Commercial and Residential Tax Appeals Swamp NJ
With many types of commercial real estate still reeling from the downturn, New Jersey faces a tidal wave of property tax appeals from thousands of weary, often cash-strapped building owners across the state. And it’s only likely to get worse.
Exactly how much worse will become clearer after April 1, the deadline for filing property tax appeals in most towns in New Jersey. But the backlog already is staggering: Nearly 44,000 cases were pending before the state’s tax court through last June, according to the annual report from the judiciary.
That includes more than 25,000 new cases that were filed during fiscal year 2013, a total that’s more than double the new filings in 2008 and one that has grown in all but two of the past 10 years, the report said. Half of those new cases came just from Bergen, Essex and Passaic counties — which have large concentrations of commercial property — while Morris, Monmouth and Middlesex each had more than 1,500 new filings.
Experts say there are no signs of a slowdown on the horizon. Frank Ferruggia, a McCarter & English attorney who specializes in property tax appeals, said the market for properties such as office buildings has not recovered to pre-recession levels — and expenses are rising as rental and occupancy rates remain stagnant.
“There’s really very little incentive for towns to reassess and reflect a declining market,” said Ferruggia, a partner with the Newark-based firm. “People have to file appeals and get their remedy, and those are not happening that quickly.”
Local governments are taking any number of steps to deal with the avalanche of appeals, Dressel said. They include trying to set aside extra cash in their budgets for settlements, short-term financing, reducing services and even raising taxes, he said.
It’s a perfect storm that is only adding to New Jersey’s backlog of pending property tax appeals, one that has been swelling since the downturn. Ferruggia said the state’s tax court, which currently has six judges, is “trying to manage their case load as best they can,” but the sheer volume means it can take more than a year to settle a case.
The state also is grappling with appeals for residential property, which are lumped in with the tax court data. But experts say those are largely handled by county tax boards, which hear appeals for property assessed below $1 million and tend to resolve cases more quickly.