Victor & Mary Aliotta, & Silo, Inc. v. Township of Belleville

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

 

 

TAX COURT OF NEW JERSEY

 

Mala Narayanan 153 Halsey Street

JUDGE Gibraltar Building, 8THFloor

Newark, New Jersey 07101

Telephone: (973) 648-2921

TeleFax: (973) 648-2149

October 19, 2012

Joshua Novin, Esq.

Joshua D. Novin, P.A.

96 Park Street

Montclair, New Jersey 07402

Christopher Stracco, Esq.

Day Pitney, L.L.P.

One Jefferson Road

Parsippany, New Jersey 07054

Re: Victor & Mary Aliotta, & Silo, Inc. v. Township of Belleville

Block 2401, Lot 2

Docket Nos. 007055-2008; 009644-2009; 009418-2010

Dear Counsel:

This letter constitutes the court s opinion with respect to plaintiffs motion in limine to exclude defendant s expert appraisal report as lacking credible factual basis. Specifically, plaintiffs argue that defendant s expert improperly deemed two trailers and one Quonset Hut located on plaintiffs property, but allegedly owned by plaintiffs tenants, as taxable real property. Additionally, plaintiffs argue that defendant s expert also improperly deemed the attic in their one-family home as another bedroom when in fact it is not.

*

The court finds that the two trailers and the Quonset Hut are taxable as real property. However, since the plaintiffs presented credible proof that the Quonset Hut did not physically exist until early 2009, its inclusion as taxable real property for tax years prior to tax year 2010 is improper. Therefore, the court denies plaintiffs motion in part. The court does not decide plaintiffs motion with respect to the alleged incorrect determination that the attic is a bedroom, and keeps the motion open for plaintiffs to raise during the valuation hearing.

PROCEDURAL HISTORY

Victor and Mary Aliotta, ( Aliottas ) and Silo, Inc. (collectively plaintiffs ) filed complaints with this court challenging the assessment on real property located at 86 Lavergne Street, designated as Block 2401, Lot 2 ( Subject ) in defendant township ( Belleville ) for tax years 2008 through 2010. Trial was scheduled for December 13, 2011. On the date of trial, plaintiffs counsel presented a motion in limine to exclude Belleville s expert appraisal report as lacking factual basis, and thus being an inadmissible net opinion requiring preclusion of his testimony in this regard.1 The trial was adjourned, and the court provided time for Belleville to respond to the motion. After parties filed the required briefing,2 the court scheduled a plenary hearing. Plaintiffs provided testimony of Barbara Miller, a shareholder and employee of plaintiff Silo, Inc., and of Charles Davies, plaintiffs valuation expert. The facts are adduced from the testimony and documents provided in connection with plaintiffs motion.

FACTS

Silo, Inc., an S corporation, and the Aliottas own the Subject. However, the Aliottas only have a life estate in the same. Barbara Miller has been an equal shareholder in and an officer of Silo, Inc. since 2003, and has been employed by that company since 1976. She is not the property manager for the Subject.

The Subject comprises of a lot sized about 2.08 acres. It is improved with the Aliottas personal residence, a single-family home with a detached garage. Ms. Miller does not reside in the home. Plaintiffs dispute Belleville s expert s designation of the attic in the home as being finished with one bedroom and contend that it is unfinished and used only for storage.

