LONG BRANCH — For the first time in a decade, the city will hire an outside firm to conduct a citywide revaluation of properties.
Finance Director Ron Mehlhorn Sr. said during the City Council’s Sept. 24 workshop meeting that the Monmouth County Board of Taxation has ordered the revaluation in advance of a pilot program that calls for a complete reassessment of properties in all of the county’s municipalities every five years.
Mehlhorn said revaluations, which involve the interiors and exteriors of properties, are more extensive than reassessments.
“The county has ordered us to do the reval because we haven’t been inside of houses for 10 years,” he said. “We’ve done two reassessments in the interim, but nobody has been inside the houses in 10 years.”
According to Mehlhorn, the revaluation will likely cost the city about $700,000, and the new figures are expected to be officially on the books in 2015.
In 2012, the state Legislature adopted the Real Property Assessment Demonstration Program (S1213/A1591), which is designed to reduce the amount of tax appeals by leveling the assessed valuations through more frequent assessments.
John Butow, the city’s tax assessor, said in a Sept. 26 interview that while only 20 percent of city properties will be inspected per year, the value of every city property will be looked at annually and adjusted if necessary.
“We are going to be analyzing all of the sales to make any necessary adjustments to assessments,” he said. “In order to be able to do that, you need to have a regular inspection program in place.”
“We are going to value the entire city every year, not just the 20 percent we look at,” he added. “This inspection process is just providing the vehicle to make the changes that need to be made.”
Butow said the pilot program will eliminate the need for a complete revaluation, but the city will still need to hire a firm to do the yearly assessments.
“It doesn’t make much sense to hire [municipal employees] who would then put a further burden on our pension system and our pension expense,” he said.
“This way, we can hire — in a more cost-effective manner — an outside company to perform these and utilize technology to make it more efficient.”
The outside firm would be responsible for its own liability insurance and technology, Butow said. He expects the city to save “40 cents on the dollar” in the new system.
According to Butow, there has been a spike in tax appeals in recent years, mostly due to an eroded housing market.
He said the city conducted more than 1,000 property assessments after superstorm Sandy, and there was only one successful appeal.
According to the county tax board, the city has $4.04 billion in taxable property valuation in 2013. There were 415 tax appeals filed in 2012.
While many of the city’s property owners may see a spike in taxes because of the 10-year span between revaluations, Butow said that spike would be eliminated under the new system.
“What this is doing on an annual basis is using technology to leverage the market information to determine what the assessment should be,” he said. “At the end of the day, everyone is paying their fair share, which is the goal of the system.”
The new system also benefits municipalities by moving up the timeline for tax-appeal hearings.
Currently, property owners must file an appeal of a tax assessment by April 1, and the appeal is heard in May, June or July. Under the new program, the deadline to file an appeal is Jan. 15, with the appeal being heard in February, March or April. The schedule change will provide municipalities with upto date tax revenue figures when they adopt budgets in May or June.
“The tax appeals are going to be adjudicated prior to the budget adoption,” Butow said. “All that will be done so that your only unknowns would be [appeals for properties eligible to be heard in New Jersey Tax Court].
“The unknown is what we are removing.”
Business Administrator Howard Woolley Jr. said the city would not have to undergo a revaluation again if the reassessment program becomes permanent.
“If this program takes traction, this will be the last revaluation we do in the city, ever,” he said. “The system in place right now, to say it is not ideal would be an understatement.”
City Attorney James Aaron said the new system would stabilize the city’s budget process.
“The rule-of-thumb is: [The values of] one-third of the homes go up, one-third stay the same and one-third go down,” he said. “So, one-third of all your line items are flooding the system with tax appeals.
“This new process will really even out the potential for appeals and reduce, in theory, the number of appeals that will be filed in the future.”
According to Butow, the city will be divided into five sectors, and the inspectors would examine the interiors and exteriors of properties in one segment per year.
While it is only a pilot program, Butow said the expectation is that it will become permanent.
“It is our belief that this will be adopted because it makes sense,” he said. “This is good government, this is good legislation, and this was a result of cooperation between various parts of government.”
The city has yet to award a contract for the revaluation. Realty Appraisal, a West New York firm, has performed the two most recent citywide reassessments and has performed revaluations in several other local municipalities.