert to contain 10,400 square feet) is used for storage, stock rooms and rest room facilities.

At the hearing before the Division the city relied on the testimony of one real estate expert, Robert J. Rubenstein. McCrory called three witnesses: two real estate experts, John D. Lazarus and Franklin Hannoch, Jr., and David Greenwald, its vice-president in charge of real estate.

Greenwald listed the gross sales of the Green Store over the years and testified that the annual gross rental cost to McCrory was approximately $62,500 (net rental $41,000 plus real estate taxes $18,000, plus maintenance, repairs and insurance $3500); that "it costs us approximately 12% to do business in the Asbury Park H. L. Green Store."

Lazarus valued the property at $330,000 (land $165,000, building $165,000) using two methods of valuation: one, the "cost or summation approach" (reproduction cost, depreciated), the other, the "income approach." In using the first method, he estimated a building reproduction cost of $301,400, deducted 40% for depreciation to reduce the building value to $180,840, and added a land valuation of $165,000 ($1650 per front foot) for a total value of $345,840.

For the income approach Lazarus, by taking 7% of $495,000 which he said were Green's gross sales for 1961, calculated an annual rental income of $34,650 before taxes and expenses, capitalized $34,650 at 11% ("7% for interest and recapture and 4% for taxes, insurance and maintenance")

and reached a valuation of $315,000. His final valuation, $330,000 was midway between the valuations resulting from the two approaches.

Actually, however, Green's 1961 gross sales were $551,785, not $495,000. Application of Lazarus' income value formula to the correct amount would result in a valuation of $351,100 instead of $315,000.

Lazarus described at some length the conditions that have adversely affected retail sales in and the rental value of property in the retail shopping area of Asbury Park, which "has always been regarded as the largest shopping center in Monmouth County." These included the opening of the Garden State Parkway in 1954, providing easy access from Monmouth County to stores in Essex, Union and Morris Counties, and the opening of various shopping centers in Monmouth County in the years from 1955 to 1960.

Hannoch, too, used two methods of valuation to reach a "fair market value" of $324,000, apportioned: land $165,000, building $159,000. In the "physical approach" (reproduction cost, depreciated), he estimated the building reproduction cost at $319,500, deducted 50% ($159,750) for depreciation, and added a land valuation of $165,000 for a total of $324,700.

In the income approach, he considered leases and sales in the 600 block and concluded therefrom that the property under appeal had an annual rental value of $400 per front foot, or a total of $40,000 per year. "As a check," he took into consideration the sales volume in the store, which he noted as $737,000 in 1957 and approximately $500,000 in 1961, and "stabilized" the gross sales at $600,000. He pointed out that "even a 6% allowance" as rental value would total only $36,000. However, he estimated a gross annual rental income of $40,000, deducted a total of $2800 for insurance, repairs and management (although the individual items listed actually totalled $4800), for a net income before taxes of ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.