The 120-unit apartment complex in South Brunswick changed hands in fall 2010. By spring 2011, the new owner was headed to tax court for a case that’s still in litigation today.
For anyone who knows New Jersey’s property tax appeal system, that’s no surprise.
Here’s what may surprise you: It was the township that filed the appeal.
South Brunswick is not alone. The township and a handful of other municipalities in the state are now filing appeals against owners whose properties they feel are underassessed, experts say, effectively turning the tables on a longstanding process that normally starts with property owners.
Such “reverse appeals” were more or less unheard of a few years ago, said A. Paul Genato, a Princeton-based property tax attorney with Archer & Greiner. But towns and cities may be reconsidering their options after years of dipping into their coffers to settle appeals.
“I think for a lot of these towns, there’s been a lot of erosion in the ratable base,” said Genato, whose firm represents a property owner in South Brunswick and two in Elizabeth that have been sued by the municipal government. “Maybe this is some way for them to potentially neutralize some of that effect.”
He noted municipalities routinely file counterclaims when property owners challenge their assessments. But it’s been rare for local governments to initiate the case.
There’s no conclusive data available for the number of reverse property tax appeals that have been filed in New Jersey, only figures that reaffirm New Jersey’s massive backlog of cases — 44,000 through last June, not counting cases that have been filed since then.
But experts say the practice still appears to be limited to just a handful of municipalities around the state.
Chief among them is Elizabeth, which filed about 100 this year against commercial properties ranging from vacant sites to the land under the Jersey Gardens Mall, according to Robert Blau, the city’s attorney.
“We’re realizing that there are a lot of properties that are underassessed, just as there are quite a few that are overassessed,” said Blau, of Springfield-based Blau & Blau. He noted that the city settles many tax appeals every year that result in refunds to property owners.