City homeowners will receive some tax relief after an almost yearlong property revaluation process came to a conclusion yesterday shrinking the city’s tax base by 30-percent from $8.2 billion to $5.75 billion, according to Appraisal Systems, the company that completed the revaluation.
The average homeowner could see savings of $900 per year, said city tax assessor Richard Marra. He said the savings largely results from the reduced valuation of residential properties.
Kenneth Morris, councilman at-large, said it may be too early to determine the exact amount residential property owners will see in savings, but he said it is certain to reduce the amount the city collects in county taxes.
“We will pay less in county taxes,” said Morris. He hoped Marra’s guesstimate is accurate, for property owners can use some tax relief, but said it’s not likely residents will see a reduction.
Morris subsequently said tax revaluations a third of people will see no change in their taxes, a third will see a decrease, and a final third will see an increase. “We all know how revaluations work. It usually works in thirds. A third of property owners will see no changes in the taxes they pay, one third will see their taxes go down, and another third may see their taxes go up,” said Morris.
As valuation decreased for residential properties, it remained almost flat for commercial properties. Marra said the commercial share of the tax base was $2.5 billion prior to the revaluation – post revaluation it stands at $2.25 billion. A slight decrease. This means a significant portion of the tax burden is being transferred to commercial property owners in the city.
“My administration is seeking to reduce the city’s reliance on residential property owners for tax revenue and this is the first step in that direction,” said mayor Jose “Joey” Torres in a press release issued Thursday afternoon.
The municipality will have to collect the same amount of revenue to fund itself by adjusting the current tax rate of 2.9-percent to 4.1-percent (this number is a preliminary estimate) to ensure it’s taking in the same dollar amounts needed to pay its share of county taxes and fund city schools.
When that rate is adjusted city’s commercial property owners will see significant increases in their tax bills. “That’s going to be very difficult for businesses,” said David Wolf of Livingston-based Skoloff and Wolfe.
Wolf, who represents more than a dozen commercial property owners, said the impact is going to be “devastating” for businesses. He said commercial property owners should wait for their new assessment notices to carefully review the numbers. Marra said the city has sent out notices yesterday and intends to finish up today.
“They’re going to have to appeal their taxes before they see the new taxes,” said Wolf. He said commercial property owners must be careful when reviewing their new assessments because if they appeal a low assessment there’s a potential risk that their valuation could increase after going through the appeal process.
Wolf said properties valued at $1 million or more can pursue appeals in the New Jersey Tax Board or with the Passaic County Board of Taxation. Properties valued less than $1 million must appeal at the county tax board.
Property owners have until May 1st to file appeals.
If they have questions or concerns about the preliminary values, property owners can also schedule a one-on-one appointment with a representative of Appraisal Systems to communicate their concerns.
“It is important that all the information presented about your property is accurate, and if you feel that there are conditions that diminish the market value of your property, the interview is your opportunity to bring those factors to bear,” said Torres.
“It can impact individual property owners that are struggling,” said Wolf. “Increases like this really can be the difference between keeping or losing a property. A significant increase in taxes has a negative impact on growth.”
Councilman Andre Sayegh, 6th Ward, said he is concerned the shift of the tax base from residential to commercial will adversely impact economic growth. “I just hope it doesn’t stifle growth in other areas,” said Sayegh. He said in recent years the city’s 6th Ward has witnessed tremendous economic growth.
The last time the city completed a full revaluation was in 2007 at the height of the housing market that eventually collapsed leaving city taxpayers to pay astronomically high taxes on underwater homes.
Marra said 80-percent of the properties were visited by appraisers, but 20-percent were not. City officials said there’s still time for property owners to schedule an appointment with the city to get their properties assessed. Property owners can call 201-493-8530 to schedule an inspection.
Morris said he doesn’t want the city’s school district to come in and attempt to take the savings city residents will see to fill its budget gap. He said he will adamantly stand against any such proposals.
“I’m hopeful that this revaluation does what we hoped this would do which is decrease the tax burden on Paterson residents they really deserve the opportunity to breathe,” said Morris.
Correction: An initial story stated, based on the statements of the city’s tax assessor, that residential property owners will see a $900 tax reduction, but that statement has seen been debunked as inaccurate by Morris. This story was revised to reflect that fact on Saturday, March 28th, 2015.