Opinion
Docket No. 011637-2009 Docket No. 012752-2010
07-09-2014
Re: Guttenberg Terrace II v. Township of Guttenberg
JUDGE
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT
COMMITTEE ON OPINIONS
Joseph Pojanowski, III, Esq.
Bertone Piccini LLP
777 Terrace Avenue - Suite 201
Hasbrouck Heights, New Jersey 07604
David Yanotchko, Esq.
Florio & Kenny, L.L.P.
5 Marine View Plaza - Suite 103
P.O. Box 771
Hoboken, New Jersey 07030
Dear Mr. Pojanowski and Mr. Yanotchko:
This letter constitutes the court's decision following a trial of these matters wherein the taxpayer challenged the assessments on the subject properties for tax years 2009 and 2010. Guttenberg Terrace II ("taxpayer"), a general partnership, is the owner of thirty-four residential condominium units located at81 70th Street in the town of Guttenberg ("Township") and designated on the official tax map as Block 35, Lots 6.02-6.34. The properties, which the taxpayer owned on October 1, 2008 and October 1, 2009, are each individually assessed.
These appeals, timely filed with the Tax Court, were the subject of proceedings before the Hudson County Tax Board ("County Board") where thirty-four separate petitions were filed by the taxpayer. The taxpayer explained the reason for the appeals before the Board thus: "[t]he net income for this failed condominium 34 unit building does not support the municipality's assessment. See attached Income and Expense Statement." The County Board affirmed the assessments.
Now before this court, taxpayer re-asserts its contention that the properties constitute a "failed condominium," relying on the testimony of the owner and an expert licensed appraiser. According to taxpayer's expert, the properties should be valued as an apartment building using the income approach because efforts to sell the units to end users have been unsuccessful. Ignoring the properties' legal status as individual condominiums, the expert valued them as a single entity on an income basis then assigned value to the units. The court finds taxpayer has failed to overcome the presumption of validity attached to the condominium assessments and affirms the judgments of the County Board.
Findings of Fact
Zarina Goel testified as a fact witness on behalf of the taxpayer and described herself as the property owner. The subject is improved with three inter-connected brick buildings, one with a parking garage on the ground floor, constructed in the 1970s as a residential apartment building. There is parking for twenty-one cars. Purchased by her in 1980 for investment purposes, Goel converted the apartment building to condominium ownership in 1989 and filed a master deed. However, she has managed the properties as an apartment building since she purchased them.
It was unclear by her testimony whether she held a 50% interest or 100% in Guttenberg Terrace II on the relevant valuation dates.
There are five studios (ranging in size from 274 to 346 square feet); seventeen one-bedroom units (478 to 644 square feet); and twelve two-bedroom (from 791 to 815 square feet) according to the floor plans included in the master deed and made a part of the Township's expert report.
Although the improvement consists of three inter-connected buildings, the court will use the term "building" or "apartment building" rather than "buildings" for ease of reference.
At the time of the conversion, Goel owned a second property in Guttenberg at 412 68th Street, which she also converted to condominium ownership in 1989 ("68th Street property"). Between 1989 and 2005, she successfully marketed and sold all of the units at the 68th Street property with the exception of one. (The unsold unit was occupied by a senior citizen and purchased by Goel.) According to the witness, the units at the two properties are the same size, but the building and units at the 68th Street property are better in terms of condition and appearance.
When the subject building underwent conversion it contained both vacant and occupied units. According to Goel, none of the pre-conversion tenants purchased their units. Notably, there was no evidence presented regarding asking prices or whether discounts were offered. Sometime in 1991, a realtor was hired, and five vacant one-bedroom units were offered for sale through the Multiple Listing Service. The units were taken off the market after three months which taxpayer claims was "on the advice" of the realtor. No units were marketed for the next fourteen years. Then, in 2005, eight vacant one-bedroom units were offered for sale during a four-month period by the same realtor. According to the witness, she was advised the reason none of the units sold was because the building looked like a motel. The units were re-rented with no further efforts to market the condominiums. As of the valuation dates, none of the units had been sold.
Goel contends that the design of the building hampered her efforts to sell the units. As depicted in photographs, there are no common interior hallways; the front door to each unit is located on an exterior walkway. When her attorney asked her why she never rescinded the master deed, she explained that the building is her retirement. Both the payment of taxes and the cost of an attorney posed financial difficulties for her. Goel testified that she never formed a condominium association, no annual reports were filed with the New Jersey Department of Community Affairs ("DCA"), and the building is registered with the DCA as a "multiple building" inspected every five years.
