Mall v. Lopatcong Twp.

Decision Date22 April 2022
Docket Number002464-2020 [1],003180-2019,007449-2016,006216-2018,002773-2017
PartiesPhillipsburg Mall c/o Namdar Realty Corp. v. Lopatcong Township Phillipsburg Mall c/o Namdar Realty Corp. v. Pohatcong Township
CourtNew Jersey Tax Court
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS

Lawrence P. Cohen, Esq. Lavery, Selvaggi, Abromitis &amp Cohen, P.C.

Michael A. Hazen, Esq. Janata, Lacap & Hazen, LLC

Kevin P. Benbrook, Esq. Benbrook & Benbrook, LLC

HON JOSHUA D. NOVIN, J.T.C.

Dear Mr. Cohen, Mr. Benbrook, and Mr. Hazen:

This letter constitutes the court's opinion in the above-referenced matters on defendants' motions, under R. 4:40-1, for entry of judgments at trial.[2]

For the reasons explained more fully below, defendants' motions are granted. Accordingly, because the court finds plaintiff has failed to overcome the presumption of validity that attaches to the 2016, 2017, 2018, 2019, and 2020 local property tax assessments, and defendants' have failed to offer evidence of the property's true value with respect to their counterclaims, the assessments are affirmed.

I. Procedural History and Factual Findings

Pursuant to R. 1:7-4, the court makes the following findings of fact and conclusions of law based on the evidence and testimony adduced during trial.

As of the valuation dates at issue, Phillipsburg Mall, LLC c/o Namdar Realty Corp. ("plaintiff") was the owner of the real property and improvements located at 1200 Route 22 East, in Lopatcong and Pohatcong Townships, Warren County, New Jersey (the "subject property"). The subject property is identified on Lopatcong Township's ("Lopatcong") municipal tax map as Block 102, Lot 9.01, and on Pohatcong Township's ("Pohatcong") municipal tax map as Block 1, Lot 1.01 (Lopatcong and Pohatcong are collectively referred to as "defendants").[3] The Lopatcong lot comprised approximately 33 to 35-acres as of the valuation dates, and the Pohatcong lot comprised approximately 37 to 43-acres as of the valuation dates.[4]

Plaintiff instituted these direct appeals challenging the subject property's 2016, 2017, 2018, 2019, and 2020 tax year assessments. Lopatcong filed counterclaims for the 2017, 2018, 2019, and 2020 tax years. Pohatcong filed counterclaims for the 2016 and 2019 tax years.

The subject property has been historically operated and is improved with a one-story regional mall, containing approximately 558, 204 square feet of gross leasable area and several outbuildings containing restaurant pad sites.[5] Plaintiff acquired the mall in 2013 for reported consideration of $11, 500, 000. Following acquisition, plaintiff subdivided the subject property creating several outparcels and "condominiumized" the mall. Between 2014 and 2015, plaintiff sold the four restaurant pad site outparcels for consideration totaling $5, 314, 760.[6] In addition, on or about October 23, 2017, plaintiff sold the unit containing the Kohl's department store for $2, 600.000, reducing the mall's gross leasable area to 475, 379 square feet.[7] In or about August 2018, the roof of the retail store site formerly occupied by Sears collapsed. Following the roof collapse, plaintiff demolished the former Sears and former Bon-Ton store sites, resulting in a further reduction in the mall's gross leasable area to 300, 635 square feet.[8]

During trial, plaintiff offered testimony from a State of New Jersey certified general real estate appraiser who, after voir dire and without objection, was accepted by the court as an expert in the field of property valuation (the "expert").[9], [10] Plaintiff's expert prepared an appraisal report expressing opinions of the subject property's true or fair market value as of the October 1, 2015, October 1, 2016, October 1, 2017, October 1, 2018, and October 1, 2019 valuation dates.

