West Orange Twp. v. Westrange LLC CVS

CourtTax Court of New Jersey
Decision Date04 March 2022
Docket Number005443-2015
PartiesWest Orange Township v. Westrange LLC CVS and Westrange LLC c/o Ecova MS363[1]

West Orange Township
v.

Westrange LLC CVS and Westrange LLC c/o Ecova MS363[1]

No. 005443-2015

Tax Court of New Jersey

March 4, 2022


NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE TAX COURT COMMITTEE ON OPINIONS

Robert D. Blau, Esq. Blau & Blau

Bruce J. Stavitsky, Esq. James T. Ryan, III, Esq. Stavitsky & Associates, LLC

JOSHUA D. NOVIN Judge

Dear Mr. Blau, Mr. Stavitsky, and Mr. Ryan:

This letter constitutes the court's opinion following trial of the local property tax appeals instituted by plaintiff, West Orange Township (hereinafter "West Orange"). West Orange charges that the 2015, 2016, 2017, 2018, and 2019 local property tax assessments on the property at 265 Prospect Avenue, West Orange, Essex County, New Jersey (the "subject property"), are less than the property's true or fair market value. Accordingly, West Orange seeks to raise the 2015, 2016, 2017, 2018, and 2019 local property tax assessments.

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For the reasons stated more fully below, the court affirms the 2015, 2016, 2017, 2018, and 2019 local property tax assessments.

I. Procedural History and Factual Findings

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

As of each valuation date, New Jersey CVS Pharmacy, LLC ("CVS") was the ground lessee of the subject property.[2] The subject property is identified on West Orange's municipal tax map as block 153.16, lot 1.

The subject property is located along the southwest corner of Prospect Avenue and Eagle Rock Avenue, between Prospect Avenue and Woodhull Avenue. The site is rectangular-shaped and comprises 2.233 acres. The lot has vehicular ingress from and egress to Woodhull Avenue and the southbound traffic lanes along Prospect Avenue.[3] The lot contains approximately 372.45 feet of frontage along Prospect Avenue, 237.85 feet of frontage along Eagle Rock Avenue, and 350.00 feet of frontage along Woodhull Avenue.

The subject property is improved with a one-story masonry and steel freestanding CVS Pharmacy. The building comprises a gross area of 16, 947 square feet divided as follows: (i) 9, 416 square feet retail sales area; (ii) 1, 080 square feet pharmacy area; (iii) 1, 945 square feet common

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and support areas; (iv) 2, 200 square feet receiving area; and (v) 2, 306 square feet mezzanine storage area.[4] Construction of the CVS Pharmacy was completed in or about November 2014. As constructed, the building contains a single-lane drive-up pharmacy window and approximately seventy parking spaces.[5]

The subject property is in West Orange's B-2 General Business district with permitted uses, including retail stores; personal service stores or studios; offices or office buildings; businesses or vocational schools; restaurants; bars; and massage, bodywork, or somatic therapy establishments. Thus, operation of the subject property as a retail pharmacy is a legally conforming use.[6]

Public and municipal utilities service the site. The subject property is in Flood Hazard Zone X, denoting an area of "minimal flood hazard" and outside of the Special Flood Hazard Area.[7]

West Orange timely filed complaints challenging the subject property's 2015, 2016, 2017, 2018, and 2019 tax year assessments. The matters were tried to conclusion over several days.

During trial, West Orange offered testimony from a New Jersey certified general real estate appraiser, who was accepted by the court, without objection, as an expert in the field of property valuation ("West Orange's expert"). West Orange's expert prepared an appraisal report containing photographs, market data, and expressing opinions of the subject property's true or fair market value as of the October 1, 2014, October 1, 2015, October 1, 2016, October 1, 2017, and October

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1, 2018 valuation dates. During trial, CVS offered no evidence of the subject property's true value, electing to rest on the presumption of validity that attaches to the local property tax assessments.[8]

As of each valuation date, the subject property's tax assessment, implied equalized value, and West Orange's expert's value conclusions are set forth below:

