New Rock Investment Partners v. Elizabeth City

1059-98 (Tax Ct. 1999) (Unpublished)
  • Opinion Date: August 16, 1999

TAXATION; ASSESSMENTS; FREEZE ACT—The only mechanism available to a municipality to avoid the “Freeze Act” is to file an avoidance complaint (even if a property owner reaps a windfall by reason of a municipality’s failure to do so).

By settlement, a property owner’s appeal of a 1996 tax assessment was resolved and the settlement was reflected in an August 6, 1996 Tax Court judgment. The judgment was entered before the October 1 assessment date for the freeze years 1997 and 1998. As a result of improvements begun during 1997 and completed in May, 1997, the municipal tax assessor imposed an added assessment for the twelve months of 1997, presumably allocating the assessment for the months of June through December. The property owner did not appeal this added assessment. If no added assessment had been imposed for tax year 1997, the assessor would have been obligated to assess the subject property for 1997 and 1998 in accordance with the 1996 judgment. The only mechanism available to the municipality to avoid applicability of the Freeze Act for 1998 would have been the filing of a Freeze Act avoidance complaint. No such complaint was filed. As a consequence, when the property owner sued to have the 1996 regular assessment applied for tax year 1998, the Tax Court held that despite the improvements made after 1996, the provisions of the Freeze Act must be followed because any increase in assessment for a freeze year, based upon pre-assessment date improvements or additions, may be imposed “only if the municipality follows the appropriate procedure for asserting a change in value.” The Court recognized that granting the property owner’s motion would produce a result which, on its face, appeared anomalous. Nonetheless, prior case law held that the provisions of the Freeze Act were “self-executing,” and clearly set forth the procedures available to an assessor to avoid application of the Act. Because the assessor failed to follow those procedures with respect to tax year 1998, the property owner was entitled to reap the benefit of such failure.