Bayonne City v. Srikanth Ramaka

NOT FOR PUBLICATION WITHOUT APPROVAL OF

THE TAX COURT COMMITTEE ON OPINIONS

TAX COURT OF NEW JERSEY

Mary Siobhan Brennan 153 Halsey Street

Judge Gibralter Building 12thFloor

Newark, New Jersey 07101

(973) 645-4280 Fax: (973) 645-4283

December 16, 2014

John R. Lloyd, Esquire

Nowell, Amoroso, Klein & Bierman

155 Polifly Road

Hackensack, New Jersey 07601

Peter S. Kollory, Esquire

1628 Oak Tree Road

Suite Five

Edison, New Jersey 08820

RE: Bayonne City v. Srikanth Ramaka

Docket No. 019027-2012

Dear Mr. Lloyd and Mr. Kollory

This letter constitutes the court s opinion after trial in the above-referenced matter. Plaintiff, City of Bayonne, challenges a judgment of the Hudson County Board of Taxation granting a five year abatement exemption on the 2012 tax year assessment for defendant s residence. For the reasons explained more fully below, the judgment of the Hudson County Board of Taxation is reversed and the abatement exemption portion of the assessment is denied.

FINDINGS OF FACT

Based on the evidence gathered during the trial1 and the documents submitted by the parties, the court makes the following findings of fact.

The property at issue is Block 240, Lot 37.01 more commonly known as 28 West 17th Street in Bayonne City, Hudson County, New Jersey. The entirety of Bayonne City is defined by city ordinance as an area in need of rehabilitation. The property was previously owned and redeveloped by Skyhail LLC, which constructed a new single family residence on the site. This new construction made the property eligible for the five year exemption and abatement program provided for by a Bayonne City ordinance.

On May 17, 2011, a certificate of occupancy was issued for the newly constructed residence. At the time the certificate of occupancy was issued, the sidewalk leading from the front of the property to the backyard was not finished. The area was also fenced off due to ongoing construction of a residence next door. This prohibited access and use of the back of the property for approximately six months until the sidewalk was completed.

On May 31, 2011, defendant, Srikanth Ramaka (taxpayer), represented by an attorney, purchased the property for use as his principal residence. On June 3, 2011 the taxpayer and his family moved into their new home. Subsequent to purchase, taxpayer decided to have an alarm system installed in his home. On June 23, 2011, an electrical construction permit was issued by the City of Bayonne Department of Engineering allowing the installation of seven alarm devices. Final approval of the electrical work was issued by the Bayonne City inspector on July 20, 2011.

At the time of purchase, taxpayer was already a resident of Bayonne. He testified that his motivation for purchasing the property was a tax incentive that Bayonne was offering to owners of newly constructed homes. He learned of this from friends and family. He did not discuss this incentive with either representatives from Skyhail, LLC or his attorney.

The tax incentive referenced by taxpayer is established by Bayonne s Five-Year Improvement Exemption Ordinance designated as Ordinance No. 0-08- 29 Chapter 10, Sections 10-1, as revised and passed October 10, 2008, which was adopted pursuant to enabling statute N.J.S.A. 40A :21-1 to -21, often referred to as the Five Year Exemption and Abatement Law.

Approximately two weeks after purchasing the home, the taxpayer went to the Bayonne Tax Collector s office to determine whether his taxes were paid. He was told by the clerk that it would take several months for the deed to be recorded and the tax records changed to reflect ownership in his name. Taxpayer assumed he would need this documentation to apply for the tax exemption. During this visit, he did not ask anyone from the tax collector s office about the exemption program nor did he ask for an application.

On or about August 12, 2011, the taxpayer received his filed stamped deed from the Hudson County Clerk s office. On August 15, 2011 taxpayer went to the Bayonne Tax Collector s office and requested an application for the exemption. The clerk told him that he was out of time but gave him the application anyway. When completing the application, taxpayer wrote in May 17, 2011 as the date of completion of the new construction of his property. He testified that the clerk gave him this date after looking up the date of the certificate of occupancy.