The land area adjacent to, but fenced off from the residence, is described as a contractor s yard. Most of the contractor s yard is gravel; however, some areas are paved with concrete. Portions of the yard are leased by plaintiffs to several tenants, such as contractors and landscapers for the tenants business purposes. Ms. Miller testified that the tenants could place/install any items, such as supplies, vehicles, storage containers, or equipment on the leased portion of the land, and plaintiffs exercise very little control in this regard although they ensure that nothing hazardous is kept on the property. The lease documents provided to the court delineate the specifically permitted usages such as parking landscaping trucks/trailers or a dump truck, or for the storage of materials/equipment. A violation of this provision of the leases is deemed an actionable breach.3

The leases are generally on a month-to-month basis. Many, such as the tenants alleged to own the three disputed items in the instant motion, namely, a white trailer, a brown trailer, and a Quonset-like hut ( Quonset Hut or Hut ), have occupied the leased areas in the Subject for several years.4

The tenants are responsible solely for paying rent for the use of land. They do not pay for any other expenses such as real property taxes or maintenance of common areas. They are responsible for directly paying the utility company any charges they incur for electric, heat, and water. Thus, the leases are considered net.

The lease agreements require the tenants to remove any equipment, fixtures, goods or other property upon termination of the leases or upon their vacating the premises. Failure to remove these items would be deemed an abandonment of the same, and the plaintiffs, as landlords, could sell or dispose of the items and retain the proceeds. Ms. Miller testified that over the past several years there have been several mobile trailers which had been removed by the tenants (along with all of their equipment) upon the tenants vacation of the premises. Although she also testified that the lease agreements never provided for the tenants to leave their structures/equipment with plaintiffs, the standard clause in the lease agreements provides that if a tenant were to, with plaintiffs consent, make, install or attach any alterations, additions or improvements to the leased area, those would belong to and become the property of plaintiffs and would revert to plaintiffs upon termination or expiration of the lease.

The White Trailer

According to Ms. Miller, the white trailer (so identified as it is painted white) belongs to tenant Roman E&G. The lease document provided to this court is dated May 1, 2006 and is on a month-to-month basis with a monthly rental of $1,260. The usage is specified to be for only . . . storage of construction equipment, construction materials and office trailer and for no other purpose. The attached sketch of the area leased (Schedule A to the lease) shows four rectangles representing the location of the tenant s structures, namely, a trailer, a storage trailer, a shed, and an office trailer. Belleville s expert only included the office trailer in his report.

The testimony offered with regards to the physical characteristics of the white trailer was not extensive. There was no testimony as to its dimensions. The photographs show a fairly lengthy structure, fully enclosed, with two separate doors and just enough parking space for two pickup trucks and a sedan between the two entryways/doors (these parked vehicles were in the photographs), and four windows on the front of the structure. It also has two separately constructed wooden staircases leading to the two doorways.

The trailer is free-standing in that it is not connected to any other structures on the Subject or to the single-family residence. It lies upon a structure which has a hitch at one end (i.e., the trailer hitch). The trailer hitch rests on the land. The photographs show the tires as being still attached to the trailer with cinder-like blocks and heavy white packages positioned alongside the wheel-base and lying on the land to hold up and stabilize the trailer. Mr. Davies testified that the trailer was positioned on blocks with its wheels and axles still attached, as were the tires which were deflated.

The trailer is furnished with its own electric, heat and air conditioning services, as well as water/sewer, none of which is received or sourced from the single-family residence, but is provided for directly to the tenant by the utility company. The photograph also showed an air conditioning compressor outside the trailer, which Ms. Miller testified was a temporary fix to replace the unit attached to the trailer. She also stated that the trailer was a replacement of one previously standing there, but which had been removed at some point in the past. She stated that the present trailer had been there quite a while but could not recollect for how long. She conceded that she has never been inside the white trailer, and did not know whether it had a bathroom, shower, stove, refrigerator, or connections for gas.

Mr. Davies did not know the identity of the owner of the white trailer. He also had never been inside of it. Neither witness provided any testimony about what was inside or what type of activity occurs within the trailer. He stated that, based upon his expertise and his personal experience as an owner of trailers, to move the trailer, one would have to jack it up, remove the blocks, inflate the tires, hook it with the hitch to another vehicle, and pull it away.

The Brown Trailer

The brown trailer (so identified because it is painted brown) is stated to belong to tenant Global Development. It has been on the Subject since at least 2007. The tenant conducts its business inside of the trailer. The trailer sits to the left of the Quonset Hut.

