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Bank Building Apartments, Inc. v. City of Jersey City

A-4775-98T2 (N.J. Super. App. Div. 2000) (Unpublished)

TAXATION; FREEZE ACT—A determination that a property is exempt from taxation is not equivalent to a determination that a property has a “zero” value; therefore, the Freeze Act will not apply to extend a “zero” value for two more years.

In 1974, the principals of a company sought approval from the Department of Community Affairs to form a non-profit corporation under the Limited Dividend statute (subsequently repealed). The company planned to renovate a building and sell the resulting apartments as condominiums. Approval was granted and the municipality’s council subsequently adopted a resolution approving the company’s application for property tax exemption under the statute. An agreement was signed to exempt the company from property taxes for a period of twenty-five years. The agreement provided that the tax exemption remain in effect only so long as the company remained subject to the statute. In 1982, the Attorney General determined that a condominium association could not qualify as a Limited Dividend or non-profit corporation under the Statute. No action was taken for seven years, when the municipality finally assessed the property as a single building for 1989 through 1993. The Tax Court granted the property owner’s motion for summary judgment voiding the 1989 and 1990 assessment of the property as one building. It did so on the basis that once the condominiums had been established, each condominium was required to be separately assessed. The property owners then filed a motion for Freeze Act relief contending that the void 1989 and 1990 assessments caused the property to be tax exempt for an additional two years, 1991 and 1992, for which they had neglected to file appeals. They contended that because the Tax Court found the assessment for the earlier two years invalid, it could only be concluded that the assessment was “$0” since no real property tax liability was due and owing for the original two years. The Appellate Division disagreed. If found that the purpose of the Freeze Act was to eliminate harassment by requiring yearly appeals to be taken where there has been no change in the value of the property. To apply the Freeze Act requires that there be a determination of value. Here, according the Court, there simply was no valuation of the individual condominium units for the two earlier years. Therefore, the Freeze Act was inapplicable.


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