Opinion
Docket No. 013772-2012
05-16-2013
Re: Dericks v. Borough of Bradley Beach Block 39, Lot 10, Unit # 303
Michael J. Dericks, Self-Represented Michael DuPont, Esq. McKenna Dupont Higgins & Stone, P.C.
NOT FOR PUBLICATION WITHOUT APPROVAL OF
THE TAX COURT COMMITTEE ON OPINIONS
Mala Sundar
JUDGE
BY FIRST-CLASS AND ELECTRONIC MAIL
Michael J. Dericks, Self-Represented
Michael DuPont, Esq.
McKenna Dupont Higgins & Stone, P.C.
Dear M\r. Dericks and Mr. DuPont:
This letter constitutes the court's decision following trial on May 8, 2013. Plaintiff contests the local property tax assessment for tax year 2012 on the above captioned condominium unit located at 631 Ocean Avenue ("Subject"), in defendant Borough of Bradley Beach ("Borough"). The assessment was as follows:
+-------------------------+ ¦Land: ¦$250,000 ¦ +--------------+----------¦ ¦Improvements: ¦$100,300 ¦ +--------------+----------¦ ¦TOTAL ¦$350,300 ¦ +-------------------------+ The Chapter 123 ratio was 99.9% with an upper limit of 114.89% and a lower limit of 84.91%. * Plaintiff filed a timely petition to the Monmouth County Board of Taxation ("County Board"). The County Board issued a judgment reducing the assessment as follows:
+-------------------------+ ¦Land: ¦$250,000 ¦ +--------------+----------¦ ¦Improvements: ¦$ 59,700 ¦ +--------------+----------¦ ¦TOTAL ¦$309,700 ¦ +-------------------------+ Plaintiff here asserts that the true value of the Subject should be $248,506, which is the per square foot ("PSF") sale price of condominium Unit #309 located in the same building, multiplied by the gross living area ("GLA") of the Subject. Alternatively, Plaintiff claims that value could be $275,000 based on the higher PSF sale price of Unit #201, but reduced for superior amenities and ocean view. The Township asserts that using the same comparables the County Board's judgment is proper.
The court finds that Plaintiff has not proven by a preponderance of evidence that the County Board's judgment is incorrect. Therefore the court affirms the judgment. FACTS
The Subject is a unit (#303) within a condominium complex called Beach Plaza built in 1984. The complex comprises of three buildings. One faces the ocean. Another, located on Laraine Avenue, provides the units therein with an ocean view. The third, containing the Subject, is landlocked with a view of the parking lots and the rear façade of neighboring buildings (despite its street address of "Ocean Avenue").
The Subject has one bedroom, one full bath and one walk-in closet. The kitchen, bathroom and floors are as originally constructed. It has one fireplace. The total GLA is 808SF. It has a front deck which is accessed through a common stairway shared by four units, a rear deck with private access and no roof deck. It has an open carport with space for parking one car. The only access to the Subject is through Laraine Avenue. ANALYSIS
While Plaintiff testified that, among others, the kitchen was not renovated, his county board petition with attachments (admitted into evidence without objection), noted that the kitchen had "newer appliances."
A. Standard of Review
"Original assessments and judgments of county boards of taxation are entitled to a presumption of validity." MSGW Real Estate Fund, L.L.C. v. Borough of Mountain Lakes, 18 N.J. Tax 364, 373 (Tax 1998). Due to the "strength of the presumption," a taxpayer has the burden of proving "that the assessment is erroneous" with evidence that must be "definite, positive and certain in quality and quantity to overcome the presumption." Ibid. (citations and quotations omitted).
Once the presumption of correctness is overcome, the court must determine the value "based on a fair preponderance of the evidence." Ford Motor Co. v. Township of Edison, 127 N.J. 290, 312-13 (1992). The court's "independent assessment" depends "on the evidence before it and the data that are properly at its disposal." F.M.C. Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 430 (1985). The complainant continues to bears the burden of persuading the court that the "judgment under review" is erroneous. Ford Motor Co., supra, 127 N.J. at 314-15.