There was no testimony as to the trailer s dimensions. The photographs show a fully enclosed, fairly lengthy structure, with a door, three windows of differing sizes on the side where the door is, and one paneled window on the west-side of the door. Near the door and on the side of the trailer is a spotlight. A wooden staircase on the side of the trailer, built by the tenant, provides access to its entrance. The staircase has railings on one side. There is a flat wooden porch between the railings and the door of the trailer. According to Mr. Davies, the porch is not attached to the trailer but is simply adjacent to it. A portion of the land leading to the steps and on the other side of the steps is paved, but the remainder is gravel.

The trailer is attached to a structure that has a hitch which sits on the property. According to Mr. Davies, the trailer is set up on blocks. Around the base of the trailer is a tenant-constructed wooden skirt or apron, which acts as a wind barrier, conceals and protects the wheels, axles and the undercarriage of the trailer from the elements and animals. The area covered by the wooden skirt can be accessed only by actually removing the skirt. Mr. Davies testified that he was told by the tenant s attorney that the wheels are still attached to the trailer and that there was a trailer hitch on the front, however, he did not observe or verify this information personally. There were no photographs showing the trailer s wheels.

There is an air conditioning unit on the side of a trailer set on a concrete pad/block, and ductwork that runs up its side. The trailer s entire interior is air conditioned. It is fully insulated.

The brown trailer has its own heat and power connections, for which it has a separate meter. Temporary services are provided by the electricity utility company for the area through an electric pole owned by the utility. The trailer is also connected to water and sewer, with direct arrangements connections. It has a bathroom but no shower or stove.

Mr. Davies testified that the trailer had a typical exterior of a mobile trailer or a mobile home, and was used as an office and had a typical administrative interior, with one bathroom and one entrance. He also agreed that the trailer was serviced with all utilities. He stated that, based upon his personal experience and his expertise in appraising trailers, to move the trailer, one would have to remove the skirt, jack up the trailer, disconnect the power lines, air conditioning and sewer connections, remove the duct work, inflate the tires, and hook it with the hitch or a special mount to another vehicle such as a pick-up truck, and pull it away. He agreed that an electrician and a permit would be required to disconnect the power connections, but opined that dismantling the connections was not a big deal.

The Quonset-Hut

From the photographs, the Hut is a large structure whose floor is a large concrete pad. The land area is leased to Global Development, a construction company, which is also the tenant occupying the Brown Trailer. According to Ms. Miller, the Hut was assembled only in late 2008 or early 2009 thus, prior to this time, the Hut or its components did not exist. Rather, there was a large concrete pad that had once been used for a kennel business on the property.

Flanking the concrete pad on either side are eight large shipping containers which comprise the walls of the Hut. The shipping containers are owned by the tenant. On each side of the concrete pad, two shipping containers are positioned length-wise, end-to-end, comprising the base-level of the walls, and an additional shipping container rests on top of each of these four base-level shipping containers. The four base-level shipping containers are not on any foundations, nor are they drilled into the land or to any attachment which is dug into the land. Rather, they sit on the land surrounding the concrete pad. Each container weighs approximately two to three tons and together, they are used to stabilize the Hut. The containers can be moved only by cranes. While Mr. Davies testified that the storage containers, which comprise the walls of the hut, are required to be, and are, stabilized and leveled to the ground, no details were offered on specifically how this was done.

Attached to the four upper-level shipping containers is a dome-shaped roof made of corrugated metal. It is attached by bolts to the shipping containers according to Mr. Davies, who was told of this method of affixation by someone refurbishing a large metal sleigh on the premises. The roof area has overhead lights.