Goel described the rental history at the converted building. Frequent turn-over of rentals in 2008 and 2009 occurred where tenants would rent for very short periods (for example, two to three months) and then move out. In total, five or six units were vacant in 2008, and seven or eight units were vacant in 2009 and 2010. She believed there were no vacant units on the valuation dates, but on cross-examination was less sure. No rent rolls were produced, but taxpayer's expert's report contained a list of each unit with a rent figure for 2008 and 2009. On cross-examination, the witness testified that the 2008 and 2009 income and expense statements list vacancy factors of $65,420 and $35,706, respectively, reflecting the amount of lost rent recorded in her books and records. One unit has been occupied by a senior citizen since June 1, 1989 and is subject to the municipal rent control.
Taxpayer's Expert
Taxpayer's expert appraised the condominiums as one parcel and referred to the subject as "the property" throughout. He concluded the highest and best use of the property is a garden apartment facility with parking. Noting that the owner has historically operated it as an apartment building, the expert further opined that the property is a single economic unit and should be valued as such. "Since apartment complexes are bought and sold based on their income producing capabilities, it is my opinion that the income approach would produce the most reliable indication of value."
He also examined use of the property as a residential condominium. The expert indicated he was unsure whether the units could be sold based on Goel's testimony about her failure to file documents with the DCA which affected his highest and best use analysis. He further determined that it was neither financially feasible nor maximally productive to operate the building as a condominium, critical of the overall interior design, layout, quality and size of the properties. According to the expert, neither the unit interior spaces nor the building's exterior appearance offered physical characteristics desirable to homebuyers. The building resembled a rental facility or "motor lodge" with "over-night stay units" rather than condominium units. He compared the exterior of Goel's second property with that of the subject in side-by-side photographs and found the second building was a "better product" because it "looked more like a condo."
The photograph of a subject unit bedroom contained in the expert's report depicted electric baseboard heat with a built-in air conditioning unit above on one wall. He used the photograph to illustrate that the space inside the subject units was "so tight" that it was "difficult to take a good picture of the space." That evidence constituted the expert's sole support for his criticism of the unit interiors. Based on the interior and exterior of the property, the expert concluded that the property would only appeal to a renter. He did, however, view the location of the property as highly favorable citing "the excellent access to New York City via transportation or via the Holland or Lincoln Tunnels."
Aside from the inferior nature of the building, the expert also concluded that the units would not be marketable to end users because the subject tenants would enjoy protection under the anti-eviction statutes, subject to eviction for non-payment of rent only. Therefore, the taxpayer would have no ability to sell vacant units.
In keeping with his highest and best use determination, the expert used the income approach to value. The evidence presented regarding the value conclusions was confusing, particularly with regard to how the expert determined the individual unit values. The expert explained his methodology thusly. First, he determined potential gross income for the apartment using a list of unit rents. To calculate expenses, the expert relied on taxpayer's 2008 and 2009 income and expense statements. He indicated that he stabilized expenses and confirmed market rent through examination of competing apartment properties. In arriving at a figure for "vacancy and credit loss" the expert compared the potential gross income to actual rent received, as listed on the income statement. The expert then calculated a net income figure for the apartment. Relying on industry data for apartment buildings in the New Jersey area, the expert derived a capitalization rate through the band of investment technique. The expert applied the capitalization rate to the property's net income and opined a value for the apartment building for each valuation date which he labelled the "Indicated Value." The "Indicated Value" was $1,958,000 (as of October 1, 2008) and $1,658,000 (as of October 1, 2009).
In addition to the "Indicated Value" the expert also reported the total sum of all of the unit assessments in the amount of $3,094,034, which he called the "Indicated Assessed Value."