B. Valuation
The sales comparable method is appropriate for valuation of a condominium unit. See Appraisal Institute, The Appraisal of Real Estate 639 (13th ed. 2008) ("[r]ecent sales of units of comparable size, location and quality are the best indicators of value"). Both parties used this method using the price PSF as the unit of comparison. They agreed that the best comparable was Unit #309 ("Unit 309"), although both also considered Unit #201 ("Unit 201") located in a different building but in the same complex, with the same size as the Subject.
Plaintiff's evidence comprised of the same information he used before the County Board. This included sales of two other 2-bedroom condominium units with an ocean view, Units #11 and 13 located at 107 Brinley Avenue which sold July 27, 2011 for $375,000 and August 4, 2011 for $365,000 respectively. He however did not testify as to these units.
Unit 309 is a two-bedroom, two (full)-bathroom condominium which sold December 1, 2011 for $350,000 after being on the market for almost a year. It is above the unit which is adjacent to and shares a wall with the Subject. Also built in 1984, it has the same parking view and the original kitchen, baths and floor coverings like the Subject. Unlike the Subject, it has a cathedral ceiling and skylight in the living room, two walk-in closets, a loft bedroom, private access to the three private decks (rooftop, front and rear), no fireplace, a larger sized carport and extra storage space. The total GLA is 1,138 SF, thus, providing a PSF sale price of $307.55.
Unit 201 sold August 15, 2012, for $350,000 after being on the market for almost a year (since November 2011), with an original listing price of $410,000, then reduced to $375,900. Located on Lariane Avenue, it is, like the Subject, a one-bedroom, one-bathroom unit with the same GLA, however, has a larger deck with stair access limited to two units and an ocean view. According to Plaintiff, Unit 201 was fully renovated with upgraded kitchen cabinets although he did not assert that this allegation was based upon his personal inspection. This sale provided a PSF price of about $433 ($350,000/808SF).
Plaintiff placed most reliance on Unit 309 because the unit is in the same building as the Subject, its sale date is proximate to the assessment date and it is similar to the Subject's age and condition. He applied Unit 309's PSF price to the Subject's GLA for a value conclusion of $248,506 ($307 X 808SF). He did not make any adjustments because he felt that the improvements were very similar to the Subject, adjustments if any to the private decks would be negligible, and adjustments to the extra bedroom and bathroom would be accounted for in the PSF computation.
He conceded that the PSF sale price of Unit 201 was higher ($433) and provided for a higher value ($433PSF x 808SF = $349,864), but maintained that due to differences in the comparable's interior condition, deck size, and ocean view, the Subject's value was $275,000.
The Borough's assessor provided a size adjustment since Unit 309 was 330SF larger than the Subject. He first reduced Unit 309's PSF price by one-third, which he stated was the price attributable to the land. He then multiplied the reduced PSF ($101.49) by the 330SF difference in GLA, and arrived at a net adjusted sale price of $319,000. He stated that the one-third reduction was his estimation. He further stated that no other adjustments were needed.
The assessor deemed Unit 201's sale, although about 10 months post-assessment, a reliable comparable because the market, in his opinion, was stagnant during this period, and thus would not require a time adjustment. He agreed that since the ocean was visible in this comparable, it merited a -10% view adjustment, providing an adjusted sale price of $315,000.
The assessor concluded that the adjusted prices of both sales provided a value between $318,000 and $314,000 (after application of the Chapter 123 ratio of 99.9%), and thus, rendered the County Board's judgment of $309,500 valid.