The Hut has a front and rear fa ade. These are also comprised of corrugated metal sheets. The metal fa ades, front and rear, are bolted to the shipping containers and to the concrete pad. The rear fa ade has lights in the interior portion. The front fa ade sheet contains two large garage door openings, which have rolling doors that are powered by electricity. Above the left garage door are two spotlights and plaintiff Silo, Inc. pays the utility bills for those spotlights. There is a wire coming out of the upper left portion of the front fa ade of the Hut. Although there is no independent source of power or electrical meter for the Hut, it is powered by a connection to the same utility pole that provides electrical connection to the Brown Trailer. The electricity for both the Brown Trailer and the Hut is measured on the same meter.

In front of the garage doors is a concrete entranceway, which was poured after the concrete pad was placed on the property. It is used as an entry ramp for the Hut. According to Ms. Miller, there is also a structure housing a fuel container/tank, and an electric pump.

The interior of the Hut is a large open area. Ms. Miller stated that there is no elevator, suspended ceiling, fixed wall partitions, sprinklers, water or sewer connection, or power. However, she has rarely visited the Hut and admitted that she never goes inside. There is no heating unit inside the Hut.

Mr. Davies testified that the shipping containers enclose an area of approximately 500 square feet (which would be about 22 x 22 feet square). This measurement appears to be questionable because the photographs depict the interior of the Hut as spacious enough to garage two large commercial trucks or pick-up vehicles, and several other items including a 16-foot roll-away ladder. While Ms. Miller testified that she did not know whether the Hut was occupied by the tenant or what the tenant used it for, the photographs show, and Mr. Davies testified that the Hut is used to store and/or maintain vehicles, equipment, and other items.

It is undisputed that plaintiffs do not own or lease the two trailers and the Quonset Hut. It is also undisputed that plaintiffs do not use any of the three structures for any purpose. The only income stream to plaintiffs attributable to these structures is from the lease of the land upon which the structures are located. Although plaintiffs pay for all of the overhead lighting in the area leased to the tenants, the tenants are also individually billed by the utility company for the power they use. Thus, there is no issue that the two trailers and the Quonset Hut are business personal property, as opposed to non-business personal property. Consequently, the taxability of the same is to be analyzed under N.J.S.A. 54:4-1(a) or (b).

DISCUSSION

N.J.S.A. 54:4-1 taxes all real property, which includes any personal property affixed to the real property or an appurtenance thereto. The inclusion of personal property in the tax base was to incorporate the common-law recognition that there are certain forms of personal property so affixed to real property as to be considered a part thereof. General Motors Corp. v. City of Linden, 150 N.J. 522, 536 (1997). Thus, in the absence of any countervailing evidence . . . personal property affixed to real property is presumptively taxable. Township of Freehold v. Javin Partnership, 15 N.J. Tax 88, 94 (Tax 1997).

The first exception to taxable personal property (sometimes called the a test, an allusion to the fact that it is contained in subsection (a) of the statute) applies to a general class of personal property which is affixed to real property. N.J.S.A. 54:4-1(a); General Motors, supra, 150 N.J. at 536-37. The a test was established by L. 1986, c. 117 to include personal property which was ordinarily intended to become part of real property, since without such intent almost any property affixed to realty could be removed without irreparable harm or serious injury. General Motors, supra, 150 N.J. at 529. The a test incorporates the common-law test for fixtures composed of the elements of affixation, adaptation, and intention. Id. at 535. Thus, under N.J.S.A. 54:4-1(a), affixed personal property is exempt if it meets all of the following three conditions:

it can be removed or severed without material injury to the real property;

it can be removed or severed without material injury to the personal property; and,

it is not ordinarily intended to be affixed permanently to real property.

