Appeals soar amid clamor for tax relief

After a grueling year in the housing market, New Jerseyans are turning out in droves to appeal their property assessments, pointing to drastic declines in real estate prices in the hope of garnering some tax relief.

In many counties, the number of tax appeals has doubled and tripled since last year and tax boards across the state are struggling to manage the increased volume, according to a Star-Ledger survey of all 21 counties.

The numbers range from a record 14,130 in Ocean County to a low of 330 in Salem, still twice as many as that southernmost county posted last year.

"Falling home prices and rising unemployment means more and more households are seeking property tax relief through the appeal process," said Joseph Seneca, an economics professor at Rutgers University.

Lawyers, local officials and tax experts say the appeals reflect a rising tide of anxiety among homeowners worried about their finances -- and the trend will continue for sometime.

"People get hysterical about this," said attorney Dan Keough of Ventura, Miesowitz, Keough, and Warner, P.C. Keough represents taxpayers filing appeals and said much of his job is calming his clients in frightening economic times. "I'm like a psychiatrist half the time."

County officials say the chances of a successful appeal are good if taxpayers do their homework, but many are taking little comfort even in a successful appeal.

"I'm not thrilled," said Ilyne Germaise, a Hoboken resident who was able to knock her tax liability down from $9,000 to $7,800. Germaise still felt her property was overvalued -- a fact exacerbated by a nearly 23 percent increase in Hoboken tax rates this year.

"I would have liked a little bit more," said Christian Stevenson, also a Hoboken property-owner, though he, too, will realize substantial savings.

Stevenson, a Harvard-educated chemist, was laid off from Merck last week. Though money is tight, he said the principle of filing an appeal is as important as the savings.

"I don't want to give them any more than I have to," Stevenson said.

Hudson County's appeals have tripled since last year and, according to real estate analysts, next year will be even worse.

"We continue to seek the bottom for housing, and I don't think we're there yet," Seneca said. "If it's a baseball game, we're in the middle innings."

According to Seneca, a 20 percent decline in home prices, rising unemployment and increased tax rates have created a "perfect storm" for appeals, and as long as these conditions persist, tax appeals will continue to rise. "It's a self-enforcing cycle," Seneca said.

As more and more appeals are granted, county and township officials are bracing for another hit to their already depleted treasuries.

Local property taxes are collected by towns but divvied up among school districts, municipalities and county government. Smaller tax revenues create bigger headaches for municipalities and counties already struggling to fund their operations.

"It's a big concern of mine that the ratable base is eroding," said Hunterdon Freeholder George Melick. "Less money from ratables drives the tax rate up."

Ratables, or taxable properties, lost about $1 billion of value last year in Hunterdon, contributing to a $7 million shortfall in the 2009 budget, according to freeholders.

Melick and his fellow freeholders have managed to reduce tax rates or keep them flat for the past 10 years. Next week they will vote on a budget that raises the property tax by 1 cent per $100 of value, anticipating further declines in prices.

Aside from tax hikes, counties have had to lay off workers, freeze salaries and suspend infrastructure projects to account for budget gaps.

The volume of appeals has stressed county tax boards that are, in many places, already understaffed.

"They're getting hit," said Debra Secola, who sits on the New Jersey County Tax Boards Association. Secola said counties are struggling to find enough commissioners to hear the appeals being brought. "Up until yesterday, Ocean County had one out of seven commissioners," Secola said last week. "Mercer was supposed to have five -- they were down to two," she said.

Ocean County is facing more than a 300 percent increase in tax appeals over last year with 14,130 appeals, one of the highest counts in the state.

"Ocean County has a double whammy," said Jeffrey Otteau, president of the Otteau Valuation Group, an independent firm that tracks real estate trends and prices. According to Otteau, vacation homes and senior housing -- both prevalent in Ocean County -- are two of the hardest-hit sectors in the housing market.

Four more commissioners were appointed to Ocean County last week to try to deal with the flood of appeals, but officials still had to seek approval to extend its hearing dates. Generally, counties have until the end of June to hear all appeals; Ocean County was given until November, officials said.

More rural counties are also facing steep losses, with residents having to travel farther to find work.

"The markets that have seen the greatest deterioration are what we call exurban markets," Otteau said. "Home buying demand is shifting closer back to employment centers."

In Sussex, tax appeals have more than doubled since last year.

To win an appeal, petitioners are expected to show three to five recent sale prices from comparable properties in their neighborhoods to demonstrate the real market value of their properties. If they can show sale prices lower than their assessments, taxpayers have a decent chance of getting a reduction, according to county administrators.

"In bad market conditions it could be 60 percent," Ozzie Vituscka, Ocean County's tax administrator, said of the success rate of appeals. In good markets the success rate varies, with some property owners discovering their property is undervalued and getting hit with higher taxes than the ones they appealed, according to Kenny.

Many appeals are settled before a hearing is necessary, but if a taxpayer remains unsatisfied, their appeal goes before a tax commissioner, who is appointed by the governor and confirmed by the state Senate Judiciary Committee.

Appeals will be held in most counties until the end of June. Nick Fargo, one of the Hudson County tax commissioners, advises hopeful appellants to come to their hearings prepared.

"Do your homework," Fargo said. " If you come in and you're unprepared, your chances aren't as good."

For those that do the necessary research, Fargo said, "You've got a much better shot."