By letter dated September 1, 2011, the Bayonne Tax Assessor denied taxpayer s application indicating it was not filed within thirty days of the completion of new construction. On March 9, 2012, taxpayer filed an appeal of the denial with the Hudson County Board of Taxation. Taxpayer cited the reason for his appeal as follows: Due to lack of information did not apply in time and had been waiting until title came in my name. I am a first time home buyer and request you to consider my appeal and approve my abatement. A hearing was held and on October 11, 2012, the Hudson County Tax Board reversed the assessor s determination and granted an abatement exemption for 2012 in the amount of $40,500. Bayonne filed this appeal with the Tax Court on December 27, 2012.

CONCLUSIONS OF LAW

The New Jersey Constitution, recognizing the need to encourage economic growth through rehabilitation and redevelopment of real property, gives the New Jersey Legislature the power to enact exemption and abatement laws to restore the vitality of depressed areas and to increase municipal ratables upon which property taxes are levied. SeeN.J. Const.art. VIII 1 6, 3 1. Through the power vested in it, the New Jersey Legislature has enacted N.J.S.A.40A:21-1 to -21, known as the Five-Year Tax Exemption and Abatement Law, promoting redevelopment that enables communities to re-use existing underutilized or abandoned sites and buildings as well as address critical housing needs, both of which support important statewide objectives. The statute is intended to provide an incentive for private industry to invest capital in real property, to establish commercial and industrial centers, to aid homeowners in improving their property, and to generate property purchases to ensure stable ratables. See N.J.S.A. 40A:21-2.

The Legislature has provided very specific and detailed procedures for municipalities and taxpayers wishing to take advantage of the exemption and abatement law. Most salient to the instant matter, a taxpayer must make a written application on the proper form, which application must be approved by the assessor of the taxing district. N.J.S.A. 40A:21-16. The application must be filed with the assessor within 30 days, including Saturdays and Sundays, following the completion of the improvement, conversion alteration or construction. Ibid.

In October of 2008, in order to implement the Five-Year Tax Exemption and Abatement Law, Bayonne adopted an enabling ordinance known as the Five-Year Improvement Exemption Ordinance (Ord. No. 0-08-29 section 1). Bayonne, N.J., Rev. Gen. Ordinances 10-1. The ordinance essentially incorporates the language and requirements of the enabling statute. Id. 10-1.1 to -1.5. All of Bayonne City is an area in need of rehabilitation. Id. 10-1.3. There is no dispute that the taxpayer s property is qualified to apply for the exemption.

Chapter 10 section 1.5.4 of the Bayonne City ordinance sets forth the application requirements for taxpayer s who wish to avail themselves of this tax incentive. The ordinance, as is the enabling statute, is clear and unambiguous; as a condition to approval, the application must be filed within thirty (30) days, including Saturdays and Sundays, following completion of the improvement, conversion or construction. Id. 10-1.5.4. Only applications filed within the time specified shall be approved and allowed by the assessor Ibid. Therefore, the application must be filed within 30 days of completion of the improvement. The term completion is defined as follows

Completion shall mean substantially ready for the intended use for which a building or structure is constructed, improved or converted as evidenced by a certificate of occupancy, temporary certificate of occupancy or certificate of approval issued by the City Building Department or the State of New Jersey with respect to such intended use.

