Kenneth P. Bosch v. Township of Voorhees

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Patrick DeAlmeida R.J. Hughes Justice Complex

Presiding Judge P.O. Box 975

Trenton, New Jersey 08625-0975

(609) 292-8108 Fax: (609) 984-0805

October 19, 2012

Kenneth P. Bosch

53 William Feather Drive

Voorhees, New Jersey 08042

John D. Wade, Esq.

Wade, Long, Wood & Kennedy, LLC

1250 Chews Landing Road, Suite 1

Gloucester Township, New Jersey 08021

Re: Kenneth P. Bosch v. Township of Voorhees

Docket No. 014971-2010

Dear Mr. Bosch and Mr. Wade:

This letter constitutes the court s opinion after trial in the above-referenced matter. Plaintiff challenges the assessment on his one-family residence in Voorhees Township for tax year 2010. For the reasons explained more fully below, the assessment is affirmed.

*

I. Findings of Fact and Procedural History

This letter opinion sets forth the court s findings of fact and conclusions of law after trial. R. 1:7-4.

Plaintiff Kenneth P. Bosch is the owner of a residence in defendant Township of Voorhees. The property is designated by the township as Block 229.06, Lot 37 and is known as 53 William Feather Drive. For tax year 2010 the property was assessed as follows:

Land $160,000

Improvements $160,000

Total $321,000

On June 30, 2010, the Camden County Board of Taxation issued a Judgment reducing the assessment as follows:

Land $160,000

Improvements $125,600

Total $285,600

The Chapter 123 common level range for Voorhees Township for tax year 2010 is 99.81, with a lower limit of 84.84 and an upper limit of 114.78. The equalized assessed value of plaintiff s home after the reduction by the county board of taxation is $286,144.

On August 13, 2010, plaintiff filed a Complaint in this court challenging the board s Judgment.

Plaintiff s home has three bedrooms and two and one half bathrooms in approximately 2,112 square feet of living space. The residence, constructed in 1984, is located in a suburban development of more than 700 homes. Plaintiff is the original owner of the house. Although plaintiff does not request a reduction in the value of his home based on its condition, there is little doubt in the court s mind that the value of plaintiff s residence is adversely affected by a long history of poor maintenance. At trial, plaintiff described himself as a hoarder on steroids who has jam packed the house to an almost uninhabitable condition. The only operable entry to the home is through the garage. All other entrances have been boarded closed from the interior to guard against plaintiff s perceived threat of intrusion from neighbors and others. According to plaintiff, no one has entered the house through the front door since 2005 and no one has visited the home at all since that time. The home has no working air condition, heating or ventilation. There is no working shower or bathtub. Two of the bathrooms are inoperable. Only a half bath is in working condition. Plaintiff stores terminate control chemicals, paint, and paint remover in the basement, resulting in a noticeable odor on the first floor.

The first floor of the home has substantial water damage to the walls and ceiling in many rooms from a leaking roof. The water damage has resulted in mold. Additionally, the first floor windows are covered with clear plastic affixed by duct tape. The reason for this condition is not clear from the record, although plaintiff noted that the plastic helps to control the temperature in the home in the absence of an operating temperature control system. Although there is a kitchen on the first floor, plaintiff intimated that it is not fully operational. Carpeting throughout the home is original and in need of replacement after twenty-five years of use.

On the second floor, water damage on the ceilings and walls is more severe than on the first floor. Plaintiff removed the doors from all of the second floor closets in order to use the doors in barricading the first-floor entrances. The wallpaper in the master bedroom is peeling. The other rooms on that floor are in similar condition. Plaintiff described the home as a tear down, which would be purchased in the marketplace only by a buyer interested in demolishing the home for construction of a new residence.

The house is located on .9 acres. A 120-feet-wide PSE&G high-voltage power line right-of-way and a 25-foot-wide sewer easement cross the property. Additionally, a 100-feet-tall electricity transmission tower is located on the property and is visible from the home. The property is deed restricted, as are all of the properties in the subject development. Plaintiff did not introduce any document memorializing the deed restriction. The court, as a result, cannot make findings with respect to terms of the restriction. All of the comparable sales offered by plaintiff, however, are subject to the same covenant. Behind plaintiff s home are 200 feet of retaining walls, to protect the residence from the sloping grade of the backyard. In plaintiff s opinion, which was not supported by expert testimony, but which the court has no reason to doubt, the retaining walls are failing and require extensive repairs. Plaintiff s home is located on the major thoroughfare of the development in which it is located. According to plaintiff, the roadway in front of the home is the site of numerous motor vehicle accidents, the debris from which lands on plaintiff s land.