After providing the "Indicated Value" of the apartment building for the relevant dates the expert read into the record a value for each individual unit. In the expert's report, the manner by which he assigned individual values to each unit was left unexplained. Moreover, at trial taxpayer's counsel never directly asked the expert how he arrived at the unit values. Instead, counsel asked the expert about his prior testimony where the expert modified the effective tax rate and capitalization rate after use of an incorrect ratio. As a follow up to that testimony, taxpayer's counsel inquired whether the modifications would affect the individual unit values reported by the expert. In that context, the expert offered the following testimony as to how he arrived at the unit values:
At trial, taxpayer's expert recognized that the Guttenberg ratio upon which he had relied in formulating the effective tax rate for his report (which he added to the capitalization rate he derived) was incorrect. Guttenberg's Chapter 123 average ratio for tax year 2009 is 35.61%. For 2010, the average ratio is 35.82%. At trial, the expert recalculated the capitalization rate, and applied it to the net income using the correct ratio. Based on those calculations the expert revised his "Indicated Value" for the property, as cited infra, and revised the unit values set forth in his report.
They [the unit values] might be modified slightly in that in order to opine a value for which the units, after opining overall value, in the master deed each of the units based on size had a percentage of the whole and we utilize that percentage to, so for example, in unit 33 on the top of the page, I believe that was, I am sorry, the next one, unit 1, C01, I believe that was 3% overall part of the whole so that would have to be adjusted from 48.7 to 49.7.
In the expert report the value of Unit CO1 as of October 1, 2009 was listed as $48,700. After accounting for the change to the capitalization rate the expert revised the unit value to $49,700.
There was no other testimony about the method used to determine the stated individual unit values, and no questions were posed on cross-examination. The unit percentages listed in the master deed were also not provided. Having testified to their individual values, the expert then set forth a Chapter 123 analysis for each unit and concluded that all of the units were over assessed.
N.J.S.A. 54:51A-6, commonly known as "Chapter 123," establishes a presumptive common level of assessment to be applied by the fact finder when a taxpayer seeks relief from a discriminatory assessment in a non-revaluation year.
The expert offered an alternate opinion of value for the units, which he labeled the "Indicated Value per Unit," that did not distinguish among unit type. While he did not testify to his method for arriving at the alternate value conclusion, he apparently divided the "Indicated Values" ($1,958,000 and $1,658,000) by thirty-four, the number of units in the building, to arrive at an "Indicated Value per Unit" of $57,588 as of October 1, 2008 and $48,764 as of October 1, 2009.
As a result, the expert provided two value conclusions for each unit, both grounded in the expert's calculation of the total potential income from rental of the properties. The values are set forth in a chart at the conclusion of the opinion. In some instances, a pronounced difference between the dollar amount of the values assigned by the expert to a particular unit exists (see chart). The expert did not explain why he provided two values, and the values were not reconciled by the expert.
Township's Expert
The Township offered a licensed real estate appraiser who was accepted by the taxpayer without objection and concluded the highest and best use of the property is a residential condominium to be valued by the sales comparison approach. The expert focused on the fact that the taxpayer filed a master deed converting the subject properties to condominiums and has continually held the property in the condominium form of ownership as reflected by the tax records, which historically list the property as a class 2 property for assessment purposes. That status has remained unchanged since the late 1980s even though the taxpayer has decided to rent the units and put minimal effort into marketing them for sale. According to the expert, the building "is a registered condo and legally permissible."
In the expert's opinion, the properties reach their highest maximum potential value as a condominium. Moreover, the law requires the assessor individually assess condominium units as they would single-family dwellings, an approach that helps maintain consistency among assessments. On that basis, the expert utilized the sales comparison approach to value as the accepted approach to value a single-family home. The expert testified on cross-examination that he would not discount the value of the occupied units since it was his understanding that any tenancy protections would have long expired.
The Township's expert found that the town of Guttenberg, only .19 square miles or several blocks in area, offers few condominium sales other than units at The Galaxy, a high-rise condominium located on the river. As a result, he relied on seven condominium sales located in West New York and North Bergen, immediately adjacent to Guttenberg, which he opined reflect the same market as the subject. The expert described the area's condominium market on the valuation dates as "active." Each comparable sale he relied on resembled the type and size of a subject unit, was vacant at the time of sale, and sold within months of the relevant valuation date. Reasonable adjustments were applied to the comparable unit sales prices to account for time, differences in age/condition, and access to parking, as between the comparable units and the subject properties. While the buildings were of similar brick construction and vintage, with a similar number of units, none of the comparable units were in buildings with exterior walkways. The expert included an age/condition adjustment of 10% for those properties that had been recently renovated. Otherwise, no adjustment was made for the difference in building design. Township's expert concluded a value for each type of unit. The studio and one-bedroom units were $200/square foot, and two-bedroom $185/square foot as of October 1, 2008. The studio and one-bedroom units were $185/square foot, and two-bedroom $170/square foot as of October 1, 2009.
