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In 1988, then-Hoboken City Council member David Roberts backed residents who were furious over the fact that the city was going to re-assess their property so they’d have to pay taxes on the market value of their buildings, instead of an outdated amount.
Well, after years of previous mayors putting off another controversial revaluation…it’s ba-ack.
Roberts, now mayor of Hoboken, probably can’t wait much longer to implement the same state-mandated balancing of assessed property values that once caused so much anger in town.
The last time Hoboken did a citywide “reval,” the matter became so controversial that it merited an article in the New York Times.
The controversy comes from the fact that those who have owned their homes for a long time have gotten used to paying taxes on whatever the home was worth back in 1988 – not what it’s worth in 2008.
Thus, the revaluation evens out the tax burden, because recent home purchasers are already paying on their current market value, while older residents have to face an unfavorable reckoning.
The assessed value of the property (say, $400,000 for a condo or several million for a brownstone) is multiplied by the tax rate, resulting in the amount of taxes paid by the property owner.
With tax rates ready to skyrocket due to Hoboken’s bloated budget, a reval would sting an already stung tax base.
Before 1988, the last reval in Hoboken was in 1970.
Is it coming?
When asked about a reval last week, Roberts said from his home, “It’s time we all have a serious look at that.”
He said that a month ago, he called the city tax assessor, Sal Bonaccorsi, to discuss the issue, but that no decision has been made.
Roberts said he will discuss it with the state and with Mayor Richard Turner of Weehawken, who also sits on the state’s Local Finance Board, before he makes a decision.
Of course, he has to get out the city’s current budget crisis first.
“The discount on taxes goes to the [newer] condominium owners,” Roberts said. “These things are very painful to the old residents.”
Roberts said it would be prudent to set aside a surplus in the budget to “soften the blow” on taxpayers.
State law
The state Constitution mandates that municipalities do periodic revaluations, but it does not give a time frame as to when they should occur.
There are two ways for a revaluation to happen: either the County Board of Taxation requests the municipality to revaluate, or the municipality decides on its own.
Donald Kenny, the Hudson County Tax Administrator, said it’s usually every five years, but some local municipalities have taken decades to catch up.
Kenny works with the county Board of Taxation and said that the board has added new board members recently and is coming out of a settling-in period. Thus, they have not pushed any towns to do revaluations lately.
The state releases its equalization ratio – a coefficient that helps the board determine how far out of line the local assessments are – each October.
Kenny said the county board’s decision to call for a reval is usually based on this calculation.
Put it off once
The city attempted a reval in 1985, but the findings were rejected because they were going to increase the assessments by 10 times the previous valuation.
So what happened when they finalized the 1988 reval?
Properties saw a 15 percent increase on average.
The process of revaluation starts with the municipality finding a qualified private sector company to undertake the process.
Once the reval begins, the company takes into consideration the physical condition of each property, current market values, and recent sale prices of comparable properties.
“It’s time we all have a serious look at that.”
– Mayor David Roberts
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Property owners wishing to appeal their calculations can do so, first with the company providing the reval, then with the county Board of Taxation.
What does it mean?
In theory, the total amount of taxes for all the property in the city should not increase, but the amount paid by an individual taxpayer may.
For owners who have completed recent renovations of their property, the reval will not hurt so much. That’s because whenever an owner renovates, he or she must apply for zoning approvals, and the property is reassessed to bring it much closer to market value.
So those who stand to be most stunned by a revaluation are old-time homeowners who have not done any renovations requiring zoning approvals.
The longer Hoboken waits, the more painful the sting will be.
For questions or comments on this story, e-mail tcarroll@hudsonreporter.com.
There is one group of buildings in Hoboken that would not be affected by a reval at first: Tax-abated and tax-exempt properties.
Those are either properties that are exempt from property taxes (such as schools, churches, and government buildings) those whose developers got a special “tax abatement” deal with the city to pay a separate rate.
When Hoboken wants to entice a developer to build, it can offer tax abatements, or PILOT plans (Payment In Lieu Of Taxes).
Under these agreements, the property owners pay a pre-agreed to amount to the city for 20 to 30 years, rather than being subject to the quixotic fluctuations of property taxes.
PILOTS help City Hall because the money goes straight into the city budget each year rather than also going to the county and school budgets. But they are controversial, because the other property owners feel they must make up the difference in those tax amounts.
When Hoboken is revaluated, the assessed value of all properties will be calculated, but PILOT owners will not pay taxes on their assessed value until their abatements expire.
In the meantime, the city may need to increase the taxes of the rest of its property owners to make up the difference. – TJC