Plaintiff offered three comparable sales from homes in the development in which the subject property is located. The sales are discussed in turn.

Plaintiff s comparable sale No. 1 is of the home at 27 Brookview Drive, located approximately .3 miles from the subject property. The house, which sold for $272,000 on June 29, 2009, was built two years later than plaintiff s home and has three bedrooms and two and one-half bathrooms in approximately 2,100 square feet. The comparable sale home, therefore, is almost precisely the same size as the subject property.

Brookview Drive is not as central a roadway as is William Feather Drive, although it is not a cul-de-sac. The land at plaintiff s comparable sale No. 1 is subject to the same electricity utility right of way that crosses plaintiff s property. The easement on the comparable sale, however, is not as wide as it is on plaintiff s property and no utility tower is located on the comparable sale s lot. Plaintiff described the comparable sale as being in move-in condition with dated decorating. Plaintiff conceded that comparable sale No. 1 was an estate sale and, although he had personal knowledge of few of the particulars regarding the sale, he testified the comparable sale No. 1 was on the market for a considerable period of time before it was purchased.

Using what he described as figures from an appraisal continuing education publication, plaintiff made the following adjustments to the $272,000 sales price of his comparable sale No. 1: a negative $2,040 time adjustment, a negative $5,000 location adjustment to account for less traffic density, the absence of a utility tower and other hazards at the comparable sale, a negative $25,000 adjustment for the superior condition of the comparable sale, a positive $420 adjustment to account for the difference in living space and a negative $3,000 adjustment because the comparable sale had an operating heating and cooling system. Plaintiff offered an adjusted sales price of $237,380 for his comparable sale No. 1.

Plaintiff s comparable sale No. 2 is of the home at 36 Battery Hill Drive, located approximately .4 miles from the subject property. The house, which sold for $282,000 on October 9, 2009, was built five years prior to plaintiff s home and has three bedrooms and two and one-half bathrooms in approximately 2,100 square feet. The comparable sale home, therefore, is almost precisely the same size as the subject property.

Battery Hill Drive is not as central a roadway as is William Feather Drive, although it is not a cul-de-sac. The land at plaintiff s comparable sale No. 2 is subject to the same electricity utility right of way that crosses plaintiff s property. The easement on the comparable sale, however, is not as wide as it is on plaintiff s property and no utility tower is located on the comparable sale s lot. The home appears to be in good condition.

Using what he described as figures from an appraisal continuing education publication, plaintiff made the following adjustments to the $282,000 sales price of his comparable sale No. 2: a positive $210 time adjustment, a negative $5,000 location adjustment to account for less traffic density, the absence of a utility tower and other hazards at the comparable sale, a negative $25,000 adjustment for the superior condition of the comparable sale, a positive $420 adjustment to account for the difference in living space, a negative $3,000 adjustment because the comparable sale had an operating heating and cooling system, and a positive $10,320 adjustment because comparable sale No. 2 has no basement. Plaintiff offered an adjusted sale price of $272,950 for his comparable sale No. 2. Application of plaintiff s adjustments, however, results in an adjusted sales price of $259,950.

Plaintiff s comparable sale No. 3 is of the home at 12 Barclay Lane, located approximately .2 miles from the subject property. The house, which sold for $295,000 on July 17, 2009, was built three years later than plaintiff s home and has three bedrooms and two and one-half bathrooms in approximately 2,100 square feet. The comparable sale home, therefore, is almost precisely the same size as the subject property.

Barclay Lane is a cul-de-sac and the comparable sale is located in close proximity to tennis courts and a lake. The land at plaintiff s comparable sale No. 3 is subject to the same electricity utility right of way that crosses plaintiff s property. No utility tower, however, is located on the comparable sale s lot. Plaintiff described the comparable sale as being in move-in condition.

Using what he described as figures from an appraisal continuing education publication, plaintiff made the following adjustments to the $295,000 sales price of his comparable sale No. 3: a negative $1,820 time adjustment, a negative $5,000 location adjustment to account for less traffic density, the absence of a utility tower and other hazards at the comparable sale, a negative $25,000 adjustment for the superior condition of the comparable sale, a positive $420 adjustment to account for the difference in living space and a negative $3,000 adjustment because the comparable sale had an operating heating and cooling system. Plaintiff offered an adjusted sale price of $260,600 for his comparable sale No. 3.