 

The second exception (or the b test, since it is contained in subsection (b) of the statute) applies to a more specific class of affixed personal property that is either machinery or apparatus or equipment, used in business. N.J.S.A. 54:4-1(b); General Motors, supra, 150 N.J. at 537. The b test was also established by L. 1986, c. 117 and amended by the Business Retention Act, L. 1992, c. 24 to specify that items of machinery, apparatus or equipment used in the conduct of a business are tax exempt business personal property unless they are a structure or enable a structure to support, shelter, contain, enclose or house persons or property. General Motors, supra, 150 N.J. at 537. Both tests provided the basis for deciding when an item of business personal property becomes real property. Id. at 545 (Handler, J. concurring). Both tests were intended to attract the manufacturing industry. See General Motors Corp. v. City of Linden, 20 N.J. Tax 242, 262 (Tax 2002).

I. Affixation

While each of the a and b tests has certain qualifications for the exception to apply, they both require that the personal property at issue must be affixed to real property. General Motors, supra, 20 N.J. Tax at 323 ( [i]f an item of personal property is not affixed, then that item is not taxable . . . therefore, [an] analysis of the a or b test is not required).

The regulations define the term affixed as fastened or attached physically. N.J.A.C. 18:12-10.1. This court has further explained the term affixation for purposes of N.J.S.A. 54:4-1(a) as follows:

Where the item is physically attached or fastened, for example, by welding, cement, bolt, screw, or other material or device, to a building, or to land, the item will be deemed affixed within the meaning of the statute. An item of personal property not physically attached or fastened to a building or land will be deemed affixed where the item is sufficiently large and heavy that gravity alone holds it in place and the building or land has been specially modified or adapted to accommodate or enclose the item.

 

[General Motors, supra, 20 N.J. Tax at 324]

 

In General Motors, the court concluded that a lime slurry tank, a cylindrical, pre-fabricated plastic tank that was sent to the site, was not affixed because it sat on a concrete floor . . . surrounded by a containment wall and was not otherwise attached. Id. at 327. Similarly, tanks which were prefabricated and trucked to the subject facility where they were installed on concrete supports or saddles, but . . . were not otherwise attached or fastened were non-taxable because they were not affixed. Id. at 325.

However, in International Flavors & Fragrances, Inc. v. Union Beach Borough, 21 N.J. Tax 403, 411 (Tax 2004), the court found that the biofilter unit of about 1,736 square feet was affixed to real property because it was constructed on a concrete foundation, had metal panel walls, was connected to exhaust ducts from the main building, had a separate uninterrupted power supply, and was connected to electric, water, and steam services. It also found to be affixed a sensory testing center which consisted of three separate modular units, called trailers that had been transported separately to the subject using their own wheels, but had been joined together at the site by removal of walls, rested on concrete piers, were connected to the main structure on the subject by a walkway or vestibule, and had electric service. Ibid.

Generally, [t]he defendant municipality has the initial burden of producing evidence that the personal property in issue is . . . affixed to the real property. General Motors, supra, 20 N.J. Tax at 265. A burden of production is a minimal burden, and can be met merely by presenting some evidence necessary to avoid the risk of a judgment or peremptory finding against him on an issue of fact. Ibid. n.2. If this burden is met, the property is presumptively taxable. Id. at 265. The taxpayer can then present proofs as to affixation and the exceptions under the a or b test. Ibid.

Based on the evidence presented,5 the court finds that both trailers are affixed for purposes of N.J.S.A. 54:4-1(a). The tires of the white trailer are deflated, and it is stabilized by cinderblocks and other weights lying by the wheels. The brown trailer is set up on blocks and has a wooden apron all around the base to stabilize the trailer and to protect its undercarriage, while providing an aesthetic look. These stability mechanisms are intended to secure the wheels on the trailer hitch, and render the trailer stationary or immobile. In addition, both trailers have all the necessary utilities. The brown trailer has air conditioning and duct work installed. Both trailers are connected to separate power, water and sewer connections. Both have heat service. Although plaintiffs valuation expert, Mr. Davies, opined that disconnecting these utilities was a simple matter, the connection to utility services is a significant factor in the determination of affixation. See International Flavors, supra, 21 N.J. Tax at 411. The brown trailer also has a bathroom. That the trailers are capable of being moved if hitched to a tractor or a truck does not alter the fact that the trailers have been standing stationary on the Subject for several years with all necessary utilities and sewer connections. For all practical purposes, these factors render the trailers much like any other habitable office building. The court thus finds the trailers affixed to the Subject for purposes of this tax appeal.

