On appeal from the Tax Court of New Jersey, Docket Nos. 4916-2004 and 2077-2005.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, A. A. Rodríguez and Collester.
Defendant White Township appeals from two December 15, 2006 judgments entered by the Tax Court with respect to the assessment on plaintiff's complex of industrial buildings in White Township. The Tax Court reduced the assessment from $134,230,700 to $57,415,200 for 2004 and to $60,217,600 for 2005 (after the $500,000 exemption).*fn1
The Township claims that "the Tax Court erred by reducing the tax assessment set by a revaluation company, because there was no definite, positive and certain evidence that the assessment was incorrect" and "erred when it 'stretched' to use plaintiff's land sales, and without legitimate land sales the court could not determine the value of the DSM complex." The defendant also emphasizes the presumed correctness of the assessments and asserts that the quality of plaintiff's proof did not overcome it.
The plaintiff emphasizes the presumption of correctness of the Tax Court opinion and the special expertise to which the court is entitled. It argues that valuation was properly determined based on competent evidence including the plaintiff's use of expert testimony as to depreciation, and that the trial court did not abuse its discretion in admitting evidence.
The site has seventy-one "separate improvements" (or "industrial buildings") comprising 899,533 square feet on 276.118 acres. However, the stipulated "land area" of the land "actually under appeal" is 144.01 acres. Only plaintiff presented proofs as to value. After plaintiff's expert, John Coyle, had submitted his report with his estimated market value for tax year 2004, and his updated report with his estimated market value for tax year 2005, the parties stipulated to the cost of replacing the buildings that totaled $153,000,000 for tax year 2004 and $171,000,000 for tax year 2005.*fn2
In his final report, Coyle allocated a land value of $4,320,000 for 144.01 acres of land (the stipulated acreage amount), and $50,205,000 for improvements, which totaled $54,525,000 for the tax year 2004. He arrived at the cost for improvements using the stipulated figure of $153,000,000 for the cost of rebuilding the improvements. He subtracted $101,244,200 for "physical deterioration" and $1,552,700 for "functional obsolescence," so that the "total depreciation" was $102,796,900. Thus, the "depreciated cost new of the improvements" was $50,203,100, which together with the land value was $54,523,100.
For tax year 2005, Coyle allocated a land value of $4,535,000 for the 144.01 acres of land and $52,465,000 for improvements, which totaled $57,000,000. He then used the stipulated figure of $171,000,000 for the "cost new of the improvements," and subtracted $116,924,000 for "physical deterioration" and $1,622,300 for "functional obsolescence," so that the "total depreciation" was $118,546,300. Thus, the "depreciated cost new of the improvements" was $52,453,700, resulting in a total value of $56,988,700, which was rounded to $57,000,000.
Coyle determined that if the property were vacant land as of the date of appraisal, "low density industrial development in accordance with zoning and other land uses controls would represent its highest and best use." "As presently improved," he believed the highest and best use is "industrial utilization for manufacturing and related purposes" by a "single occupant."
Coyle noted all three approaches to value -- "the sales comparison approach," the "income approach," and "the cost approach" -- but made no calculation based on the first two approaches because he felt there was inadequate information available as to sale or rental of similar properties of similar size with multiple buildings and some multiple levels.
In his cost approach, Coyle used multiple comparable land sales, Da 247-353, of properties in rural areas physically close to Warren County, including Eastern Pennsylvania. Based on the five land sales, Coyle determined that the subject property had a value of $30,000 per acre. The original report was based on the 276.118 acres of land, but - as already noted - based on the stipulation as to the size of the subject property, Coyle revised his calculation so that it was based on 144.01 acres. Thus, he concluded that land was worth $4,320,000 for tax year 2004. For tax year 2005, Coyle "trended" the land value upward by five percent, so he calculated $31,491 per acre for 2005. Thus, he concluded that the land was worth $4,535,000 for tax year 2005.
Coyle considered the cost of reconstruction, age and overall condition of the buildings, and calculated depreciation and costs for replacing the improvements. As already noted, he determined their value to be $54,523,100 and $56,598,700 respectively, and "rounded" the total value for the property to ...