Two motions were made at trial on which the court reserved, including the Township's motion for involuntary dismissal pursuant to R 4:37-2. As the basis of the motion, the Township contended that the taxpayer failed to overcome the presumption because use of the taxpayer's income approach to value condominium units has been rejected by the courts. At the close of trial, the taxpayer moved to bar admission of the Township's expert's report co-signed by him and by a colleague in his office, as a net opinion based on the expert's testimony that he had not inspected the interior of the "subject property" or the comparable properties relied on to arrive at value. The court finds that based on all of the testimony, Jablin v. Borough of Northvale, 13 N.J. Tax 103 (App. Div. 1991) is controlling and denies the taxpayer's motion to bar admission of the Township's expert's report.
The Township's motion was renewed at the close of trial pursuant to R. 4:40.
As a practical matter, nearly all of the information included in the report was admitted in evidence through the testimony of the expert.
Conclusions of Law
"Original assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). The presumption of correctness arises from the view "that in tax matters it is to be presumed that governmental authority has been exercised correctly and in accordance with law." Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (citing Powder Mill, I Assocs. v. Township of Hamilton, 3 N.J. Tax 439 (Tax 1981)); see also Byram Twp. v. Western World, Inc., 111 N.J. 222 (1988) and City of Atlantic City v. Ace Gaming, LLC, 23 N.J. Tax 70, 98 (Tax 2006).
The burden is on the appealing party to overcome the presumption and prove that the assessment is erroneous. "The presumption in favor of the taxing authority can be rebutted only by cogent evidence [ ]. The strength of the presumption is exemplified by the nature of the evidence that is required to overcome it. That evidence must be 'definite, positive and certain in quality and quantity to overcome the presumption.'" Pantasote Co., supra, 100 N.J. at 413 (quoting Aetna Life Ins. Co. v. Newark, 10 NL 99, 105 (1952)).
The court must accept as true the proofs of the party challenging the assessment and accord that party all legitimate favorable inferences from that evidence. MSGW Real Estate Fund, LLC, supra, 18 N.J. Tax at 376 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 535 (1995)). If the court determines that sufficient evidence to overcome the presumption has not been produced, the assessment shall be affirmed and the court need not proceed to making an independent determination of value. Ford Motor Co. v. Township of Edison, 127 N.J. 290, 312 (1992); Global Terminal & Container Serv. v. City of Jersey City, 15 N.J. Tax 698, 703-704 (App. Div. 1996).
The court finds that the taxpayer failed to overcome the presumption of validity that attaches to the assessments. The law requires that units held in the condominium form of ownership receive individual assessments. "Each unit shall constitute a separate parcel of real property which may be dealt with by the owner thereof in the same manner as is otherwise permitted by law for any other parcel of real property." N.J.S.A. 46:8B-4. "All property taxes, special assessments and other charges imposed by any taxing authority shall be separately assessed against and collected on each unit as a single parcel, and not on the condominium property as a whole." N.J.S.A. 46:8B-19; se e also Bloomfield Assocs. v. Town of Bloomfield, 12 N.J. Tax 501, 509 (Tax 1992) ("[c]ondominium units, whether constructed as condominiums or converted from rental apartments, are separately assessed for local property tax purposes. [ ] Residential condominiums are thus treated no differently from detached, owner-occupied single-family dwellings . . . ."). The forgoing sections clearly indicate the State's intention to "place condominium owners on the same legal basis . . . as other owners of real property." Cigolini Assoc. v. Borough of Fairview, 208 N.J. Super. 654, 665 (App. Div. 1986).
Notwithstanding the statutory mandate and the fact that each unit carried an individual assessment for the tax years in question, the taxpayer's expert in this case valued the properties as a single parcel and failed to offer cogent evidence as to the market value of each condominium unit on the relevant valuation dates. He calculated the property's potential income by adding together the contract rents for all of the units at the property, relied on industry data for sales of apartment buildings to arrive at a capitalization rate, and derived an "Indicated Value" for the building as one parcel.