"One sale does not necessarily make a market [and, thus] is not controlling on the issue of value." Briskin v. City of Atlantic City, 6 N.J. Tax 187, 190 (Tax 1983). See also Lorenc v. Township of Bernards, 5 N.J. Tax 39, 49 (Tax 1982) ("a single sale is not a sufficient sampling to arrive at a firm conclusion" since it does not help establish "a definite trend from which a reasonable conclusion can be drawn"). The court will therefore consider the sales of both Units. Unit 201's sale does not require an automatic rejection on grounds it sold about eight months after the assessment date. See generally Newport Center v. City Jersey City, 17 N.J. Tax 405, 425-427 (Tax 1998) (accepting a sale after two years of the assessment date but rejecting a sale more than two/three years after the assessment date since the expert had "failed" to show that "flat" market conditions during that time).
The court does not consider the two sales in July/August 2011, see supra n.2, in its analysis because the information is insufficient to decide the Subject's value. No details were provided other than information on the Multiple Listing Services. Further, Plaintiff made no adjustments to those sales (some features such as the garage, absent in the Subject, clearly requiring adjustments).
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The court finds both sales are usable because they are in the same condominium complex as the Subject and it is undisputed that they were arms-length usable sales. However, the adjustments to their sale prices are not credible. Plaintiff's method of applying the PSF price of Unit 309 to the Subject not only ignores the principle of "economies of scale" (smaller areas sell for larger PSF price as evidenced by the sale of Unit 201), but also equates to providing a gross and net adjustment of about 29% to the sale price (the Subject's GLA being about 71% of Unit 309's GLA). The sheer magnitude of this single adjustment is cause for a pause. See e.g. M.I. Holdings, Inc. v. City of Jersey City, 12 N.J. Tax 129, 136-37 (Tax 1991) (rejecting plaintiff's expert's single comparable because the "magnitude" of his 30% adjustment was "too large in view of the expert's reliance upon only one sale").
The assessor's size adjustment fares no better. His reduction of the PSF amount by a third for land is unsupported. There was nothing to show that land (which is a "common element" in a condominium, see N.J.S.A. 46:8B-3(d)(1)) commands one-third of the sale price. Additionally, his conclusion of $101.49 as being the PSF value ascribed to the improvements is questionable. If, according to him, one-third of the sale price is attributable to land, it follows that two-thirds should be allocated to improvements thus he should have multiplied the GLA difference of 330 SF by this amount, not $101.49.
The court therefore is not persuaded that the parties' adjustment methodology to Unit 309's sale price, and the resultant adjusted price, are sufficiently credible to provide probative evidence of the Subject's value. Indeed, the sales of Units 309 and 201 tend to prove that the market trend for condominium units in the Borough and near the Subject's location is at least, if not, over $300,000, and thus, simply does not support Plaintiff's request for a reduction in the Subject's value to $248,506. The County Board's judgment reducing the assessment to $309,700 is thus consonant with the market.
The court also finds that the sale of Unit 201 does not tend to prove that the County Board's judgment is incorrect. Although the assessor testified that the market was flat from 2011 to 2012, there was no market evidence to support this statement. Further, while his provision of a downward 10% adjustment for view is credible, he conceded that he did not consider its oversized deck as meriting an adjustment. Plaintiff also did not provide details of the alleged superior amenities in Unit 201. He did not provide details or the adjustment method/amounts in this regard but concluded that with adjustments, the Subject's value should be $275,000. This bare conclusion is neither sufficient nor probative. The court also cannot sua sponte make adjustments without sufficient cognizable factual evidence in the record. Township of Warren v. Suffness, 225 N.J. Super. 399, 414 (App. Div.) (the court's "independent assessment must be based on the evidence before it and the data that are properly at its disposal"), certif. denied, 113 N.J. 640 (1988). Nor can the court "arbitrarily assign a value to the property not supported in the record." U.S. Life Realty Corp. v. Township of Jackson, 9 N.J. Tax 66, 79 (Tax 1987).
In sum, the preponderance of evidence presented here does not persuade the court that the County Board's judgment is incorrect. CONCLUSION
The County Board judgment is affirmed. A Judgment reflecting this affirmance will be entered simultaneously.
Very truly yours,
Mala Sundar, J.T.C.