At a community meeting held Wednesday to provide information on Hoboken’s upcoming “rolling reassessment” of property values, city officials and the company hired to conduct the program faced a largely hostile response from residents in attendance.
Just last year, Hoboken undertook its first revaluation in 25 years, bringing all properties up to their full assessed value as of last Oct. 1. But since the “reval” was completed, city Tax Assessor Sal Bonaccorsi said he has observed notable increases in the sale value of residential properties, and in particular condominiums.
Thanks to these strong sales, the New Jersey Division of Taxation recently calculated that Hoboken’s 2013 assessed values equal only 88 percent of its estimated true value in 2014.
In the interest of maintaining fair assessments of property at as close to 100 percent as possible, the city decided to begin a rolling reassessment program, in which at least 25 percent of properties will be physically inspected every year, and all properties will have their value reassessed according to models developed by Appraisal Systems.
Conceived as a system for maintaining constant upkeep of accurate property values, rolling assessment is designed to continue indefinitely, although Hoboken’s contract with the company managing the program only lasts four years.
“If my extension is worth $700,000, please remove it.” – Christopher Idler
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Appraisal Systems Vice President Robert Brescia said the 25 percent of properties being inspected this year would primarily be one- through four-family homes and condominiums, as well as properties that are on the market, were recently sold, or have taken out a permit for renovation.
Political hot button
For years, revaluation has been one of the live wires of Hudson County politics. Guttenberg is the only other county municipality that has had a recent revaluation. Jersey City Mayor Steven Fulop is currently in court defending his decision to pull the plug on a revaluation in his city.
Because the revaluations lead to higher taxes for some residents, they are politically unfavorable to whichever mayor sets them in motion.
Still, Zimmer reiterated Wednesday that revaluation is the only way to ensure that property assessments are fair, and has the potential to decrease the amount that Hoboken pays in county taxes. Property owners pay an overall tax amount consisting of municipal, county, and school taxes.
The new contract for Appraisal Systems was passed by the normally divided City Council 9-0 in September, but political opponents of Zimmer have already begun to come out against the rolling reassessment.
On Thursday, State Assemblyman Carmelo Garcia (D-33) said in a statement that he plans to call for a citywide referendum on next November’s ballot as to whether the program should continue. The vote would not be able to stop this year’s reassessment, but it could potentially prevent the cycle from continuing over the next three years and beyond.
The main concerns
Many speakers on Wednesday said that the sales-based model used to assess single-family homes was vastly overvaluing their residences. One man said the supposedly comparable properties that had been used to assess the value of his unrenovated single-family home had both been gut-renovated and sold for double the price. In general, single-family homeowners said Appraisal Systems used the highest possible sale prices to generate a value for their own homes, a charge Brescia denied.
Christopher Idler said his single-family home on the 700 block of Garden Street was assessed at $700,000 higher than his next-door neighbor’s due to an extension that makes it 25 percent larger. “If my extension is worth $700,000, please remove it,” said Idler.
A number of homeowners also criticized the level of attention paid to their homes by Appraisal Systems during inspections for last year’s revaluation. Anthony Varriano said the inspection of his four-family home lasted only 10 minutes, and when his property was appraised for a mortgage, it was found to be worth $450,000 less. Others said that Appraisal’s inspectors never even measured the dimensions of their houses.
Brescia defended his employees, saying that property inspections had both external and interior components, and that most dimensions of houses were ascertained during the exterior inspection, when the homeowner was not present.
Another key concern of property owners was the lack of permanence created by what would be the equivalent of yearly revaluations. Because the value of each property would be reassessed every year, any reduction in appraised value achieved by filing a tax appeal before the Hudson County Board of Taxation would only be guaranteed to be on the books for the individual tax year it was filed for.
Why rehire?
Given the significant questions raised Wednesday, property owners questioned why Appraisal Systems had been rehired with little public fanfare. In response, Hoboken Business Administrator Quentin Wiest defended the reputation of Appraisal Systems, stating his belief that their assessments will stand the test of time as accurate and fair.
According to Wiest, Appraisal Systems went beyond the minimum amount of required work for the revaluation. For example, the city asked them to collect extra data on rent control, which the company then analyzed to show that income-producing properties with no rent control had a higher value. “We think we got a good result,” said Wiest.
Will taxes go up?
Naturally, a crucial question for homeowners was whether the rolling reassessment would cause their taxes to rise. Reassessments do not change the size of the tax levy demanded by Hoboken for the municipal budget, but they do change the value of the entire city that is taxed to pay that levy. Therefore, the effect on the tax rates of individual properties depends on how their assessed value changes relative to other properties.
According to Brescia, if the increase in a homeowner’s assessed value is greater than the average increase in assessed values citywide, they will pay more in taxes than they would have otherwise. If it is less, they will pay less. In last year’s revaluation, the average assessed value of a property in Hoboken increased by 3.64 times, according to Appraisal Systems.
Thus, the fastest appreciating properties in Hoboken should expect higher taxes unless the overall tax levy decreases. This year, the tax levies of Hudson County, Hoboken, and Hoboken’s public school district all increased.
For some attendees Wednesday, this was the real issue. One woman asked Zimmer why the tax rate has gone so high. Zimmer said her administration has been working hard to bring down taxes, citing her restructuring of the police and fire departments and the sale of Hoboken University Medical Center. Zimmer pointed to Hudson County as the key culprit behind rising tax rates, saying that Hoboken property owners currently pay more in taxes to the county than they do to the city.
Benefits to city?
Zimmer said multiple times Wednesday that the city paid $400,000 less in county taxes last year than it would have if there had been no revaluation. That’s because in the absence of a reval or reassessment, the county uses an “equalization ratio,” a multiplying factor based on recent sales data, to produce the estimated true value of each town’s property.
However, Hoboken’s savings of $400,000 last year represent around four hundred-thousandths (.00004) of Hoboken’s total assessed value, which the revaluation determined to be $11.02 billion.
Bonaccorsi said Wednesday that he suspected the city will save money on its total county taxes again this year as a result of the new reassessment. However, he could not say with certitude that that would be the case, because he had no snapshot of how Class 4 properties (commercial, industrial, and apartment buildings) have appreciated in the last year due to a lack of sales data. Part of the purpose of the rolling reassessment, Bonaccorsi said, is to find out what is happening to the value of commercial properties in Hoboken.
Carlo Davis may be reached at cdavis@hudsonreporter.com.