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Hartz Mountain Development Co. v. Secaucus Town

February 13, 1997

HARTZ MOUNTAIN DEVELOPMENT CO., PLAINTIFF-APPELLANT,
v.
SECAUCUS TOWN, DEFENDANT-RESPONDENT; MASSACHUSETTS MUTUAL LIFE, PLAINTIFF-APPELLANT, V. SECAUCUS TOWN, DEFENDANT-RESPONDENT.



Before Judges DREIER and D'ANNUNZIO.

Massachusetts Mutual Life (Mutual) appeals from Tax Court judgments upholding the real property assessments for the tax years 1991, 1992, 1993 and 1994 of an office building located at 300 Harmon Meadow Boulevard in the town of Secaucus, Hudson County, New Jersey. Hereafter we shall refer to this property as the property in question or "PQ." The relevant assessing dates are October 1, 1990, 1991, 1992 and 1993. The PQ was assessed for each of those years in the amount of $13,250,000.

Originally built in the 1980's by Hartz Mountain Development Co., the PQ contains approximately 125,000 square feet of rentable space in a six-story building. The PQ was part of a mixed use project known as Harmon Meadow. The project contains office buildings, hotels, theaters and retail uses. In mid-1992, the appellant, Mutual, acquired the property from Hartz Mountain by a deed in lieu of foreclosure. Thereafter, Mutual substituted for Hartz in the pending 1991 and 1992 tax appeals, and filed direct appeals from the 1993 and 1994 assessments. The cases were consolidated and tried on September 21 and 26, 1994, and the court rendered a written opinion.

On appeal, Mutual contends that the Tax Court erred because it failed to consider a prior contradictory report rendered by the town's expert witness which "conceded that a reduction in assessment was appropriate." Mutual also contends that the Tax Court erred in finding an economic rent "widely divergent from actual, recent leases in the record."

Mutual's expert determined the true value of the PQ to be $7,950,000 on October 1, 1990, $8,120,000 on October 1, 1991, $8,335,000 on October 1, 1992, and $8,635,000 on October 1, 1993. In arriving at these estimates he used the income capitalization approach to value. See Parkway Village Apartments Co., v. Township of Cranford, 108 N.J. 266, 270, 528 A.2d 922 (1987) (citing Helmsley v. Borough of Fort Lee, 78 N.J. 200, 394 A.2d 65 (1978)). These estimated true values were primarily based on eight leases within the subject property:

Tenant Inception Expiration Rent (sq.ft.)

Bank of America 08/15/93 5.5 years $15.03

Sanyei America 06/15/93 06/15/98 $18.50

PM Group Ins. 04/15/93 04/15/98 $16.75

AST Research 01/01/93 12/31/96 $14.05

Inchcape 01/15/93 01/15/98 $15.67

Shinwah USA 12/01/92 12/01/97 $15.67

American President 01/03/90 5.16 years $15.00

Fireman's Fund 03/27/89 03/26/94 $17.00

The estimated true values were also secondarily based on nine leases in a building in the Town of Lyndhurst which plaintiffs expert deemed comparable to the PQ:

Tenant Inception Expiration Rent (sq.ft.)

Taree 12/90 12/95 $18.50

W. Braun Co. 4/90 03/95 $15.00

IBP Service Ctr. 06/93 05/98 $13.75

Nedco 08/92 08/93 $7.50

Comtel Computer 12/92 03/98 $13.03

Medi Promotions 05/91 05/97 $12.00

Libby Glass 09/91 09/96 $15.57

Charles T. Main 06/91 05/94 $15.00

Intl. House of Pancakes 05/93 05/98 $14.75

From these comparable leases, plaintiff's expert estimated a stabilized economic rent of $15 a square foot for all years or $1,887,300 annually. He deducted a 20% vacancy allowance and $534,735 estimated expenses, and applied a capitalization rate of 11.70% for 1991 and 1993, 11.50% for 1992, and 11.29% for 1994. His ...


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