As of each valuation date, the subject property's local property tax assessments, and implied equalized values are set forth below:

                                Valuation dates
                              
                                Lopatcong's tax assessment
                              
                                Average ratio of assessed to true value
                              
                                Lopactong's implied equalized value
                              
                

10/1/2015

$11, 096, 200

                                100%
                              
                                $11, 096, 200
                              
                

10/1/2016

$11, 096, 200

                                99.83%
                              
                                $11, 115, 096
                              
                

10/1/2017

$11, 096, 200

                                99.97%
                              
                                $11, 099, 530
                              
                

10/1/2018

                                $8, 596, 200
                              
                                98.44%
                              
                                $8, 732, 426
                              
                

10/1/2019

$8, 596, 200 [11]

                                99.15%
                              
                                $8, 669, 894
                              
                                Valuation dates
                              
                                Pohatcong's tax assessment
                              
                                Average ratio of assessed to true value
                              
                                Pohatcong's implied equalized value
                              
                

10/1/2015

$17, 977, 200

                                99.91%
                              
                                $17, 993, 394
                              
                

10/1/2016

$17, 977, 200

                                99.32%
                              
                                $18, 100, 282
                              
                

10/1/2017

$17, 977, 200

                                95.92%
                              
                                $18, 741, 868
                              
                

10/1/2018

$15, 442, 400

                                95.42%
                              
                                $16, 183, 609
                              
                

10/1/2019

$15, 442, 400 [12]

                                94.29%
                              
                                $16, 377, 559
                              
                

Plaintiff's expert valued the subject property as a single economic unit, reaching the following value conclusions: (i) $7, 000, 000, as of the October 1, 2015 and October 1, 2016 valuation dates; (ii) $6, 000, 000, as of the October 1, 2017 valuation date; (iii) $5, 500, 000, as of the October 1, 2018 valuation date; and (iv) $5, 750, 000, as of the October 1, 2019 valuation date.

Lopatcong offered testimony from its professional planner, who was accepted by the court, without objection, as an expert in the field of professional planning and zoning. In addition, Pohatcong offered testimony from its professional planner and engineer, who was accepted by the court, without objection, as an expert in the fields of engineering and professional planning.

At the close of the evidence, defendants moved, under R. 4:40-1, for entry of judgments at trial and requested the opportunity to submit briefs detailing the alleged deficiencies in plaintiff's evidence.[13]

In support of their motions, defendants advance several arguments. First, defendants emphasize that plaintiff's expert possessed inadequate knowledge and understanding of Lopatcong's and Pohatcong's zoning ordinances, zoning map, and the permitted uses identified thereunder. Accordingly, plaintiff's expert's highest and best use analyses and conclusions were materially flawed. Second, defendants contend that in performing his sales comparison approach, plaintiff's expert identified property sales that bore uses not permitted under defendants' zoning ordinances. Specifically, defendants argue that because plaintiff's expert "thought that the permitted uses for this [subject] property included warehousing," distribution centers, and industrial uses, his reliance on certain sales identified as comparable was misplaced. Third, defendants argue that in performing his income capitalization approach plaintiff's expert failed to employ market or economic rents. Charging that it was improper for plaintiff's expert to rely on anchor tenant leases executed in 1989, 1994, and 2004. In sum, defendants argue that because plaintiff's expert's highest and best use analyses, and sales comparison and income capitalization approaches to value were so "fraught with errors, mistakes and misrepresentation of law," that the court should accord them no weight. As a result, defendants maintain that plaintiff failed to overcome the presumption of validity that attaches to the local property tax assessments in these matters.

In addition, in support of their request for entry of judgments following trial, defendants emphasize that cross-examination disclosed numerous "errors, misconceptions, [and] faulty conclusions" in both plaintiff's income capitalization and sales comparison approaches to value. As a result of these errors, defendants argue that plaintiff has not proven, by a fair preponderance of the evidence, the subject property's true or market value requiring the court to affirm all years' local property tax assessments.

In opposition to defendants' motions and in support of its request for judgments reducing the subject property's tax assessments, plaintiff argues that viewing the evidence presented, with the benefit of all reasonable inferences, a debatable question was raised as to the validity of the local property tax assessments. Plaintiff highlights the 2013 sale of the subject property and the body of evidence that plaintiff's expert considered under his income capitalization and sales comparison approaches to value. Moreover, plaintiff submits that defendants have offered no valuation expert testimony challenging the opinions and conclusions reached by plaintiff's expert.

Therefore, plaintiff argues that defendants' motions must be denied, and judgments should be entered reducing the subject property's 2016, 2017, 2018, 2019, and 2020 tax year assessments.

The court observes that plaintiff's brief lacks any detailed discussion regarding plaintiff's expert's highest and best use analysis, as vacant, or plaintiff's expert's highest and best use analysis, as improved for the 2019 and 2020 tax years, two of the core themes of defendants' motions. In response to defendants' motions plaintiff's brief...

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