[Id. 10-1.3 (d)]

In addition to the constitutional, statutory and municipal ordinance laws, there are also certain well-established principles applicable to exemption determinations. Because they represent a departure from the fundamental approach of our statutes that all [33] property bear its just and equal share of the public burden of taxation, exemption statutes are strongly construed against those claiming exemption. Princeton Univ. Press v. Princeton Bor., 35 N.J. 209, 214, (1961). Those claiming an exemption from taxation have the burden of establishing their entitlement to it. Ibid. Strict construction does not require a rigid interpretation that would defeat the evident legislative design, but taxation is the rule, and the claimant bears the burden of proving entitlement to an exemption. New Jersey Carpenters Apprentice Training & Educ. Fund v. Kenilworth Bor., 147 N.J. 171, 177-78, (1996), cert. denied, 520 U.S. 1241, 117 S. Ct. 1845, 137 L. Ed. 2d 1048 (1997). As always, the judicial function is to determine the legislative intent as expressed in the statute. Paper Mill Playhouse v. Millburn Tp., 95 N.J. 503, 507, (1984).

The courts have held in past appeal proceedings that the findings of the County Board of Taxation must be presumed correct and that the burden of proving otherwise falls on the party carrying the appeal to the Tax Court level. It is a 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. Mountain Lakes Bor., 18 N.J. Tax 364, 373 (Tax 1998). 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 Co. v. City of Passaic, 100 N.J. 408, 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).These cases however dealt with property valuation, which is a determination of fact and not law. Since the Hudson County Tax Board was not required to, and did not articulate the reason for reversing the Bayonne Tax Assessor, the court is unaware if their reversal was based on an interpretation of fact, which would allow for a presumption of correctness, or an interpretation of the law which would not. To the extent that a presumption of correctness may exist however, the court finds that Bayonne has overcome it.

Considering all of the above, the court finds that the construction of a new residence on the taxpayer s property was completed as of May 17, 2011. While the date of issuance of the certificate of occupancy may not be an absolute and strict date in all cases, the court finds that under the facts of this case, May 17, 2011 is the legislatively intended date that triggers the commencement of the thirty day filing deadline. The court finds that the assessor s denial of taxpayer s application for a Five-Year Exemption or Abatement was statutorily required due to the late filing of the application.

Taxpayer s proof at trial that the sidewalk leading from the front of the property to the backyard was not completed at the time the certificate of occupancy was issued is not dispositive. The condition of the side walk is immaterial to the date of substantial completion of the residence. The taxpayer and his family moved into and were residing in the home a few days after closing, which is sufficient evidence of substantial completion. Likewise, the proffer of an electrical permit application for the installation of an alarm system does not negatively impact the determination of the date of completion of the improvement.

Taxpayer argues that Bayonne City did not give him notice of the five year exemption ordinance so that application for the exemption could have been made within the thirty day requirement. Taxpayer alleges this violated his right to due process and also argues that the city did not act honestly and scrupulously when dealing with new homebuyers in Bayonne. The court disagrees.

The facts clearly demonstrate that the taxpayer had notice of the ordinance based on his testimony that the five-year tax program was his incentive to purchasing the home. The court finds no evidence that the city was required to contact taxpayer and notify him of his right to apply for the exemption or to notify him of the thirty day limitation to submit his application. Equity in this matter is found in the objective administration of the requirements of the ordinance and statute in a uniform and equal fashion. The court agrees with the city that it is not within its discretion to allow a late-filing applicant to receive the same benefits as taxpayers who have complied with the rules; or for the city to make an exception and allow a late-filing applicant to enjoy the benefit of an exemption that has been denied to other taxpayers because of their failure to file the application within the thirty day time period.

For the above mentioned reasons the court concludes that Bayonne produced evidence sufficient to overcome the presumption of correctness attached to the county board s judgment permitting the five year exemption. As there was no evidence in the record to challenge the valuation component of the original assessment, the court affirms the original Land assessment of $50,000.00 and the Improvement assessment of $134,800.00 for a total assessment of $184,800.00 for tax year 2012. The court will enter Judgment affirming the original assessment without the exemption.

_________________________ ___

Hon. Mary Siobhan Brennan, J.T.C.

1 April 24, 2014 (defendant appearing pro se), and continuing on December 3, 2014 (with counsel)

*