Plaintiffs argue that because the trailers sit on a hitch with wheels they can be easily removed, and since they are designed to be, and are, mobile, they should be non-taxable. However, any building or structure can be moved. If plaintiffs were correct, then, regardless of its intended usage and length of its existence on the land, all trailers which lie on the land will be non-taxable, whether the trailers sit on deflated tires or on the land directly itself (by removal of the tires), and no further analysis would be necessary. Mobility is relative and must be analyzed as but one factor under the totality of circumstances. This is why the affixation element is analyzed liberally by our courts, and as apparent from the precedent, the term affixed is not limited to the regulatory definition of requiring an actual physical fastening/attachment, but includes, among others, stand-alone structures which are held down by their own weight, and/or which are adapted to and function as habitable premises.

Plaintiffs argue that since they do not own the trailers, and since the tenants can take the trailers when the lease term expires, tax cannot apply. However, these points are not relevant to the question of affixation. Affixed personal property is deemed to become a part of the real property, and thus, taxable only to the owner of the real property. General Motors, supra, 150 N.J. at 534 (business personal property owned by tenants became taxable fixtures when affixed to and intended to become part of the realty). See also Rainhold Holding Co. v. Township of Freehold, 14 N.J. Tax 266, 277-78 (Tax 1994) (the legal incidence of the local property tax is . . . on the property itself and the tax is the legal obligation of the owner of the fee, and that interest is subject to the municipality s lien for taxes thus, the tax cannot be, except in limited statutorily provided exceptions, charged to or collected from a tenant), aff d, 15 N.J. Tax 675 (App. Div. 1995). Moreover, the removal of the items upon the lease expiration are contractual provisions for protection of the parties under certain contingencies and do not, in and of themselves prevent their taxability, at least until they are removed.

The Quonset Hut s eight stacked containers, the main foundations of the Hut s support, weigh two to three tons each. As such, and although the containers sit on the land, and are bolted to the corrugated metal fa ade sheets, they are sufficiently heavy such that gravity holds them in to place. See e.g. New Jersey-American Water Co., Inc. v. Borough of Jamesburg, 20 N.J. Tax 637, 651 (Tax 2003) (storage tank weighing over 2,000 tons when full . . . is sufficiently heavy so that gravity would hold it in place and due to the existence of a concrete pad . . . beneath the tank to support its weight, the tank was affixed for purposes of N.J.S.A. 54:4-1 ). Further, the corrugated metal sheets that make up the front and rear fa ades of the hut are bolted to a pre-existing concrete pad. Additionally, the Hut s garage doors are electric-powered and lit with overhead lights. As such the Hut s components are, and thus, the Hut is affixed.

In sum, and from the evidence adduced, the court finds that both the trailers and the Hut are affixed to the Subject for purposes of N.J.S.A. 54:4-1.

II. Exemption for Affixed Personal Property

Once it is demonstrated that personal property is affixed to the realty, the proponent of exclusion from local property taxation must prove that the property is removable without material injury to the personalty itself or to the real property, and that the personalty is not ordinarily intended to be permanently affixed. N.J.S.A. 54:4-1(a). See alsoJavin, supra, 15 N.J. Taxat 95 ( the burden of going forward on the realty/personalty issue should be placed on the taxpayer because the taxpayer has greater access to the relevant information . . . [which] includes facts necessary to establish that the property fits within the a or b test). Since plaintiffs relied solely on the a test for non-taxability, they have the the initial burden of producing evidence and the burden of persuasion as to non-taxability under the three elements . . . . General Motors,supra, 20 N.J. Taxat 265. Therefore, the court examines plaintiffs evidence.

