After meeting with tax experts earlier this month, Mayor Steven Fulop says he will comply with a state order that the city perform a revaluation of property.
A revaluation forces properties to pay taxes based on the current assessed value of the property, rather than the one from when the last reval was done years earlier, or from when they bought the house. Older properties are often paying a value lower than their current worth, putting the tax levy burden on the backs of more recent home buyers.
So when their homes are reassessed according to modern standards, owners of older properties end up paying more taxes. For this reason, politicians hesitate to perform revals.
The city will issue a request for proposals from companies who will bid to perform the revaluation. At the same time, the city will petition its state legislators to make changes to the revaluation process in order to “minimize disruption to long-time residents.”
Jersey City is one of 30 municipalities which have not done a revaluation in 25 years and is one of three municipalities ordered by the state to start the process. The last reval in Jersey City was in 1988.
“Most of the towns that have not had a revaluation for more than 25 years are based in three counties, Hudson, Middlesex and Union.” – Joseph Perone
The Request for Proposals (RFP) from companies should lead to a contract award in the fall of 2016.
“Because the state fails to enforce revals equally and fairly throughout the state, the current structure of New Jersey revaluations feeds gentrification in neighborhoods,” Fulop said. “Is it fair that someone who lived in an area prior to it being desirable should be squeezed out? New Jersey should consider what many other states do, which is to reassess at the time of sale, which is a fairer method, as the buyer knows what they are getting and the seller factors this into the formula.”
State: this is not political
Fulop initially labeled the order to perform the revaluation as “political.” He claimed it was payback for his critical statements about Gov. Christopher Christie’s alleged role in closing of traffic lanes on the George Washington Bridge, commonly referred to as “Bridgate.”
But Joseph R. Perone, director of communications for the state treasurer’s office, said there was nothing political about the order.
“We selected three towns that were the worst offenders in their respective counties based on objective criteria,” Perone said. “We could not process 30 towns at once considering that we had to conduct an investigation, review statistical measurements and tax maps and schedule and conduct public hearings. Remember, that the division has not taken such an action in 40 years.”
He said the leadership of the three towns involved are from both political parties.
“Any suggestion that this action is partisan in nature is a specious argument and an insult to the dedicated professionals at the Division of Taxation,” Perone said. “The numbers speak for themselves. The three municipalities were cited, in part, because they have the worst Director’s Ratio in their respective counties, and they have avoided a revaluation or reassessment for more than a quarter century.”
Jersey City has the lowest Director’s Ratio in Hudson County (27.63 percent). Elizabeth has the lowest Director’s Ratio in Union County (13.4 percent), and Dunellen has the lowest in Middlesex County (24.61 percent).
The Director’s Ratio represents the average ratio of assessed value compared with true value. Jersey City’s Director’s Ratio of 27.63 percent means homes in that city are assessed at just over one-fourth of their true market value. Towns are considered noncompliant when the Director’s Ratio drops to 85 percent or lower.
”All of these towns have assessed values that are far below acceptable levels. Jersey City has not had a revaluation in 27 years, Dunellen in 33 years and Elizabeth last had a revaluation during the Bicentennial Year of 1976,” Perone said.
The three municipalities, he said, have been persistent violators of the uniformity clause in the state Constitution, which requires property taxes to be assessed uniformly state-wide.
Equalizing the tax burden
“Some residents of those communities have been overpaying their share of the tax burden, while others have not been paying their fair share for many years,” Perone said. “Taxpayers in 18 counties in this state have no issues in complying with state law and have been paying their fair share of taxes. Most of the towns that have not had a revaluation for more than 25 years are based in three counties, Hudson, Middlesex and Union. The Hudson, Union and Middlesex county tax boards failed to provide oversight of these three municipalities, were complicit in their noncompliance and shirked their statutory obligation.”
Perone said Jersey City is seeking to change that revaluation law that would reassess only upon resale. This would still lead to inequitable results to the extent that properties would not be sold for many years.
“While we understand the concern regarding financial hardship to those that have been long-time owners of property, the reality is that if the revaluations had been conducted on a periodic basis, as required by law, these situations would not have occurred,” Perone said.
Each of the three towns must complete the revaluation by Nov. 1, 2017, according to State regulations.
“That is because it needs to be done in time to prepare for the 2018 tax season,” Perone said. “In order to prevent this process from being politicized, no new assessment values can be sent by the town or the reval companies to taxpayers prior to Nov. 10 of 2017, which would be after any possible election day.”
Al Sullivan may be reached at email@example.com.