The city’s governing body approved an $800,000 contract on Tuesday evening to conduct annual property reassessments to eliminate tax shifts the most recent of which resulted in large protests by homeowners at City Hall.
Morristown-based Appraisal Systems received the contract which will cost taxpayers $200,000 per year for four years. The contract allows the city to renew year after year for a period of four years, according to the resolution approved by the city council.
The cost is not much more than the amount of money the city shells out every ten years or so to conduct a full revaluation of all properties in the municipality. In this case, the city is spreading out the cost while receiving the benefits obtained from having all its properties at market value.
“The real estate market is too volatile to do a one shot revaluation and wait 10 to 15 years to do it again,” said Rick Del Guercio, president of Appraisal Systems, which completed the citywide property revaluation last year. “The remedy to that is to do a revaluation and maintain it with re reassessments each year afterwards.”
Del Guercio said the annual reassessments program will ensure all residential, industrial, and commercial properties reflect their true market value. He said by conducting reassessments every year, the city will prevent big swings in assessed property values used to levy taxes.
The once a decade revaluation generally leaves a third of homeowners saddled with unaffordable tax bills due to large shifts as it happened late last year. A third of homeowners found their tax bills went up by thousands of dollars after the city retroactively applied the new assessments.
This could be a thing of the past for homeowners. “You can eliminate tax shifts. By your moving with the market you don’t have drastic swings,” said Del Guercio. “You will never see the swings you saw in 2005 or 2015.”
Del Guercio said this will drastically reduce the number of tax appeals filed by homeowners. Prior to last year’s citywide revaluation, the city was hit with 9,000 tax appeals, said tax assessor Richard Marra.
Last year, that number declined to 1,500. This year it went up to 2,900 as unhappy homeowners, hit with large tax bills, attempted to get their assessments reduced to lower their taxes.
Hackensack, the largest Bergen County municipality, also uses Appraisal Systems’ program to keep its properties at 100-percent of market value. Hackensack saw its tax appeals drop from 1,000 to 100, said Del Guercio.
The annual reassessments will also mean less “high exposure” appeals when the city has to payout hundreds of thousands or millions of dollars in some cases to large commercial property owners as has happened in the past several years.
A majority of council members supported the move to conduct the reassessments every year.
“We’re obligated to do this on a regular basis. Logically, it’s something we should be doing so people get fair assessments on their properties,” said Andre Sayegh, 6th Ward councilman.
Kenneth Morris, councilman at-large, noted the annual reassessments will not reduce taxes for homeowners. He said it could tip the tax scale negatively towards the 2nd and 6th wards, both of which have hotter property markets compared to the rest of the city.
The sole voice against the annual reassessment program was Alex Mendez, councilman at-large. He had an issue with the cost of the program.
The firm will have to ensure all properties are at 100-percent of their market value. It also has to inspect 25-percent of properties for verification purposes; by the end of the contract the company will have inspected 100-percent of the properties in the city.
Michael Jackson, 1st Ward councilman, asked about the annual assessment’s impact on commercial properties, which are assessed based on expected rental income, a method called income-capitalization, that are vacant.
Del Guercio told Jackson a year after the revaluation the vacancy may no longer exist. He said the annual reassessments will also address this issue.
Mendez said the annual reassessments won’t eliminate tax appeals and will not result in lower tax bills for homeowner when casting his vote against the contract.
“It almost equals out,” said Morris referring to the cost of the contract. “I’m willing to roll the dice.”