The court finds that the plaintiffs have not satisfied their burden of production or burden of persuasion with respect to the two material injury prongs of the a test. Mr. Davies testified that removing the trailers simply required jacking them up, removing the blocks, inflating the tires, removing the skirts, disconnecting and removing the power lines and duct work, and having them driven away. Although he claimed that this was all no big deal he agreed that the power or other utility connections required the services of a licensed individual (or entity), and a permit. Further, there was no evidence presented as to the end result of such actions with respect to damage, material or otherwise, to the trailers or to the real property. Nor was there any evidence as to the time or costs that would be expended in relocation. Any conclusion by the court in this regard would be pure speculation. Further, while some evidence was presented that the Hut could be disassembled and its pieces removed by crane, there was no testimony as to whether such an action would result in damage to the components of the Hut or to the real property itself. While merely disassembling components may not constitute material injury to the personalty, R.C. Maxwell v. Township of Galloway, 145 N.J. 547, 558 (1996), plaintiffs produced no evidence of the specific disassembly procedures, their probable effects, the time, effort and cost involved in the process - all significant omissions given that the Hut s facades are bolted to the concrete pad, the roof is bolted to the shipping containers, and the Hut has garage doors installed.

Nor have plaintiffs provided credible evidence of the other prong of the a test, namely, that the property at issue is not ordinarily intended to be affixed permanently to real property. In making this determination, the court is to apply the custom and usage in the industry for which such items are used, and the court looks through the eyes of a reasonable person familiar with customary practices in that industry. General Motors, supra, 20 N.J. Tax at 274; R.C. Maxwell, supra, 145 N.J at 561. Therefore, the court must possess evidence of the industry in which the items are employed and the customary practices of such industry with respect to the permanence of the items to conclude whether such items are not ordinarily intended to be affixed permanently to real property.

There was no evidence as to the industry in which the trailers and the Hut are employed. For instance, no representative of the tenants testified about their practices for using trailers and/or the Hut, and whether such use was the norm in their field, i.e., the standard industry practices in the particular s tenant s business with respect to such items. Although Mr. Davies testified that removal of the trailers was easily doable (and thus, presumably implying that the trailers and the Hut are not ordinarily intended to be affixed), this conclusion was based upon his personal experience (friends and family). Similarly, Ms. Miller s testimony that the tenants generally took the trailers with them at the end of the lease term does not help because she did not establish that she was a part of, or knowledgeable about, the industry in which these structures are employed. Just because other trailers on the Subject have been moved and the trailers at issue here can be moved does not mean or presumptively establish that there is no ordinary intention to make them permanent. Further, Ms. Miller s testimony does not overcome her concession that the two trailers have remained stationary on the Subject for several years since the month-to-month leases were originally signed, and likewise for the Quonset Hut. The length of stationary stay at the location provides an objective indicia of permanency, and without evidence to the contrary about the industry or customary practices in this regard, the court cannot make any conclusions about the ordinary intentions for such items vis- -vis permanent affixation.

In sum, the court finds that the trailers and Quonset Hut are taxable as real property, and are not exempt under N.J.S.A. 54:4-1(a).

Plaintiffs did not claim an exemption under the b test. Even if they did, it is clear from the record that the trailers and Hut are not exempt under N.J.S.A. 54:4-1(b). First, the b test was intended to assist only the manufacturing industries, thus the exemption under this test is to help manufacturing interests. R.C. Maxwell, supra, 145 N.J. at 565-66 (rejecting the taxpayer s argument that outdoor advertising billboards were exempt from local property tax under N.J.S.A. 54:4-1(b)). Plaintiffs are not in manufacturing industry, nor have they provided proof that the tenants owing the trailers/Hut are in such industry, and therefore the b test does not provide a basis for exemption.

