December 10, 2007
JOHN KUHN BLEIMAIER, PLAINTIFF-APPELLANT,
HOPEWELL TOWNSHIP, DEFENDANT-RESPONDENT.
On appeal from the Tax Court of New Jersey, Docket No. 8287-2006.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 26, 2007
Before Judges Lintner and Sabatino.
In this residential property tax appeal, John Kuhn Bleimaier ("appellant") seeks review of a January 9, 2007 decision of the Tax Court concerning the municipal assessment of his home in Hopewell Township ("the Township"). Although the Mercer County Board of Taxation ("the County Board") had slightly reduced the Township's assessment, the Tax Court declined to reduce it any further. The Tax Court determined that appellant had failed to overcome the presumption of correctness for municipal assessments set forth in Pantasote Co. v. City of Passaic, 100 N.J. 408 (1985). We affirm.
Appellant purchased the subject property in 1985 for $185,000. The property consists of a two-acre lot, which is a portion of a larger 66.612-acre tract, also owned by appellant, located in the Township in a residential zone at Block 20, Lot 14. The two acres contain a two-story colonial-style stone dwelling built in or about 1750. The present house includes a 32 foot by 15 foot addition that is attached to the original stone structure. The house is situated at the end of a long unpaved driveway. The property also has an 800 square foot pole barn and a 616 square foot detached garage. The remaining 64.612 acres are assessed as qualified farmland. The property is adjacent to two nonconforming sites, respectively occupied by a roofing business and an excavating company.
The residence, which appellant has occupied since he bought it twenty-two years ago, consists of seven rooms. The first floor includes a living room, kitchen, large recreation room, and a full bathroom. On the second floor, there are two bedrooms and another full bathroom. The walls are plaster and the floors are hardwood and tile. It is undisputed that the house, although continuously occupied by appellant, is in need of substantial repairs.
In 2006, the Township completed a municipal-wide revaluation. During the course of that revaluation, appellant's property was inspected and assessed at $570,600, consisting of $350,000 for the two acres of land and $220,600 for the two-story residence. In connection with the assessment, a thirty-two page report was prepared for the Township by Robert J. Edgar, SCGREA, CTA, a State-certified real estate appraiser. As part of his valuation, Edgar referred to recent comparable sales of four homes in the Township built between 1800 and 1900, making various downward and upward adjustments.
Appellant challenged the Township's assessment before the County Board. In doing so, he presented what he contended were four comparable sales of two-bedroom homes sold in the Township between 2002 and 2005. Appellant did not retain an expert. Based upon his own calculations and assumptions, relying upon his list of comparable sales, appellant requested that the land and buildings be assessed at no more than $323,999.*fn1 The County Board reduced the Township's assessment by $20,600 with respect to the improvements, leaving intact the land valuation, yielding a total revised valuation of $550,000.
Appellant subsequently filed an appeal with the Tax Court. His matter was heard on January 9, 2007. The sole witnesses were appellant and Edgar, the Township's expert appraiser. Appellant stipulated to Edgar's qualifications as an expert.
In his appraisal report, Edgar opined that the highest and best use for the subject property is residential, notwithstanding the need for repairs in appellant's house. However, Edgar took into account the disrepair of the dwelling, by making various negative adjustments to the comparable sales of the four pre-20th century homes he used in his analysis. In his expert testimony before the Tax Court, Edgar noted that it would be up to an arms-length purchaser to decide whether to keep and renovate the house or demolish it. Thus, it would be inappropriate to value the property on a land-only basis.
Edgar testified that the dimensions of the house are 2,702 square feet, measured by conventional techniques utilizing the exterior, rather than the interior, walls. Edgar applied to those dimensions a value of $222 per square foot, derived from his averaging of the adjusted square foot value of the four comparables. He acknowledged on cross-examination that his four comparables all had more than two bedrooms. Nonetheless, Edgar maintained that he had adequately taken into account the smaller nature of appellant's premises by adjusting the comparables downward based on the number of bathrooms rather than the number of bedrooms. Edgar also utilized an upward annual inflationary adjustment of twelve percent, in recognition that his comparable sales were from 2004 and earlier in 2005. Based upon his analysis, Edgar valued the subject property, as of an October 1, 2005 valuation date, at $600,000 and within a market range of $502,000 to $779,000.
Edgar opined that the comparable sales posited by appellant were not reliable because appellant had not presented sufficient information to demonstrate their similarity to the subject premises. He noted that appellant's comparables were all much smaller than the subject property, ranging from 1,080 square feet to 1,490 square feet. Additionally, two of the properties were ranch houses, which Edgar considered inappropriate to liken to appellant's two-story historic colonial home. As for the two other properties that were not ranch homes, one was only 1,080 square feet in size and situated on a parcel about one-eighth of the size of appellant's lot, while the other involved a sale occurring almost three years prior to the 2005 valuation date.