Confronted with separate assessments for each of the subject properties, rather than one, the taxpayer's expert then applied the unit percentages in the master deed to the "Indicated Value" of the apartment building to arrive at individual assessments. The Condominium Act states that the master deed percentages reflect "[t]he proportionate undivided interests in the common elements and limited common elements, if any, appurtenant to each unit." N.J.S.A. 46:8B-9. But, the expert failed to provide any evidence to show the percentage calculation equated with value. He did not examine or analyze the value of each unit beyond applying the master deed percentage. In fact, the expert offered no explanation for how the master deed percentages were derived other than that they were "based on size."
Any reliance the court might place on the opinion of unit value offered by the taxpayer's expert is further diminished by the fact that he offered two different value conclusions. While the expert seemed to focus more on the value reached through the first method than the uniform "Indicated Value per Unit," he failed to reconcile the separate value conclusions and instead provided contradictory, rather than cogent, evidence of value.
The taxpayer made a business decision to hold the units in the condominium form of ownership. Indeed, both experts testified that condominiums are generally more valuable than apartments. A consequence of the taxpayer's election to continue ownership of the properties as a condominium is that, by law, each condominium unit must receive a separate tax assessment based on the unit's market value. See N.J.S.A. 46:8B-19; Cigolini Assocs., supra, 208 N.J. Super. at 664-66; Chesterfield Assocs. v. Edison Twp., 13 N.J. Tax 195 (Tax 1993).
In Cigolini Assocs., supra, 208 N.J. Super. at 664-65, the Appellate Division held that a taxpayer did not overcome the presumption of validity attached to condominium unit assessments when the "plaintiff's expert ignored the individual nature of the units and the assessments and instead treated the building as a single entity which he valued on an income basis." In that case, the owner of a building operated as a nineteen-unit apartment complex filed a master deed and converted the building to condominium ownership. As of the following tax year, none of the units had sold; but this, the Appellate Division said, did not warrant disregarding the legal status of the property as comprising of individual parcels.
We recognize that the units are not selling. While that may be unfortunate for plaintiff, nevertheless it must bear the tax consequences of its voluntary business decision to convert the building, even if unwise. See General Trading Co., v. Taxation Div. Director, 83 N.J. 122, 416 A.2d 37 (1980). If we reached any other conclusion we would contravene the policy of this State to place condominium owners on the same legal basis, insofar as consistent with the special problems of condominiums, as other owners of real property. See AMN, Inc. v. So. Bruns. Tp. Rent Leveling Bd., 93 N.J. 518, 527-529, 461 A.2d 1138 (1983). Further, in our view the fact that plaintiff owns all the units is not germane. We consider plaintiff as being the owner of 19 separate properties, a legal status it selected for itself.Further, the Appellate Division held that permitting the attorneys to divide an assessment for an entire building arrived at using the income approach among the building's units was insufficient to assess the individual units. Id. at 661-64. This court finds Cigolini controlling and concludes that the taxpayer failed to support its claim for relief with evidence definite in nature sufficient to overcome the presumption.
Id. at 665.
The taxpayer in this case argues that the subject properties reach their maximum potential through the rental of the units because the design and appearance of the complex renders the units unsalable, and protected tenancies also hinder sales. Thereby, the taxpayer contends that the concept of a "failed condominium" discussed in Bloomfield Assocs. v. Town of Bloomfield, 12 N.J. Tax 501 (Tax 1992) formed the model for this case. However, the taxpayer's reliance on the case is misplaced.
Unlike here, the majority of the units in that case were subject to protected tenancies which led the court to conclude that the highest and best use of the property was for investment.
The highest and best use of the unsold units . . . is for investment. One arrives at this conclusion almost by default. All but 87 units are occupied by protected tenants who, for a number of years, cannot be evicted except for non-payment of rent, so they cannot be sold for occupancy by the purchasers; they can only be sold to investors.As a result, the Tax Court accepted the taxpayer's expert's income approach to valuation where the expert ascertained a value for each unit type based on the income it generated. Significantly, that conclusion has no effect on the requirement that the units be separately assessed and that the taxpayer provide cogent evidence of unit value. See also Chesterfield Assocs., supra, 13 N.J. Tax 195; Double R. Enters. v. City of East Orange, 13 N.J. Tax 54 (Tax 1993). Indeed, the expert in Bloomfield Associates did not base his value conclusions for the condominium units on the income attributable to the whole building.
Id. at 509-10.
