The decline in the real estate market has led tax assessor Michael Ticktin to declare a 20 percent across-theboard reduction in land values to avoid the large number of tax appeals Roosevelt might have to defend.
At the Nov. 23 Borough Council meeting, Ticktin told the governing body that due to the general decline in property values, they are now in a situation where they are vulnerable to tax appeals, which the town must defend and pay the difference if found in the appellant’s favor. He said the best way to deal with it is the 20 percent reduction.
“Everybody has the same problem. It’s the fairest way to do it,” said Ticktin.
Ticktin explained that in 2006, the last year under the 1993 reassessment, Roosevelt had a total taxable valuation for real property of $12,885,750 for land and $23,413,160 for improvements, for a total of $36,308,910. The valuation for the land was thus 35.48 percent of the total. The total taxable valuation for real property for 2009, which incorporates the results of the 2006 revaluation, is $57,225,100 for land and $38,581,100 for improvements, for a total of $95,806,200, of which 59.73 percent is the valuation of the land. With the 20 percent reduction in land values, land valuation will now be 54.26 percent of the total valuation, or $45,780,080 divided by $84,361,180 equals 54.26 percent.
The re-evaluation company hired by the borough, Realty Appraisal, determined land and improvement values based on then-current sales data and cost figures. The increase in land values reflects a general increase in demand for properties in this area, while increases in the value of improvements reflects construction costs. The shift from improvements to land reflects the fact that the general demand rose faster than construction costs in the years between 1993 and 2006, Ticktin said.
He added that since the decline in property values is essentially in general demand, a partial retrenchment in the land values, which had increased so dramatically, is appropriate.
“Reducing the land valuation by 20 percent gives us a valuation of $45,780,080 for land,” he said. “With the valuation for improvements unchanged, the total would now be $84,361,181, which is about 88 percent of $95,806,200. To raise the same amount of revenue from this lower ratables base, the tax rate would have to be raised from 2.327 percent to 2.644 percent, since 2.327 divided by 88 percent is 2.644.”
The effect on the average homeowner would be no change at all. According to Ticktin, those for whom land is a higher percentage than the average of the total valuation would pay less, since they are the
ones who paid more following the last revaluation, while those for whom improvements are a higher percentage than
average would pay more, since they are the ones who paid less following the last revaluation.
“In effect, all property owners will be given the relief that some might otherwise get through tax appeals. If everyone gets the appropriate relief, there will be no need for any refunds to be paid, thus avoiding a municipal expenditure for that purpose,” he said.
Ticktin discussed the proposition with Robert Rubinstein, one of the principals of Realty Appraisal, and Jeffrey Otteau, a leading authority on regional real estate, and said both agreed with him. He spoke with both of them at the recent conference of the New Jersey chapter of the Appraisal Institute, which Ticktin attended as part of his fulfillment of the continuing education requirement for assessors.
At the council meeting, Councilman Jeff Ellentuck asked that Ticktin speak with the borough’s chief financial officer, George Lang, to make sure this would not complicate any future presentation to the Local Finance Board, in the event that the town may have to again request relief from cap limits. Ticktin said he has since spoken to Lang, who agreed that dealing with this issue proactively was a good idea and that it would not cause any problems with the Local Finance Board.