Cty. grants $20M assessment
decrease for Lucent property
Company’s tax bill
on Holmdel property
will drop $560,000
By maura dowgin
Cty. grants $20M assessment
The county has approved a tax decrease for Lucent Technologies Inc.
The Monmouth County Board of Taxation agreed March 12 to reduce the assessed value of Lucent’s Holmdel property on Crawfords Corner and Roberts roads by $20 million, said Matthew S. Clark, Monmouth County tax administrator.
Based on last year’s tax rate, the reduction in property taxes Lucent will experience as a result of the reassessment is about $560,000, Holmdel Tax Assessor Eldo Magnani said.
Even with the $20 million reduction in Lucent’s assessment, the township has an additional $63 million in ratables this year because of the new Holmdel Towne Center, the Holmdel Commons and other construction projects around town, Magnani said.
"That basically absorbs this reduction and the homeowner picks up no liability," Magnani said.
With no additional spending in the new budget, which has not been introduced, there would be a decrease in property taxes, even though Lucent was reassessed, Magnani said.
Lucent’s property was assessed last year at $130 million. The township asked the county, at Lucent’s request, to reassess the property at $110 million, Clark said.
The assessed value of the property next year is expected to go down again by another $5 million to $105 million, Magnani said.
The $5 million assessment reduction for 2004 has only been approved by the township. The county tax board did not even discuss the possibility of reducing Lucent’s assessment for 2004, Clark said.
The assessment was agreed to by the Township Committee and Lucent at the end of January, Magnani said.
The committee discussed the reduction in Lucent’s assessment in closed session and not at a public meeting because of possible litigation, Mayor Larry Fink said.
"We [Lucent] want to make sure we pay our fair share of taxes and make sure the amount we pay is fair," said John Skalko, spokesman for Lucent.
The township came to the agreement after the company said it would file a tax appeal, which would possibly have cost taxpayers more money, Fink said.
"In 2002, Lucent Technologies told the township that it would be appealing its Crawfords Corner Road property tax assessment by up to 50 percent, which would result in an assessment of [the property at] $65 million," Fink said.
Lucent calculates the 2004 tax reduction may be about $170,000, Skalko said.
The figures are based on last year’s tax rate because this year’s has not yet been determined.
Every dollar collected through property taxes is split up three ways: for the township, for the school, and for the county. In Holmdel, 14 cents of every dollar goes to the township and township open space, 64 cents goes to the school district, and 22 cents goes to the county, the county library system and county open space, Magnani said.
The increase of ratable property will increase the amount of money the school receives from taxes by $1.1 million. If Lucent had not been reassessed, the schools’ share of the property taxes would have been $361,400 more, Magnani said.
The expense to the taxpayers would have been much greater if the township had not come to an agreement and Lucent had decided to file a tax appeal, Magnani added.
"A tax court ruling lowering Lucent’s assessment would have required the township to pay back – out of its own budget – not only its share of excess tax revenue, but also the excess tax revenue collected on behalf of the schools and the county," Fink said.
"Because the township’s share of total tax revenue collected is less than 14 percent, having to pay back 100 percent of Lucent’s tax overpayment would have been devastating to the town’s budget," Fink said.
Corporate business properties are going down in value all over the tri-state area, Magnani said.
The Lucent building is a "combination of research facilities and administrative offices," Skalko said.
"The demand for this type of space is not high right now," Magnani said. The market is flooded with these types of buildings, he added.
"We were faced with the potential of a much bigger hit on our budget and our taxpayers," Fink said.
In the best case scenario for a tax appeal, $700,000 of the township’s revenue would have been be put aside this year and $800,000 next year. This would have been used to pay the expenses of a tax appeal by Lucent, Magnani said.
"The advice of our professionals (special tax attorney Maryann Nergaard and Magnani) was that the town was not in a good position and the appeal could have resulted in the town being charged, not only for the municipal portion, but for the school portion and county portion," said Christopher Schultz, township administrator.
"Professionals are very important as a tool, but they are just that, a tool," Committeeman Terence Wall said.
Fink is a former employee of Lucent and should not have voted on the agreement because of a conflict of interest, Wall said.
"I used to work for Lucent but I haven’t worked for them in over three years. My understanding of the ethics law is that my former employment does not constitute a conflict. Neither does a miniscule investment," Fink said.
There was not enough information to enter into this agreement because Lucent never revealed information about when it sold the property to itself and leased the property to itself as a cost-saving measure, Wall said.
"[The sale-leaseback information] would give us the most current, up-to-date value on the property," Wall said.
"My understanding is that the sale-leaseback information was taken into account and was used in arriving at a settlement that was to the town’s advantage," Fink said.
The county did feel the evidence presented was sufficient to reduce the assessment, Clark said.
"Many people in the industry are aware of that sale-leaseback. The board members are aware of that sale-leaseback," Clark said.
At least one member of the committee did not believe there was adequate proof that Lucent planned to appeal its taxes.
"There is no tax appeal on file or filed [from Lucent]," Wall said. "As an elected official, you don’t act on a phone call. You act on documentation."
There was "more than a whisper" about the fact that Lucent was going to appeal if there was no deal, said Janet Berk, deputy mayor and committeewoman.
Township professionals "told us point blank that they (Lucent) are going to appeal," Fink said.
When asked if he believed Lucent would have filed an appeal, Wall said, "Hard to say. If they were passionate in their appeal process, I imagine they would have sent a letter."
This sends a message to corporations that it is not necessary for them to file a tax appeal before the township reduces the assessment of property, Wall said.
In the deal, Lucent agreed not to appeal its 2003 or 2004 taxes.
The company could be back in 2005 to appeal its taxes, Fink said.
Lucent will not appeal its taxes in 2005 if the county orders the township to revaluate, Magnani said.