The taxpayer here did not introduce any evidence to support its contention that statutory protections for tenants of condominium units applied to any tenants at the subject properties on the relevant valuation dates (with the exception of one senior protected tenant listed on the income and expense statement offered into evidence at trial). Had there been credible support for taxpayer's argument, the court assumes such evidence would have been introduced, particularly in light of taxpayer's stated reliance on Bloomfield Associates. Notably, the taxpayer's own evidence suggests it is unlikely there exist any other protected tenancies at the subject properties because the properties experience frequent and continual turnover in tenancies.
As to the protections afforded by the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 et seq., in the case of non-senior, pre-conversion tenants, statutory protection extends for a maximum of eight years after conversion to condominium status. Tenants who elect not to purchase their units must be given three years notice before the landlord can institute eviction actions on the basis of conversion. Where a tenant has applied for comparable housing and such housing has not been provided, the tenant may be entitled to up to five one-year stays. The Senior Citizens and Disabled Protected Tenancy Act, N.J.S.A. 2A:18-61.22 et seq., provides forty years of protection to seniors and disabled tenants cannot be evicted as long as they continue to qualify under the Act. Pre-conversion condominium residents in Hudson County may also be protected under the Tenant Protection Act of 1992, N.J.S.A. 2A:18-61.40 et seq. which provides unlimited tenant protection for those who qualify through income, age (seventy-five) or disability and remain qualified. Under the Act, post-conversion tenants are entitled to two months' notice prior to entry of a judgment of possession by the owner who seeks to sell a unit to an end user. The notice is to be served at the commencement of the tenancy. N.J.S.A. 2A:18-61.1 et seq.
The court understands that the taxpayer believes the units are unsalable because they are unattractive and small. But, the taxpayer failed to substantiate this conclusion with evidence showing there is no market for condominiums with exterior hallways, short of the hearsay statements it relied on at trial. Moreover, as to the unit size, the evidence in the record appears contrary to taxpayer's expert's opinion that the layout of the units had a negative effect on sales. Goel testified that the units at both the subject and at her second converted condominium are the same, and as of 2005 she had sold out the second property, proof that the market did not find units of the subjects' size to be undesirable. The schematic plans contained in the master deed also reveal nothing unusual about the layout of the subject units. Taxpayer elected to rent the units rather than market them during the relevant valuation dates despite the fact that units were vacant and available for sale. Then, in an effort to prove its case, the taxpayer relied on the history of sales efforts made in prior years which were limited at best. In sum, the taxpayer's contention that the units could not be sold as of the valuation dates is unsupported by the record.
Moreover, the taxpayer's expert did not testify to any research on comparable sales while the Township's expert identified several that sold during the relevant time period. In deriving a market-based value for each unit, the taxpayer would have the opportunity to properly account for the effect of any of the subject properties' potentially undesirable qualities by making appropriate adjustments to the sales prices of selected comparable properties. If the market would demand a lower selling price for units with the subject properties' attributes, that decrease in value assignable to the unattractive attributes could have been appropriately accounted for just as they would with any other residence valued using the sales comparison approach.
Two further arguments submitted by taxpayer merit comment. First, the taxpayer asserts that, "[i]n order to maintain the viability of a condominium there are reporting requirements which were never followed." That argument is rejected by the court. The taxpayer offers no legal authority supporting its claim that condominium associations must file reports each year with the Department of Community Affairs to maintain their election made upon filing of the master deed. The taxpayer further contends that the assessor should have done due diligence once he read the County Board petitions and considered assessing the properties as one parcel, as apartment buildings, thereby removing the condominium assessments. The court finds that the units were properly listed and assessed by the assessor as individual parcels, all of which were owned by taxpayer on the relevant valuation dates. The assessor was entitled to rely on the master deed filed by the taxpayer in preparing his list of assessments, N.J.S.A. 54:4-23, N.J.S.A. 54:4-24, and thereby placed an assessment on each unit, as mandated by the Condominium Act and Cigolini. See also General Trading Co., supra, 83 N.J. at 136 (citing Commissioner v. National Alfalfa Dehydrating and Milling Co., 417 JUSL 134, 149, 94 S. Ct. 2129, 2137, 40 L. Ed. 2d 717, 727 (1974)) ("This Court has observed repeatedly that, while a taxpayer is free to organize his affairs as he chooses, nevertheless, once having done so, he must accept the tax consequences of his choice, whether contemplated or not . . . , and may not enjoy the benefit of some other route he might have chosen to follow but did not.") . .