In his testimony, appellant stated that he had utilized his own interior measurements of living space because the house has considerable "dead wall" space, yielding a measurement of 2,041 square feet. Using his own comparables, appellant applied to those interior dimensions an average price per square foot of $162. Based upon those calculations and other adjustments, appellant advocated to the Tax Court a proposed valuation of $360,000.*fn2
Having considered these proofs, the Tax Court judge ruled that appellant failed to overcome the presumption of correctness associated with municipal property tax assessments. See Pantasote, supra, 100 N.J. at 412. The judge concluded that appellant had not presented sufficient evidence "definite, positive, and certain in quality and quantity to overcome the presumption" that the Township's assessment reflected a fair value for the property.
In particular, the judge observed that appellant had not provided sufficient information regarding his allegedly comparable properties, other than the fact that they were all two-bedroom dwellings. As the judge stated, "apart from the fact that they have two bedrooms, I know nothing else about them . . . ." The judge further noted that a number of the sales cited by appellant were several years old. The judge rejected appellant's effort to have his square footage limited by interior measurements, noting that Edgar's use of exterior measurements of the "outside perimeter of the structure" was consistent with standard appraisal practices customarily accepted by the court.
Consequently, the Tax Court judge adopted the Township's calculations and affirmed the County Board's assessment under Pantasote. This appeal ensued.
Our scope of review in matters arising out of the Tax Court is circumscribed. As a general matter, we recognize the expertise of the Tax Court in state tax matters and will not disturb its rulings unless it "came to its decision in an arbitrary fashion" or its findings of fact are not "supported by substantial credible evidence." Little Egg Harbor Twp. v. Bonsanque, 316 N.J. Super. 271, 285 (App. Div. 1998) (citing Glenpointe Assocs. v. Twp. of Teaneck, 241 N.J. Super. 37, 46 App. Div.), certif. denied, 122 N.J. 391 (1990)).
The trial judge correctly recognized that this case is governed by the standards enunciated by the Supreme Court in Pantasote, supra, applicable to taxpayer challenges to local property assessments. In Pantasote, the Court instructed that "there is a presumption that an assessment made by the proper [taxing] authority is correct and the burden of proof is on the taxpayer to show otherwise." Pantasote, supra, 100 N.J. at 413 (quoting Aetna Life Ins. Co. v. City of Newark, 10 N.J. 99, 105 (1952)). That presumption in favor of the taxing authority "can be rebutted only by cogent evidence." Ibid. The evidence must be "'definite, positive and certain in quality and quantity to overcome the presumption.'" Ibid. (quoting Aetna, supra, 10 N.J. at 105); see also F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 431 (1985); MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998).
We recognize, as did the Tax Court, that appellant presented what he personally considered to be four comparable two-bedroom properties in an effort to overcome the valuation reached by the Township's expert appraiser. However, "it is not sufficient for the taxpayer merely to introduce evidence[;] the presumption stands until sufficient competent evidence is adduced to prove a true valuation different from the assessment." Pantasote, supra, 100 N.J. at 413 (quoting Aetna, supra, 10 N.J. at 105). Such proofs, for example, suffice when they show that the taxing authority's assessment is "totally unrelated to true value or one derived from a patently arbitrary and capricious assessment methodology." Id. at 417.
As the sole expert witness and the Tax Court judge both noted, the four comparable sales presented by appellant involved properties that were all substantially smaller than the subject residence, one of them being nearly two-thirds less than the size of appellant's home. Although appellant did testify that he was personally familiar with one of the four allegedly comparable homes because he was a friend of its owner, his testimony otherwise did not shed much light on the characteristics of those other properties. The probative value of his counterproofs was also diminished by the fact that two of his cited sales occurred in 2002 and 2003, substantially before the October 1, 2005 valuation date for his property.
With respect to appellant's criticisms of the valuation conducted by Edgar, we are satisfied that those criticisms, while not frivolous, were insufficient to demonstrate that Edgar's appraisal was patently inflated, arbitrary or capricious. We are mindful that an inhabited eighteenth century farmhouse is not that commonplace in New Jersey, and that valuing a property of that vintage may not be easily accomplished. Nonetheless, the Tax Court judge had ample grounds under Pantasote to find that the appraiser's assessment possessed sufficient reasonable support.
We recognize that reasonable minds might differ about whether one should consider the number of bedrooms rather than the number of bathrooms in evaluating the marketability of a suburban dwelling, but that point of disagreement does not necessarily upset the overall reasonableness of the Edgar appraisal. Nor does the alleged fact, as appellant repeatedly emphasized, that no other two-bedroom home has ever sold in the Township for $600,000 necessarily mean that this particular property was not worth that much, or at least the $550,000 figure adopted by the County Board. Moreover, the Township's expert did take into account the need for repairs on the premises by applying a discount for its condition in his valuation; the parties disagree over the proper quantum of that discount. Also, given that appellant has resided in the house for over two decades without undertaking any major renovations, the trial judge had good reason to reject the argument that the house should be deemed of no positive value.
In sum, we sustain the Tax Court's considered determination that appellant failed to overcome the presumption of correctness in accordance with Pantasote.