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Hackensack City v. Bergen County

405 N.J. Super. 235, 963 A.2d 1236 (App. Div. 2009)

TAXATION; ASSESSMENTS; PUBLIC PURPOSE — Although the status of property owned by a governmental entity may be in question, and the property may not be in active use, it may still qualify for an exemption from real estate taxes if the public use of the property has not actually been abandoned.

A county purchased property used primarily for administrative purposes and also used for basement storage. After the county’s offices were relocated, the county continued to use the premises for storage. The municipality unsuccessfully attempted, before the county tax board and before the Tax Court, to have the property’s tax-exempt status revoked after it was no longer being used for administrative purposes. The municipality, however, continued to assess taxes on the property and send tax bills to the county. The parking lot of the property was at times used by civic and non-profit organizations and also for the storage of, and auction of, seized automobiles. In an attempt to increase the property’s value so that it could be sold, the county began removing certain items from storage. After receiving a number of bids that were lower than expected, the county planned on using the property for office space again, but then ended up selling the property to a community college. The county’s challenges of the continued assessments for the following two years were rejected by the county tax board as untimely.

On appeal, the Appellate Division consolidated the challenges by the municipality for the years in which the property was found by the Tax Court to be exempt and by the county for the dismissal of its challenge to the two years of assessment following the board’s decision. The Court pointed out that a public property’s exemption from property taxes is based on its use, not merely the governmental status of its owner. It found, in agreement with the Tax Court, that although the future status of the property was in question, the public use of the property had not been abandoned. Nonetheless, the Tax Court’s decision upholding the dismissal of the county’s challenge to the assessments for the two years following the decision declaring the property to be exempt was found to be reasonable since the two year time limitation was statutory. The Court declined to answer the question of whether the finding that the property’s tax status was exempt, fixed, or frozen for the following two years after the municipality made its assessments, but found that the county reserved the option of challenging the assessments on that basis before the Tax Court. Based on its findings and conclusions, the Court affirmed the findings of the Tax Court and the county tax board that the property continued its tax-exempt status and that the county’s challenges of the two years of assessments were properly dismissed as untimely.


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