Despite the fact that the adjusted sales prices of plaintiff s three comparable sales ranged from $237,380 to $259,950, plaintiff offered the opinion that as of October 1, 2009 his home had a true market value below $200,000. He did not offer a specific value and did not explain with any degree of precision how he reached his value conclusion of below $200,000. It appears that plaintiff is of the view that the condition of his home is so dire that the only purchaser who could be found in the marketplace is one who intended to tear the home down for construction of a new residence.

Defendant did not offer comparable sales as evidence, relying on the presumption of validity attached to the assessment.

II. Conclusions of Law

The court s analysis begins with the well-established principle that [o]riginal assessments and judgments of county boards of taxation are entitled to a presumption of validity. MSGW Real Estate Fund, LLC v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). As Judge Kuskin explained, our Supreme Court has defined the parameters of the presumption as follows:

The presumption attaches to the quantum of the tax assessment. Based on this presumption the appealing taxpayer has the burden of proving that the assessment is erroneous. The presumption in favor of the taxing authority can be rebutted only by cogent evidence, a proposition that has long been settled. The strength of the presumption is exemplified by the nature of the evidence that is required to overcome it. That evidence must be definite, positive and certain in quality and quantity to overcome the presumption.

Ibid. (quoting Pantasote Co. v. City of Passaic, 100 N.J. 408, 413 (1985)(citations omitted)).

The presumption of correctness arises from the view that in tax matters it is to be presumed that governmental authority has been exercised correctly and in accordance with law. Pantasote, supra, 100 N.J. at 413 (citing Powder Mill, I Assocs. v. Township of Hamilton, 3 N.J. Tax 439 (Tax 1981)); see also Byram Twp. v. Western World, Inc., 111 N.J. 222 (1988). The presumption remains in place even if the municipality utilized a flawed valuation methodology, so long as the quantum of the assessment is not so far removed from the true value of the property or the method of assessment itself is so patently defective as to justify removal of the presumption of validity. Transcontinental Gas Pipe Line Corp. v. Township of Bernards, 111 N.J. 507, 517 (1988)(citation omitted).

In the absence of a R. 4:37-2(b) motion . . . the presumption of validity remains in the case through the close of all proofs. MSGW Real Estate Fund, LLC, supra, 18 N.J. Tax at 377. In making the determination of whether the presumption has been overcome, the court should weigh and analyze the evidence as if a motion for judgment at the close of all the evidence had been made pursuant to R. 4:40-1 (whether or not the defendant or plaintiff actually so moves), employing the evidentiary standard applicable to such a motion. Ibid. The court must accept as true the proofs of the party challenging the assessment and accord that party all legitimate favorable inferences from that evidence. Id. at 376 (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 535 (1995)). In order to overcome the presumption, the evidence must be sufficient to determine the value of the property under appeal, thereby establishing the existence of a debatable question as to the correctness of the assessment. West Colonial Enters, LLC v. City of East Orange, 20 N.J. Tax 576, 579 (Tax 2003)(quoting Lenal Props., Inc. v. City of Jersey City, 18 N.J. Tax 405, 408 (Tax 1999), aff d, 18 N.J. Tax 658 (App. Div.), certif. denied, 165 N.J. 488 (2000)).

Only after the presumption is overcome with sufficient evidence at the close of trial must the court appraise the testimony, make a determination of true value and fix the assessment. Rodwood Gardens, Inc. v. City of Summit, 188 N.J. Super. 34, 38-39 (App. Div. 1982)(citations omitted). If the court determines that sufficient evidence to overcome the presumption has not been produced, the assessment shall be affirmed and the court need not proceed to making an independent determination of value. Ford Motor Co. v. Township of Edison, 127 N.J. 290, 312 (1992); Global Terminal & Container Serv. v. City of Jersey City, 15 N.J. Tax 698, 703-704 (App. Div. 1996).

The court concludes plaintiff produced sufficient evidence to overcome the presumption of validity attached to the assessment on his property. According all favorable inferences to plaintiff s evidence, as is required by law, the court concludes that plaintiff raised a debatable question regarding the correctness of the assessment on the subject property. Plaintiff produced three comparable sales from homes in the development in which the subject property is located. The homes are nearly identical in size and close in age to the subject property. In addition, plaintiff offered credible testimony that the subject property is in an almost uninhabitable condition, while the comparable sales, which sold for unadjusted amounts slightly below or above the equalized assessed value of the subject property. Given the similarity of the comparable sales to the subject property (apart from condition), their close proximity and age and the fact that plaintiff s testimony regarding the condition of his home was not contested, the court concludes that the record contains evidence that is sufficiently definite, positive and certain that the assessment on the subject property exceeds its true market value as of October 1, 200.

