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DSM Nutritional Products, Inc. v. White Township

A-2762-06T3 (N.J. Super. App. Div. 2008) (Unpublished)

TAXATION; APPRAISALS — Even though municipal assessments are entitled to a presumption of validity, they can be set aside if sufficient and competent evidence establishes a different assessment even if such evidence is based solely on the cost approach method of valuation.

A property owner challenging a municipal real estate tax assessment presented an expert appraiser before the Tax Court who assessed the property according to the cost approach but not according to the comparison approach or the income approach. The assessor testified that for the year 2004, not enough information was available as to the sale or rental of other similarly sized properties with buildings similar to the property in question. The appraiser had valued the property for the year 2005 using the same method but increased the amount by roughly $3 million to account for its estimate of an upward trend in land values. After cross-examination by the municipality, the Tax Court found that the appraiser had appropriately relied on only the cost approach. The Tax Court, however, disagreed with the appraiser on certain aspects of the land and improvement values which were the two methods used in determining the cost approach, and increased the assessments for each year by about $3 million.

On appeal, the Appellate Division noted that the Tax Court is entitled to considerable deference by reason of its special expertise and that its decisions were to be accepted if supported by substantial credible evidence. It also noted that the municipality never presented any expert testimony. The municipality argued that its assessment was entitled to a presumption of validity and that its assessments should have been accepted by the Tax Court. The Court, however, agreed with the property owner that even though municipal assessments were entitled to a presumption of validity, they could be set aside if sufficient and competent evidence established a different assessment. Here, it found that the Tax Court reasonably relied on the owner’s expert appraiser and was not obligated to require that one of the other two valuation methods be used. The Court acknowledged that the cost approach method of valuation was the least favored by the courts, but found that the Tax Court had offered sound explanations for reaching its decision. Based on the deference given to the Tax Court, its reasoning, and the supporting evidence, it affirmed the Tax Court’s assessment of the property.

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