Second, even if the trailers and the Quonset Hut were to be considered under the b test, they would not qualify because the Legislature intended exclusion only for items similar to machinery, apparatus, or equipment used in manufacturing operations. R.C. Maxwell Co., supra, 145 N.J. at 565-66. The trailers and the Hut are not even remotely similar to the items designated in the b test. See N.J.S.A. 54:4-1.15 (defining the designated items as any machine, device, mechanism, instrument, tool, tank or item of tangible personal property used or held for use in business. )

Third, plaintiffs would fail the b test, which precludes exemption for an item considered machinery, apparatus, or equipment if that item is a structure. A structure is defined as any assemblage of building or construction materials fixed in place for the primary purpose of supporting, sheltering, containing, enclosing or housing persons or property. N.J.S.A. 54:4-1.15. It is undisputed that the brown trailer is used as an office trailer. Both trailers are used in furtherance of the tenants business. The brown trailer undisputedly encloses, shelters, contains, and/or houses people or property. Although no evidence was presented as to the use of the white trailer, there was also no evidence that it had been abandoned by the tenant or that the tenant s lease had expired. Since it is undisputed that it is an office trailer with all required utility connections, as such, it is no different from the brown trailer, and thus, qualifies as a structure. The evidence also showed that the Hut is used to store vehicles and other property. Consequently, the two trailers and the Hut would qualify as taxable structures under the b test.

Regardless of the a or b test, plaintiffs provided credible evidence that the Quonset Hut was not in existence as of the assessment dates of October 1, 2007 or October 1, 2008. As such, they have met their burden of proof and persuasion that the inclusion of the Hut as taxable real property for tax years 2008 and 2009 is not sustainable.

CONCLUSION

The court has concluded that the two trailers and the Quonset hut are affixed to the real property, and the plaintiffs have failed to prove the structures are nontaxable under N.J.S.A. 54:4-1(a) or (b). Therefore, the trailers and the Quonset hut are taxable real property. However, the Quonset Hut is taxable only for tax year 2010, therefore, plaintiffs motion to strike portions of Belleville s expert s report dealing with the Quonset Hut for 2008 and 2009 is granted.

The court will schedule a conference with counsel to address the resolution of plaintiffs motion with respect to the classification of the attic in the Aloittas residence as a bedroom by Belleville s expert, and for further proceedings of the matter.

Very truly yours

 

 

 

Mala Narayanan, J.T.C.

1 Belleville s expert also included as taxable real property a cell tower located on the Subject. Plaintiffs do not challenge this inclusion.

2 Belleville argued that this motion was premature because its expert s testimony and his appraisal report have not been and may not ever be submitted to evidence since the burden of proof in this tax appeal is upon plaintiffs, therefore the proper time for plaintiffs motion would be if and after Belleville s expert has testified. The court agreed that plaintiffs motion was somewhat premature, but since it implicated a material issue for trial, namely, the designation of certain assessed items as real or personal property, and the consequent taxability, the court determined that the most efficient course of action would be to hold a plenary hearing but defer plaintiffs arguments as to Belleville s expert s opinion and testimony during the valuation trial.

3 Plaintiff provided 20 lease agreements, a majority of which were dated May of 2005 and a few dated in 2006.

4 Although plaintiffs provided the court with 20 leases, only the two trailers and the Quonset Hut were included in Belleville s expert s report (the fourth being the cell tower which was undisputed by plaintiffs). Ms. Miller testified that there were only two mobile trailers and no other structures on the Subject Property, but on cross-examination agreed that there were other additional trailers on the lot, as well as on an un-related adjacent lot.

5 Belleville did not offer any of its own witnesses testimony. However, as it correctly points out, due to the procedural posture of the matter, namely, the plaintiffs instant motion and the court s plenary hearing, Belleville s initial burden of providing evidence with respect to affixation was met through cross-examination of plaintiffs witnesses, as well as through presenting photographs which were admitted into evidence.