This determination alone does not end the court s inquiry. Having found that the presumption of correctness was overcome, it is the court s obligation to determine the true market value of the subject property on October 1, 2009 if doing so is possible based on the evidence in the record.

The comparable sales approach is generally accepted as an appropriate method of estimating value for a residence. Brown v. Borough of Glen Rock, 19 N.J Tax 366, 377 (App. Div. 2001); Appraisal Institute, The Appraisal of Real Estate, 419 (12th ed 2001)(the comparable sales approach usually provides the primary indication of market value in appraisals of properties that are not usually purchased for their income-producing characteristics. ). This method of valuation has been defined as [a] set of procedures in which a value indication is derived by comparing the property being appraised to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sales prices of the comparables based on the elements of comparison. Id. at 417. The court finds that this approach is the best method for determining the true market value of plaintiff s residence. A purchaser in the marketplace on October 1, 2009 would determine the value of the subject property through the use of comparable sales.

After a careful consideration of the record, the court concludes that plaintiff failed to meet his burden of proof with respect to the true market value of his home. While the court has no doubt that the condition of plaintiff s home has a significant negative effect on its value, the comparable sales and adjustments offered by plaintiff are insufficient to establish the true market value of plaintiff s home on October 1, 2009.

The adjustments offered by plaintiff are entirely unsupported by credible evidence. Plaintiff testified that he made the adjustments based on adjustment rates in continuing education materials provided to appraisers. Plaintiff did not identify the materials by name, date or author. He provided no information with respect to who formulated the adjustment rates, when those adjustment rates were formulated, whether the adjustment rates were intended for residential homes in southern New Jersey, Camden County, Voorhees Township or any specific location. No data was provided to explain how the adjustment rates were derived, tested or applied to the marketplace in which the subject property is located. The court does not even have proof that plaintiff correctly recorded the adjustment rates from the source materials on which he relied. Thus, even if the court accepts as credible the three purchases prices of the comparable sales and the proposition that adjustments are warranted for the condition of plaintiff s home, its proximity to the electric utility tower, the covenant restrictions and easement, and location on a busy street, the court has no credible evidence on which to calculate those adjustments. The fact that plaintiff, who is not an appraisal expert, copied the adjustment rates from other materials does not make those adjustments credible evidence of value. As far as can be derived from the record, the proffered adjustments are not based on credible data, are not market specific, and are not bolstered by the opinion of an expert witness.

Additionally, plaintiff presented no coherent explanation for his argument that the true market value of his home on the valuation date was below $200,000. Nothing in the record details how plaintiff arrived at this imprecise figure, particularly where the lowest adjusted sales price of plaintiff s comparable sales was $237,380. That adjusted sales price, on the home plaintiff testified was the most comparable to the subject property, reflected adjustments for time, location, condition, size and lack of heating and air conditioning. How plaintiff reduced that sales price by at least another $37,380 to conclude that the value of his home was below $200,000 was not explained at trial. Although it is the court s obligation to determine the true market value of property once a taxpayer has overcome the presumption of validity, the taxpayer continues to carry the burden of proof once the presumption of validity is overcome. There is nothing in the record on which the court can determine by a preponderance of the credible evidence the true market value of plaintiff s home on October 1, 2009.

It may well be true that the primary value of plaintiff s property in the marketplace is as a candidate for a complete renovation or demolition to make way for a new home. Plaintiff candidly admitted that his home is in a condition few would find acceptable for habitation. The amount that a purchaser with the intention of renovating or demolishing plaintiff s home would pay for the subject property cannot be derived from the record. The court might be able to determine the true market value of plaintiff s home through testimony from an appraiser or real estate agent with respect to the marketability of the subject property, the market for renovations or demolitions in Voorhees Township or surrounding municipalities and comparable sales of home which were completely renovated or demolished to make way for a new home. Sales of homes of similar age and size to the subject property, but which are in move-in condition, may not be the most credible evidence of vale in this case. Potential purchasers of the homes are not operating in the same marketplace as potential purchasers of homes which require a substantial investment of time and capital to create a habitable space. In light of plaintiff s failure to meet his burden of proof with respect to the true market value of his property, the assessment must be affirmed. To set a true market value for the subject property based on the trial record would amount to pure speculation by the court.

The Clerk of the Tax Court will enter Judgment affirming the assessment on the subject property for tax year 2010.

Very truly yours,

Patrick DeAlmeida, P.J.T.C.