The court notes that the Planned Real Estate Development Full Disclosure Act, the requirements of which are fully applicable to condominiums, contains an annual reporting mandate N.J.S.A. 45:22A-23(h). The Act states, "[w]ithin 30 days after each anniversary date of the order registering the development, and while the developer retains any interest therein, he shall file with the agency an annual report reflecting any material changes in information contained in the original application for registration, in a form designated by the agency." N.J.S.A. 45:22A-31. But, the Act does not indicate that failure to file these reports has any bearing on a property's legal status as a condominium. "Section 2 is the definitions section of Senate Bill No. 148 and it is important to note that this section makes the provisions of the act inclusive of, but not limited to, the property subject to the 'Condominium Act' (P.L. 1967, c. 257, C. 46:8B-1 et seq.). Senate Bill No. 148 is a regulatory act and is affirmative in its approach. It provides the State with a mechanism for positive action with respect to regulating, investing and monitoring 'planned real estate developments.'" As to the potential consequences for failing to comply with the Act's requirements, N.J.S.A. 45:22A-38 states generally that, "[a]ny person who violates any provision of this act... shall be fined not less than $250.00, nor more than $50,000 per violation." The "Condominium Act," on the other hand, is a "structural act" in the sense that it sets forth guidelines for the creation of condominiums.
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Conclusion
The subject properties were converted to condominium status approximately 20 years before the valuation dates, during which time the properties have remained largely unmarketed and unsold. Taxpayer's use of the income approach to value the property as a single unit rather than valuing the individual condominium units is flawed as it failed to provide cogent evidence that the condominium assessments are erroneous. The court concludes that the presumption of validity that attaches to the judgment of the County Board has not been overcome and thereby the assessments are affirmed.
The Clerk of the Tax Court is directed to enter Judgment in accordance with this opinion.
Very truly yours,
Christine M. Nugent, J.T.C.
Plaintiff's Expert's Concluded Value Per Unit as of October 1, 2008 *Expert's Indicated Value Per Unit - $57,588 Plaintiff's Expert's Concluded Value Per Unit as of October 1, 2009 *Expert's Indicated Value Per Unit - $48,764 Unit No. Apt. No. Value Unit No. Apt. No. Value Unit No. Apt. No. Value Unit No. Apt. No. Value C0033 1A $31,500 C0023 23 $74,200 C0033 1A $26,700 C0023 23 $62,900 C0001 1 $58,700 C0024 24 $72,100 C0001 1 $49,700 C0024 24 $61,100 C0002 2 $58,700 C0025 25 $72,100 C0002 2 $49,700 C0025 25 $61,100 C0003 3 $58,700 C0026 26 $74,400 C0003 3 $49,700 C0026 26 $63,000 C0004 4 $58,700 C0014 14 $58,700 C0004 4 $49,700 C0014 14 $49,700 C0034 5A $25,000 C0015 15 $56,900 C0034 5A $21,100 C0015 15 $48,200 C0005 5 $34,400 C0016 16 $56,900 C0005 5 $29,100 C0016 16 $48,200 C0006 6 $42,100 C0017 17 $58,700 C0006 6 $35,600 C0017 17 $49,700 C0007 7 $58,700 C0018 18 $45,800 C0007 7 $49,700 C0018 18 $38,700 C0008 8 $56,900 C0019 19 $31,200 C0008 8 $48,200 C0019 19 $26,400 C0009 9 $56,900 C0020 20 $43,500 C0009 9 $48,200 C0020 20 $36,800 C0010 10 $58,700 C0027 27 $74,100 C0010 10 $49,700 C0027 27 $62,700 C0011 11 $45,800 C0028 28 $74,100 C0011 11 $38,700 C0028 28 $62,700 C0012 12 $35,700 C0029 29 $74,400 C0012 12 $30,200 C0029 29 $63,000 C0013 C0021 13 21 $43,500 $74,100 C0030 C0031 30 31 $72,100 $72,100 C0013 C0021 13 21 $36,800 $62,700 C0030 C0031 30 31 $61,100 $61,100 C0022 22 $74,100 C0032 32 $74,400 C0022 22 $62,700 C0032 32 $63,000