By David Cruz
It is the rare New Jersey homeowner who doesn’t think he pays too much in property taxes. But, the state says some cities are actually taxing some homeowners less than they’re supposed to and is investigating whether to order Jersey City, Dunellen and Elizabeth to reassess the value of their properties to square their assessed value up with their true value. It’s called a property revaluation, reval for short. Ernie Del Guercio’s company has been doing revals since 1980.
“True value is what properties are selling for as of that assessing date, October 1 of the pre-tax year,” he explained. “Assessed value is the value on the tax list, which may be five years old, 10 years old and in the case of some New Jersey municipalities, 30 years old.”
In a city like Jersey City, which has seen steady economic advancement in the last two decades, property values in its trendy neighborhoods – like downtown and the heights – have exploded.
To give you an idea how much the real estate market has changed in the last two decades, back in the 80s if you wanted to buy one of these townhouses it would cost you under $100,000. If you wanted to buy that same townhouse today, you’d pay over $750,000.
But properties here haven’t been revalued since 1988, so this house, purchased recently by Mayor Steve Fulop, sold for over $800,000. However, the taxes are only $7,700 because its assessed value is almost 30 years old. That has state Senator Mike Doherty incensed.
“I have no problem with towns trying to keep taxes as low as possible, but when that town is receiving most of its school aid from the taxpayers from across the state of New jersey that’s where the problem comes in,” he said. “If Jersey City and its actions did not affect the rest of New jersey, then that would be fine; they could do whatever they want within Jersey City. But once they receive 70 percent of their school funding from the state of New Jersey, the actions that Jersey City takes impacts the rest of us because we’re paying for their school system.”
In Jersey City that’s over $400 million for its schools, on top of $63 million to the city’s general budget. Elizabeth gets almost $30 million. But it’s not just these three towns. The state says – once it gets through with Jersey City, Elizabeth and Dunellen it will investigate Westfield, South River, East Newark, Harrison, Roselle and Winfield Township.
“New Jersey is number one in the country on its reliance on property taxes to meet its budgetary demands,” added DelGuercio, “and since we have that high demand on property to meet those budgetary demands its incumbent on all officials to make sure that those assessments are fair.”
Which critics, like former city attorney Bill Matsikoudis claim, is not the case in places like Jersey City, where neighborhoods that were once booming are now marginal and once marginal neighborhoods are now booming.
“The poorer residents and homeowners in sections of the city like Greenville are paying a disproportionately high property tax and are subsidizing wealthier residents that may be living in more affluent areas, and that’s simply not right,” he said.
The result is successful tax appeals, which have almost doubled since 2008, costing cities millions of dollars.
“The rough rule of thumb in a revaluation is that a third of the people are going to experience a tax increase, a third will go down and a third will stay the same,” explained John Lloyd, an attorney with Chiesa, Shahinian & Giantomasi. “That’s a generalization, but the farther away you get from doing a reval, the less likely that is, even. It’s really hard to tell how out of whack some sections of the town may be.”
None of the mayors we reached out to would talk to us about this. A reval can have a major impact on a town, sometimes good, sometimes bad. It’s an uncertainty that could explain why towns try so hard to avoid them.