Valuation date

Tax assessment

Average ratio of assessed to true value

Implied equalized value

West Orange's expert value opinion

10/1/2014

$5, 259, 500

97.22%

$5, 409, 895

$9, 465, 000

10/1/2015

$5, 259, 500

93.90%

$5, 601, 171

$9, 520, 000

10/1/2016

$5, 259, 500

92.50%

$5, 685, 946

$9, 630, 000

10/1/2017

$5, 259, 500

89.81%

$5, 856, 252

$9, 645, 000

10/1/2018

$5, 259, 500

87.74%

$5, 994, 415

$9, 760, 000

Accepting the opinions of West Orange's expert would lead to an increase in the subject property's local property tax assessments. Thus, one of the central issues for the court to consider is whether West Orange has proven, by a fair preponderance of the evidence, that the subject property's tax assessments are erroneous. See Ford Motor Co. v. Edison Twp., 127 N.J. 290, 312 (1992) (concluding that once the presumption of validity attaching to the original tax assessment has been overcome, the court must turn to a consideration of the evidence "based on a fair preponderance of the evidence.")

II. Conclusions of Law

A. Presumption of Validity

"Original assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, LLC v. Mountain Lakes Borough, 18 N.J. Tax 364, 373 (Tax 1998). Thus, the appealing party shoulders the burden of proving that the

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assessment is erroneous. Pantasote Co. v. Passaic City, 100 N.J. 408, 413 (1985). The presumption of correctness remains in place "until sufficient competent evidence to the contrary is adduced." Little Egg Harbor Twp. v. Bonsangue, 316 N.J.Super. 271, 285-86 (App. Div. 1998). The party challenging the local property tax assessment or county board of taxation judgment can only rebut the presumption by introducing "cogent evidence" of true value. Pantasote Co., 100 N.J. at 413. That is, evidence "definite, positive and certain in quality and quantity to overcome the presumption." Aetna Life Ins. Co. v. Newark City, 10 N.J. 99, 105 (1952). Accordingly, at the close of the proofs, the court must be presented with evidence that raises a "debatable question as to the validity of the assessment." MSGW Real Estate Fund, LLC, 18 N.J. Tax at 376.

The evidence presented "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. East Orange City, 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. 2000)). "Only after the presumption is overcome with sufficient evidence . . . must the court 'appraise the testimony, make a determination of true value and fix the assessment.'" Greenblatt v. Englewood City, 26 N.J. Tax 41, 52 (Tax 2011) (quoting Rodwood Gardens, Inc. v. City of Summit, 188 N.J.Super. 34, 38-39 (App. Div. 1982)).

Here, at the close of West Orange's proofs, CVS moved to dismiss these matters under R. 4:37-2(b), arguing that West Orange failed to overcome the presumption of validity that attaches to the local property tax assessments. Specifically, CVS argued that West Orange's expert's appraisal report contained fundamental flaws because his concluded highest and best use was subjective and not based on market data and research, thereby amounting to a net opinion. However, for the reasons set forth on the record and detailed herein, the court denied CVS' motion.

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B. Highest and Best Use

First, CVS argues that West Orange's expert rendered a "net opinion that the subject property's [as improved] highest and best use was narrowly defined as [a] 'drugstore.'" CVS maintains that West Orange's expert's statement that, because "Walgreens currently has no presence within the community, it would represent the most logical and probable tenancy for the subject property in the event of vacancy" casts a too narrow net on all legally permissible, physically possible, financially feasible, and maximally productive uses of the subject property, as improved.

Next, CVS contends that West Orange's expert's focus on New Jersey pharmacy licensing requirements and statement that the property "was designed, built and configured for use as a retail pharmacy, it cannot be considered as general or generic retail space," results in West Orange's expert valuing the business and not the real estate. CVS submits that the highest and best use "is not the value of the subj ect property to CVS (or Walgreens), but rather the price on the open market without undue stimulus."

An indispensable element not only to principles of property valuation, but to the determination of a property's true market value is discerning its highest and best use. Ford Motor Co. v. Edison Twp., 10 N.J. Tax 153, 161 (Tax 1988), aff d o.b., 12 N.J. Tax 244 (App. Div. 1990), affd, 127 N.J. 290 (1992). See also General Motors Corp. v. City of Linden, 22 N.J. Tax 95, 107 (Tax 2005). "For local property tax assessment purposes, property must be valued at its highest and best use." Entenmann's Inc. v. Totowa Borough, 18 N.J. Tax 540, 545 (Tax 2000). Thus, the highest and best use analysis is often referred to as "the first and most important step in the valuation process." Ford Motor Co., 10 N.J. Tax at 161.

In the quest to determine a property's highest and best use, an appraiser must sequentially

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consider "the following four criteria, determining whether the use of the subject property is: 1) legally permissible; 2)...

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