On appeal from the Tax Court of New Jersey, 001117-1998.
Before Judges King, Wefing and Lisa.
The opinion of the court was delivered by: Lisa, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
We consider in this appeal whether the increase in assessment of a nursing home, owned by Regent Care Center, Inc. (Regent Care), constitutes a constitutionally impermissible spot assessment. The increase did not occur as part of a district-wide revaluation or reassessment. The nursing home was not the subject of a sale. Thus the increased assessment was not based on a sale of the subject property. The increase was the product of the assessor's assessment maintenance program, in which he reviewed all line items on the municipality's tax rolls and determined that certain commercial properties dramatically increased in value. In the case of the subject property, the assessor concluded it had been grossly underassessed, perhaps as a result of an oversight on the part of the former assessor. The assessor increased the assessments of about 150 properties, including Regent Care's. About 95% of the changes were increases in assessments.
After a trial, the Tax Court, in a published opinion, Regent Care Center, Inc. v. Hackensack City, 19 N.J. Tax 455 (Tax 2001), upheld the increased assessment, concluding it was not a constitutionally prohibited spot assessment. On appeal, Regent Care contends the trial court erred, asserting that because the increased assessment was not based on a change in the zoning, change in legal status or physical change to the property, and it was one of only a small group of properties for which assessments were changed, it is a prohibited spot assessment. Regent Care further urges that we declare the practice of"assessment maintenance" an unconstitutional device creating spot assessments.
Finally, Regent Care argues that even if assessment maintenance is a constitutionally permissible practice, it was conducted in this case without the benefit of uniform guidelines from either the Division of Taxation or the Bergen County Board of Taxation, and therefore the resulting increase in the assessment of its property cannot be sustained. In a related argument, Regent Care contends the subsequently-adopted amendment to N.J.S.A. 54:4-23, L. 2001, c. 101, effective June 14, 2001, which requires submission by the assessor of a compliance plan to the county board of taxation and the Division of Taxation, and approval of the plan, as a prerequisite to changing assessments that are not part of a district-wide revaluation or reassessment, should be retroactively applied. The assessor in this case submitted no such plan because his actions occurred four years before enactment of the law requiring a plan. For the reasons expressed by the Tax Court in its decision on Regent Care's reconsideration motion, where the retroactivity issue was raised, Regent Care Center, Inc. v. Hackensack City, 20 N.J. Tax 181 (Tax 2001), we conclude that L. 2001, c. 101 is prospective only in its application and has no bearing on this case. See also Centorino v. Tewksbury Tp., 347 N.J. Super. 256, 267 n.7 (App. Div. 2001), certif. denied, 172 N.J. 175 (2002).
We reject the arguments advanced by Regent Care and affirm the decision of the Tax Court.
Although this was a trial, the facts are undisputed. Regent Care Center, Inc., supra, 19 N.J. Tax at 457. The only trial witness was Hackensack's assessor, Arthur Carlson, who was called by Regent Care. Ibid. We set forth the pertinent facts from the Tax Court opinion and from our review of the record.
The challenged assessment is for tax year 1998. Hackensack's last prior revaluation was in 1988, followed by a district-wide reassessment in 1993, approved by the Bergen County Board of Taxation, in which all 11,209 line items were reviewed pursuant to N.J.A.C. 18:12A-1.14(c) and the State of New Jersey, Division of Taxation Handbook for New Jersey Assessors § 801.13 (1989). The nursing home was under construction at the time of the 1993 reassessment, and upon completion was assessed at $4,878,000,*fn1 including land and improvement. This assessment was carried forward in 1994, 1995 and 1996.
As of October 1, 1996, for the tax year 1997, Carlson changed the assessment, leaving the land at $546,000, but increasing the improvement to $7,544,300, for a total of $8,090,300, which remained in place through the time of trial in 2001. Between 1993 and October 1, 1996, there were no physical changes to the property and no zoning changes. The property was in use throughout that period as a nursing home. This was one of the approximately 150 assessments*fn2 the assessor changed for tax year 1997 as part of what the Tax Court characterized as an"assessment maintenance plan." Regent Care Center, Inc., supra, 19 N.J. Tax at 457.
To provide context to the assessor's action with respect to the subject property, we describe what he did and why he did it with respect to other properties as part of an overall process that resulted in adjustments to the 150 properties. Carlson initially characterized what he did as an"update." He explained that he reviewed every one of the approximately 11,200 property record cards for the entire city. He considered all available sales ratio data, all available"Chapter 91" income and expense information, N.J.S.A. 54:4-34, and applicable zoning changes. He concluded that, generally, between the 1993 reassessment and 1997 the values of single family homes did not increase.
The assessor determined that about 150 commercial properties were grossly underassessed, of which about 125 were vacant parcels on River Street and apartment buildings scattered throughout the city. The remainder were other commercial buildings, consisting mostly of shopping centers and other retail uses, which were also scattered throughout the city, and Regent Care's nursing home. The assessor determined that the River Street parcels doubled, and in some cases tripled, in value because of a change in zoning from manufacturing to retail. He found the apartment building and other commercial properties to be substantially underassessed based on his analysis of income and expense data. The 150 affected properties did not constitute all commercial properties in the city.
In addition to Regent Care's nursing home, there is one other nursing home in Hackensack. The assessor evaluated both of them. Based upon his knowledge of valuation methods, Carlson believed the most appropriate method for determining the value of a nursing home is based on comparable sale prices allocated on a per bed basis. He was aware of recent nursing home sales in surrounding communities in the range of $40,000 to $60,000 per bed. Regent Care's original assessment was at $24,000 per bed. The other nursing home in the city was appropriately assessed in the higher per bed range. He concluded that Regent Care's property was grossly underassessed, that it"stood out like a sore thumb." Referring to the assessment placed on Regent Care's property by his predecessor, Carlson said:"In my estimation it was underassessed at the time. I don't know what judgment or criteria he used. Obviously I wasn't there at the time. I just thought maybe it was an oversight on his part." Carlson reviewed but did not change the assessment on the other nursing home because no change was warranted.
The changes in the assessments of those 150 properties were not based on sales of those properties. This was not a piecemeal review of only some properties, some classes of properties, or some neighborhoods. Based upon a comprehensive review of every line item in the district, certain commercial properties were determined to be substantially underassessed and their assessments were raised. As ...